Bitcoin - Peer to Peer currency

[Tim_54321]

Seems like the idea has a lot of potential. Thoughts?

http://launch.is/blog/l019-bitcoin-p2p-currency-the-most-dangerous-project-weve-ev.html

 

[disarray]

Re: Bitcoins - Peer to Peer currency

yeah there's been a fair bit of chatter recently about the "deep web" and bitcoins are a common unit of currency there. drug dealers, hit men, pedos and all sorts of people are carving out their little niche among the seas of information available on the private web. it's pretty interesting but there's a lot of tinfoil hattery surrounding it.

basically you go to the tor project, get it setup in firefox then head on over to the hidden wiki and start from there. tinfoil hats aside, it is highly recommended you DO NOT start playing with this part of the internet with your personal banking / work computer, instead set up a virtual machine using VMWare player so if / when your pc gets hijacked you can just nuke it and start again.

 

[Tyler Durden]

Re: Bitcoins - Peer to Peer currency

Interesting. If one were interested in investing in something related to bitcoin, I wonder what opportunities there are out there? I mean, are there any companies on the ASX doing bitcoins?

 

[So_Cynical]

Re: Bitcoins - Peer to Peer currency

I've had a little Bitcoin logo in my avatar since joining the BC community back in January back when 1 BC was only worth around $0.80 USD after spending a couple of weeks getting all excited and doing due diligence i decided not to put any real money into this fledgling virtual currency because i really doubted the longevity of it...still do.

Anyway now the BC/USD exchange rate is 1 for 8.5 and the currency has been totally over run by speculators and USD haters....seriously have a look at the BC/USD 6 months chart.

Pretty amazing stuff.

http://bitcoincharts.com/markets/
~

 

[moXJO]

Re: Bitcoins - Peer to Peer currency

How do you exchange them for hard cash?

 

[So_Cynical]

Re: Bitcoins - Peer to Peer currency

How do you exchange them for hard cash?

Most trading is done Using MtGox, you have to trade via LR (Liberty Reserve) another type of virtual currency however well established and with some legitimacy...its a very round about way of trading and a bit of a pain in the ass.

To trade BC you would need an LR account to put USD into and take LR out of, you trade the LR for BC and vise versa on the MtGox exchange or one of the other new exchanges....that's how it worked back in Jan/Feb i must admit i haven't been keeping up with all the changes.

Its very much a open currency with no regulation or organisation so change can happen quickly.

• http://www.libertyreserve.com/
• https://mtgox.com/
• https://en.bitcoin.it/wiki/Main_Page

 

[Tyler Durden]

Re: Bitcoins - Peer to Peer currency

What I still don't understand after reading that web page is why would anyone consider this to be worth anything?

 

[moXJO]

Re: Bitcoins - Peer to Peer currency

Most trading is done Using MtGox, you have to trade via LR (Liberty Reserve) another type of virtual currency however well established and with some legitimacy...its a very round about way of trading and a bit of a pain in the ass.

To trade BC you would need an LR account to put USD into and take LR out of, you trade the LR for BC and vise versa on the MtGox exchange or one of the other new exchanges....that's how it worked back in Jan/Feb i must admit i haven't been keeping up with all the changes.

Its very much a open currency with no regulation or organisation so change can happen quickly.

• http://www.libertyreserve.com/
• https://mtgox.com/
• https://en.bitcoin.it/wiki/Main_Page

It's an interesting idea but I suppose at the end of the day if you convert it back to hard cash you still have to explain to the ATO where the stack of cash came from. Otherwise it's a bit like a form of bartering. Suppose it has potential for the online community though.
Jees you get around So_cyn you seem to have had a dabble in everything.

 

[Tim_54321]

Re: Bitcoins - Peer to Peer currency

What I still don't understand after reading that web page is why would anyone consider this to be worth anything?

Why is fiat currency worth anything? All it is is a bit of paper? I'd rather have bitcoins than USD where politicians and bankers are destroying the currency.

