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Bitcoin Price…to $1 Million?
The Wall Street Journal ^ | 2 April 2014

Posted on 04/03/2014 7:20:12 PM PDT by Errant

It’s no surprise that Wences Casares, the CEO of Xapo, a bitcoin startup, is a big bull on the digital currency. His company, which specializes in insured Bitcoin vaults, just raised $20 million in a funding round led by Benchmark.

But Mr. Casares belives that other bitcoin bulls, especially those in the U.S., do not fully appreciate the value of the currency, which has proved especially sticky in emerging markets prone to wild currency fluctuations, such as Mr. Casares’ home country Argentina.

In a video interview with the Wall Street Journal, Mr. Casares says he’s not worried about bitcoin’s own volatility hampering its adoption – though he expects significant volatility over the next few years. He predicts that in a decade, one bitcoin will be worth somewhere between half a million dollars to one million dollars.

(Excerpt) Read more at blogs.wsj.com ...


TOPICS: Business/Economy; Culture/Society; Government; News/Current Events
KEYWORDS: argentina; bitcoin; casares; crypto; currency; investing; vaults; xapo
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Video at link.

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1 posted on 04/03/2014 7:20:13 PM PDT by Errant
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To: Lurkina.n.Learnin; nascarnation; TsonicTsunami08; SgtHooper; Ghost of SVR4; Lee N. Field; DTA; ...

Click to be Added / Removed.
2 posted on 04/03/2014 7:22:05 PM PDT by Errant (Surround yourself with intelligent and industrious people who help and support each other.)
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To: Errant

Damn, now I know how old Ed White felt.


3 posted on 04/03/2014 7:26:33 PM PDT by Lurkina.n.Learnin
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To: Lurkina.n.Learnin

Lol, how’s that?


4 posted on 04/03/2014 7:30:37 PM PDT by Errant (Surround yourself with intelligent and industrious people who help and support each other.)
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To: Errant

Ed White was an old farmer in the small town that I grew up in. He showed up one morning and told everyone that he lost $10,000 overnight. When they asked how he did that he said the price of hogs went up 10 cents a pound and he had “nary a one”.


5 posted on 04/03/2014 7:34:24 PM PDT by Lurkina.n.Learnin
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To: Errant
Bitcoin, as a fiat currency, has no inherent value. Speculation about its future value is pointless - it can be USD $1E-10 just as easily as it can be $1E+10. Fiat currencies acquire value through trust of buyers and sellers - or through the guns of the government that issues the money. At this point in time Bitcoin does not have:

As matter of fact, many of these questions are explicitly answered in the negative. For example, as the volume of trading increases the value of each Bitcoin is doomed to grow. This is unacceptable in a currency; I'm not going to pay you 1 BTC today for something that will cost 0.5 BTC tomorrow.

There is also that lingering problem of early mining; those people, from t=0 to t=+2 years, minted a bunch of Bitcoins that are still in their wallets. As the value of Bitcoin increases *and* the market grows, those early miners will become multi-trillionaires. Unfortunately, all the eager proponents of Bitcoin are just carrying water for those shadowy figures - who, if their plan is successful, will own the world. I'd rather avoid that.

6 posted on 04/03/2014 7:35:03 PM PDT by Greysard
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To: Lurkina.n.Learnin

IC, thanks - hadn’t heard that one before. :-)


7 posted on 04/03/2014 7:35:58 PM PDT by Errant (Surround yourself with intelligent and industrious people who help and support each other.)
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To: Greysard
Looks to me like each of your points are incorrect.

FYI: A beginner's guide to bitcoin

8 posted on 04/03/2014 7:39:44 PM PDT by Errant (Surround yourself with intelligent and industrious people who help and support each other.)
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To: Errant

Bitcoin IMO will end up being nothing.


9 posted on 04/03/2014 7:50:18 PM PDT by A CA Guy ( God Bless America, God Bless and keep safe our fighting men and women.)
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To: Errant
Looks to me like each of your points are incorrect.

I believe them to be correct, of course. But if I am wrong you are always welcome to counter them, point by point. For example, you can say that in the latest poll by Gallup 97.3% of US residents (100,000 polled) reported that they know about Bitcoin. In reality, of course, not more than 1% have such knowledge, per my own, informal observations. To compare, about 100% are aware of existence of the US Dollar.

Your link leads to a website of a Bitcoin exchange, which is hardly an unbiased observer. It would be the last place to go to if you want an independent opinion.

Personally, some of my observations are based on my technical knowledge about the Bitcoin protocol. Other are based on known, immutable facts about the Bitcoin ecosystem. For example, the total number of Bitcoins in existence is 21 million. This is what this company derives their expected future value from - simply divide the global money supply in some future year by the projected Bitcoin supply.

10 posted on 04/03/2014 7:51:28 PM PDT by Greysard
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To: A CA Guy

It would seem your opinion of bitcoin reflects my opinion of the dollar - a far worse catastrophe.


