Bitcoins

[Azure]

Paypal is very similar, but still structured a different way.

BTC is a bit more anonymous, and has lower fees for the consumer. Not saying it is the best option, but I do think it can work.

[Rathji]

Originally Posted by nfotiu

What is the advantage of using bitcoins to buy legal items, instead of using Canadian dollars? I can think of lots of disadvantages, but have a hard time seeing the value? Just because you can, doesn't mean you should.

The main reason is I mined them with equipment I already had or purchased with bitcoins I mined. The electric cost of doing do is far less than the current value of the coins, even at half their peak value. I guess that's not really an advantage of using them though, as I could easily convert that same value into cash and then pay through Paypal.

The other advantage is if I was using Paypal, I would be paying exchange on top of the price, which is becoming more and more relevant these past couple months.

If you were buying BTC, and then spending them, rather than using Paypal, you would have more (but not complete) anonymity, if that was a concern to you. It isn't to me though.

[nfotiu]

Originally Posted by Rathji

The main reason is I mined them with equipment I already had or purchased with bitcoins I mined. The electric cost of doing do is far less than the current value of the coins, even at half their peak value. I guess that's not really an advantage of using them though, as I could easily convert that same value into cash and then pay through Paypal.

The other advantage is if I was using Paypal, I would be paying exchange on top of the price, which is becoming more and more relevant these past couple months.

If you were buying BTC, and then spending them, rather than using Paypal, you would have more (but not complete) anonymity, if that was a concern to you. It isn't to me though.

There is a big difference between being possibly a better (or possibly worse) alternative to Paypal, and to being something that will be a commonly accepted currency. I don't know about others, but the only need I've ever had for paypal is the odd time I buy and sell things on ebay.

[Azure]

The strength in Paypal or a service like that is in mobile payments. Problem is the credit card companies will do mobile payments too.

[Tinordi]

Bcause bitcoin only releases a certain number of coins every year, it is an inherently deflationary currency if the market interest in using and keeping bitcoins continues to go up.

That defeats the point of a currency which is used to be a medium of exchange. If you know that a bitcoin will be more valuable a year from now then you have no incentive to spend it. That means that the whole currency will defeat itself once people realize that the value of currency is based on nothing but speculation.

That will be its downfall. Once they realize that currency has no use as a currency it's tits up.

But yes, it would be great to have a payment system that got around ridiculous bank-controlled currencies and exchanges. I would love the idea of a global currency that is fraud proof.

[Wormius]

Originally Posted by Tinordi

Bcause bitcoin only releases a certain number of coins every year, it is an inherently deflationary currency if the market interest in using and keeping bitcoins continues to go up.

That defeats the point of a currency which is used to be a medium of exchange. If you know that a bitcoin will be more valuable a year from now then you have no incentive to spend it. That means that the whole currency will defeat itself once people realize that the value of currency is based on nothing but speculation.

That will be its downfall. Once they realize that currency has no use as a currency it's tits up.

But yes, it would be great to have a payment system that got around ridiculous bank-controlled currencies and exchanges. I would love the idea of a global currency that is fraud proof.

Doesn't a Paypal account with US funds kind of solve any issues with banks and exchanges?

[photon]

Dogecoin doesn't limit the # of coins, so it isn't deflationary.

Which just means i should sell any Dogecoins I mine for BTC, until I figure BTC is going to turn, then switch back

[Tinordi]

It's the lack of a central bank that explains why so many libertarians and weirdos are into bitcoin and it's the lack of a central bank that makes bitcoin functionally useless.

[GGG]

Originally Posted by Tinordi

It's the lack of a central bank that explains why so many libertarians and weirdos are into bitcoin and it's the lack of a central bank that makes bitcoin functionally useless.

I don't think you need a central bank to make a currency work.

If you think about what a central bank does it controls the quantity of the currency available through a variety of measures and works at preventing fraud.

A digital currency essentially is a currency without the ability to change policy after its creation. It can't change the amount of supply out there. I agree with your earlier post that Bitcoins flaw is that it is inherently deflationary.

I think in order to have a stable digital currency that is mildly inflationary is that you need to have the difficultly in mining based on the price of the coin. The idea being if the price goes up beyond the 2% set inflationary level the difficulty drops to increase the supply if the price drops difficulty is tightened to reduce new supply.

