How To Use Bitcoin – The Most Important Creation In The History Of Man

reply to post by MischeviousElf
Oddly enough, it was 'pyramid schemes' that first came to mind whilst reading the article.

Here is the Bitcoins answer to the poinzi Question.

Is Bitcoin a Ponzi scheme? In a Ponzi Scheme, the founders persuade investors that they’ll profit. Bitcoin does not make such a guarantee. There is no central entity, just individuals building an economy. A ponzi scheme is a zero sum game. Early adopters can only profit at the expense of late adopters. Bitcoin has possible win-win outcomes. Early adopters profit from the rise in value. Late adopters profit from the usefulness of a stable and widely accepted p2p currency. The fact that early adopters benefit more doesn't alone make anything a ponzi scheme. Apple stocks aren't ponzi even though the early investors got rich.

Long explanation and replies in the bitcoin forum.

forum.bitcoin.org...

Originally posted by Crakeur
reply to post by mnemeth1

 

while you stock up on bitcoin, who's lobbying people in the real world to utilize this form of currency?
might as well go to the supermarket with a laptop and show them how much plat you have in the WoW bank.

No one has to lobby anyone.

Bitcoins have real value in the real world.

I can trade my coins for dollars and vice versa.

Because they are a stable medium of exchange that enough people already recognize, they have value right now. Bitcoins have value as a currency for the exact same reasons why gold has value as a currency.

Lobbying is not necessary. As the dollar continues its decline into inflationary obscurity, people will naturally look for a stable medium of exchange. Bitcoin, by my reckoning, is the most superior currency ever created.

reply to post by mnemeth1


The only thing that gets me about bitcoins is the way they can be totally lost forever. If somehow you dont back up your wallet or something like that. Supposedly they are lost forever and noone can ever use them again. Doesn't that seem like it could be a problem especially with a finite resource?

Originally posted by mayabong
reply to post by mnemeth1

 

The only thing that gets me about bitcoins is the way they can be totally lost forever. If somehow you dont back up your wallet or something like that. Supposedly they are lost forever and noone can ever use them again. Doesn't that seem like it could be a problem especially with a finite resource?

Not really.

Consider that almost all the gold ever mined is still in circulation. Almost none of it has been lost.

But lets say that over time, wayyyyyyyyy in the distant future, 99.9% of coins have been lost due to files being corrupted or deleted.

As long as a single fraction of a fraction of a fraction... etc.. of a single bitcoin still remains, the markets will continue on.

Bitcoins are infinitely divisible.

In the future, bitcoins will be bought and sold as .01 coins, then as .001 coins, then as .00000000001 coins, etc.. etc.. etc..

reply to post by mnemeth1


Very interesting though, I need to wrap my head around it. Just got my first 10 bitcoins sent to me about 5 minutes ago.

I do think it's possible that this might even be part of some sort of official test for a new sort of world currency. Even if it wasn't from the get go, it will be watched and studied, and could significantly contribute to such a project.

Ultimately, cheating on your taxes is cheating on your taxes. Given the world economy now, I don't see them shutting anything down that could potentially be a boon to commercial activity at the level of the ordinary citizen. At least, they wouldn't squash it right away. But my point is, that commercial activity generates tax revenue. Lots of people will still want to take their bitcoins and turn them into cash they can put in bank accounts, etc, and thus need to keep it all (or mostly) above board.

Here's one thing though, if this model does continue to be successful, nothing is stopping anybody from copying it.

As in...there could be bitcoin clones. Bitcoin2, Botcoin, Betcoin, lolcoin, etc..all based on the same sort or even exactly the same code.

Also, worse for bitcoin and bitcoin holders, there could be rivals that start as copycats but which offer significant improvements to the overall model. They would be improvements partly based on watching how bitcoin itself plays out. It doesn't seem to me like it'd be easy for bitcoin to make significant changes to their protocols.