11 posted on 04/03/2014 7:59:27 PM PDT by Errant (Surround yourself with intelligent and industrious people who help and support each other.)
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To: Greysard

V


12 posted on 04/03/2014 8:14:08 PM PDT by HMS Surprise (Chris Christie can STILL go straight to hell.)
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To: A CA Guy

The IRS does not issue guidance on nothing. The world is transforming right under your feet , resistance is futile.


13 posted on 04/03/2014 8:16:19 PM PDT by TsonicTsunami08 (SEND BITCOIN 1CYfujvffxKKPHKvrQvLP3CDb3Z5Lu7LwM Funny Money)
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To: Greysard
More work than I feel like tonight after a long day, maybe later...

The site I gave you contains facts, there might be a wee bit of bias but it would be minimal.

Truthfully, there are too many variables to make the prediction the author has that Bitcoin could hit 1 million. If the dollar goes the way of the Zimbabwean dollar, it'll be worth a lot more than that! ;)

I'll counter a couple of your points just for fun:

Convenience of use.

I've personally made several purchases from Overstock. They were the easiest/simplest online purchases I've ever made.

Insurance of accounts

Read the OP, the author is in the business of insuring crypto currency vaults,

Guarantee of convertibility

The many numerous exchanges means you can convert Btc into any currencies or other cryptocurrencies.

Government oversight to prevent shenanigans

The Bitcoin community is self-regulation, but that doesn't mean government doesn't play a part, as we're seeing with the courts involved with the Mt. Gox fiasco.

Stable value

Check Btc's chart against the dollar's chart since its introduction.

Paper trail and reversibility of transactions

Paper trail is contained within the public distributed ledger. Businesses will reverse your transactions if you are not satisfied (see Overstock's return policy).

Acknowledged security of the entire mechanism

The system is very secure compared to CCs and other means of conducting transactions.

Public awareness

Growing exponentially!

Popularity

Growing exponentially!

Purpose

?

Hey, I believe that's all of them...

14 posted on 04/03/2014 8:17:06 PM PDT by Errant (Surround yourself with intelligent and industrious people who help and support each other.)
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To: Errant
Pass'n thru bump.

5.56mm

15 posted on 04/03/2014 8:19:54 PM PDT by M Kehoe
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To: Errant

“Government oversight to prevent shenanigans”.

This is my favorite,how many times must one refute this nonsense. The scary part is this guy believes this stuff.

Two words in answer to the above : JOHN CORZINE

Government oversight to prevent shenanigans? Laughable!


16 posted on 04/03/2014 8:26:27 PM PDT by TsonicTsunami08 (SEND BITCOIN 1CYfujvffxKKPHKvrQvLP3CDb3Z5Lu7LwM Funny Money)
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To: TsonicTsunami08

I think in Newspeak “prevent” means what “enable” used to...


17 posted on 04/03/2014 8:34:16 PM PDT by null and void (I don't mind getting older, but I hate wearing out!)
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To: null and void

You got that right FRiend!


18 posted on 04/03/2014 8:35:58 PM PDT by TsonicTsunami08 (SEND BITCOIN 1CYfujvffxKKPHKvrQvLP3CDb3Z5Lu7LwM Funny Money)
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To: Errant

If you really believe in bitcoins and that they will go up to $1 million apiece, or even $10,000 apiece, why would you spend them for $600 worth of product today. A true believer would hoard them.


19 posted on 04/03/2014 8:46:20 PM PDT by sharkhawk (Mr Gorbachev, tear down this wall.)
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To: Errant

Hold onto those Bitcoins ... :-) ...


20 posted on 04/03/2014 8:51:03 PM PDT by Star Traveler (Remember to keep the Messiah of Israel in the One-World Government that we look forward to coming)
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To: Errant

Well lately it hasn’t been doing anything but steadily sinking. Closed at $440.9 today.


21 posted on 04/03/2014 8:51:47 PM PDT by catnipman (Cat Nipman: Vote Republican in 2012 and only be called racist one more time!)
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To: sharkhawk
A true believer would hoard them.

Scripture tell us the love of money (or bitcoin) is the root of evil. If the SHTF, a good bible and a good hunting knife (what I used them for) will be worth much more than fiat, gold, or bitcoin.

22 posted on 04/03/2014 8:53:17 PM PDT by Errant (Surround yourself with intelligent and industrious people who help and support each other.)
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To: catnipman; Errant

Don’t blink, you’ll miss all the fun!


23 posted on 04/03/2014 9:00:50 PM PDT by TsonicTsunami08 (SEND BITCOIN 1CYfujvffxKKPHKvrQvLP3CDb3Z5Lu7LwM Funny Money)
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To: catnipman
Well lately it hasn’t been doing anything but steadily sinking

"You got to know when to hold 'em, know when to fold 'em, Know when to walk away and know when to run. You never count your money when you're sittin' at the table. There'll be time enough for countin' when the dealin's done."

http://www.youtube.com/watch?v=bHPSrumNupI

24 posted on 04/03/2014 9:02:13 PM PDT by Errant (Surround yourself with intelligent and industrious people who help and support each other.)
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To: Errant

I heard that the IRS is now involved with the BitCoin. Wow the IRS enjoys getting into every dam hole it can get inside. In other words, keep record of every transaction you make per request of the IRS. They consider Bitcoin as property not currency. Sheesh the IRS needs to be abolished.


