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

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Belz... said:
It's customary to admit when you're wrong, so you look like a reasonable person.
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I don't see much of that around here.

Belz... said:
The point of setting a time limit is to make sure you don't cop out if the crash doesn't happen. If you say "within 6 months" and it doesn't happen, your opposition can say "you were wrong". Otherwise your claim becomes unfalsifiable, and we tend to not like that here.
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If bitcoin is to be accepted as currency it's going to have to be stable in it's value. As to right and wrong, they don't mean much at all except to religionists and a certain class of posters on the internet. Mania's can last longer than anyone believes they can, so setting a time limit is irrelevant.

What I am curious about is why bitcoin is rising and I don't see any of the bitcoin enthusiasts with any idea there. Bitcoin isn't being used to buy much and it's not accepted by the most important e-commerce ventures. If it is just speculation driving it, that always ends and badly.
 
psionl0 said:
It's comparing apples with lemons. The tulip mania was all about bidding for something that had yet to come into existence. That created the double jeopardy that the item might not come into existence or that when it did, the demand for it had fallen. This is very different to buying something that you can take delivery of almost immediately.
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Did it occur to you that bitcoin is being manipulated?

psionl0 said:
The property bubble is also an invalid comparison. It was caused by NINJA loans. The bankers' belief that property prices would always rise fast enough to cover these worthless loans was a global recession in the making.
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My house never really dropped in value more than 10% during the so-called bubble and now it's worth more than at the peak. I got my highest ever tax bill last month. My house is worth more than double what I bought it for in 1997 but it's a long way from the kind of bubble that bitcoin is right now.

psionl0 said:
The dot-com bubble might be a more realistic comparison to bitcoin but I would need to do further research into it.
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This may indeed be more like it. The stocks of those companies sky rocketed with no cash flow and no basis for really ever making money. It was the same kind of talk I hear about bitcoin. It was really tough trying to run a real business when people had money to burn and dreams to sell. Most of those businesses folded up after a year or two and spectacular stock crashes.

A few names from around here were DrKoop.com, Agillion, Garden.com, Books.com, Exodus and the list goes on but I can't remember all of them. I did make good money off of several of them and one (Altaworks.com) actually OEM'd my software so it wasn't all bad. But if bitcoin doesn't actually find a use in commerce, it's nothing more than a dotcom stock.
 
mhaze said:
So you think 'trusted intermediaries' are a solution, not a problem? The Russian mobsters sitting on millions of US credit card numbers and personal data would just LOVE your 'solution'...

LOL...
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The UN certifies transaction hubs by private crypto keys. Wait a minute! No, ANYONE can set up a UN coin transaction hub! Because it's the protocol that determines the behavior. Just as in Bitcoin. Anyone can set up a Bitcoin miner! :cool:
 
wrs said:
I don't see much of that around here.
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Someone has to set the example, then. ;)

My point is that is we set a time limit it sounds like a reasonable standard. Otherwise we can just move the goalposts repeatedly, and your opponents will just accuse you of doing so, getting the debate nowhere.
 
Belz... said:
Someone has to set the example, then. ;)

My point is that is we set a time limit it sounds like a reasonable standard. Otherwise we can just move the goalposts repeatedly, and your opponents will just accuse you of doing so, getting the debate nowhere.
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Here is the thing, given that I have no idea why it bounced the last month, I have no idea if it's sustainable so I can't place any timeframe on it. With the current price, it's going to take more money to sustain the same transaction volume of a month ago.

Just watching the Mt. Gox ticker I see that bitcoin doesn't sustain very high transaction volume without significant price swings. It's pretty clear to me that each time the price falls, it's driven back up again with incremental buying. This all looks like speculation and to me, that always ends with a collapse of some kind and $150 is just a guess, it may only be $500.
 
steve s said:
I don't really understand much about how bitcoins work. Is there really no other record of this guy's bitcoins than what was on his hard drive? What if your hard drive goes on the fritz, are you out all your money? Given that computers frequently break down, it doesn't seem like a good way to run a currency.

Steve S
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Well this begs the question of replacement for lost and worn out currency. With paper currencies they simply print new replacements as they destroy the old stuff. If your hard drive goes and there was no backup, how can there be replacement BCs? If there are no replacements, then the existing BCs gain more value and thus, this will become like a tontine insurance scam in practice.

The biggest problem with BC is that it is becoming increasingly harder to make more of it and thus, whomever has a lot becomes richer the more it is used. This is as bad as the existing debt based money system and of course I can see why the people that run that system would want people to flock to this type of currency. I think it would be extremely interesting to know who owns those 100 biggest wallets.
 
So how long before we see a virus that deliberately tries to fry the hard drives of other Bitcoin users in order to drive up the value of surviving Bitcoins?

Steve S
 
remirol said:
The exact height of the price is largely irrelevant, since BTC is trying to become a currency and thus a reliable store of value -- should it become that, it will have an established exchange rate in USD/GBP/RMB.

For BTC to be anything other than a speculator's toy (which it currently is), the value would have to remain stable and nonzero for a good, long period of time. (The value was, of course, stable and effectively-zero for plenty of time at its inception, but that does nobody any good). Then, for it to actually gain widespread acceptance, real vendors will have to start accepting it in BTC form.

