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I Spent A Coin (And I Liked It) — How I Bought Lunch in Manhattan with Bitcoins

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Re: I Spent A Coin (And I Liked It) — How I Bought Lunch in Manhattan with Bitcoins

#41

Post by ars »

jasonzemos wrote: post #39
ars wrote: post #33

Earlier quoted context omitted.

> Economic issues (deflation) This is actually a pretty serious problem. The value of bitcoins always settles such that the cost of the electricity to make them is approximately their value. But because the difficulty is adjusted such that a fixed number of bitcoins are generated per time (meaning faster or more efficient computers don't help), and that the number generated per unit time is constantly shrinking, it w…

I don't see how this is a problem. There will only be 21 coins in existence and their cost per generation (hence their intrinsic value) will rise up until that last coin is generated. At that point coins will just be subdivided many more times -- nobody will wield around an entire coin on a day to day basis the same way most people don't carry around a roll of $100 bills. Remember coins can be divided down to the 8th…

Look up deflation, and in particular Deflationary spiral.

Re: I Spent A Coin (And I Liked It) — How I Bought Lunch in Manhattan with Bitcoins

#42

Post by ars »

wedesoft wrote: post #36
ars wrote: post #33

Earlier quoted context omitted.

> Economic issues (deflation) This is actually a pretty serious problem. The value of bitcoins always settles such that the cost of the electricity to make them is approximately their value. But because the difficulty is adjusted such that a fixed number of bitcoins are generated per time (meaning faster or more efficient computers don't help), and that the number generated per unit time is constantly shrinking, it w…

The cost of electricity per Bitcoin in turn depends on the computing power invested in the network. The strength of the next block is adjusted so that it takes approximately 10 minutes for the network to solve it. Also there are optional transaction fees.

Right, that's what I'm saying: As more people join the network it becomes uneconomic to mine bitcoins, because since it's harder now, it costs too much electricity. So those with the least efficient setups stop mining.

So the price settles at the cost of electricity.

Then they reduce the number of coins per block. So suddenly it comes even less worth it to mine. Until the value of each bitcoin rises to match, causing people to want to mine again.

If the value of each bitcoin did not rise, no one at all would mine and the network would grind to a halt (no confirmed transactions).

Unless they have a mechanism to reduce the difficulty factor at that point. I'm not sure on that point.

Re: I Spent A Coin (And I Liked It) — How I Bought Lunch in Manhattan with Bitcoins

#43

Post by csomar »

patrickg wrote: post #8
c4urself wrote: post #2

There's a lot to like about BitCoin. They "just" need to solve the following: 1. Technical issues (make it more secure) 2. Economic issues (deflation) 3. "Competitor" issues (governments, banks, the powerful status quo)

4) Legislative issues. For example Germany (I'd bet) would not accept bitcoins in one's tax form ("I have to pay 345.67 bit coins of taxes to the state"). And if you have income in a non approved currency, you get into some trouble.

If you consider it as a commodity, it would be no different than Gold or Oil.

Re: I Spent A Coin (And I Liked It) — How I Bought Lunch in Manhattan with Bitcoins

#44

Post by halostatue »

dools wrote: post #22
ars wrote: post #10

The most important by far rule for currency is stability. With stability comes acceptance of the currency. You don't have that - the owner first looked up the exchange rate to US dollars. What you have is a medium of exchange, but you don't have a currency. A medium of exchange is useful, and can eventually become a currency. But bitcoins are not yet a currency. Perhaps someone can make a bank, where you store US dol…

Does that mean that the Euro is not a real currency? Or that the US dollar isn't real in Canada?

After a fashion, yes. Just because a merchant accepts a non-native currency (such as USD instead of CAD) doesn't mean that the non-native currency is inherently valuable in the native country. The merchant can't remit taxes in USD; can't pay her employees in USD. It must all be converted back to CAD before the merchant can do anything useful with it.

Don't mistake what is offered as a convenience by some merchants as normal and accepted.

Re: I Spent A Coin (And I Liked It) — How I Bought Lunch in Manhattan with Bitcoins

#45

Post by discover »

jasonzemos wrote: post #40
discover wrote: post #17

Earlier quoted context omitted.

http://nerdr.com/shutting-down-bitcoin-really-taking-down-th... I'll add that the crypto will one day be broken (even brute force will eventually work once CPU/GPU have progressed far enough). And when it is, there is no reason you couldn't just sit back cracking those wallets in secret before funneling the coins your way. A significant weakness of the anonymity of the network means no one really "owns" a wallet in t…

You're right that sha256 will one day be in jeopardy, but there's no reason why the system can't update itself well before then. If sha256 is broken, all it takes is for people to update their clients and only start accepting sha3, etc.