25 posted on 04/03/2014 9:13:28 PM PDT by Patriot Babe
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To: Patriot Babe

Yeah, wish they’d done like other countries and went with a commodity designation instead of “property” at least.


26 posted on 04/03/2014 9:25:06 PM PDT by Errant (Surround yourself with intelligent and industrious people who help and support each other.)
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To: Errant

But... but... but...

YOU told me there would be NO NEED for vaults for Bitcoins! You promised! I was the dumb one, remember?

http://www.freerepublic.com/focus/news/3098530/posts?page=66#66

(Funny how some of us see this stuff coming, just like the pending Bitcoin collapse, while others tell us we have no idea what we are talking about. Heh. Good luck!)


27 posted on 04/03/2014 9:47:22 PM PDT by bolobaby
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To: bolobaby
I believe I was asking you: What are vaults going to be needed for?

You never did answered the question as I recall?

You should have taken the idea and ran with it! You might have been a multi-millionaire in only a few short months by now!

28 posted on 04/03/2014 10:20:31 PM PDT by Errant (Surround yourself with intelligent and industrious people who help and support each other.)
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To: Star Traveler

Reminds me of the movie CONVICTS. Robert Duval’s character gives James Earl Jones and his wife some Confederate money for Christmas. The wife says “This is Confederate money.”

Duval’s characters says “Well, you better hang onto it. You never know.”


29 posted on 04/03/2014 10:30:54 PM PDT by VerySadAmerican
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To: Errant
Well, I don't want to drag you into more discussion that you have time for, so I will just provide a couple comments:

1. Convenience of use.

I've personally made several purchases from Overstock. They were the easiest/simplest online purchases I've ever made.

So how would my parents, for example, go about it when they are in the store? They have with them a wallet and a debit card. They do not carry a cell phone. They are not exceptionally young, and they know only enough about computers to use email and Skype, and to read books. A large portion of Earth's population is in that same boat.

As matter of fact, I'm sitting here, surrounded by computers, and I'd be somewhat unsure how to pay someone with Bitcoin even if I had any. Well, I have a 0.00005 BTC somewhere in a test account. But I can't send it anywhere because the fees exceed the amount. This will be a common situation when 1 BTC = $1M USD. I have several computing devices; how would I synchronize the wallet among them without using Dropbox and their ilk (which, of course, are not an option with a wallet.) You see, it's infinitely easier to just call the place and tell them the number. Or to enter it into a Web form. I do not need to physically have the money to make a payment. With Bitcoin you have to have the money, here and now.

2. Insurance of accounts

Read the OP, the author is in the business of insuring crypto currency vaults

You can insure a white elephant if you want to. There is a man who will sell you insurance for every possible calamity, real or imagined. However the key word here is "sell." I do not need to pay anything for my bank accounts being insured. There is nothing of the sort with Bitcoin.

3. Guarantee of convertibility

The many numerous exchanges means you can convert Btc into any currencies or other cryptocurrencies.

Yes, they can convert. Or they can not convert. There is no guarantee whatsoever. There is no even guarantee that you will see your money ever again, as it is the case with Mt. Gox. Courts will not make money out of thin air. They can only punish the guilty, if the victims are lucky.

4. Government oversight to prevent shenanigans

The Bitcoin community is self-regulation, but that doesn't mean government doesn't play a part, as we're seeing with the courts involved with the Mt. Gox fiasco.

In other words, that "self-regulation" did not prevent Mt. Gox to take people's money for MONTHS, knowing well that they are running a pyramid. The government got involved only after people filed lawsuits. A well regulated economy *prevents* such situations by requiring that banks follow the rules. There were no rules to follow for Mt. Gox because it was an illegal (in many countries, but not in Japan,) unregulated bank. No surprise that its officers had no clue what's happening (if we give them benefit of the doubt.)

5. Stable value

Check Btc's chart against the dollar's chart since its introduction.

It's a rollercoaster alright. What else can one see there? It got to $1,100, then fell to $550, then rose to $800, then fell to $600 ... ? If I send you $1,000 in BTC today, nobody knows how much you will get, in dollar value, tomorrow, after it passes one day and two exchanges.

6. Paper trail and reversibility of transactions

Paper trail is contained within the public distributed ledger. Businesses will reverse your transactions if you are not satisfied (see Overstock's return policy).

So why Mt. Gox won't reverse transactions through which, they say, someone stole their money? The answer is simple: you only can know that account 32904823jrkjl3423432 received the money. No face, no name, no address attached to that account. You cannot send police there; you cannot name that person in a lawsuit. This is not how it works in the banking industry.

7. Acknowledged security of the entire mechanism

The system is very secure compared to CCs and other means of conducting transactions.

