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Last post Author Topic: Does anyone here use Bitcoins?  (Read 185055 times)

IainB

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Re: Does anyone here use Bitcoins?
« Reply #175 on: April 09, 2013, 05:33:36 AM »
...If somebody cleans out my bank account I have several very direct avenues of legal recourse....
Yes, well, maybe you might have - today, in any event - but this would seem to be inapplicable if you live in Cyprus/Europe.

The currency "backing" you perceive is just that - i.e., perceived. Modern money is generally created by things including credit creation, printing, and fiat, supported by fractional reserve banking (a virtual accounting myth) and enabled with stability of notional value through trust. Military or economic might do not of themselves "prove" or "command" money to have/retain value - as you seem to be suggesting - the USSR and China already tried that and failed (QED).
No, breach that trust and the whole thing collapses like a house of cards and the notional value evaporates.
So...guess what just happened in Cypress?

I am very interested in, but also ambivalent about Bitcoin and crypto-currency generally, but I do at least see that in Bitcoin the currency seems to be its own gold standard (as I wrote in a separate post), and trust seems to be made irrelevant and is substituted by the security and statistical authenticity inherent in the incorruptible cryptographic protocol. I would suggest the possibility that Bitcoin - or other crypto-currency - could be considered as a potential new "gold standard", against which all other currencies could be valued.
Nationa/International settlement and exchange could even take place through the medium of the crypto-currency, thereby reducing systemic risk. Forex trading could become obsolete.

I recommend maintaining a healthy skepticism toward any of the MSM (mainstream media) running TV docos or writing pro-Bitcoin or anti-Bitcoin pieces. They are arguably not doing this from the perspective of good journalism, since most of them don't seem to know the meaning of that term. So why would they be doing it? The answer is that, generally speaking, the MSM communicate only those religio-political marketing messages and propaganda that they are told to communicate (QED), and so the messages are dumbed down and NTR (No Thinking Required), aimed at the standard reading ability and/or mentality of a 13 or 14-year old.

40hz

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Re: Does anyone here use Bitcoins?
« Reply #176 on: April 09, 2013, 07:39:03 AM »
^I have a healthy skepticism for all things created by humans. I'm also a keen student of history and a decent enough amateur psychologist that I'm not too easily 'taken in." At least not unknowingly. (Allowing oneself to be knowingly taken in is an altogether different thing. That's the tariff we pay for allowing ourselves to have hopes and dreams. It's a fair exchane IMHO.)
 ;D

Again, it comes down to a question of having a relative and reasonable level of trust - or more correctly, a rational level of reliance on something. When looking at something like Cypress, about the best I can say is that the United States is not Cypress. And although the world's economy and monetary system has a significant impact on the American economy, and a collapse elsewhere would be felt, it's consequences would be different both in form and scale.

And a sudden economic collapse would be nothing new for us. The US has been through one totally catastrophic economic collapse recent enough to still be within living memory. It has also weathered several major recessions, and at least two (depending upon how you define it) systemic banking crises. We're somewhat used to them. And mechanisms are in place for dealing with it as far as that goes. So Cypress is not actually that equivalent here.

Regarding currencies, they're all perfect examples of a willing suspension of disbelief. But some lies are more 'dependable' than others - relativistically speaking.

Which brings me back to my problem with bitcoin. Right now it's not a big enough - or a commonly believed enough 'falsehood' - for me to knowingly let myself be taken in by it. And this roller coaster ride it seems to be so proud of is a clear indication (to me at least) of its total lack of control and failure to exercise fiscal responsibility as either a medium of exchange or an investment vehicle. Not exactly something I'd want to get involved with.
 8)
« Last Edit: April 09, 2013, 07:48:31 AM by 40hz »

tomos

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Re: Does anyone here use Bitcoins?
« Reply #177 on: April 09, 2013, 03:47:10 PM »
The current artificial and deliberate cap of about 20 million BTC numbers (objects) that can be created in/by the Bitcoin protocol is very interesting in that it is a control - it safely controls the experiment and caps the bubble that we see inflating/deflating (it is currently re-inflating after having had one major deflation).
This control affects/limits the endogenous money supply (M3) in this enclosed system, but not necessarily the velocity of circulation of the money. The latter may be theoretically unlimited, but in practice could be under a constraint set via a function determining the necessary CPU cycle time forced to be consumed in operating the protocol.

