yeah, I don't understand all the attention given to bitcoin. It's not like it's a system that's immune to systematic manipulation. Anyone operating under the assumption that bitcoin is a stable system is naive.
However the return of mining is hugely favored to the creator and the early adopters in a way that, if joined much later, there is little to no value in it.
So the early adopters could promote them and we can just wait and see. Since the rest of us won't earn much by promoting it, so just mine 1 or 2 BC (still takes some efforts given the massive amount of bot-nets out there) and speculate.
Is this really a bad thing? Now people can stop hoarding them and start really using them as currency. It never really mattered what they were worth unless you were holding onto them. If you use bitcoins to enable transactions only and keep your money in real dollars then it can be pretty useful.
It is if the only reason that they have value in the first place was the hoarding and speculating, which seems a reasonable interpretation of events to date. A currency of no value is not useful for trade.
I mean that "if" as a true logical statement, not an implied assertion that it must be true. (I do believe that, but I'm not asserting it right now, because I'm not defending it.)
It's a problem because the people who are using bitcoin have seen the value drop to less than 10% of what it was, so why should they trust it to be a currency worth using?
For it to be a currency it doesn't need a huge value per bitcoin, nor does it need to be constantly rising a huge amount - but it does need to be reasonably stable.
Every bitcoin opposer repeats, that the money will artificially start going up and that is why it will crash.
Right now, it is going down, for a long time. So that is not why it will fail.
It will fail because noone actually needs it. It has no real value over other means of electronically exchanging money - paypal, for example, is much faster, easier to use and, dwhile it is not free, thanks to the wild exchange rate of bitcoin, one will probably still have more money from paypal than bitcoin money exchange.
There is no place to spend bitcoin, because most of the people don't CARE that it's centralized and someone can watch it, because it is infinitely easier to use paypal to just PAY STUFF, instead of going through the pains to exchange bitcoins through shady sites, wait DAYS to get it on your wallet, then wait hours until the blockchain is downloaded, then wait another hours since the block is 6 times confirmed.
Maybe it will work in the end, it's nicely designed and all. But I don't see anyone using it right now. There is no real reason to do so.
Even though users typically don't care whether a service is centralized or not, decentralized services have the advantage when it comes to building infrastructure around them.
With Paypal, the same company is responsible for sending, receiving and storing your money. A decentralized currency like Bitcoin could act as an intermediary protocol that would allow users to choose different companies to handle each of these tasks.
Bitcoin to me seems interesting because it's essentially an open protocol for transferring and manipulating finances. I kinda feel that talking about deflationary currencies or currency fluctuations is somewhat missing the point.
Value is arbitrary. None of the major world fiat currencies have any inherent value. They are backed by nothing.
Reminds me of an episode of This American Life. Brazil's currency was down the toilet, so they invented a new currency and tricked the populace into thinking it had value.
One of these things will happen: (1) A successful attack on Tor, (2) A successful attack on Bitcoin, (3) The Silk Road's (or similar site's) share of the black market will continue to grow rapidly.
It seems pretty inevitable in the longer term. If current technologies break up, new technologies will be popping up. I guess law enforcement has already lost this battle (in the long term), similarly as RIAA/MPAA has lost to piracy.
It should also be noted that criminal use doesn't raise the price of bitcoins, since criminals don't necessarily hold their bitcoins. For them bitcoin is just an another money laundering system.
I was buying a lot of article writing service (0% payment fees is nice!)
I shipped several orders from international customers in my http://store.gifti.us and accepted payments in bitcoins (0% foreign transaction fees is nice too!).
I bough steam codes.
I built somewhat profitable for short period of time site - http://betco.in and used some profit in bitcoins to pay for development work on open source project.
EDIT:
Bought, just like few other visitors, articles in PDF at http://ubitio.us. This is also project of mine and I am going to contribute it to open source soon, so just another bit into bitconomy.
And I am working on two other projects involving products/services and bitcoin :)
This is just what came in to my head right away...