Credit cards, even those with mag stripe that we still use in the USA, have far more security checks at the bank than any Bitcoin transaction. But the real deal here is that those transactions are reversible because every payment has a name and an address attached to them. You tell the bank that the transaction is fraudulent and they pull the money back from the merchant's account. You, as the c/c holder, are not injured. (The merchant might be, if he is lax at checking c/c credentials.)

In simple words, if anything happens with your c/c account you have someone to complain to - and that would be the bank that issued the card. You know for a fact that they will listen to you, and most likely they will help you. This is diametrically opposite to Bitcoin. If you mistype an address and send your money there... it's gone. What would you do in such a case? However if I'm at at the Home Depot Web site paying for a wrench with a c/c, I cannot imagine a situation when my payment would go to Walgreens, no matter what I do.

30 posted on 04/03/2014 11:42:47 PM PDT by Greysard
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To: Greysard

Bitcoin is as easy as sending email.It’s that simple. Maybe get your hands on some more and move it around, you’ll see. This is to a point where there is no turning back.People who won’t get up to speed with this technology are simply going to be left behind.


31 posted on 04/04/2014 4:33:56 AM PDT by TsonicTsunami08 (SEND BITCOIN 1CYfujvffxKKPHKvrQvLP3CDb3Z5Lu7LwM Funny Money)
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To: Errant

I have no desire to go bankrupt in the Bitcoin collapse.

In 2000, I was a multi-millionaire on paper from the dot-com boom. I learned a lot of lessons after that collapse, with lesson #1 being, “Don’t invest any time or money in something that doesn’t have the economics to support itself.”

I still work in technology. I’m back to where I need to be financially - better off, even, since it isn’t wealth “on paper” anymore - and I got here by investing my time in real activities that have good unit economics. The unit economics of Bitcoin mark it as an obvious boondoggle.

Step 1: Buy some computers or cloud computing power.
Step 2: Pay money to run these systems to crunch a useless algorithm that has no value except to generate a Bitcoin.
Step 3: Collect your Bitcoin and see where the market has it currently valued.
Step 4: Find someone who wants this slice of waste in exchange for a good/service with actual tangible value.

It won’t last. In a way, it reminds me of the people who used to farm platinum in online video games like Everquest and then sell it on ebay. At least the process of obtaining platinum can be considered entertainment, though, so there is actual entertainment value being generated while the platinum is collected. There is no entertainment value or anything in the computing cycles wasted to generate a Bitcoin. There is nothing.

From a unit economics standpoint, this exercise is bound to fail. It’s not a question of “if,” it’s “when.”


32 posted on 04/04/2014 6:16:57 AM PDT by bolobaby
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To: Greysard
I have to ask my question, and you seem to have real knowledge about bitcoin. I'm pretty good about understanding math, economics, even stock market stuff, but cannot grasp what is the thing that has value that is being mined out of cyberspace. I mean, gosh, even the tulip Ponzi scheme had people chasing some very pretty flowers. It seems a bit more like Enron....lots of "energy credits", no energy.

Then the thing about those quickie massive trades that got out front of other trades in the stock market came up. And that brought a thought to my mind, as true coincidence is so unusual. Could those trades and the money they shave in front of regular stock purchases and sales be the source of bitcoin value?

33 posted on 04/04/2014 6:28:45 AM PDT by grania
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To: bolobaby
There is no entertainment value or anything in the computing cycles wasted to generate a Bitcoin.

I guess that depends on what somebody considers "entertainment". I think it's a blast trying to squeeze every last hash out of a mining rig. It's fun to communicate over forums with other miners to attain tips and tricks. I enjoy trying (fruitlessly) to compare the projected ROI of a scrypt ASIC to a GPU.

I'll listen to your other arguments against, but your point about "no entertainment value" is completely subjective.
34 posted on 04/04/2014 6:40:36 AM PDT by mmichaels1970
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To: mmichaels1970

I suppose some people would consider it fun to figure out who can be more efficient at waste.

Maybe you belong in government...? Have you thought about running?


35 posted on 04/04/2014 6:56:29 AM PDT by bolobaby
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To: bolobaby
Maybe you belong in government...? Have you thought about running?

Piss off.
36 posted on 04/04/2014 6:59:25 AM PDT by mmichaels1970
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To: bolobaby
I learned a lot of lessons after that collapse, with lesson #1 being, “Don’t invest any time or money in something that doesn’t have the economics to support itself.”

The #1 lesson of investing, is don't invest in anything you don't understand.

#2 would be: Don't put all of your eggs in one basket (i.e., diversify).

I'm glad you're happy with where you're at in life. There are many who can't say that. I'm VERY happy were I'm at as well, so looks like we've got that in common! ;)

37 posted on 04/04/2014 7:09:59 AM PDT by Errant (Surround yourself with intelligent and industrious people who help and support each other.)
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To: Greysard

I’ll get back to you later on #30 Greysard. Gotta run for now...


38 posted on 04/04/2014 7:11:48 AM PDT by Errant (Surround yourself with intelligent and industrious people who help and support each other.)
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To: grania
I'm pretty good about understanding math, economics, even stock market stuff, but cannot grasp what is the thing that has value that is being mined out of cyberspace.