I'm not too well up on the terminology here Iain - could you explain what you mean by "operating the protocol"? Do you mean 'creation of' - or simply trading bitcoin? I thought only creation was affected by CPU etc. but confused when you say this will affect the "velocity of circulation".



I am very interested in, but also ambivalent about Bitcoin and crypto-currency generally, but I do at least see that in Bitcoin the currency seems to be its own gold standard (as I wrote in a separate post), and trust seems to be made irrelevant and is substituted by the security and statistical authenticity inherent in the incorruptible cryptographic protocol. I would suggest the possibility that Bitcoin - or other crypto-currency - could be considered as a potential new "gold standard", against which all other currencies could be valued.
Nationa/International settlement and exchange could even take place through the medium of the crypto-currency, thereby reducing systemic risk. Forex trading could become obsolete.

I wonder what would/will happen if/when another similar currency is created ... (I suppose that would only happen if Bitcoin is a 'success' - in the medium term at least.)
Tom

IainB

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Re: Does anyone here use Bitcoins?
« Reply #178 on: April 10, 2013, 09:15:56 AM »
@tomos: I'm no expert. I was using the terminology and concepts explained here: About Bitcoin

Concise Oxford: Computing protocol - a set of rules governing the exchange or transmission of data between devices.

Operating the protocol occurs at an internal "clock" speed, which governs the rate at which it consumes CPU cycles. The output from the cycles is an object - actually a number - and that is the Bitcoin.
The velocity I referred to was the velocity of circulation of a currency, which, if it is scarce, might change hands faster to compensate for the lack of supply.
But since the protocol apparently has to be involved to exchange Bitcoins, then that might constrain the max velocity of exchange of Bitcoins in a Buy/Sell transaction.

tomos

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Re: Does anyone here use Bitcoins?
« Reply #179 on: April 10, 2013, 09:52:50 AM »
^Thanks Iain
"the protocol apparently has to be involved to exchange Bitcoins" would explain it.

Re the circulation: unless it's value stabilises, this will be useless as a currency AFAICS. Even then it would have to stabilise at a very high value. At very high value, it could be divided in 'billionths' or 'trillionths'. The trickle down effect would take a long time to be felt by those without Bitcoin though....

Ska's link was interesting (http://www.naturalne...in_bubble_crash.html).
I quote -
• Bitcoin is a currency that's subject to human psychology
• As such, it is subject to the "greed" and "fear" herd mentalities of human investors


Sounds like something Jeeves would say to Wooster - "it's subject to human psychology" :)
I think in order for a money to be successful in terms of everyday use it has to somehow avoid those pitfalls.
I like the idea of a mutual credit system where one can create 'money' through work - rather than (mostly) needing the money to be available before work can be done - but it's not something I know much about. AFAIK it has only ever been implemented locally, on very small scales.
Tom

40hz

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Re: Does anyone here use Bitcoins?
« Reply #180 on: April 10, 2013, 10:14:31 AM »
^It would very likely have to be local in that a labor exchange is most commonly a barter arrangement. And without an agreed standard for valuation, how much are you worth really? The answer is: it all depends on local needs. Take it beyond that and you're right back to creating a private currency since its tokens, scrip, or account balances become a general medium of exchange.
 :)

 

tomos

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Re: Does anyone here use Bitcoins?
« Reply #181 on: April 10, 2013, 10:45:42 AM »
^Well the idea of a mutual credit system is to 'become a general medium of exchange'.

