16 ms·

Bitcoin rises

227 points by pg 14y ago

waterside81 14y ago
Either a sign of a bubble or a sign of adoption, there's a billboard on the Lawrence Expy in Santa Clara for a restaurant saying it accepts Bitcoin.
kogir 14y ago
Halving day was an interesting test that the community passed, which is really cool. What I look forward to seeing next is how a malicious, distributed hijacking of the block chain is handled once it's profitable to attempt.
- nym 14y ago
  It's already profitable... has been for at least a year now.
  - kogir 14y ago
    I think you underestimate the volatility of bitcoin. Right now there's not enough you can do with them in their native form, and converting them to cash would make make the price crash. I also doubt there's any exchange with enough funds to actually support such a conversion.
    - nym 14y ago
      I don't underestimate the volatility... I watch the price very carefully, and understand how volatile it is. Bitcoins are converted to USD and back to BTC every day. If you were to try to sell ALL the bitcoins in one day that would clear out the order books, and would likely cause a crash and then rally, much like we saw when there was a bug in the blockchain. The price dropped to $37, and quickly went back to the original price due to the demand. The volume of MTGOX-USD is $69M for a 30 day period, which is about $2.3M a day. Source: http://bitcoincharts.com/markets/mtgoxUSD.html http://bitcoincharts.com/markets/mtgoxUSD.html
- tlrobinson 14y ago
  One of the neat things about mining is if you have enough hashing power to execute a 51% attack, you also have enough hashing power to mine a shitton of Bitcoin (50% * 6 blocks/hour * 24 hours * 25 BTC/block * 57 $/BTC = $100,000 per day), which might be more profitable (51% attacks only allow you to double spend what you have, not steal arbitrary Bitcoin), and is certainly far easier and less risky. I'd be more concerned about governments or corporations who want to sabotage Bitcoin, or bugs in the software like we saw last week with the blockchain fork. Right now it would only take a couple million dollars worth of ASICs to overwhelm the current hash rate. That should change as more ASIC manufacturers start shipping.
- rmc 14y ago
  It's kinda scary that important things like this are so up in the air and could have broken massively.
yabbadabbadoo 14y ago
PG - I'm curious what you think about Bitcoin. Care to share?
- nym 14y ago
  PG invested in Coinbase (YC) http://howdoyoubuybitcoins.com/from/coinbase/ http://howdoyoubuybitcoins.com/from/coinbase/ I would love to know how many bitcoins PG personally holds: http://www.quora.com/Paul-Graham/How-many-bitcoins-does-PG-own http://www.quora.com/Paul-Graham/How-many-bitcoins-does-PG-o...
  - pg 14y ago
    None. But I'm very conservative.
    - nym 14y ago
      Thanks for sharing!
    - reaclmbs 14y ago
      Wouldn't a conservative hedge?
      - ajross 14y ago
        Hedge vs. what? The collapse of the entire world financial system and its replacement by .... bitcoin? To be serious: obviously bitcoin can be used as in any investment strategy, including "conservative" ones. You seem to be arguing that a bitcoin position must be part of one, which is kinda insane.
        reaclmbs 14y ago
        I think you're being rude. I am referring to the collapse of financial systems, but not necessarily the replacement by bitcoin. Maybe precious metals, heirloom seeds, or guns?
        14y ago
bozho 14y ago
I was surprised the other day when I was testing the bitcoin integration for a project of mine (here's a how-to: http://techblog.bozho.net/?p=1114 http://techblog.bozho.net/?p=1114), that the price is so high. I bought my bitcoin a couple of months ago at 10 times lower prices, and it was a pleasant surprise.
- mamcx 14y ago
  Unfortunally for us not in USA, be part in the bitcoin stuff is still harder. Can't be buy easily at all..
  - bozho 14y ago
    I'm outside the US and it was no problem. Wire some money to a bank account, get the bitcoin.
miles 14y ago
Out of curiosity: I submitted the exact same link 6 days ago: https://news.ycombinator.com/item?id=5369899 https://news.ycombinator.com/item?id=5369899 How is it possible for the same link to be submitted in such a short time again? Old link: http://www.aljazeera.com/indepth/opinion/2013/03/2013391325331795.html http://www.aljazeera.com/indepth/opinion/2013/03/20133913253... New link: http://www.aljazeera.com/indepth/opinion/2013/03/2013391325331795.html http://www.aljazeera.com/indepth/opinion/2013/03/20133913253...
- niggler 14y ago
  Because it was PG that submitted the new link :)
  - Xcelerate 14y ago
    The person who submits the article affects its votes? That's weird. (Even if it is the founder).
    - andrewtbham 14y ago
      I suspect people follow pg's submission. https://news.ycombinator.com/submitted?id=pg https://news.ycombinator.com/submitted?id=pg
    - jpwagner 14y ago
      Think about all the other factors as well: time of day, day of week...
- SODaniel 14y ago
  Because every time BTC jump 20% the same article will be 'interesting again' due to the large number of Bitcoin owners that frequent HN. CAPITALISM!!
  - deleted 14y ago
    [deleted]
- 14y ago
martythemaniak 14y ago
My problem with BTC (and I say this as a supporter) comes from a pg essay - you make what you measure. The BTC community measures BTC/USD exchange rate so it ends up optimizing for that, but I can't understand how focusing on that is a good thing. It already produced one massive crash and we're in the middle of another one. The actual number (BTC/USD) is mostly irrelevant, but volatility is quite bad for people who actually want to perform transactions with BTC. I hope BTC is able to get over this and continue growing.
- kiba 14y ago
