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It says to me that there is a large amount of speculation. As a currency, Bitcoin is basically useless except for illicit transactions (which are usually pretty

by glesica 14y ago

It says to me that there is a large amount of speculation. As a currency, Bitcoin is basically useless except for illicit transactions (which are usually pretty inefficient anyway). Would you use dollars if the value of a dollar could change by hundreds of percentage points in a few months? No one would.

wolfpackk 14y ago
high volatility is natural for all new currencies, as volume continues to increase then volatility will decrease.
- derrida 14y ago
  I was wondering what your reasoning behind this was. Do you have any past examples to support this assertion? Or do you base this position on some prior principles?
eof 14y ago
Well your logic is obviously flawed, because people do use bitcoins for transactions and they have changed by hundreds of percentage points. "No one" is patently false. Besides, illicit transactions are still transactions. And.. you are just plain wrong. Bitcoin is also useful for buying many completely legal things. Including a VPN that can't be linked to your identity. (Illicit you say? What about a journalist in a repressive regime).
- glesica 14y ago
  Illicit plus grey market and a few special cases. Fine, you win the Pedant's Prize for nitpicking. The point is that they don't make a good general-purpose currency. Just because they're awesome for buying drugs and secret VPNs doesn't mean very much in the grand scheme of things (most transactions, at least in the developed world, do not take place in the grey market). Also, just because some people do something doesn't mean that there aren't strong incentives against doing that thing, and doesn't make a statement such as "people don't do that" false. It just means that there are exceptions, but when the exceptions don't affect the point it is common to ignore the exceptions in general conversation.
  - mayneack 14y ago
    Vpns are a gray market? Does not wanting my car searched imply that I have illegal things in it?
    - laumars 14y ago
      Bad analogy as bitcoins wouldn't stop your VPN host from being searched. In fact, if we're completely honest, paying for a VPN with bitcoins doesn't mean your identity is hidden anyway. All it would take is one connection record in one log file and you're exposed.
  - shredfvz 14y ago
    Money is ultimately just a standardized indicator of wealth with no intrinsic value on its own, a definition shared by both USD and BTC. The downside of USD being that it can be counterfeited, illegally by unscrupulous individuals or legally by the Federal Reserve (see: QE Infinity). Regrettably, it's still super common for people to turn up their noses in disgust, claiming "Bitcoin Boogey Man, oh noezzz"! I'm sorry, does the USD somehow not come with a Boogey Man? Because last I checked HSBC was caught with their pants down directly funding terrorism through shady business practices, Bernie Madoff is still in prison for running a giant Ponzi, the illegal narcotics trade is done mostly in USD, plus you have money laundering, and just about every crime conceivable being carried out in USD. But wait, the Bitcoin Boogeyman!!! Everyone come to look! The USD is dirtier than Bitcoin by several orders of magnitude. It's been taking a full out mudbath every day of its life for the past several decades. It's just that the USD is all people know, so they assume it's squeaky clean, because how could it not be squeaky clean??
    - lmm 14y ago
      Even in the presence of QE, the value of the USD remains more-or-less stable. I can go to bed confident that it's not going to cost me $10 to get a loaf of bread tomorrow. Bitcoin isn't and won't be useful to me as a currency until its value is stable.
      - 14y ago
- NickNameNick 14y ago
  You do realize bitcoin is not anonymous... The act of conducting a transaction posts the wallet id's of the participants to the global ledger, and associating wallet id's to real identities is far from impossible.
  - eof 14y ago
    It is nearly impossible if I play satoshi dice with my coins for a while via TOR before spending them, or.. I buy them via cash through localbitcoin.
- bayesianhorse 14y ago
  Bitcoins are almost useless for legal and non-illicit transactions. Paypal is cheaper than bitcoins in these situations, if you account for the astronomical currency risk and thus the premium bitcoin-traders and shops accepting btc have to charge in order to not go out of bussiness in an eyeblink.
  - shredfvz 14y ago
    There's 0% chargeback risk with Bitcoin, and 0% risk of fraud. Counterfeit is impossible. These factors substantially reduce the cost of selling goods and services with Bitcoin.
    - glesica 14y ago
      There's also no way to recover your Bitcoins if they get stolen (as many, many people have discovered already). My credit card on the other hand, can be made whole again with a simple phone call to my bank (YMMV, please no stories about banks being big meanies).
    - illuminate 14y ago
      "There's 0% chargeback risk with Bitcoin" That is problematic for much of what currency is used for. "and 0% risk of fraud" This is completely untrue, because it assumes the motives of both sides of a transaction.
  - pantaril 14y ago