Silkroad. It has consistant business and I know people who have used this website.
However, it fails to use bitcoin as a currency in the sense that other stores use dollars as a currency. The prices on Silkroad are adjusted to mirror the USD->BTC exchange rate dialy. And, I would suspect that the majority of the users are buying bitcoins to buy goods on Silkroad, and that venders on Silkroad turn their BTC back into USD often. These two use cases don't support BTC as a viable currency. It is being used exactly as detractors presumed: merely a way to launder money.
While there is an iTunes store in Germany, some of the apps aren't available (e.g. TV Station apps that I could use with a VPN) and with the current euro/usd ration, the US store is cheaper.
Seconding hippich -- gambling, for one thing. All gambling sites require you to ship currency on and offline. Normally the site swallows a 5-7% fee for that each way, which is why it takes so long -- to prevent you from doing it too often. With Bitcoin you can deposit, win, withdraw in an hour and you'll get better odds because the casino's got 10% more money to throw at the games.
Sorry to hear betco.in's going down -- StrikeSapphire.com will stick around no matter what the price goes to, because it's just a good, efficient way to take bets, process payments, and pay people out.
It is essential to remember that there is massive inflation of the money supply going on (by design), and that this is the key driver of the price downwards. ~35% increase in the money supply over the next 12 months; proportionately higher over the last 12 (as the same in absolute terms).
Its rise to $30 was driven by hype and speculation. The falling prices stop any speculators jumping on board, and there is no significant 'economy' yet. The rate of money supply increase will be halved in 2013, so don't expect any recovery before then.
As much as bitcoin's gotten some bad press recently, this kind of market volatility will severely hamper bitcoin's efficacy as a stable unit of currency. It needs a consistent and stable rate of growth (even if negative).
Bitcoin is essentially a giant pyramid scam. The early adopters have cashed out long ago. As mining gets more and more difficult, less people will cling to the liquid currency. Why trade with a deprecating currency, anonymous or not? The fact that the exchange rate is below the cost of mining should be alarming for many reasons.
I'd assume the creator/first adopters do not care, either way.
It's free market, everyone is free to buy and sell as they wish. It's not a scam since there is the same information to everyone.
I'm pretty sure that the early adopters couldn't guess this year's rise in value, and couldn't guess the price drop either.
While I believe in bitcoin or cryptocurrencies in the longterm, I'm still pretty sure that bitcoin value will stay very volatile in the coming years. The stability will take time, and widespread adoption for this kind of innovation will take years if not tens of years.
No, the exchange rate ($2.6/BTC) has still not fallen under the cost of mining for the average miner who selects the right GPUs ($1.8/BTC).
The current difficulty is 1468e3. It takes 2^32 * 1468e3 Bitcoin hashes to solve a block of 50 BTC. The majority of people mine with HD 5000 or 6000 series. If you pick efficient ones, you can count on 2 Mhash per Joule. The average worldwide domestic electricity price is $.10/kWh. So the average cost of production is:
I'm in the school of thought that anyone who says Bitcoin is a pyramid scam is trying to scam Bitcoin and/or intentionally depress the value of BTC for personal gain.
I am an early adopter, I was one of the first 100 people to mine, and I've mined thousands of BTC (including 650 with a single CPU), and I wrote the most popular miner, DiabloMiner.
If it was a pyramid scam, why would I currently be ignoring the current price of BTC in USD? It just means the demand is currently low, and since I'm not selling, who cares?
Mining is not about making money, its about preserving the cryptographic integrity of the currency. Also, no, the exchange rate is not yet below the cost of mining for many miners. It will have to drop below $1 before everyone is out.
As a small-time miner, I don't care. I always thought the value should be stable at roughly $1 at this point in time. I am in it for the long haul, I am waiting to see where it goes in the next 5 years, not trying to cash out to dollars.
> Bitcoin is essentially a giant pyramid scam. The early adopters have cashed out long ago.