There will only ever be 21 Bitcoins. ATM there are around 6 million bitcoins in existence so the value of all bitcoins in existence is only around 50 million despite them trading at 8USD each, in the scheme of things they are very scarce. If everyone in Australia wanted a bitcoin right now there would only be enough for ~.25 each.

If you think of how many countless billion there are floating around the world not much needs to go into bitcoin for the price to continue to rise.

I am in no way affiliated with them, but I have bought coins from https://bitpiggy.com/ and it went fine for those wondering how to buy them from Australia.

 

[Tim_54321]

Re: Bitcoins - Peer to Peer currency

Interesting. If one were interested in investing in something related to bitcoin, I wonder what opportunities there are out there? I mean, are there any companies on the ASX doing bitcoins?

Why not just buy bitcoins? I think most things related to bitcoin at the moment are private enterprises.

 

[tothemax6]

Re: Bitcoins - Peer to Peer currency

Ive got some monopoly money if someone wants to take that as payment. There's only a fixed amount of my special monopoly money (about one board games worth + some gold ink to write 'special' on them), so they're rare you know.

 

[skc]

Re: Bitcoins - Peer to Peer currency

Why is fiat currency worth anything? All it is is a bit of paper? I'd rather have bitcoins than USD where politicians and bankers are destroying the currency.

There will only ever be 21 Bitcoins. ATM there are around 6 million bitcoins in existence so the value of all bitcoins in existence is only around 50 million despite them trading at 8USD each, in the scheme of things they are very scarce. If everyone in Australia wanted a bitcoin right now there would only be enough for ~.25 each.

If you think of how many countless billion there are floating around the world not much needs to go into bitcoin for the price to continue to rise.

I am in no way affiliated with them, but I have bought coins from https://bitpiggy.com/ and it went fine for those wondering how to buy them from Australia.

I think bitcoin will fail pretty quickly.

Supporters of bitcoin say that it works just like fiat money, but its supply is limited by the 21m cap, whereas governments can print money that reduces the value of the fiat currency.

That is true but is missing the big picture. The supposed 21m bitcoin cap doesn't actually offer any real protection. Sure, bitcoin itself will not create any more dollars, but what is stopping any other imitators starting the same thing?

Yes, government prints money that devalues the currency. But what is important to remember is that government is the only one who can print more money. With e-currency, anyone can print more money! And that's supposed to offer better protection than government fiat money? There are no regulations or authorities involved. I bet you there are hundreds of programmers out there testing beta of their own currencies already.

Gold holds its value because it has a finite supply and cannot be 'printed'. If you and I can create gold out of thin air, what would be the value of gold be?

The higher the value of bitcoin, the faster and better the competitors will be. The seed of Bitcoin's failure is planted at the very moment it becomes successful.

Now if only I can short bitcoin - the chart is looking like a classic bubble.

 

[Tim_54321]

Re: Bitcoins - Peer to Peer currency

I think bitcoin will fail pretty quickly.

Supporters of bitcoin say that it works just like fiat money, but its supply is limited by the 21m cap, whereas governments can print money that reduces the value of the fiat currency.

That is true but is missing the big picture. The supposed 21m bitcoin cap doesn't actually offer any real protection. Sure, bitcoin itself will not create any more dollars, but what is stopping any other imitators starting the same thing?

Yes, government prints money that devalues the currency. But what is important to remember is that government is the only one who can print more money. With e-currency, anyone can print more money! And that's supposed to offer better protection than government fiat money? There are no regulations or authorities involved. I bet you there are hundreds of programmers out there testing beta of their own currencies already.

Gold holds its value because it has a finite supply and cannot be 'printed'. If you and I can create gold out of thin air, what would be the value of gold be?

The higher the value of bitcoin, the faster and better the competitors will be. The seed of Bitcoin's failure is planted at the very moment it becomes successful.

Now if only I can short bitcoin - the chart is looking like a classic bubble.