    That's not true. If i'm not mistaken, paypal charges percentage of the ammount recieved to all merchants recieving money. Also, fees are charged for any international transfer and paypal can disable your account and freeze your funds on a whim. On the other hand, i don't know what "astronomical currency risk" are you talking about. Merchants accepting bitcoin are not forced to keep their balance in bitcoins. They can exchange it for dollars or other official currency every hour if they wish so. They are not affected by the volatility of the bitcoin exchange rate as you probably asume.
  - nym 14y ago
    False. I pay my coworker back for lunch with bitcoin.
- lenazegher 14y ago
  >Bitcoin is also useful for buying many completely legal things. Including a VPN that can't be linked to your identity. The "can't be linked to your identity" part depends entirely on how you get your BTC in the first place. If you buy them with cash from a guy on the street who has no idea who you are, fair enough. If you buy them from an exchange by making a deposit from your bank account, the level of anonymity you enjoy depends entirely on how much you trust the exchange. They know your real name and the wallet you used to receive the BTC. If they share this information with anyone, a sufficiently motivated attacker can trace the BTC to their ultimate destination (the wallet of the VPN firm). If you launder the BTC through a few intermediary wallets first, I suppose you might have some plausible deniability, but if you're a journalist in a repressive regime how much is plausible deniability worth?
  - celticninja 14y ago
    Coin mixers exist and can obfuscate the origins of the coins.
rishimoko 14y ago
> Bitcoin is basically useless except for illicit transactions I'd never spend my bitcoins on drugs or gambling. That's what the rapidly devaluing dollar is for. Recall that the US dollar is Narco Currency #1 on the planet. Bitcoins are useful as leverage due to their rapidly expanding (and sometimes deflating) value. I bought my first bitcoins for ~$3 two years ago and held them, even through the first spike and afterwards. I bought more btc at $5-12 as they were floating along last year. I recently traded some of my btc for hard assets, gold and silver. I then sold some of the gold to a friend and bought more bitcoins. Useless? No, Bitcoin is a very useful tool. It's the email of money.
- laumars 14y ago
  > Bitcoin is a very useful tool. It's the email of money. I hope not because email should have been replaced a decade ago (no native end-to-end nor encryption. Node-to-node encryption (eg SSL) isn't standard let along the default, no native support for binary objects and base64 MIME increases files sizes by ~30%, and the mess of plain text and half supported HTML across the plethora of clients make designing mailshots a complete nightmare so there should be some sub-standard of HTML that is both secure and universally supported.
  - yaix 14y ago
    > email should have been replaced a decade ago Like HTTP should have been replaced by AOL, right?
    - laumars 14y ago
      No. And I resent the fact that you couldn't be bothered to read past my first sentence. The e-mail protocol (and I'm talking about the entire stack, from SMTP to the client's handling) is old and really not best suited for the modern way we send documents and modern security concerns. Which was the crux of my point. So I'm not talking about replacing the paradigm nor ownership, just it's the implementation.
  - icebraining 14y ago
kiba 14y ago
According to an unscientific bitcoin community survey, only 9% used bitcoin to purchase narcotics. 53% of uses were for donation.
- turtlepower 14y ago
  And yet 99% of bitcoins in circulation have traces of cocaine on them.
- bayesianhorse 14y ago
  The surprising thing about that survey is that even 9% actually admitted to felonies...
kybernetikos 14y ago
Actually, with modern software bitcoins are among the easiest way to transfer money between people. I load up my phone app, point it at the relevant QR code and the money is transferred securely and quickly, usually with no transaction costs. If I want to receive money, I can just give the person my QR code (or show them on the screen of my phone) and they can give me money just as easily. I have been wishing for my bank to give me this kind of service for a long time, but still no sign of it happening.
- bayesianhorse 14y ago
  Easy, maybe. Cheap, no. The costs associated with the currency risks are huge, and you ignore them at your own peril.
  - kybernetikos 14y ago
    If you buy and hold certainly. While bitcoin is pretty volatile, you can turn dollars into bitcoins and then transfer them or transfer them and turn them into dollars quickly enough that the risk is pretty small. Sure, holding bitcoins is a risky proposition - like holding gold, or anything else of similar volatility.
ankeshk 14y ago
Here is a chart that shows bitcoin trade volume vs transaction volume. It gives a good idea of speculation vs demand. http://blockchain.info/charts/tx-trade-ratio http://blockchain.info/charts/tx-trade-ratio (This article may help in understanding the chart: http://codinginmysleep.com/measuring-bitcoin-speculation/ http://codinginmysleep.com/measuring-bitcoin-speculation/) The chart shows that the rise is not due to an insane rise in speculation.