This may not be relevant, but not all of them have. Something like 800,000 of the early bitcoins have never moved in the blockchain since they were minted (leading to speculation that they have been held onto by Satoshi).
It is my understanding that Pyramid Scheme was an explicit, stated design feature of Bitcoin. Because the only value of the coins are in the network effects, there would otherwise be very little motivation for early adoption and the idea would have died on the vine. By giving a huge advantage to early movers, the whole system was kick-started.
I expect that the creator already considers the system a success. The goal was not to create an investment vehicle. It was to allow people all over the world to exchange value without corporate or government interference. $30/coin or $3/coin doesn't matter. Either way, it's working.
Bitcoin is something completely new and different. It is like open source software. Until people really understand it, it will be toy for geeks with similar market coverage and price. (or someone find design bug and we can forget about it)
Biggest hurdle when using bitcoins is not it's high/low price, but rather fluctuation.
Fluctuation happens because too many speculate it and not trade with it (well.. currency trading is also trading..) And I would say this is totally expect-able and acceptable.
With time if this technology will prove itself, it become major online payment method. And believe me - work on this project is very active right now. All this investing mumbo-jumbo is just a random noise...
Here was Jason Calacanis's take on May 15: "Bitcoin P2P Currency: The Most Dangerous Project We've Ever Seen" -- "We are 100% certain that governments will start banning bitcoins in the next 12 to 18 months. Additionally, we’re certain bitcoins will soar in value and a crush of folks will flood the system and start using them." http://www.launch.is/blog/l019-bitcoin-p2p-currency-the-most...
To everyone mentioning the great Dutch tulip debacle: Tulips are a commodity, the coin is a currency. Bubbles can be analogous, but they aren't tautological. Just a thought.
good thing I made a bunch of money by trading BC intra-day when it hit mainstream.
seriously, did anyone expect this to be a "new paradigm"? it was a fun toy for financially-minded engineers and traders, but I can't say I'm surprised to hear that it's in free-fall.
i wonder where the bottom is? Once it drops well below USD1.00, I think I'll buy a bunch on a cheap bet :)
this reminds me about the quora post about bitcoin.
In a world of where there is no regulation in currency, you dont have a FED, this money will crash. We dont have liquidity in this currency, as so, nobody can 'inject' money in the market.
All I have to say is "wow". The commenters here are atrocious. If you're going to rage against BitCoin, (and I'm no huge fan), at least bother yourself to have half a clue what they are instead of spouting lies here in some vicious attack on them.
[+] [-] powertower|14 years ago|reply
Come on. Was it ever attributed to anything but speculation.
[+] [-] alexhaefner|14 years ago|reply
I'm open to being wrong about my assumptions.
[+] [-] Eyght|14 years ago|reply
[+] [-] itsnotvalid|14 years ago|reply
So the early adopters could promote them and we can just wait and see. Since the rest of us won't earn much by promoting it, so just mine 1 or 2 BC (still takes some efforts given the massive amount of bot-nets out there) and speculate.
[+] [-] joshontheweb|14 years ago|reply
[+] [-] jerf|14 years ago|reply
I mean that "if" as a true logical statement, not an implied assertion that it must be true. (I do believe that, but I'm not asserting it right now, because I'm not defending it.)
[+] [-] corin_|14 years ago|reply
For it to be a currency it doesn't need a huge value per bitcoin, nor does it need to be constantly rising a huge amount - but it does need to be reasonably stable.
[+] [-] runn1ng|14 years ago|reply
Right now, it is going down, for a long time. So that is not why it will fail.
It will fail because noone actually needs it. It has no real value over other means of electronically exchanging money - paypal, for example, is much faster, easier to use and, dwhile it is not free, thanks to the wild exchange rate of bitcoin, one will probably still have more money from paypal than bitcoin money exchange.
There is no place to spend bitcoin, because most of the people don't CARE that it's centralized and someone can watch it, because it is infinitely easier to use paypal to just PAY STUFF, instead of going through the pains to exchange bitcoins through shady sites, wait DAYS to get it on your wallet, then wait hours until the blockchain is downloaded, then wait another hours since the block is 6 times confirmed.