  It already produced one massive crash and we're in the middle of another one. Why do you believe a crash is forthcoming? The actual number (BTC/USD) is mostly irrelevant, Why do you believe it is irrelevant? The market capitalization is only 500 million dollars. Can you imagine operating an entire economy with only 500 million dollars? It's a proxy for adoption, although that is muddled by price speculation and so on. but volatility is quite bad for people who actually want to perform transactions with BTC. I hope BTC is able to get over this and continue growing. The bitcoin economy is very tiny. Google probably makes more money than the entire bitcoin economy in a year several times over. Of course, it's going to be volatile. That's because we are growing. It would be a more legit concern if that the economy is worth 100 billion dollars or a trillion dollars.
  - martythemaniak 14y ago
    1. Because it has jumped 3x in 2 months. Either the bitcoin economy has exploded over the last 2 months or speculators are feeding the hype machine. I see no evidence for former, but plenty of the latter. 2. It is irrelevant because you can use any sub unit down to satoshis to transact. If you want to use BTC as a currency and perform transactions, the exchange rate number is irrelevant, because it doesn't matter if a widget costs 1BTC and the rate is 1 BTC/USD or if the widget costs 1 satoshi and the rate is 10,000,000 USD/BTC. If you're a currency speculator OTOH, yes the rate matters immensely. Which goes back to my point - is BTC there to provide an alternate currency and associated economy, or just an easy way to gamble? 3. You're using the terms "market capitalization" and "economy" interchangeably. The economy implies the size of goods and services produced in the BTC universe - this number is important but seems largely ignored by the BTC community (in fact, it seems to not exist). Market Cap here means # of bitcoins multiplied by the USD exchange rate. This number is closely followed by the BTC community, but is large meaningless. It has spiked 3x in two months, but what has happened to the BTC economy itself? It seems to have grown, but can anyone say definitively?
deleted 14y ago
[deleted]
vinayan3 14y ago
Despite it rising who in the right mind would hold bit-coins besides for speculation? The exchange rates are so variable. As a very risky investment great idea but day to day currency? I suppose it isn't a bad way to pay people abroad and avoid foreign transactions.
- jacoblyles 14y ago
  If you're looking for growth, it's better than the stock market where the deep pockets have already gotten in early and eaten up all the speculative value in promising ventures.
Thiz 14y ago
Bitcoin is here to stay, can't deny that, but I believe e-gold will be the future e-currency if somebody nails it. Buy gold shares with your dollars, use it as e-currency, exchange it for e-goods, merchants sell the shares and get dollars back. I'd invest money in that venture, and money in that currency.
- simcop2387 14y ago
  That's essentially what gold backed currency used to be. It'd be "easy" to do that for bitcoin backed currency right now.
  - Thiz 14y ago
    Gold backed credit cards are flourishing in europe, that got me thinking about internet transactions in gold.
- deleted 14y ago
  [deleted]
- muyuu 14y ago
  The problem with that is... who backs it? it's a radically different concept, not comparable to Bitcoin.
- vbuterin 14y ago
  http://ripple.com http://ripple.com It's a cryptocurrency system that lets you store ANY currency that someone, somewhere is willing to support through it. So far it's just USD, AUD, EUR, CHF, BTC and a few others, but gold and silver are definitely going to appear soon.
- mcantelon 14y ago
  The problem with e-gold is it's hard to verify that the gold exists. This isn't an issue with physical gold or BTC.
- wintersFright 14y ago
  Sounds like a few steps faster than the inevitable death of a gold standard: Gold coins, then bank storage, then gold lending, then gold certificate use, then lending of certificates, then certificates are declared paper money, then overprinted, then gold backing removed…
rockyleal 14y ago
Hey PG, I'm Nicolas Mendoza author of the article. Any comments? Anything you specially liked about it?
rdl 14y ago
I've always liked the idea behind bitcoin (decentralized cryptocurrency), but I think ultimately it will serve the role of "specie gold" with something more useful on top for transactions -- either book-entry accounting at a wallet provider, or ideally some kind of blinded token system. Bitcoin has numerous inherent deficiencies as a transaction system. It's also not a great store of value -- you ultimately want something equivalent to debt or equity in productive enterprises, rather than a commodity, to hold the majority of wealth -- that's the whole point of fractional reserve banking or mutual funds/investment accounts. It may or may not be an ideal unit of account. Right now, USD is undeniably the default unit of account, and even bitcoin vendors tend to price in USD (with the runners up being EUR, JPY, etc.; other fiat nation-state currencies). So, some kind of blinded token system where issuers of blinded tokens hold public amounts of bitcoin, and where the tokens are redeemable upon demand for bitcoin ("specie") would work a lot better than trying to shoehorn transactions into bitcoin directly.
- rmc 14y ago
  Many in the bitcoin industry /community think that fractial reserve banking was a bad idea, and there would have never been the recent banking trouble if all the USD could be converted into gold (just ignore the banking problem when there was a gold based currency and ignore other countries that had banking problems).
  - rdl 14y ago
    There's potentially an argument for a currency itself to not have investment/fractional reserve features, but there is really no viable argument against investment assets existing independent of the currency at all (but denominated in that currency, potentially). Also no sound financial argument for anyone (except those with short term needs or exceptional risk aversion) to store the majority of his wealth in a non-appreciating asset (like currency, even fiat USD) vs. income-bearing assets.