I can see where you are coming from, but I disagree. Your argument seems to consist of 2 points. More can be created out of thin air and a better alternative will come along. More can't be created as I explain below and your if you think a competitor may be better, which it may well be, then you must think the idea has merit?

There is nothing stopping someone starting a competing currency. In fact bitcoin is open source so you could start your own little seperate currency if you wanted. No one would use it unless it provided tangible benefits over the current bitcoin though. If bitcoin fails it may be because of a better alternative crypto currency, but I think it is inevitable that a currency of this type will succeed. Competing currencies of this type may not be a bad thing just like multiple currencies in the real world isn't a bad thing.

It's not the case that anyone can print an e-currency. It has to be an accepted form of exchange, which bitcoin is becoming, before anyone cares. Any currency to rival bitcoin would have to have real advantages over it to be adoapted. Bitcoins can be "mined" until the 21 million is reached, this is analagous to mining gold from the ground untill it has been exhausted and in the case of bitcoin, mining serves to distribute the currency in it's early stages. You can't make more bitcoins after 21 million unless you make a new currency, however each coin has up to 8 decimal places so they can be practically used no matter what their value.

There is the chance it is a bubble and I agree it looks that way from the chart. However, I think the fundamentals of bitcoin are sound and the price is largely a function of the extremely tight supply of bitcoins.

This is an interesting map of the nodes on the bitcoin network. As you can see it's quite widespread. http://maps.google.com/maps?q=https://smsz.net/btcStats/bitcoin.kml

 

[So_Cynical]

Re: Bitcoins - Peer to Peer currency

I think bitcoin will fail pretty quickly.

Supporters of bitcoin say that it works just like fiat money, but its supply is limited by the 21m cap, whereas governments can print money that reduces the value of the fiat currency.

That is true but is missing the big picture. The supposed 21m bitcoin cap doesn't actually offer any real protection. Sure, bitcoin itself will not create any more dollars, but what is stopping any other imitators starting the same thing?

Yes, government prints money that devalues the currency. But what is important to remember is that government is the only one who can print more money. With e-currency, anyone can print more money! And that's supposed to offer better protection than government fiat money? There are no regulations or authorities involved. I bet you there are hundreds of programmers out there testing beta of their own currencies already.

Gold holds its value because it has a finite supply and cannot be 'printed'. If you and I can create gold out of thin air, what would be the value of gold be?

The higher the value of bitcoin, the faster and better the competitors will be. The seed of Bitcoin's failure is planted at the very moment it becomes successful.

Now if only I can short bitcoin - the chart is looking like a classic bubble.

Sure nothing to stop a rival or 10 from starting up...many have preceded BC and many will follow im sure, what makes BC unique is that (i think) it was the first virtual currency to be encrypted with an unbreakable encryption key, just like a serial number on a note, and the very nature of the peer to peer program that creates and tracks BC movements make BC a real pioneer.

Like say IBM, Google, Cisco and Apple are/were pioneers...and that's where some of the allure with BC comes from, the fact that each BC has a unique encryption key and the fact that the software making, tracking and verifying transactions of BC actually lives on the PC's of the people using the currency.

BC has potential and is certainly unique....there's a real flavour of a social currency about it.

 

[Tyler Durden]

Re: Bitcoins - Peer to Peer currency

Why is fiat currency worth anything? All it is is a bit of paper?

Well in theory, it had its origins tied to gold, hence there is a longstanding link with the value that fiat curreny represents (even though it may not be the case today).

But it seems like BC has just come along and said to everyone "we are of value". But why?

 

[skc]

Re: Bitcoins - Peer to Peer currency

I can see where you are coming from, but I disagree. Your argument seems to consist of 2 points. More can be created out of thin air and a better alternative will come along. More can't be created as I explain below and your if you think a competitor may be better, which it may well be, then you must think the idea has merit?