by glesica 14y ago

wolfpackk 14y ago

high volatility is natural for all new currencies, as volume continues to increase then volatility will decrease.

derrida 14y ago
I was wondering what your reasoning behind this was. Do you have any past examples to support this assertion? Or do you base this position on some prior principles?

eof 14y ago

Well your logic is obviously flawed, because people do use bitcoins for transactions and they have changed by hundreds of percentage points. "No one" is patently false. Besides, illicit transactions are still transactions. And.. you are just plain wrong. Bitcoin is also useful for buying many completely legal things. Including a VPN that can't be linked to your identity. (Illicit you say? What about a journalist in a repressive regime).

glesica 14y ago
Illicit plus grey market and a few special cases. Fine, you win the Pedant's Prize for nitpicking. The point is that they don't make a good general-purpose currency. Just because they're awesome for buying drugs and secret VPNs doesn't mean very much in the grand scheme of things (most transactions, at least in the developed world, do not take place in the grey market). Also, just because some people do something doesn't mean that there aren't strong incentives against doing that thing, and doesn't make a statement such as "people don't do that" false. It just means that there are exceptions, but when the exceptions don't affect the point it is common to ignore the exceptions in general conversation.
- mayneack 14y ago
  Vpns are a gray market? Does not wanting my car searched imply that I have illegal things in it?
  - laumars 14y ago
    Bad analogy as bitcoins wouldn't stop your VPN host from being searched. In fact, if we're completely honest, paying for a VPN with bitcoins doesn't mean your identity is hidden anyway. All it would take is one connection record in one log file and you're exposed.
- shredfvz 14y ago
  Money is ultimately just a standardized indicator of wealth with no intrinsic value on its own, a definition shared by both USD and BTC. The downside of USD being that it can be counterfeited, illegally by unscrupulous individuals or legally by the Federal Reserve (see: QE Infinity). Regrettably, it's still super common for people to turn up their noses in disgust, claiming "Bitcoin Boogey Man, oh noezzz"! I'm sorry, does the USD somehow not come with a Boogey Man? Because last I checked HSBC was caught with their pants down directly funding terrorism through shady business practices, Bernie Madoff is still in prison for running a giant Ponzi, the illegal narcotics trade is done mostly in USD, plus you have money laundering, and just about every crime conceivable being carried out in USD. But wait, the Bitcoin Boogeyman!!! Everyone come to look! The USD is dirtier than Bitcoin by several orders of magnitude. It's been taking a full out mudbath every day of its life for the past several decades. It's just that the USD is all people know, so they assume it's squeaky clean, because how could it not be squeaky clean??
  - lmm 14y ago
    Even in the presence of QE, the value of the USD remains more-or-less stable. I can go to bed confident that it's not going to cost me $10 to get a loaf of bread tomorrow. Bitcoin isn't and won't be useful to me as a currency until its value is stable.
    - 14y ago
NickNameNick 14y ago
You do realize bitcoin is not anonymous... The act of conducting a transaction posts the wallet id's of the participants to the global ledger, and associating wallet id's to real identities is far from impossible.
- eof 14y ago
  It is nearly impossible if I play satoshi dice with my coins for a while via TOR before spending them, or.. I buy them via cash through localbitcoin.
bayesianhorse 14y ago
Bitcoins are almost useless for legal and non-illicit transactions. Paypal is cheaper than bitcoins in these situations, if you account for the astronomical currency risk and thus the premium bitcoin-traders and shops accepting btc have to charge in order to not go out of bussiness in an eyeblink.
- shredfvz 14y ago
  There's 0% chargeback risk with Bitcoin, and 0% risk of fraud. Counterfeit is impossible. These factors substantially reduce the cost of selling goods and services with Bitcoin.
  - glesica 14y ago
    There's also no way to recover your Bitcoins if they get stolen (as many, many people have discovered already). My credit card on the other hand, can be made whole again with a simple phone call to my bank (YMMV, please no stories about banks being big meanies).
  - illuminate 14y ago
    "There's 0% chargeback risk with Bitcoin" That is problematic for much of what currency is used for. "and 0% risk of fraud" This is completely untrue, because it assumes the motives of both sides of a transaction.
- pantaril 14y ago
  That's not true. If i'm not mistaken, paypal charges percentage of the ammount recieved to all merchants recieving money. Also, fees are charged for any international transfer and paypal can disable your account and freeze your funds on a whim. On the other hand, i don't know what "astronomical currency risk" are you talking about. Merchants accepting bitcoin are not forced to keep their balance in bitcoins. They can exchange it for dollars or other official currency every hour if they wish so. They are not affected by the volatility of the bitcoin exchange rate as you probably asume.
- nym 14y ago
  False. I pay my coworker back for lunch with bitcoin.
lenazegher 14y ago
>Bitcoin is also useful for buying many completely legal things. Including a VPN that can't be linked to your identity. The "can't be linked to your identity" part depends entirely on how you get your BTC in the first place. If you buy them with cash from a guy on the street who has no idea who you are, fair enough. If you buy them from an exchange by making a deposit from your bank account, the level of anonymity you enjoy depends entirely on how much you trust the exchange. They know your real name and the wallet you used to receive the BTC. If they share this information with anyone, a sufficiently motivated attacker can trace the BTC to their ultimate destination (the wallet of the VPN firm). If you launder the BTC through a few intermediary wallets first, I suppose you might have some plausible deniability, but if you're a journalist in a repressive regime how much is plausible deniability worth?
- celticninja 14y ago
  Coin mixers exist and can obfuscate the origins of the coins.