- febeling 14y ago
  I think ultimately it will serve the role of "specie gold" I agree with this. (I don't understand the blinded token idea.) I think it is quite easy to imagine that banking services are build on top of BTC. These would be account receivables against banks, much like current accounts and CDs in USD or EUR work today. The transaction features of bitcoin are amazing, in my opinion, if you compare them with gold bullion. Granted it can take up to hours for a payment to become fully confirmed, but this is the cryptographic specie being transfered from one individual party to the other. It is a lot more direct on this account than even a fast bank transfer, because in that you still only have a receivable against your bank, much like equivalent ones in todays credit system denominating in USD, etc. Plus you have the safety that no-one can inflate much value out of the currency, because it is specie-based. At least not for a very long time. (Unless the "closing of the bitcoin window" trick is pulled again. "Closing of the gold window" was the language the was used euphemistically, when redeemability of USD into gold was ended in 1973.) If you wanted instant transactions, that is just as easy as today, with a lot more pressure on banks to make transfers real-time, because one main business model would be to beat transaction speed. And that has an upper bound of max. a few hours in plain BTC.
jacoblyles 14y ago
The coolest thing I've seen with bitcoin is the reddit bitcointip bot: http://www.reddit.com/r/bitcointip http://www.reddit.com/r/bitcointip The second coolest thing are twitter tip bots. It's amazing what you can do with a digital-native currency. Creating accounts on the fly is as easy as sending an http request to the bitcoind client.
- jacoblyles 14y ago
  I also really like that you don't need login information with sites like Satoshi Dice and bitbet: http://bitbet.us/ http://bitbet.us/ Your sending address is your authentication. So frictionless, so good.
pnathan 14y ago
I find it fascinating watching people's reactions to bitcoin. As near as I can tell from an informal eyeballing, the antipathy to bitcoin is correlated to how mainstream the person is.
- vy8vWJlco 14y ago
  I don't think I'm mainstream at all (anti-social, anti-copyright, my preferred political parties can never seem to get elected, ...) but I can't get behind Bitcoin for a few reasons... The biggest being the pyramid-scheme-like distribution of coins slanted towards early adopters. I want an un-regulatable digital currency too, but I can't get excited about trading one financial plutocracy for another when money is tantamount to voting power. Money is just an IOU; money doesn't need to be scarce (like gold), just enforceable (legal tender). If Bitcoin's enforcebility depends on it's exchange with other currencies that have the power/threat of governments and militaries behind them, what ground has been gained?
bitgossip 14y ago
I have heard from people who have heard, that the government of China is through proxies aggresively buying large amounts of Bitcoins for future strategic advantage. I am not sure at all how accurate those reports are, it is probably just hearsay. But it makes one think.
- rmc 14y ago
  It's probably easier and cheaper for the Chinese government to just mine them. They'd control enough computing power.
  - bitgossip 14y ago
    I don't think so, the number of miners is giant nowadays.
DanielBMarkham 14y ago
In the last couple of months, Bitcoin has passed the phase of "BC is nature's way of teaching economics to nerds" and entered the phase of "BC is natures's way of teaching political power to nerds" Reading through the recent Treasury Department guidance this morning, it looked to me like the U.S. is initially attacking where hard currency comes in and leaves the system -- no matter where in the world that takes place (plug: http://freedom-or-safety.com/blog/the-other-bitcoin-shoe-drops/ http://freedom-or-safety.com/blog/the-other-bitcoin-shoe-dro... ) I imagine they'll leave that decision out there for a while -- months or years -- before they start heavy enforcement. But enforcement is coming. And reading through the AJ link, it looks like BC is beginning to integrate quite nicely into the EU banking system. So now I have an anonymous virtual currency -- that governments can track the movement of. Which might require special licensing, permits, and insurance to broker. Perhaps I'm missing the point here? We're getting to the point where the big boys step in, and my bet is that it's not going to be comfortable for the people who started the whole thing. I expect more "integration" into the traditional banking system, at least until there's no value-add between cash and BC, and then we've reached our starting point. BC becomes nothing more than "collecting sharp sticks" in such a fashion as to be closely monitored by world governments.
- lukasb 14y ago
  Anonymity isn't the only value of Bitcoin. There's also the matter of exchanging money electronically without paying fees to banks, Visa, or Mastercard. Regulation might make transacting Bitcoin more expensive but still leave it cheaper than traditional approaches. I'm not a fan of Bitcoin personally (too much speculation for me to be comfortable using it as a medium of exchange, much less a store of value) but I think people underestimate how badly we're getting screwed by the current payment oligopoly.
  - jacoblyles 14y ago
    This is exactly why I don't like the transaction fee model of funding mining in the long-term, and would prefer a coin with a slowly-growing uncapped money supply.
tvladeck 14y ago
This is why deflation matters: http://en.wikipedia.org/wiki/Capitol_Hill_Babysitting_Co-op http://en.wikipedia.org/wiki/Capitol_Hill_Babysitting_Co-op
wiradikusuma 14y ago
Is this the right time to buy bitcoin for "investment" purpose? (e.g buy now and expect +++ return next year)