Right now almost no vendors accept BTC, and that is the second largest reason it's nothing more than a toy right now -- mhaze is spending a lot of effort and spin trying to pretend that you can buy things with BTC, but when you have to use an intermediary to convert it to USD first, that's nothing more than buying things with USD and paying an extra charge to the middleman.

When I can pay my utility bills or mortgage with BTC, _then_ i'll consider it to have arrived. I'll consider it to be on its way when I can do something as simple as order from a major online retailer and pay in BTC to that retailer. That means "Amazon, Papa John's, etc. accepting BTC directly". Of course, no retailers worth their salt are doing this because the price spike over the last month would ruin them -- the minute one of those top 100 BTC holders decides to cash out any significant part of their holdings, all hell will break loose, and anyone who sold a good or service for .1 BTC (equivalent of what, $100 right now?) is going to be really pissed when those BTC are suddenly only worth, say, $25. $75 dollar loss soaked by the merchant? I don't think so -- and that's why you can't buy anything other than drugs or CP with Bitcoin.

Oh, and finally: Tippit posted an interesting article I alluded to, and I wanted to point out something above -- Not a single one of those top 100 BTC holders has made a transaction after May 7, 2013. Bitcoin prices around that time (between 5/1 and 5/14) ranged from between 80 to 140 USD. None of the Bitwhales are involved in this bubble, and that's not at all surprising in the least bit. But it does mean that everyone who's not a Bitwhale and is purchasing coins right now is at great risk from one of those same whales deciding to dectuple (it's a word now, dammit) his investment and cashing out while it's on the current ludicrous spike.

I don't buy into the $20/40 table with only $1000 for a reason -- a lot of amateur speculators are about to learn the same lesson.
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Very informative post.

RE the bolded part: are you talking about poker?
 
Belz... said:
http://preev.com/

1098$. :boggled:
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Based on the attached chart, BTC has topped out at $1242. Now that might be wrong, it's had big red reversal candles before after a new high and later recovered. However, BTC equalled one ounce of gold yesterday and I have a hard time believing it surpasses that.

Looks to me like $1050 will be tested followed by $900. If those two lines fail, look out below.

However, if BTC does move higher than $1242, it could keep going. My guess is that it needs to take a rest after this insane run.
 

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psionl0 said:
It is not logical to suppose that the price (demand) for bitcoins would continue to increase at a rapid exponential rate but the opportunities to sell or spend the bitcoins would remain static.
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I don't believe I said that they would remain static, I said that as a currency they're throttled by the fact that nearly nobody accepts them. At present Bitcoins are pretty much a deflationary version of Zimbabwe dollars, nobody accepts them even though bitcoins technically have a very good purchasing power.

mhaze said:
The bitcoin is tracable back through the blockchain by computer forensics experts armed with supeonas as at every step they must make a connection that requires asking that individual who he sold to and bought from.

It is also traceable by deduction. If you knew that X sent 1 btc to 20 indivduals on a certain date, you could look at the blockchain for activity of that sort.
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But I take it that the blockchain just says that there was a transaction, but not who made it?

RE government fiat currency versus private currency. Generally speaking if it were possible to take control of money out of the hands of trusted intermediaries, of which government is one as the originator, this would be a good thing because it would mean moving a great deal of power - and wealth - from the state to the individual. One way to look at the recent surge in bitcoin valuations is to consider that surge as part of that wealth transfer, but at a very early stage.
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However it could be said that bitcoin does have trusted intermediaries. I would say that as long as bitcoins have to be transferred into a more widely accepted currency there is a trusted intermediary - the exchanges. A lot of the confidence in bitcoin, especially among the speculators, is in the fact that you can convert your bitcoins back to money.

The power in bitcoins appears to be held by two groups, the exchages who are able to convert bitcoins into hard currency and the individuals who hold the coins. The problem is that the individuals with the most power are the ones with the most bitcoins. I think the exchanges see the people who are hoarding large numbers of bitcoins with dread at the moment, since it's very likely that none of them have the money to pay out if one of them decides to cash out entirely. A lot of what little stability bitcoins have comes down to the noblesse oblige of those individuals, but then they probably know themselves that they could never cash their bitcoins out in one go, simply because the little liquidity present in the exchanges can't handle it.

The other factor would be why you would want to? There is to be a finite amount of bitcoins which would mean that as long as people want them, whether for speculation or to actually use them as a medium of trade; they will be inherently deflationary. More so if you have just enough people hoarding them.

That assumes the private currency actually works fairly well. This is not an 'either/or' question but more along the lines of giving consumers a choice in currency instead of forcing them to only use one.
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The problem currently being that as a private currency bitcoins work extremely poorly. To a lot of people bitcoin is pretty much magic internet money that you can't spend anywhere unless you want to buy drugs. Value wise to most people it's somewhere between the post-WWII Pengo and Itchy & Scratchy Money.
 
Fudbucker said:
Very informative post.

RE the bolded part: are you talking about poker?
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thanks! :D

And yep. At the $20/$40 I would expect to see stacks in the five figures at least, so for me to buy in with what is effectively 1/10th of what at least one other person has at the table is roughly equivalent to putting up a sign in front of my chips reading "Crush me, I'm a grape."
 
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