I'm not sure what exactly you mean when you say that beyond local, you're creating a 'private' currency - but I think you might be right :)
- I presume you mean with all the pitfalls of todays currencies.
Tom

app103

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Re: Does anyone here use Bitcoins?
« Reply #182 on: April 10, 2013, 03:50:48 PM »
Bitcoin falling HARD, amidst possible DDos attack of one or more exchanges.

http://techcrunch.co...04/10/bitcoin-crash/
http://venturebeat.c...ices-crash-over-100/


Stephen66515

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Re: Does anyone here use Bitcoins?
« Reply #183 on: April 10, 2013, 04:00:41 PM »
Seems to be going back up now:

$184.5/BTC*

*Correct at time of writing

wraith808

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Re: Does anyone here use Bitcoins?
« Reply #184 on: April 10, 2013, 06:21:36 PM »
Another interesting posting on Bitcoin...

http://www.reddit.co...nd_savings_invested/

app103

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Re: Does anyone here use Bitcoins?
« Reply #185 on: April 10, 2013, 07:13:52 PM »
Another interesting posting on Bitcoin...

http://www.reddit.co...nd_savings_invested/

Glad to read that he did the smart thing to correct what could have been a really big foolish mistake and now whatever he makes from what he still has invested will be pure profit without risk.

But it could have easily become a situation where a fool and his money were soon parted, with him living on no more than $150.00/wk for a long time, if he defaulted on those credit cards and they obtained judgements against him, along with permission to garnish his wages till it was all paid off.

SKA

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Re: Does anyone here use Bitcoins?
« Reply #186 on: April 10, 2013, 10:43:08 PM »
You gotta appreciate this guy's modesty:
http://www.naturalne...tion_Mike_Adams.html

Ska

wraith808

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Re: Does anyone here use Bitcoins?
« Reply #187 on: April 10, 2013, 10:51:08 PM »
Was that... sarcasm?

40hz

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Re: Does anyone here use Bitcoins?
« Reply #188 on: April 10, 2013, 11:41:07 PM »
^Yeah. A guy who writes for a natural food site and goes by the nickname The Health Ranger?

Sure sounds like a qualified financial professional to me.  ;D

This is a good example, however, of just how many amateurs are piling on the bitcoin bandwagon for whatever reason. In this case I think the motivation is probably the hope of driving traffic to the site by getting some hot button keywords up on a page in order to increase their visibility with the search engines.
 ;)

f0dder

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Re: Does anyone here use Bitcoins?
« Reply #189 on: April 11, 2013, 12:14:48 AM »
Just for fun, I installed a bitcoin miner yesterday evening, and joined a mining pool.

If my maths is any good, it seemed like - at the current rate - it would take me around 400 days to mine one single BTC, even though I used a GPU miner (on my not-so-recent-but-still-relatively-beefy GTX460... but OK, AMD/ATI cards are better for mining). And do note the "at the current rate" - mining gets progressively harder as the minting-limit approaches.

Guess one has to gamble the bubble (or resort to botcoining :p) in order to cash out on the scheme - and neither is my cuppa tea.
- carpe noctem

Stephen66515

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BTC Trades halted after major drop in value.
« Reply #190 on: April 11, 2013, 06:16:12 PM »
BTC Trades halted after major drop in value.

btc.jpg

As of right now the MTGOX website is showing:

Quote from: www.mtgox.com
Service is down for emergency maintenance for one hour, until 2013-04-11 23:30:00 UTC. Please retry at that time

MTGOX Released the following statement:

Quote
As expected in such situation people started to panic, started to sell Bitcoin in mass (Panic Sale) resulting in an increase of trade that ultimately froze the trade engine! To give you an idea of how impressive things were here are some numbers that we would love to share with you guys: – The number of trades executed tripled in the last 24hrs. – The number of new account opened went from 60k for March alone to 75k new account created for the first few days of April! We now have roughly 20,000 new accounts created each day.

Bitcoin plummeted more than $160 yesterday after hitting a new high of $266. It continued to fall on other exchanges Thursday, trading below $100 in many. Two months ago the digital currency was valued at $20.

As of this moment, BITSTAMP is valuing $72.00/BTC but exchange rates are for information only.

[edit]

After refreshing the MTGOX website, I can now only see the following text

Quote
Database access error, please retry later

[/edit]

Panic selling seems to be at the heart of this problem.

Due to the nature of the so-called "Crypto-currency", there is no physical backing.  Not being on the public stock market, or based on any governments economy, BitCoins are notoriously difficult to predict.  Due to this, people rely on each others reactions, in order to figure out when to buy and sell.

