Bitcoin

[Guest110715-3]

Any fellow geeks want to talk Bitcoin or other crypto-currencies?

If any members want to know more, I can meetup with you or give you a general feel for what is means for the present and future of "untraceable" funds.

[Centaur]

Don't have time for an in-depth discussion, but here are some contrarian views:

http://www.wired.com/2013/05/lets-cu...-bitcoin-hype/

http://www.antipope.org/charlie/blog...-die-in-a.html

I don't entirely agree with Mr Stross's opinion, but he makes some valid (and some less valid) points. Ultimately I think Bitcoin is like M-theory, a neat prototype that harbingers future aspects of more accurate models while simultaneously undermining itself from reaching its full potential by certain fatal flaws, yet which must be passed through on the way to increasingly useful models. In BitCoin the technical imperfections are not the greatest hurdle. Those could be fixed in a decade or so. But it may be several generations, if ever, before the social climate exists in which robust cryptocurrencies can flourish to the same extent, but in their own unique way, as other forms of wealth have.

[Guest110715-3]

Currency has always evolved once a new system is adequately adopted and/or the current system has failed. The dollar. The gold standard. Dutch Tulips.

Digicash, E-gold, Internetcash, Cybercash were the models on what not to do, how to avoid hackers, and the reason for slow growth and early adoption. Bitcoin is not the first model for digital currency, digital exchanges and digital transaction. Nor will Bitcoin be no different to the failings of man but it definitely trails the path past what can be called "Government Regulation" and possibly world wide adoption as we know it.
Being track-able but not fully traceable, gives the user a feeling of being anon. I have traded in my bitcoin for cash many times. The only person that can "out" me is the person who gave me the cash or the person who sent me a product online after buying with bitcoin. Why would they? And to whom? They would be outing themselves as well. And with the availability to create multiple wallets (accounts) within a matter of a few seconds and with complete autonomy, anyone would be able to track the flow but not who owns the account, the purpose for the account and if or when the account will change.

Even Amazon is getting it's beak wet with Amazon Coins. Amazon can set the value without any outside interference. Will the user have to pay taxes on each sale? or just the taxes on the first sale of coins? It would be up to Amazon at that point to either value each coin equal to that of another currency or a different standard. Same with Bitcoin and any currency. The value is based on the majority's need and demand for it. What can I get with a Bitcoin? What can I get with a dollar? What can I get with a New Macbook? Value and trade go hand and hand in any economy.

When Bitcoin first came on my radar it was around $5. Seeing it's limited use, I set my assumed max value to $10. So I bought a few locally for $5 expecting it to reach $10, then I would sell and make a few $ and participate in the growth and demand for a cool idea. Before I sold any, I got wind of it's use in the dark web (underground and usually illegal sites) and the $ value for Bitcoin in my estimate was around $1000. So I kept buying and making Bitcoin and then selling as I needed funds for other hobbies and interests. Many other people and investment groups have valued it around $1300. This, of course, is speculation at best and the $ value will never be stable enough. But then again, Bitcoin is a currency AND a traded commodity. So it can't follow the investment standards of a currency and needs to be allowed to ebb and flow with demand and trade standards. Bitcoin is just 1 of hundreds of active crypto-currencies. While it is currently the "gold standard" that others can derive it's value, each currency has it's own market and users who set the value independent of Bitcoin.
But as with any currency, the local market demand and usage will be the governing factor for it's future.

[Mr Peabody]

I loved the quote in Centaur's reference:
"Libertarianism is like Leninism: a fascinating, internally consistent political theory with some good underlying points that, regrettably, makes prescriptions about how to run human society that can only work if we replace real messy human beings with frictionless spherical humanoids of uniform density (because it relies on simplifying assumptions about human behaviour which are unfortunately wrong)."
This would be true..... except for the existence of every other political party in the U.S.

I would compare the bitcoin idea to the Seinfeld television series. A sitcom based on nothing and a currency without an underlying standard. Both are fun to watch but will eventually run their course.

Oops, bad example, you still have reruns with Seinfeld.

It is difficult to destroy gold.

[Guest110715-3]

There have been MANY sitcoms before Seinfield that was based on "nothing" and there are many sitcoms after their run that are based on "nothing" as well. There may be a premise on stories and character development but to say that means fictional stories are based on nothing. All movies are nothing. Example: movies such as Star Wars and Star Trek are based on nothing. Fictional characters doing stuff over a period of time. That pretty much is the basis for all fictional stories. Nothing. These people did this and this happened. Now go out and become a director!

Gold's value as an investment is solely based on it's value as a mineral. If a number of investors think gold is overpriced, they sell and the price of gold falls. If many other people see the fall and suspect it will go even further down, they will sell as well....driving down the price. The only thing that keeps it stable is when people who still view gold at a high price will then buy gold at the low price and believe they are getting a bargain. That's the stock side.
If Gold as a mineral is no longer in demand by the consumer, then the value of gold is lost also causing a price fall, maybe even to zero if gold is seen as useless.
All the prices you pay for stocks, bonds, funds, gas, bacon, diamonds, cars, pussy, dick, etc...are all based on perceived value. NOTHING has a standard that can be changed or modified by an outside source. Some seen but mostly unforeseen. I try not to deal in absolutes, it makes an instant fool.

[GneissGuy]

The US dollar is now based on nothing. In the past, it was theoretically based on gold or silver. You could turn dollars in to the government and get gold or silver in return. This was slowly nibbled away, and now there is no guarantee of anything. Google "fiat money" for an idea of what this means.