Previously, breaking a crypto was nice, but not instantly and anonymously profitable as it is with Bitcoin. It will be interesting to see how it plays out when it happens.

Re: I Spent A Coin (And I Liked It) — How I Bought Lunch in Manhattan with Bitcoins

#46

Post by csomar »

I really wander what if a country legalizes bitcoins. A small/poor country with less than 1 million inhabitants. Bitcoin supporters will found a great base where to make transactions legally and build bitcoin related start-ups without fear. All transactions take place in that country banks and then forward to the bank of choice of the company/person/start-up.

Think of that country as a legal bridge to using/trading bitcoin. They can charge a small fee for doing it (say 3%). If the economy of bitcoins grows at a multi-national scale making around 1 billion USD in daily transactions, this will bring a $10.5bn income for that country, assuming the number of its inhabitants to 1 million, that's $10K per capita. It could save it from poverty and may be in the future makes it one of the richest.

Just few thoughts...

Re: I Spent A Coin (And I Liked It) — How I Bought Lunch in Manhattan with Bitcoins

#47

Post by meow »

csomar wrote: post #46

I really wander what if a country legalizes bitcoins. A small/poor country with less than 1 million inhabitants. Bitcoin supporters will found a great base where to make transactions legally and build bitcoin related start-ups without fear. All transactions take place in that country banks and then forward to the bank of choice of the company/person/start-up. Think of that country as a legal bridge to using/trading b…

On the other hand, that country might lose tax money - assuming that it encourages bitcoins internally. Of course, if the country is really poor they may not be collecting much tax income to start with.

Re: I Spent A Coin (And I Liked It) — How I Bought Lunch in Manhattan with Bitcoins

#48

Post by mike_esspe »

jalada wrote: post #19
guelo wrote: post #18

If bitcoin was a currency the meal would have been denominated in bitcoins not dollars. Bitcoin is an asset like gold or a stock certificate, not a currency.

No, only because Bitcoin isn't stable enough right now to know what the price should've been in BTC.

That is not the problem of stability, that is because the restaurant is paying in USD to their contractors.

This should change in the future.

Re: I Spent A Coin (And I Liked It) — How I Bought Lunch in Manhattan with Bitcoins

#49

Post by ralfd »

stuhood wrote: post #7
retube wrote: post #5

It seems that bank accounts are public: https://blockexplorer.com/address/1MTbKpYWnzqmsLvCjdTtwrvuX8... Why is this?

This is why people say Bitcoin is pseudonymous: the entire transaction history of every Bitcoin is public knowledge. To achieve actual anonymity, receivers need to use a one-time-address for each sender, and senders need to not leak information about which addresses they own. https://en.bitcoin.it/wiki/Anonymity

Imagine all the money exchange and circulation of the world economy. 7 billion people. If hypothetically Bitcoin would be the "world currency" how much data (which is never deleted) would that generate per day? What data will amassed in 10 years?

I wonder how that will hard limit the system...? I have no clue about Bitcoin but a quick google search seems to imply that the global history of all transactions is locally saved in the client as "blk0001.dat". Already this database seems to be a few hundred Megabytes big?

Re: I Spent A Coin (And I Liked It) — How I Bought Lunch in Manhattan with Bitcoins

#50

Post by ubernostrum »

drivebyacct2 wrote: post #12
c4urself wrote: post #2

There's a lot to like about BitCoin. They "just" need to solve the following: 1. Technical issues (make it more secure) 2. Economic issues (deflation) 3. "Competitor" issues (governments, banks, the powerful status quo)

I'm curious. Where exactly do you see a security flaw in Bitcoin? Exchanges run by former magic the gathering admins don't count. What flaw is there is there in the security of the currency, I'm curious.

Exchanges run by former magic the gathering admins don't count.

Not sure what's meant by that dig, but worth pointing out that a lot of former (and some current) Magic pros do quite well in financial work. In fact, an eerie number of them seem to graduate from Magic, to poker, to finance.

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