The thing that is mined is just very long numbers. It is difficult to find them, even if using special computers. You cannot find them with a regular PC anymore. This labor (such as investment into the equipment, and then expense of electric energy) is called "proof of work." Once you mine your Bitcoin, it then represents the resources that you spent on producing it. The difficulty of mining is adjusted periodically, so that it keeps up with the costs. So in the end a miner exchanges his electric bill for the Bitcoin. He then can expect that his Bitcoin has value - roughly as much as he spent, but in reality only as much as others are willing to pay for it.

The Bitcoin, indeed, has no inherent value. Many currencies are like that, so that's not unique. Only commodity money has intrinsic value; the rest (representative, fiat, coins, paper bills, bank papers, and electronic) are made as cheaply as possible. Bitcoin is an outlier here - its coins are expensive because that's the only thing that stops a random person from minting a trillion of those. This is one of the problems with Bitcoin, as miners have to waste perfectly good electrons to calculate long numbers that are of no value themselves, outside of their use in the Bitcoin network.

Comparison with tulip bulbs is not unreasonable. In both cases the items are acceptable tokens that represent some amount of something that has value. Bitcoin is a valid, mostly secure (in theory) electronic token. Only a few problems of Bitcoin are related to its nature, such as the need to use a computer and be fluent in bitcoining.

Bitcoin has no inherent value, as opposed to cost. (You can spend a million dollars doing useless work, for example, but nobody will buy your product - so its cost is larger than its value.) The value of a Bitcoin is softly limited on the bottom by costs of mining it at a given time. There is no limit at the top - people can trade it at whatever they want. A Bitcoin holder may "sell" his coins from his left pocket into his right pocket, for a million dollars each... and this will help establish the exchange rate for others. Ways to play the exchange are known since the first stock exchange opened (probably somewhere in ancient Egypt.) Intentional and unintentional (but still cascading) forces can be applied to the market, resulting in the Tulip bubble and the South Sea bubble, and the Housing bubble. Bitcoin is not safe from being pumped and then dumped - people who are doing this are not computer scientists who are fascinated with cryptocurrencies. It is done by experienced FX operators who can't care less what the currency is, as long as they can buy it low and sell it high. The early adopters of Bitcoin, who are now sitting on the unrealized wealth of about 1/3 of the planet's worth (if Bitcoin becomes an accepted currency,) have no objection to that.

39 posted on 04/04/2014 11:01:09 AM PDT by Greysard
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To: mmichaels1970
I guess that depends on what somebody considers "entertainment". I think it's a blast trying to squeeze every last hash out of a mining rig. It's fun to communicate over forums with other miners to attain tips and tricks. I enjoy trying (fruitlessly) to compare the projected ROI of a scrypt ASIC to a GPU.

This is a perfectly good hobby, just as any other. However a car enthusiast does not define the car market, and barely (if at all) affects car production.

In this case Bitcoin started and took off on shoulders of crypto geeks and cypherpunks. I studied the basics in my time, and I even used RSA in one of my products. I used symmetric ciphers in many products. This is a good technology, and it's fun to code, and it's useful.

The concept of a cryptocurrency is also an interesting one - from the theoretical point of view. However one must be careful with cramming a theory into the real life; a square peg into a round hole. The Bitcoin mechanism is fast-tracked by enthisiasts who clamor for its adoption, even though the Bitcoin cannot even solve a trivial problem of instant payment - something that we enjoy every day when we swipe our cards in stores. How long does it take for the card to become approved? A couple of seconds? Well, Bitcoin cannot do that, for very technical reasons. (For the uninitiated: there is no central authority who could instantly say yes or no; the Bitcoin network, as in "many privately owned computers," has to "vote" on your purchase. This takes up to 15 minutes; sometimes longer.)

This accelerated, forced even, adoption is of concern to everyone who can look at the problem objectively. The Bitcoin as a unit of money is perfectly good for the planet. But several important questions must be answered. To begin with, the "early adopter" advantage must not exist. I will not take "money" that you printed in your garage and offer as money. Why is Bitcoin any different from paper that you print on your laser printer? You may have printed a ton of those papers before you went public with the money, so you unfairly own a lot of wealth now. Money's purpose (in its ideal) is not to make wealth but to represent wealth. Early adopters sit on monies that represent no wealth.

This said, how could a cryptocurrency be improved, such as it becomes a planet-wide money? You could begin with *replacement* of existing money (that represents real wealth) with crypto coins. This means that each crypto coin must have very low minting cost (ideally, zero.) Replacement would be done by central authorities, just as it is done today with paper bills. So now we have a new requirement: the new system must generate coins at low cost. As a simple example, you take a sufficiently long nonce and sign it with the issuer's key. Then you publish the nonce. (This also handles revocation.) Naturally, the generation mechanism must be controlled, to maintain inflation at the desired rate. At the same time, the new system must have variable (unlimited) number of coins, because as the society expands it needs more and more money to execute trades. (This relates to built-in deflation of Bitcoin, which is awful.) How to control printing of money? It's easy. Each "coin" can be cryptographically signed upon minting; and since its use is registered in the blockchain (if we adopt the BTC scheme) one can ensure that all coins are unique. The problem of the network anarchy can be controlled by payment processing centers who would be able to instantly accept a payment. The problem of double-spending would be solved by reversibility of transactions... which, in turn, would require that each coin, at any time, has a unique ownership that is tied to a specific individual, or a wallet that is also associated with an individual - which, in turn, requires that everyone who receives or sends crypto money must be registered with the planetary government.