The flexibility for some types of changes are built in to their protocols, like how difficult it is to make new bitcoins, but beyond that, I'm really not sure at this point how they could adapt.

Originally posted by MischeviousElf
In addition to that there is no way you can ever actually "cash in" as such your bit coins, dependent on the internet as well, that includes state and government controls.

...

Also there is the possibility of people "creating" there own Coins, which sounds just like the Fed to me! lol anyhow this will inflationise the perceived value.

Do you mean you looked in to it a few weeks ago when the Forbes story came out, or about a year ago?

If you looked into it a few weeks ago, you missed that a bunch of exchanges exist and you can currently sell a bit coin for ~$9 as I write this.

mtgox.com...
bitcoincharts.com...

If you looked into it like a year ago and passed...you had the opportunity to buy bitcoins for ~$.25, and they were much easier to make/mine as well. I don't think there were any exchanges then, but you could have negotiated a deal on the bitcoin forums.

Overall it's crazy. In mid April it was in the $4 range, and that was unprecedented at the time. Attention and market prices went up together in mid May. There was a dip back to around $5, and then it has gone up mostly since then, with other smaller dips.
...

As for making your own bitcoins...that's built into the system and while it seemed dodgy to me at first, it's part of the strength of the system.

You use your computing power to add to the 'block chain' i.e. you are contributing to the strength of the cryptography for a currency that is backed by cryptography.

They aren't easy to make. Working by yourself, it could take you ~6-12 months even with a fairly new GPU to 'find a block' granting you 50 new bitcoins. Miners are now mostly working together in 'pools' which 'find blocks' much faster and they divide the rewards proportionately.

For example: swepool.net...

CPU based mining is kind of dead for the time being. GPU aka graphics card mining is where it's at. Generally, nVidia cards are a lot worse than ATI cards for bitcoin mining.

There is a maximum number of bitcoins. At the current rate of progress, all 29 million bitcoins will have been created in another ~5.6 years. I'd expect that progress rate to increase though. There was a major spike around the time of the Forbes story in ~mid May.

But what I should really have just written was to say just check the bitcoin wiki for anything you want to know:

en.bitcoin.it...

reply to post by 11andrew34


I don't think it is a test for a world currency.

It is a world currency.

One that was put together by sane logical rational software developers who aren't bankers or politicians.

reply to post by mnemeth1


Isn't Bitcoin only limited to 2 decimal places today?

So who gets to keep all the real money that people are paying for bitcoins?

It sounds a lot like a scam to me. Correct me if I'm wrong here. It really looks like someone's getting real money to supply you with pretend money that you can spend, but only with other people who also pretend that this money has value. What's to prevent the bitcoin guy from disappearing to a tropical island with everybody's money, leaving you with bitcoins that nobady will buy from you?

reply to post by subject x


There is no bitcoin guy, the bitcoins are created by people mining and creating the currency. The coins are randomly distributed from what I understand.

You can sell them on the market just like you would any other currency.

I don't think its a scam at all, I think its very well thought out.

Originally posted by mayabong
reply to post by mnemeth1

 

Isn't Bitcoin only limited to 2 decimal places today?

It is an infinitely divisible currency.

It's traded in two decimal points, but it has no limitations on how divisible it is.

It's still a ways off from needing to be more divisible anyways. An open source community can easily alter the way it is presented in the future if they so desire. If they do change how it is displayed, it makes no difference to the underlying hash codes. No new coins would be created in the process.

I don't think most people understand the ramifications of this.

I think they will come around when people start seeing ebay sales accepting payment in bitcoins instead of dollars.

Originally posted by Crakeur
reply to post by mnemeth1

 

while you stock up on bitcoin, who's lobbying people in the real world to utilize this form of currency?
might as well go to the supermarket with a laptop and show them how much plat you have in the WoW bank.

Alas, or paying cash for the WOW gold..

Your paying spending real money for fake cash to spend in a fake world..

Seems silly...

