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Bitcoin Hits $1 Billion

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Re: Bitcoin Hits $1 Billion

#151

Post by joe_the_user »

cs702 wrote: post #35

As usual on HN, any submission about Bitcoin is met with concerned comments about its high volatility, present impracticality as a currency, disadvantages versus precious metals, current concentration of transactions in a single exchange (MtGox), potential for market manipulation by governments and/or speculators, etc. This is analogous to being present at the creation of the World Wide Web, but instead of getting ex…

This is analogous to being present at the creation of the World Wide Web, but instead of getting excited about its obvious potential, one decides to stay on the sidelines because it's still unproven technology, almost no content has been made available online, commercial opportunities are virtually non-existent, etc.

As someone schooled in economics, I have to point out the fundamental difference between technologies and economic "innovations". The key thing is that any currency or investment scheme or similar phenomena is going to always contain risks as well as rewards (the US dollar contains risk right now, it's main virtue is being perceived as having less risk, not that it's "solved" the risk problem).

If the Internet as it exists today, was able to "crash" tomorrow in a way that left everyone with less than they had before, it would be ambiguous, even twenty years into the project, whether it was a good thing.

That's the distinction between an upsurge in a technology and an upsurge in an economic phenomena. Housing prices and Internet usage increased substantial in the period 2002-2007. Internet usage brought information and utility that pretty much couldn't go away and leave you worse off. Housing prices could and did.

Re: Bitcoin Hits $1 Billion

#152

Post by nadaviv »

alyx wrote: post #135

Is nobody else here bothered by the following statement? It's on the first page, last sentence of the original paper on Bitcoins... "The system is secure as long as honest nodes collectively control more CPU power than any cooperating group of attacker nodes." [1] [1] http://bitcoin.org/bitcoin.pdf

No. If someone does manage to control 51% of the computing power of Bitcoin, he's much better off using that to mine bitcoins rather than "cheating". If he'll use it to cheat, he'll cause panic, make bitcoin drop their value and undermine the source of his own potential wealth. It'll be much better for him to play fair and just gain (a lot, with that much computing power) wealth by mining.

Re: Bitcoin Hits $1 Billion

#153

Post by benbataille »

kyledrake wrote: post #116

So, in a sentence: Bitcoin is being used by people as a highly liquid, defensive store of value from within Cyprus, where capital controls are preventing people from moving their money out through traditional means. This is what gold used to be used for. But gold is not liquid, and Bitcoin is. It appears that hackers have made something better than gold, the longest standing store of value in human history. What an i…

We have been in a post gold economy since the end of the Breton-Wood agreement. Hording gold is far from a wise investment. It certainly isn't a safe way to store value. First, history aside where it's value comes from is difficult to understand. There is literally tones of it lying around without any real use (far more than what is produced). Basically it's a safe haven because people decide to use it this way but the market could crash any day and has multiple times before and thus despite central banks holding so much of it they dwarf anything someone could decide to inject.

From my point of view, bitcoin is an even more stupid investment. As little as 5000BT makes the rate plummets. Nothing could stop a young Soros from pulling out a mini-black Wednesday. Add the fact that the market is completely unregulated and you have a pretty risky situation. I see Bit coin has a step backward. It's like current currency without any of the warranty provided by governments (security of trade is one of the main reason we instituted government after all). To the people who will argue that Cyprus is currently stealing its citizen, please think about what would have happen to them if there was no way to get a bailout and the banks actually collapsed.

Re: Bitcoin Hits $1 Billion

#154

Post by sashagim »

nadaviv wrote: post #152
alyx wrote: post #135

Is nobody else here bothered by the following statement? It's on the first page, last sentence of the original paper on Bitcoins... "The system is secure as long as honest nodes collectively control more CPU power than any cooperating group of attacker nodes." [1] [1] http://bitcoin.org/bitcoin.pdf

No. If someone does manage to control 51% of the computing power of Bitcoin, he's much better off using that to mine bitcoins rather than "cheating". If he'll use it to cheat, he'll cause panic, make bitcoin drop their value and undermine the source of his own potential wealth. It'll be much better for him to play fair and just gain (a lot, with that much computing power) wealth by mining.

That's true only if you assume the motivation is purely financial.

Re: Bitcoin Hits $1 Billion

#155

Post by dragontamer »

cookiecaper wrote: post #140
dragontamer wrote: post #132

Earlier quoted context omitted.

Or... you know... Gold. That other currency that has transcended governments?

Gold is not really practical for modern commerce without first converting it into an alternate currency (passthroughs in dollars, for instance) or trusting a third-party. Bitcoin can be traded really easily, no conversion or trusted intermediary (unless you count the btc swarm) necessary.

Unless you want instantaneous transfers. Which requires you to use either a Bitcoin Bank (ie: Flexcoins), or an intermediate trusted 3rd party (Green address).