Over the past several weeks, MTGOX have been subjected to a bombardment of DDOS attacks, causing some major downtime, severe trading lag, and the inevitable panic selling that comes along side seeing prices fluctuate wildly. 

Amongst all this however, BitCoin saw its highest ever trade value of $266/BTC.

[edit2]
The MTGOX Website is now showing:

Quote
502 Bad Gateway

nginx/1.3.11
[/edit2]

If any of you do have real money currently riding on BTC, I would love to know your thoughts on the ups and downs, and also...do you plan to panic sell?

Stephen66515

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Re: BTC Trades halted after major drop in value.
« Reply #191 on: April 11, 2013, 06:18:56 PM »
As soon as I posted the above, the MTGOX website re-appeared.  Perfect timing really.

Lets see what happens from here.

<Update>

Quote
Trading is halted until 2013-04-12 02:00am UTC to allow the market to cooldown following the drop in price. Read more details on the support. Additionally trading fees will not be charged within 48 hours of trading resuming (until 2013-04-14 02:00am UTC).

</Update>


The latest press release from MTGOX currently says:

Quote from: https://mtgox.com/press_release_20130411.html
TOKYO - JAPAN - April 11, 2013   Hi everyone, just a quick update on the situation and what happened last night.  First of all we would like to reassure you but no we were not last night victim of a DDoS but instead victim of our own success!  Indeed the rather astonishing amount of new account opened in the last few days added to the existing one plus the number of trade made a huge impact on the overall system that started to lag. As expected in such situation people started to panic, started to sell Bitcoin in mass (Panic Sale) resulting in an increase of trade that ultimately froze the trade engine!  To give you an idea of how impressive things were here are some numbers that we would love to share with you guys: - The number of trades executed tripled in the last 24hrs. - The number of new account opened went from 60k for March alone to 75k new account created for the first few days of April! We now have roughly 20,000 new accounts created each day.  Due to these facts we have been busy working on improving things since last week and our team has been working around the clock to improve Mt.Gox to catch up with the demand. We will continue to release several updates today and in the coming few days to improve our system overall performance.  Also please note that we may have to close the exchange for two hours in the next 12 to 24hrs to add several new servers to our system.  Thank you for your understanding and continuous support! 
Regards
Mt.Gox Co. Ltd Team.

TaoPhoenix

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Re: Does anyone here use Bitcoins?
« Reply #192 on: April 11, 2013, 07:01:50 PM »
This whole thing sounds like a gorgeous scam now, and this is about where the propellers are being fired up for that night-flying.


40hz

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Re: Does anyone here use Bitcoins?
« Reply #193 on: April 12, 2013, 12:40:04 PM »
Hacker News has a post by Dan Kaminsky who casually attempted to do a hack on bitcoin - and (somewhat predictably) failed.

Not much depth in the article, but it does provide some insights into how bitcoin's protocol works - even if it does sound like the author is occasionally regurgitating info off some "talking points" PR sheet.

Quote
By all extant metrics in security system review, this system should have failed instantaneously, at every possible layer.

And, to be fair, it has failed at other layers – BitCoin thefts have occurred, in the meta-code that surrounds the core technology itself.

But the core technology actually works, and has continued to work, to a degree not everyone predicted. Time to enjoy being wrong.  What the heck is going on here?

First of all, yes.  Money changes things.

A lot of the slop that permeates most software is much less likely to be present when the developer is aware that, yes, a single misplaced character really could End The World.  The reality of most software development is that the consequences of failure are simply nonexistent.  Software tends not to kill people and so we accept incredibly fast innovation loops because the consequences are tolerable and the results are astonishing.

BitCoin was simply developed under a different reality.

The stakes weren’t obscured, and the problem wasn’t someone else’s.

They didn’t ignore the engineering reality, they absorbed it and innovated ridiculously.

Worth a read since it's that much more grist for the mill. And some of the information is quite interesting. Link here.