This is only a rough outline, and it barely scratches the surface. As you can see, I am not against replacing all those paper monies with a crytocurrency that is reliable, controllable by the people, and that has a paper trail. However Bitcoin is a few light years away from being even *usable* as a planet's universal money. Bitcoin is a great hobby money; a money that is suitable for the real world has quite a few additional requirements that Bitcoin does not satisfy. It is not practical to ignore those deficiencies. They should be fixed. Once you have Bitcoin-II, for example, that *is* a good replacement of paper, then I will be glad to use it. But not before.

40 posted on 04/04/2014 11:56:04 AM PDT by Greysard
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To: Greysard
This is a perfectly good hobby, just as any other.

Thanks. I agree.

As you can see, I am not against replacing all those paper monies with a crytocurrency that is reliable, controllable by the people, and that has a paper trail.

I can respect that. And I can respect the points you make regarding the technology.

Above all, I appreciate the civility you have used in making them.
41 posted on 04/04/2014 12:52:20 PM PDT by mmichaels1970
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To: Greysard; grania; Errant

Respectfully, I’m sure you beleive what you have written there is just so much that is factually incorrect. I am referring here to both your lengthy posts.

No one is compelled to mine, it is done by free will.

In the early years there was no profit in mining. Two pizzas were purchased for 10.000 Bitcoin.

Early there were no cookie cutter mining rigs. It took a lot of effort to assimilate the knowledge to run a rig proficiently from scratch.

Anywhere in the world if you need to send $1000.00 to someone they will receive $1000.00 minus perhaps a few pennies. Moving money through banks or a wire service will cost you a large percentage. The poorer the country, the higher the percentage. If this is not intrinsic value to you , then it’s not, its subjective. I can tell you it is very valuable to me.

Any issues with speed of transaction will be addressed by developers as billions of investment in “ real “ dollars are poring into Bitcoin. You seem like a tech savvy guy so you know this is a very solvable issue.

The Bitcoin network is supported and secured by the worlds most powerful supercomputer, it is valuable to me. Scientists are already preparing to fold proteins for medical research with the network. Naturally as capabilities are realized, more will be accomplished. I had a friend describe the process of discovery thusly in terms of acquired knowledge of the blockchains potential. “ I was digging a well for water in my yard and oil started gushing out”. Innovation in the coming months is going to explode because of this discovery.

The Byzantine Generals problem has been presented at all major computer science institutions of higher learning as unsolvable. Bitcoin technology has solved it. In short, the solution of trust-less consensus across time and space has been discovered. The implications of this discovery cannot be overstated. It is a breakthrough of monumental proportions with great promise for the future.

Bitcoins are divisible to 100.000.000.00 places and more if need be. Anyone who wants Bitcoin can get it, and if you don’t want it you need do nothing.


42 posted on 04/04/2014 2:25:06 PM PDT by TsonicTsunami08 (SEND BITCOIN 1CYfujvffxKKPHKvrQvLP3CDb3Z5Lu7LwM Funny Money)
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To: TsonicTsunami08

Actually the IRS uses the tax code to manipulate all business and wealth activity.


43 posted on 04/04/2014 3:32:26 PM PDT by A CA Guy ( God Bless America, God Bless and keep safe our fighting men and women.)
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To: Greysard

Bitcoin, as a fiat currency, has no inherent value.


And that is why we should go back read The Wealth of Nations by Adam Smith......................

We have a perverted view of wealth these days. Too much of a focus on liquidity.


44 posted on 04/04/2014 3:54:30 PM PDT by PeterPrinciple
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To: A CA Guy

Thats the point, if Bitcoin had no value the IRS wouldn’t issue guidance.


45 posted on 04/04/2014 4:27:42 PM PDT by TsonicTsunami08 (SEND BITCOIN 1CYfujvffxKKPHKvrQvLP3CDb3Z5Lu7LwM Funny Money)
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To: TsonicTsunami08; grania; Errant
No one is compelled to mine, it is done by free will.

Since there is no slavery in the world [that we live in,] everything that we do is done by free will. Why mining of Bitcoins would require a special mention?

In the early years there was no profit in mining. Two pizzas were purchased for 10.000 Bitcoin.

Those pizzas were purchased, regardless of the profit in mining, for the real value of Bitcoin as the pizza vendor perceived it to be at that time. I bet that the pizza maker did not even know what was the "profit in mining," just as when you buy an apple from me for $1 I do not ask how hard you had to work to earn that dollar.

Early there were no cookie cutter mining rigs. It took a lot of effort to assimilate the knowledge to run a rig proficiently from scratch.