Which is the entire point of this thread of discussion. People are not liking the restrictions on Bitcoin (ie: wait X number of hashes before the transaction is complete), and are recreating "alternative currencies" for Bitcoin. Which to me... seems against the point of the medium.

Re: Bitcoin Hits $1 Billion

#156

Post by erikpukinskis »

drusenko wrote: post #117
WhoIsSatoshi wrote: post #84

Earlier quoted context omitted.

How do you think credit card work? They approve blindly but might later reverse the transaction. You might want to setup a holding period for big transactions, and otherwise setup a system that incurs an expected loss/scam: Visa takes 2-5% of transactions and expects irrecoverable loss in that buffer - a Bitcoin seller still could undercut that with expected petty theft. e.g. under $100 transaction: no waiting. $100-…

That's not how the credit card system works. The merchant first makes an "Authorization" which is a promise by the credit card company to pay the merchant that amount of money within the next 90 days. When they make that promise, they check the customer's account to verify that there are enough funds and then deduct that amount from the available funds. Assuming everything else goes as expected, the merchant then iss…

So, basically what you're saying is:

Bitcoin:

* funds transfer: instant

* fraud vulnerability window: 1 hour

* fraud exposure: reversal of transaction

Credit card:

* funds transfer: 24 hours

* fraud vulnerability window: 60 days

* fraud exposure: reversal of transaction + $25

Re: Bitcoin Hits $1 Billion

#157

Post by nobodysfool »

adestefan wrote: post #134

People keep comparing the "value" of bitcoin against the USD. If bitcoins were a truly useful currency, then there would be no need to value them against another base currency.

People keep comparing the "value" of the Euro against the USD. If Euros were a truly useful currency, then there would be no need to value them against another base currency.

Re: Bitcoin Hits $1 Billion

#158

Post by erikpukinskis »

bitcartel wrote: post #118
cs702 wrote: post #35

As usual on HN, any submission about Bitcoin is met with concerned comments about its high volatility, present impracticality as a currency, disadvantages versus precious metals, current concentration of transactions in a single exchange (MtGox), potential for market manipulation by governments and/or speculators, etc. This is analogous to being present at the creation of the World Wide Web, but instead of getting ex…

What is the potential impact of Bitcoin forking, given that it's trivial[1]? Q1. We can differentiate between fiat currencies by looking at the qualities of the issuing authority, and thus determine that it's better to have savings in Swiss Francs rather than Zimbabwean Dollars. With Bitcoin, Litecoin and other forks, how do we differentiate apart from popularity of the network? Q2. I've heard the argument that Bitco…

> how do we differentiate apart from popularity of the network?

Currencies are all differentiated based on their ability to be spent. Qualities of the "issuing authority" is one measure of that, when there is such an authority. But even for dollars there are other properties: difficulty of counterfit, number of merchants who accept the currency, etc. Merchants in Argentina don't accept dollars because they can pay their taxes in dollars, or because the U.S. government is insuring their accounts. They accept dollars because they can be readily, stably traded for value in their country.

Cryptocurrencies can be spent in places where no other currency can (international transactions, politically sensitive transactions, etc). Transactions can never be reversed. You can store them in your brain. You can keep your bitcoins in your brain while you are imprisoned in Iran, and spend them whenever you are released. These are all aspects of a currency's spending power.

You may think that government deposit insurance, or promise to accept tax payments in a currency, or promises to stabilize prices by issuing debt are the Be All End All of spendability measures, but that's you. There are lots of other concerns people other have.

Re: Bitcoin Hits $1 Billion

#159

Post by cadetzero »

gyom wrote: post #130
cadetzero wrote: post #99

Earlier quoted context omitted.

Oh, this literally happened yesterday. Someone sold off 5k bitcoins (~USD $450k at the time). That's exactly what happened. Big sell off from 95 to 80ish, and then it sprang back to ~$90 today. There's low confidence in it right now, but that's because most players are actual players. They aren't using bitcoins for groceries, like a bank reserve (yet). They're playing them like stocks.

And maybe the 5k seller wasn't even trying to game the system. He/she just wanted to get out. Imagine a hedge fund with an order of magnitude more monetary mass trying to provoke those kind of sell offs and benefit from them.

It totally stands within reason that until it has wide spread adoption and regular people stop caring about what the exact exchange rate is that we will see large runs like that. As I stated, we have several people (myself included) invested to make money and take care of an investment, not to use a daily currency.

Re: Bitcoin Hits $1 Billion

#160

Post by michaelochurch »

I'm going to start calling it ShitCoin. Not because it's a scam and I hate it, but in the sense of "Oh, shit".

(BitCoin is doing well right now because of the Cyprus crisis.)

I have no clue about its directional future, but I can see it being, for the next 10 years, a way of betting against the world-- a distinction that gold used to have.

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