If you could build a self adjusting currency it would essentially control inflation for you without buisness or government influence.

[Tinordi]

I agree with that. There's basically two different wedges to the bitcoin "debate" for lack of a better term. One is the technological argument that I dont really understand to any depth but I'll try to summarize it anyway. It's a breakthrough in the technology of exchanging packets of information (bitcoins) that avoids doubt counting, fraud and just basic copy and pasting. This is a useful rail on which to mount a completely peer driven and decentralized payment system. There's definitely something to this. I like that concept. I like that the trust in payments is taken from other institutions like banks and given to an algorithm.

The other issue is bitcoin as a store of value. This is where the libertarians gold bugs enter the movement and where I get pretty dismissive of the bitcoin promise. I like the basic architecture of transfering value, I don't like that architecture having units operating as pieces of value independent of actual money. Right now people are treating bitcoin essentially like its gold. I just don't get that, I think it's people conflating the computer science breakthrough with the idea that it then must be valuable.

[photon]

Originally Posted by Tinordi

The other issue is bitcoin as a store of value. This is where the libertarians gold bugs enter the movement and where I get pretty dismissive of the bitcoin promise. I like the basic architecture of transfering value, I don't like that architecture having units operating as pieces of value independent of actual money. Right now people are treating bitcoin essentially like its gold. I just don't get that, I think it's people conflating the computer science breakthrough with the idea that it then must be valuable.

I don't even know if libertarian gold bugs think bitcoins have value in the way they think gold has value.. Any currency is just a shared fiction that a specific rock or paper or ledger entry in a block chain has value, I don't know if the libertarian guys think any different (about bitcoin anyway), they just like it because they think it's not manipulated by the powerful.

Here's a couple of good blog entries on Bitcoin, the second is a good technical description.

Bitcoin is a currency which isn’t backed by any government. In fact, it’s not backed by anyone. It’s a fundamentally decentralized system of currency. There’s no central authority behind it. Instead, it works based on an interesting protocol of computation over communication networks. Everything about it is distributed all over the world. You could pick any individual computer or group of computers involved in bitcoin, blow them to bits, and bitcoin would be unaffected, because there would still be other people in the bitcoin network. It’s all driven by distributed computation. A bitcoin is an utterly intangible asset. There is no coin in a bitcoin.

I’ll go into more detail in my next post. But the basic idea of bitcoin is really, really simple. There are a bunch of computers on the network that are keeping track of bitcoin transactions. Between them, they maintain a ledger, which consists of a list of transactions. Each transaction says, effectively, “X gave N bitcoins to Y”. The only way that you can own a bitcoin is if, somewhere in the ledger, there is a transaction saying that someone gave a bitcoin to you. There is no coin. There is no identifying object that represents a bitcoin. There’s not even anything like the serial number printed on a banknote. There is no bitcoin: there is just a transaction recordin a ledger saying that someone gave you a bitcoin. There is absolutely no notion of traceability associated with a bitcoin: you can’t take a bitcoin that someone gave you, and ask where it came from. Bitcoins have no identity.

The point of it is specifically that intangibility. Bitcoin exists largely as a way to move valuable stuff around without the involvement of governments. Bitcoin is, really, just a way of making a computationally safe exchange of value, without transferring anything tangible, and without any single central authority in control of it. You know that someone gave you money, because there are thousands of computers around the world that have agreed on the fact that someone gave you money.

http://www.goodmath.org/blog/2014/02...what-is-money/


And the second for the techie stuff:

http://www.goodmath.org/blog/2014/02...ch-of-bitcoin/

[Tyler12]

Any one doing any Cuda Mining on the Nvidia side? Alt Coins ofc.

[Swarly]

Not sure what this site plans to do next exactly, but they say they are planning to become a major exchange. For now they are giving away free coins daily so I just signed up. Still in beta.

QoinPro

anybody heard of them? please use my referral to sign up

[PsYcNeT]

http://valleywag.gawker.com/bitcoin-...arah-hedgecock

AFP reports Mt.Gox is doing more than just bowing with shame: the virtual currency exchange is bankrupt, and is seeking court protection accordingly. Funny, how these people only want anything to do with the government after they've ####ed themselves over into another dimension

[chemgear]

Another bank wiped out today:

http://www.cbc.ca/news/business/bitc...heft-1.2559018

A second online bitcoin bank has shut down after a security breach allowed thieves to steal a large quantity of bitcoins.