I'm afraid you have it backward. Early on the mining rigs were just a PC with a program. Compare to the GPU setups of last year, and to the custom ASIC miners that cost a fortune. It did not become "easier" to mine - it became harder, much harder, because as the network grew in size the hash rate had to be kept constant, at one block per ten minutes on average. Thus, each miner has to share this loot with all other miners.

Anywhere in the world if you need to send $1000.00 to someone they will receive $1000.00 minus perhaps a few pennies. Moving money through banks or a wire service will cost you a large percentage.

First of all, here is a link to some discussion about this. I had most of my response written before Google gave me this very recent news article.

Then, I am not sure why moving the money abroad is such a popular example in the Bitcoin world. Very few people need to do it impromptu. Most people do not send money abroad because they and their relatives live in the same country. Some other people have relatives abroad, but wire transfer is one of not quite common ways to help them out. There are easier ways. And, finally, businessmen who operate in multiple countries have bank accounts in all of them, and the transfers are done by the banks. (One couldn't do it otherwise anyhow; imagine IBM walking into a US bank to withdraw $10M to pay salary to their Malaysian workers :-)

Most of the money rotates inside the country; we get paid, and then we spend most of it within a pay period. This is "the killer application" of any payment system - to be able to effortlessly pay for gas, for utilities, for rent, for food... and existing banking systems are nearly ideal for that. I haven't written checks in ages, since "Bill Pay" service - an electronic one - is free at Wells Fargo. I rarely use cash, unless at a flea market, or when crossing a bridge once in a blue moon. This is what matters - and Bitcoin is lacking in this regard.

But even if we look at the foreign transfers... what are my options here? Say, I want to send $3,000 to Germany.

a) I go to the bank and execute a wire transfer. This is a very safe method, where the money will not disappear into the vacuum of open space if anything goes wrong. I had one case when I wired money to another country, on request of a relative's friend, but the account there was closed. Guess what, I got all the money back. It's reliable. How expensive is that? About $30 or $40 last time I checked. Flat fee, regardless of how much you send. That would be about 1% of the $3K that I wanted to send. Time to do this: about 15 minutes, as you are guaranteed to pass by your bank every single day.

b) I can buy Bitcoins, send them to the recipient, and ask the recipient to cash them back to USD. How much will that cost? Let's count. First, there is the spread. Today you can buy bitcoins for anything from $490 to $447, and to sell them for anything from $447 to $402. Naturally, you'd want to buy and sell for exactly $447, but that is not always easy: there may be only a few coins available at that price. If you need more than one... tough; talk to more expensive sellers and less expensive buyers. In our example, you need $3K. That would be BTC 6.711. If you buy for $457 and sell for $437 your loss on the spread alone is $134. This is already far more than I'd need to spend at my bank, with insurance and all. But you may be more lucky and you can minimize the loss here. Will the recipient be equally interested in saving your money? If he is a business, he will sell the BTC at whatever going rate it is at this very moment, and if he gets less USD than you need... do not guess, I will tell you - he will request more money from you.

On top of that you will be hit by the exchange fees; by the transfer fees; and by the labor that goes into all this Forex stuff. You cannot do it all in 15 minutes! This labor not only costs money, it is also risky. To begin with, someone can make a honest mistake. But it is also possible that you will never see your money again. It is also a lengthy process. Mt. Gox, in their better days, required a long time to have the trading account set up; you had to transfer US funds into their bank ahead of time. We are very quickly running out of 15 minutes!

As an executive summary: if your life does not revolve around various, complicated ways to lose your money, just go to the bank, pay the man, and have your money sent the right way.

The Bitcoin network is supported and secured by the worlds most powerful supercomputer, it is valuable to me

That is actually the truest statement about Bitcoin, even though most of the hashing power is provided by single purpose machines, like ASIC miners. Still, if they can be used for something good, why not? The catch here is that all this computing power costs real money to buy and to run. Miners hope to get rich off of their BTC activities. Will they be likewise rich on protein folding? If not... too bad.

Bitcoins are divisible to 100.000.000.00 places and more if need be. Anyone who wants Bitcoin can get it, and if you don’t want it you need do nothing.

This is also correct; but it is orthogonal to the discussion. The question here is much simpler: "Should the society embrace Bitcoins as they are?" My answer to that is "No. The technology is promising, but it's nowhere ready. Go back to the drawing board. Come back when, for example, you have a solution for waving something in front of the terminal and having your coffee paid for at that very instant." This is the level of simplicity that we have today, and it would be unreasonably optimistic to think that people will want to do copy and paste of unreadable gibberish that is Bitcoin addresses.

46 posted on 04/04/2014 6:00:50 PM PDT by Greysard
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To: Greysard
Well, I don't want to drag you into more discussion that you have time for...

Thanks for your consideration. I really do need to start limiting my online time. This time of year is my favorite time to be outside doing stuff. Everything in moderation you... ;)

1. Convenience of use.

So how would my parents, for example, go about it when they are in the store?