TaoPhoenix

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Re: Does anyone here use Bitcoins?
« Reply #194 on: April 12, 2013, 06:51:00 PM »

Hmm. Well, sure, there's a couple of bright fellas behind it. So maybe they caught the most obvious bugs. But it just feels like something is unstable for the Long Game, and when that happens a few people win and lots of people lose. I just don't have the complete theme of how it will play out yet.


Tinman57

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Re: Does anyone here use Bitcoins?
« Reply #195 on: April 12, 2013, 07:02:30 PM »

  I came across this today, it gets into how BTC are made, how they're traded, security, and the authors opinions on investing:

Quote
7 things you need to know about Bitcoin
Bitcoin is booming, but don't buy the hype before you read our guide.


http://www.pcworld.c...w-about-bitcoin.html

IainB

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Re: Does anyone here use Bitcoins?
« Reply #196 on: April 13, 2013, 07:01:03 AM »
Bitcoin or some other crypto-currency might yet be the place of calm in turbulent times. I would suggest this news (following) will further destabilise the world currency of the US$, and inflate Bitcoin prices:
Quote
Here It Comes – Australia to Abandon the U.S. Dollar
April 13, 2013 - 07:00 America/
The Trumpet

Australia’s announcement that it is abandoning the U.S. dollar for trade with China is the latest broadside in the global currency war. Starting April 10, Australia and China will no longer use the U.S. dollar for trade between the two nations. For the first time, Australian businesses will be able to conduct trade in Chinese yuan. No more need for U.S. dollar intermediation.

This is a significant announcement and key development for China as it continues its campaign to internationalize the yuan and chip away at the dollar’s role as the world’s reserve currency.

Australian Prime Minister Julia Gillard made the announcement during an official visit to Shanghai on Monday. She noted that China is now Australia’s biggest trading partner and that the direct currency trading would be a “huge advantage for Australia.”

She called the currency accord a “strategic step forward for Australia as we add to our economic engagement with China.”

(Read the post for more.)

40hz

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Re: Does anyone here use Bitcoins?
« Reply #197 on: April 13, 2013, 07:40:30 AM »
This is a significant announcement and key development for China as it continues its campaign to internationalize the yuan and chip away at the dollar’s role as the world’s reserve currency.
>

I think it's more a political statement than an economic groundswell at this point. But still not something to dismiss as pure politics either.

Ideally (for China >:D ) this move will be coupled with a significant shift towards less manipulative monetary policies and exchange rate games on the part of China.

Because if China could just pull it's political head out of Mao's butt they would probably become unstoppable economically.

IainB

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Re: Does anyone here use Bitcoins?
« Reply #198 on: April 13, 2013, 09:56:41 AM »
^^ Yes, Mao's butt would seem to be a potentially  limiting factor for China.
A potentially bumpy ride for us all though, if the US$ is being incrementally removed from its mandated position as the primary currency/unit of global exchange. This rather looks like a first brick being removed from the wall.

40hz

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Re: Does anyone here use Bitcoins?
« Reply #199 on: April 13, 2013, 01:50:07 PM »
This rather looks like a first brick being removed from the wall.

Or at least an attempt to do so. The real trick will be to pull enough bricks out of the wall to make a new entry for yourself without having the whole building come crashing down on your head.

But China will first need to do a lot more to fix the problems caused by the need to secure highly placed political patronage in order to conduct any significant business. And also to check the blatant and pervasive corruption plaguing their emerging new economic elite before it will be able to push any harder than what it's intrinsic market potential as a customer base will allow.

Unfortunately, cases like the 'disappearance' of Chinese billionaire Liu Han, and the somewhat bizarre circumstances leading up to it, won't give the average western investor warm fuzzies about dealing with Chinese businesses or the Chinese government.

As a recent article about Lui Han in Bloomberg noted:

Quote
Liu’s rise to riches and sudden disappearance aren’t just the makings of a made-for-Hollywood potboiler. They’re a warning of the risks investors take when dealing with opaque private businesses in China, where fortunes depend on political ties and the favors of state entities, and even the wealthiest entrepreneurs can vanish if they lose the patronage of powerful government allies.

Certainly gonna be worth watching.

For these times, they are a-changin'... as the old Dylan tune goes.

« Last Edit: April 13, 2013, 02:43:16 PM by 40hz »