Maybe it will work in the end, it's nicely designed and all. But I don't see anyone using it right now. There is no real reason to do so.
[+] [-] weavejester|14 years ago|reply
With Paypal, the same company is responsible for sending, receiving and storing your money. A decentralized currency like Bitcoin could act as an intermediary protocol that would allow users to choose different companies to handle each of these tasks.
Bitcoin to me seems interesting because it's essentially an open protocol for transferring and manipulating finances. I kinda feel that talking about deflationary currencies or currency fluctuations is somewhat missing the point.
[+] [-] unknown|14 years ago|reply
[deleted]
[+] [-] dolphenstein|14 years ago|reply
Reminds me of an episode of This American Life. Brazil's currency was down the toilet, so they invented a new currency and tricked the populace into thinking it had value.
http://www.thisamericanlife.org/radio-archives/episode/423/t...
[+] [-] Tichy|14 years ago|reply
[+] [-] bdr|14 years ago|reply
[+] [-] jerguismi|14 years ago|reply
It should also be noted that criminal use doesn't raise the price of bitcoins, since criminals don't necessarily hold their bitcoins. For them bitcoin is just an another money laundering system.
[+] [-] Murkin|14 years ago|reply
[+] [-] hippich|14 years ago|reply
I was buying a lot of article writing service (0% payment fees is nice!)
I shipped several orders from international customers in my http://store.gifti.us and accepted payments in bitcoins (0% foreign transaction fees is nice too!).
I bough steam codes.
I built somewhat profitable for short period of time site - http://betco.in and used some profit in bitcoins to pay for development work on open source project.
EDIT:
Bought, just like few other visitors, articles in PDF at http://ubitio.us. This is also project of mine and I am going to contribute it to open source soon, so just another bit into bitconomy.
And I am working on two other projects involving products/services and bitcoin :)
This is just what came in to my head right away...
[+] [-] joejohnson|14 years ago|reply
However, it fails to use bitcoin as a currency in the sense that other stores use dollars as a currency. The prices on Silkroad are adjusted to mirror the USD->BTC exchange rate dialy. And, I would suspect that the majority of the users are buying bitcoins to buy goods on Silkroad, and that venders on Silkroad turn their BTC back into USD often. These two use cases don't support BTC as a viable currency. It is being used exactly as detractors presumed: merely a way to launder money.
[+] [-] Kenan|14 years ago|reply
You can buy web hosting at http://cinfu.com, https://bitcoinwebhost.com, or https://kalyhost.com/?Currency=BTC
Purchase domain names at http://privacyshark.com, http://exoware.net, or http://bitdomain.biz
Use them at a variety of travel locations: http://bitcoin.travel/
Buy NewEgg stuff through http://bitcoinredemption.com or http://bitspend.com
Charity: http://bitcharity.org, http://bitcoin-charity.com, http://bitcoinsforcharity.org
[+] [-] powertower|14 years ago|reply
[+] [-] efnx|14 years ago|reply
[+] [-] rb2k_|14 years ago|reply
While there is an iTunes store in Germany, some of the apps aren't available (e.g. TV Station apps that I could use with a VPN) and with the current euro/usd ration, the US store is cheaper.
[+] [-] adrianwaj|14 years ago|reply
[+] [-] nas|14 years ago|reply
[+] [-] bdr|14 years ago|reply
[+] [-] mutagen|14 years ago|reply
[+] [-] Tichy|14 years ago|reply
[+] [-] noduerme|14 years ago|reply
Sorry to hear betco.in's going down -- StrikeSapphire.com will stick around no matter what the price goes to, because it's just a good, efficient way to take bets, process payments, and pay people out.