Flexcoin made the abrupt announcement on its website Tuesday, admitting that it had been robbed of 896 bitcoins after a thief or thieves managed to collect them from Flexcoins servers and transfer them to two bitcoin wallets — a unique string of numbers and letters that function similarly to an email address, and bitcoin's equivalent to individual bank accounts where customers store money.

At current market rates, the theft amounts to more than $600,000 US. The figure represents the bank's entire bitcoin holdings online, effectively wiping out any customers who held assets there.

[photon]

Security is hard.

[Wormius]

They should probably have some kind of clock system that physically disconnects their machines from the internet and only allows customers to log in at their prescribed time or by appointment if they want a transaction. Kind of like those fancy vaults.

Also, why would you want to store your bitcoins on an exchange? I assume you wanted to exchange them for real money, so... wouldn't the original owners of the bitcoins have gotten their money when they traded their coins in? Why wouldn't they just keep their coins stored locally if that wasn't the intention?

[photon]

Originally Posted by Wormius

They should probably have some kind of clock system that physically disconnects their machines from the internet and only allows customers to log in at their prescribed time or by appointment if they want a transaction. Kind of like those fancy vaults.

Flexcoin did something similar that lots of people who hold lots of Bitcoins do in they held them in offline wallets. Be it a disconnected computer or physically printing them out, some (most?) of the bitcoins were offline and not accessible to hackers.

The part that hackers stole was the float, the stuff they needed to have online so that they could process transactions in a reasonable amount of time.

So it was like stealing the money from the teller but leaving the vault because it was locked. Or stealing the vault but most of the money is taken offsite.

I guess you could still have some kind of appointment system to try and reduce or even eliminate your float, but the harder it is to use the fewer people will use it.

Originally Posted by Wormius

Also, why would you want to store your bitcoins on an exchange? I assume you wanted to exchange them for real money, so... wouldn't the original owners of the bitcoins have gotten their money when they traded their coins in? Why wouldn't they just keep their coins stored locally if that wasn't the intention?

Flexcoin actually put itself forward as a bank, rather than an exchange. The idea behind Flexcoin is storing Bitcoins securely is hard and most people get security wrong.. even experts can make easy mistakes. So they were saying they had the solution so you could use them to store your Bitcoins and not worry. The Bitcoins are like cash analogy is apt here as well; storing money in your house is hard to do so that it's impossible to have it stolen, so people put their money in banks, because banks have had lots of experience protecting money and have solved the problems.

As for exchanges, some people leave their coins in exchanges because they're day-trading the coins, some do it just because they're lazy, and because storing them properly is hard and most people don't know how to do it properly.

The people that use the exchange to do just that; exchange them (i.e. transfer in some coins, exchange to other coins or cash, transfer out) are only at risk if they happened to have their stuff in there at the exact time of the theft.

EDIT: So on one hand you could say people are being foolish by using an exchange as a bank, or using a bank they don't know anything about, and buyer beware, but that's why we have banking regulations and stuff, because people are foolish and lazy, or just simply can't be expected to have enough knowledge to either take care of their own security or evaluate the security of available options. And having a secure place to keep money is something that's pretty important to society.

[Super Nintendo Chalmers]

Originally Posted by chemgear

Another bank wiped out today:

http://www.cbc.ca/news/business/bitc...heft-1.2559018

A second online bitcoin bank has shut down after a security breach allowed thieves to steal a large quantity of bitcoins.

Flexcoin made the abrupt announcement on its website Tuesday, admitting that it had been robbed of 896 bitcoins after a thief or thieves managed to collect them from Flexcoins servers and transfer them to two bitcoin wallets — a unique string of numbers and letters that function similarly to an email address, and bitcoin's equivalent to individual bank accounts where customers store money.

At current market rates, the theft amounts to more than $600,000 US. The figure represents the bank's entire bitcoin holdings online, effectively wiping out any customers who held assets there.

Last week, they tweeted:

flexcoin ‏@flexcoin Feb 25
We hold zero coins in other companies, exchanges etc. While the MtGox closure is unfortunate, we at Flexcoin have not lost anything.

That's like saying "shutout" before the game is over.

[chemgear]

^ Damn.