This reminds me of the vault issue I discussed back in December with the other guy. I discounted his notion vaults would still be needed too easily, due to only looking at the circumstance from my point of view. What you've raised here could be a similar need that needs a solution. I just happened across a article that may answer part of the problem: Inside Square’s Stealth Approach to Bitcoin Integration

I have a 0.00005 BTC somewhere in a test account.

That's only $0.0225. Not hardly worth bending over to pickup? If you're going to do some testing, a tenth of a bitcoin would only run you about $45 now.

Again, the easiest, fastest online transactions I've ever made were done using bitcoin. Before I could change windows after hitting send, the purchase was completed!

2. Insurance of accounts

I do not need to pay anything for my bank accounts being insured. There is nothing of the sort with Bitcoin.

Yes you do, It's hidden, you wouldn't believe how much insurance costs (e.g., facility, FDIC, other). Also, banks have large IT security, and independent audit costs.

3. Guarantee of convertibility

There is no even guarantee that you will see your money ever again, as it is the case with Mt. Gox.

For every Mt. Gox, there are dozens of others that dealt in dollars which have also collapsed. And indeed, the long arm of the law is working to get victims at least some of their investment back. Then there is a class action lawsuit that has been filed.

4. Government oversight to prevent shenanigans

There were no rules to follow for Mt. Gox because it was an illegal (in many countries, but not in Japan,) unregulated bank.

Mt. Gox was/is an exchange, not a bank. Indeed something strange took place and it's being investigated not only by Japanese Investigators, but also US Investigators.

5. Stable value

It's a rollercoaster alright. What else can one see there?

Actually I find its value pretty stable considering its high tech, newly invented nature. If you haven't noticed, gold, silver, and certain well known stocks (twitter, facebook for two) have been pretty volatile too.

6. Paper trail and reversibility of transactions

So why Mt. Gox won't reverse transactions through which, they say, someone stole their money? The answer is simple: you only can know that account 32904823jrkjl3423432 received the money. No face, no name, no address attached to that account.

Actually Mt. Gox does have this very information available. Everyone had an account with their personal information and attached to each, addresses to their bitcoins.

7. Acknowledged security of the entire mechanism

Credit cards, even those with mag stripe that we still use in the USA, have far more security checks at the bank than any Bitcoin transaction. But the real deal here is that those transactions are reversible because every payment has a name and an address attached to them.

I believe there is the requirement to notify your CC agency within 30 days of discrepancies. Bankcards have not so many avenues to contest charges. The CC industry spends much time and resources dealing with fraud, securing customer records, and etc. and these costs are passed on to the consumer through higher interest rates and merchant fees.

CC companies are looking at crypto push technologies due to its superior efficiency since the merchant doesn't have to fear chargebacks, and customer records aren't required for verification at the POS. No doubt more can be done to make crypto more user friendly. Sounds like another opportunity for filling a need to me.

If the world holds together, crypto currency/payment are here to stay and will continue to grow in popularity due to their utility.

47 posted on 04/04/2014 6:32:35 PM PDT by Errant (Surround yourself with intelligent and industrious people who help and support each other.)
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To: Greysard; TsonicTsunami08; grania
On top of that you will be hit by the exchange fees; by the transfer fees; and by the labor that goes into all this Forex stuff. You cannot do it all in 15 minutes! This labor not only costs money, it is also risky. To begin with, someone can make a honest mistake. But it is also possible that you will never see your money again. It is also a lengthy process. Mt. Gox, in their better days, required a long time to have the trading account set up; you had to transfer US funds into their bank ahead of time. We are very quickly running out of 15 minutes!

The last purchase I made from Overstock using bitcoin, I decided to see how much was going toward "fees (i.e., transfer fees)". So I took the amount and converted it to the price of btc at the time. It came out exactly equal to the price in dollars. And again, the transaction took less than 1 sec. to complete.

48 posted on 04/04/2014 6:38:22 PM PDT by Errant (Surround yourself with intelligent and industrious people who help and support each other.)
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To: Greysard
This is only a rough outline, and it barely scratches the surface. As you can see, I am not against replacing all those paper monies with a crytocurrency that is reliable, controllable by the people, and that has a paper trail. However Bitcoin is a few light years away from being even *usable* as a planet's universal money. Bitcoin is a great hobby money; a money that is suitable for the real world has quite a few additional requirements that Bitcoin does not satisfy. It is not practical to ignore those deficiencies. They should be fixed. Once you have Bitcoin-II, for example, that *is* a good replacement of paper, then I will be glad to use it. But not before.

Btc is only one of about a hundred different cryptocurrencies. The market will decide which ones succeed based on their individual merits - way better than the artificial markets and too big to fail/jail banks/banksters that have taken the world's economies to the very edge of the cliff.

49 posted on 04/04/2014 6:46:57 PM PDT by Errant (Surround yourself with intelligent and industrious people who help and support each other.)
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To: Greysard; TsonicTsunami08; grania
$6 Billion Goes Missing at State Department

More than the entire current market value of Btc in existance.

50 posted on 04/04/2014 6:51:18 PM PDT by Errant (Surround yourself with intelligent and industrious people who help and support each other.)
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