I'm not saying this means a collapse of the US dollar is inevitable, but there is no ironclad guarantee it won't.

Bitcoin is a neat idea, and it's astounding in some ways. I'm not deeply into the math, but It does have some potential technological weaknesses. It also isn't as untraceable as people think it is.

The biggest risk to bitcoin is if people decide to stop giving you things of value for it. That's true of the US dollar as well, but I think a collapse of bitcoin prices is much more likely.

A number of things could cause a collapse of bitcoin value. You could have the classic economic bubble like the Dutch tulip bubble, Beanie Babies, or Enron stock. There could be some bad press (true or false) and a classic panic. There might be some sort of government action.

There could be some sort of technological or procedural failure. There was a recent minor panic over a "security hole" in Bitcoin. As I understand it, it wasn't actually a hole in the bitcoin protocol, but in the way some exchanges were handling their bitcoins. There was a lot of stupidity and hubris involved in this particular event.

There is some risk someone will figure out how to break the mathematical or procedural system at some time and "break the bank" by creating false transactions or something similar that lets them steal or counterfeit bitcoins.

Personally, I do expect bitcoin to collapse at some time in the future. That doesn't mean not to use it or invest with it. Just don't put too much of your net worth in it, and realize you could end up with it being worthless at any time.

Note this is not nutjob/conspiracy theory stuff. The bitcoin standards are public, and the inventors made it clear what it could and couldn't do. It's been way overhyped by others.

As for the conspiracy theories, there might be some sort of "backdoor" or secret security hole in the protocol, but the above concerns are valid even without the conspiracy theory stuff.

I DO wish there was some way to make an untraceable, secure, digital currency. Bitcoin is a really great attempt at something like this. From a theoretical/mathematical standpoint, it's amazing. I would have never thought you could do all the things that bitcoin does. However, it's not necessarily secure and it's not untraceable.

[Centaur]

Although it shares some properties, BitCoin is fundamentally different from the digital currency models that preceded it. Ultimately though, however widely it persists among Silk Road 2.0 and other imitators of DPR’s use of TOR - and much of the deep web is not strictly illegal activity, nor is what is illegal in one country always so in another, but BitCoins certainly lend themselves to the black market – virtual cash’s transformative potential will co-evolve with existing currency systems. As big business and banks find use for it, they will get into bed with regulators and the supposedly inviolable anonymity of BitCoin between two secure users will not follow.

Ultimately you still have to convert it back into cash if you want to use it in above-board marketplaces. That’s a vulnerability. So is, as you yourself pointed out, the need trust the other buyer/seller. Setting aside the potential for entrapment, the bread and butter of Federal LE, the other party doesn’t necessarily need to voluntarily betray you. The oldest hack of all, social engineering, means there’s no such thing as airtight crypto.

Will BitCoin or something evolved from it have a major mainstream role in the coming decades of trade and commerce? Most probably yes. What that will be depends on how the needs of and relationships between corporations, governments, private citizens and dissidents of tyrannical regimes develop in tandem with the tech. Most of the idealistic cyber-libertarians who followed in the footsteps of John Perry Barlow during the height of the crypto wars are realizing how easy it is to underestimate the capabilities and ruthless resolve of a government who’s revenue is threatened and how much further it will go in the pursuit of taxes than mere national security.

The price of natural diamonds is artificially inflated by a cartel that controls most of the accessible supply.

Many stories and other art works are woven around a central theme or idea. Seinfeld's unifying theme was it's lack of any unifying theme. It was not the first to do this by any means, but it was the first (AFAIK) to do it in a way that self-consciously parodied that lack.

[GneissGuy]

Originally Posted by Centaur

Although it shares some properties, BitCoin is fundamentally different from the digital currency models that preceded it.

Yes, but it still has its potential and known vulnerabilities in the technical sense.

It also has the market bubble and acceptance problems.

[Mr Peabody]

Something often glossed over in the bitcoin analysis is it's ultimate fungible value. As a floor value it's worth is equal to the cost of the energy required to go through the digital calculations in the "mining" process. I have read that the process has progressed from computers to programmable chips to finally custom integrated circuits in an attempt to mine the coins more efficiently. This is a check on inflationary pressure. Gold, due to it's production costs faces a similar valuation floor.

The only difference is that gold will still be around after the internet is demolished.

I would have included diamonds as a safe investment, but they are just carbon after all. Artificial diamonds promise to crater the De Beers cartel.

[ScarletSeven6]

This Bitcoin bit is very interesting. Being a woman caught up in a cash world, I have my bank of america online acct and use paypal and think that's inet savvy financials.
I had no idea Bitcoin was all this. Fascinating.
Although for the above, I thought diamonds were a sound investment.
I should stick to literature and art, i know, but I truly found this thread tres cool and informative.
Thxx guys.

xoxo.
scarletseven6
(becca)
*********************
The ultimate FBSM+++ in Austin

[Pitfall]

[Victoria Columbari]

I had no idea what Bitcoin was or that there was such a thing..Off to do some reading about it. Thanks for the interesting convo guys.

[Guest110715-3]

If anyone (male or female or both) wanted to learn more about it, I would be happy to have a lunchtime meeting or after work gathering. It's another "hobby" of mine, that help pays for other "hobbies" of mine.

[runtx3]

I will stick with the dollar until I have to