Originally posted by hillynilly

Originally posted by Crakeur
reply to post by mnemeth1

 

while you stock up on bitcoin, who's lobbying people in the real world to utilize this form of currency?
might as well go to the supermarket with a laptop and show them how much plat you have in the WoW bank.

Alas, or paying cash for the WOW gold..

Your paying spending real money for fake cash to spend in a fake world..

Seems silly...

edit on 1-6-2011 by hillynilly because: (no reason given)

Well if you read the article, you'll see that you can spend real money (bitcoins) for real goods (t shirts) in the real world.

The dollar is the fraud, not bitcoins.

Originally posted by subject x
So who gets to keep all the real money that people are paying for bitcoins?

sounds like the geniuses who created the exchanges where you can buy internet money with real money.

oddly enough, I read an article on gizmodo today about a site that sells contraband and the currency used is bitcoins. The article talked a bit about the currency and I did a bit of reading on it and, to me, it sounds like plat farming in a real economy. Think about it - in online games that have tradeable currency (EQ, Wow etc), there are people who work their tails off earning that platinum and then they offload it to lazy gamers who have real money to spend.

The only difference here is that, instead of buying +3 nerdblocking cape of troll skin, you're buying an actual product.

As mentioned, the product I saw being sold was an illegal one. I'm sure there are sites that will accept fantasyland money too but, in order to get them, you need to purchase the coins. It's an added step in commerce and, in the global lazy, ever widening derreire world we live in, I can't see how having to buy something in order to buy something is worth the effort. If a site was selling widgets for $5 bitcoins or $50 cash, and 1 bitcoin cost less than $10, sure, it might be worth it. I'm guessing this is more a means of getting around the various credit card transaction fees that merchants are hit with when they try and sell things in the real world.

That and the lack of a paper trail for the contraband.

what legit merchants actually take these things? Do they also take pogs and magic the gathering cards? can I trade my old happy days trading cards for bitcoins?

thought I'd add this little question to the mix:

for those of you who are touting this as the future of currency, have you ever tried cashing in the bitcoins? trading them in for US dollars or some other useable currency?

I ask because, from time to time, you hear about a stock or a currency that is "flying" and people don't realize that there might not be anyone buying the shares or coins back from you. The Iraqi dinar is one of those con jobs where people were told it would, one day soon, be worth a fortune, but nobody's buying it.

I had a stock that was very similar to this. I bought it for pennies, it went up to a buck or something and when I went to sell it, there wasn't a buyer out there to take the shares off my hands.

reply to post by Crakeur


The exchanges operate on a two way street. The exchanges don't actually have bitcoins of their own. Thus, if you are buying bitcoins from someone, then someone else must be willing to sell them to you.

The inverse is obviously true. If someone can sell them to you for dollars, you can sell them to someone else for dollars.

While it is true that only a few merchants are accepting bitcoins at this time, there is still a large currency market for the coins. That market is only going to grow over time as more people come to realize the benefits of a currency that can't be inflated by bankers.

All currencies can experience swings in value, but with bitcoins you can be sure that those value swings are not due to futures speculation, since the future quantity of existing coins is already known.

The value of the coins has been steadily appreciating since their release.

reply to post by Crakeur


theres actually someone selling bitcoins on ebay with quite a few bids

reply to post by Crakeur


Exactly.

Also as a currency it needs something to Back it, you know a few hundred million birth certificates, to enslave you to taxes for life, or an Army.

This is what creates the stability.

The Volatility of this will be huge, and if it is say $100 a bitcoin, it crashes evil as they are there is no "central Bank" to bailout, stabilize or whatever.

And as you rightly say at that point there is no buyers for it, at what you paid and there is the Ponzi.

This will make serious investors very cautious.

There is money to be made on it, people have, but its too concentrated, spread to thinly, to emotional/perceived value driven, with no stability and an finite amount.

Great for whats its used for. Not for much else.

Kind Regards,

Elf