rishimoko 14y ago

> Bitcoin is basically useless except for illicit transactions I'd never spend my bitcoins on drugs or gambling. That's what the rapidly devaluing dollar is for. Recall that the US dollar is Narco Currency #1 on the planet. Bitcoins are useful as leverage due to their rapidly expanding (and sometimes deflating) value. I bought my first bitcoins for ~$3 two years ago and held them, even through the first spike and afterwards. I bought more btc at $5-12 as they were floating along last year. I recently traded some of my btc for hard assets, gold and silver. I then sold some of the gold to a friend and bought more bitcoins. Useless? No, Bitcoin is a very useful tool. It's the email of money.

laumars 14y ago
> Bitcoin is a very useful tool. It's the email of money. I hope not because email should have been replaced a decade ago (no native end-to-end nor encryption. Node-to-node encryption (eg SSL) isn't standard let along the default, no native support for binary objects and base64 MIME increases files sizes by ~30%, and the mess of plain text and half supported HTML across the plethora of clients make designing mailshots a complete nightmare so there should be some sub-standard of HTML that is both secure and universally supported.
- yaix 14y ago
  > email should have been replaced a decade ago Like HTTP should have been replaced by AOL, right?
  - laumars 14y ago
    No. And I resent the fact that you couldn't be bothered to read past my first sentence. The e-mail protocol (and I'm talking about the entire stack, from SMTP to the client's handling) is old and really not best suited for the modern way we send documents and modern security concerns. Which was the crux of my point. So I'm not talking about replacing the paradigm nor ownership, just it's the implementation.
- icebraining 14y ago

kiba 14y ago

According to an unscientific bitcoin community survey, only 9% used bitcoin to purchase narcotics. 53% of uses were for donation.

turtlepower 14y ago
And yet 99% of bitcoins in circulation have traces of cocaine on them.
bayesianhorse 14y ago
The surprising thing about that survey is that even 9% actually admitted to felonies...

kybernetikos 14y ago

Actually, with modern software bitcoins are among the easiest way to transfer money between people. I load up my phone app, point it at the relevant QR code and the money is transferred securely and quickly, usually with no transaction costs. If I want to receive money, I can just give the person my QR code (or show them on the screen of my phone) and they can give me money just as easily. I have been wishing for my bank to give me this kind of service for a long time, but still no sign of it happening.

bayesianhorse 14y ago
Easy, maybe. Cheap, no. The costs associated with the currency risks are huge, and you ignore them at your own peril.
- kybernetikos 14y ago
  If you buy and hold certainly. While bitcoin is pretty volatile, you can turn dollars into bitcoins and then transfer them or transfer them and turn them into dollars quickly enough that the risk is pretty small. Sure, holding bitcoins is a risky proposition - like holding gold, or anything else of similar volatility.

ankeshk 14y ago

Here is a chart that shows bitcoin trade volume vs transaction volume. It gives a good idea of speculation vs demand. http://blockchain.info/charts/tx-trade-ratio http://blockchain.info/charts/tx-trade-ratio (This article may help in understanding the chart: http://codinginmysleep.com/measuring-bitcoin-speculation/ http://codinginmysleep.com/measuring-bitcoin-speculation/) The chart shows that the rise is not due to an insane rise in speculation.