There is nothing stopping someone starting a competing currency. In fact bitcoin is open source so you could start your own little seperate currency if you wanted. No one would use it unless it provided tangible benefits over the current bitcoin though. If bitcoin fails it may be because of a better alternative crypto currency, but I think it is inevitable that a currency of this type will succeed. Competing currencies of this type may not be a bad thing just like multiple currencies in the real world isn't a bad thing.

It's not the case that anyone can print an e-currency. It has to be an accepted form of exchange, which bitcoin is becoming, before anyone cares. Any currency to rival bitcoin would have to have real advantages over it to be adoapted. Bitcoins can be "mined" until the 21 million is reached, this is analagous to mining gold from the ground untill it has been exhausted and in the case of bitcoin, mining serves to distribute the currency in it's early stages. You can't make more bitcoins after 21 million unless you make a new currency, however each coin has up to 8 decimal places so they can be practically used no matter what their value.

Forget about the technology smarts and other practical attributes of bitcoin - those are necessary but not sufficient for it to work - bitcoin can only have value because of 2 critical things. 1. Acceptable form of exchange and 2. Limited supply. Both are currently satisfied and hence bitcoin has value currently - that cannot be disputed.

1 is a bit of a mystery to me. Do you have any information on how bitcoin started as an acceptable form of exchange? At some point in time it made a quantum leap from having no value to having some value. How did that happen? Only then it can become an acceptable form of exchange.

The technology can be replicated no doubt, but can 'acceptability' be imitated as well? If so, the problem isn't just that there is a competitor to bitcoin. The problem is that the second condition for value (i.e. limited supply) will be violated. The 21m cap is useless in this case.

So the real question is...Why can't a different e-currency with the same characteristics become an acceptable form of exchange when bitcoin can? If there is a ironclad reason why not, then I am open to bitcoin having some long term value.

I must say this is very intriguing and is stretching my very limited knowledge in economics... but I am doubting it on the grounds of logic at the moment.

 

[Tim_54321]

Re: Bitcoins - Peer to Peer currency

1 is a bit of a mystery to me. Do you have any information on how bitcoin started as an acceptable form of exchange? At some point in time it made a quantum leap from having no value to having some value. How did that happen? Only then it can become an acceptable form of exchange.

I'm relitively new to bitcoin and only heard about it 3 weeks ago but I guess initially it became an acceptable form of exchange between the community that formed around it's development and grew from there (see this as an example http://forum.bitcoin.org/?topic=137.0) As more people realised the merits of such a currency it spread to the point where it had received a fair bit of (non mainstream) media in the last few months.

I think bitcoin has got enough momentum now that any similar alternative currency would have to be significantly better to gain a foothold and challenge the same 'market' bitcoin has. The fact that it is the first of it's type might be enough to secure the market. Sites and services are springing up around bitcoin and these will serve as the infrastructure that make bitcoin a viable online currency. Once that is in place other competing currencies would have to replicate that to have a chance.

EDIT: also the mining of bitcoins serves to distribute the currency helping it gain a foothold.

 

[Tim_54321]

Re: Bitcoins - Peer to Peer currency

The price of bitcoins has doubled in a week for anyone interested.

 

[So_Cynical]

Re: Bitcoins - Peer to Peer currency

The price of bitcoins has doubled in a week for anyone interested.

LOL its true...1 USD will get you 18.5 BC as im typing, up over 120% in a week if we were in bubble territory last week at 8 BC for 1 USD/LR then this must be double bubble territory.

i really thought that the lack of any genuine need for BC due to the BC economy being almost non existent would stifle demand...the demand and thus exchange rate is being driven by pure speculation, i wish i had thrown 500 bucks at this back in the day.

 

[disarray]

Re: Bitcoins - Peer to Peer currency

informative article HERE from a systems admin who is using his schools pc's as a bitcoin mining farm. explains in simple terms the concepts and processes behind it.

the Mt. Gox Bitcoin Exchange has market rate at US$18.15