[+] [-] daimyoyo|14 years ago|reply
[+] [-] polshaw|14 years ago|reply
Its rise to $30 was driven by hype and speculation. The falling prices stop any speculators jumping on board, and there is no significant 'economy' yet. The rate of money supply increase will be halved in 2013, so don't expect any recovery before then.
[+] [-] mikeryan|14 years ago|reply
[+] [-] lurch00|14 years ago|reply
I'd assume the creator/first adopters do not care, either way.
[+] [-] jerguismi|14 years ago|reply
I'm pretty sure that the early adopters couldn't guess this year's rise in value, and couldn't guess the price drop either.
While I believe in bitcoin or cryptocurrencies in the longterm, I'm still pretty sure that bitcoin value will stay very volatile in the coming years. The stability will take time, and widespread adoption for this kind of innovation will take years if not tens of years.
[+] [-] mrb|14 years ago|reply
The current difficulty is 1468e3. It takes 2^32 * 1468e3 Bitcoin hashes to solve a block of 50 BTC. The majority of people mine with HD 5000 or 6000 series. If you pick efficient ones, you can count on 2 Mhash per Joule. The average worldwide domestic electricity price is $.10/kWh. So the average cost of production is:
2^32 * 1468e3 / 50 (BTC per block) / 2e6 (Mhash/Joule) / 3.6e6 (Joule/kWh) * .10 ($/kWh) = $1.8/BTC
[+] [-] DiabloD3|14 years ago|reply
I am an early adopter, I was one of the first 100 people to mine, and I've mined thousands of BTC (including 650 with a single CPU), and I wrote the most popular miner, DiabloMiner.
If it was a pyramid scam, why would I currently be ignoring the current price of BTC in USD? It just means the demand is currently low, and since I'm not selling, who cares?
Mining is not about making money, its about preserving the cryptographic integrity of the currency. Also, no, the exchange rate is not yet below the cost of mining for many miners. It will have to drop below $1 before everyone is out.
[+] [-] hugh3|14 years ago|reply
http://en.wikipedia.org/wiki/Pump_and_dump
[+] [-] polshaw|14 years ago|reply
I must agree it is massively stacked in favour of the early adopters, who could have made an absolute killing so far if they played things smart.
[+] [-] Andys|14 years ago|reply
[+] [-] gwern|14 years ago|reply
This may not be relevant, but not all of them have. Something like 800,000 of the early bitcoins have never moved in the blockchain since they were minted (leading to speculation that they have been held onto by Satoshi).
[+] [-] corysama|14 years ago|reply
I expect that the creator already considers the system a success. The goal was not to create an investment vehicle. It was to allow people all over the world to exchange value without corporate or government interference. $30/coin or $3/coin doesn't matter. Either way, it's working.
[+] [-] tedjdziuba|14 years ago|reply
[deleted]
[+] [-] hippich|14 years ago|reply
Biggest hurdle when using bitcoins is not it's high/low price, but rather fluctuation.
Fluctuation happens because too many speculate it and not trade with it (well.. currency trading is also trading..) And I would say this is totally expect-able and acceptable.
With time if this technology will prove itself, it become major online payment method. And believe me - work on this project is very active right now. All this investing mumbo-jumbo is just a random noise...
[+] [-] lukev|14 years ago|reply
It bought me an iPad 2 when I cashed out my 3 weeks worth of mining at the height of the bubble.
[+] [-] ajones05|14 years ago|reply
[+] [-] vrdb2|14 years ago|reply
[+] [-] kellyreid|14 years ago|reply
seriously, did anyone expect this to be a "new paradigm"? it was a fun toy for financially-minded engineers and traders, but I can't say I'm surprised to hear that it's in free-fall.
i wonder where the bottom is? Once it drops well below USD1.00, I think I'll buy a bunch on a cheap bet :)
[+] [-] dudurocha|14 years ago|reply
[+] [-] jmvoodoo|14 years ago|reply
[+] [-] drivebyacct2|14 years ago|reply
[+] [-] joeycfan|14 years ago|reply
[deleted]
[+] [-] AndyKelley|14 years ago|reply