227 points by pg 14y ago

Either a sign of a bubble or a sign of adoption, there's a billboard on the Lawrence Expy in Santa Clara for a restaurant saying it accepts Bitcoin.

kogir 14y ago

Halving day was an interesting test that the community passed, which is really cool. What I look forward to seeing next is how a malicious, distributed hijacking of the block chain is handled once it's profitable to attempt.

nym 14y ago
It's already profitable... has been for at least a year now.
- kogir 14y ago
  I think you underestimate the volatility of bitcoin. Right now there's not enough you can do with them in their native form, and converting them to cash would make make the price crash. I also doubt there's any exchange with enough funds to actually support such a conversion.
  - nym 14y ago
    I don't underestimate the volatility... I watch the price very carefully, and understand how volatile it is. Bitcoins are converted to USD and back to BTC every day. If you were to try to sell ALL the bitcoins in one day that would clear out the order books, and would likely cause a crash and then rally, much like we saw when there was a bug in the blockchain. The price dropped to $37, and quickly went back to the original price due to the demand. The volume of MTGOX-USD is $69M for a 30 day period, which is about $2.3M a day. Source: http://bitcoincharts.com/markets/mtgoxUSD.html http://bitcoincharts.com/markets/mtgoxUSD.html
tlrobinson 14y ago
One of the neat things about mining is if you have enough hashing power to execute a 51% attack, you also have enough hashing power to mine a shitton of Bitcoin (50% * 6 blocks/hour * 24 hours * 25 BTC/block * 57 $/BTC = $100,000 per day), which might be more profitable (51% attacks only allow you to double spend what you have, not steal arbitrary Bitcoin), and is certainly far easier and less risky. I'd be more concerned about governments or corporations who want to sabotage Bitcoin, or bugs in the software like we saw last week with the blockchain fork. Right now it would only take a couple million dollars worth of ASICs to overwhelm the current hash rate. That should change as more ASIC manufacturers start shipping.
rmc 14y ago
It's kinda scary that important things like this are so up in the air and could have broken massively.

yabbadabbadoo 14y ago

PG - I'm curious what you think about Bitcoin. Care to share?

nym 14y ago
PG invested in Coinbase (YC) http://howdoyoubuybitcoins.com/from/coinbase/ http://howdoyoubuybitcoins.com/from/coinbase/ I would love to know how many bitcoins PG personally holds: http://www.quora.com/Paul-Graham/How-many-bitcoins-does-PG-own http://www.quora.com/Paul-Graham/How-many-bitcoins-does-PG-o...
- pg 14y ago
  None. But I'm very conservative.
  - nym 14y ago
    Thanks for sharing!
  - reaclmbs 14y ago
    Wouldn't a conservative hedge?
    - ajross 14y ago
      Hedge vs. what? The collapse of the entire world financial system and its replacement by .... bitcoin? To be serious: obviously bitcoin can be used as in any investment strategy, including "conservative" ones. You seem to be arguing that a bitcoin position must be part of one, which is kinda insane.
      - reaclmbs 14y ago
        I think you're being rude. I am referring to the collapse of financial systems, but not necessarily the replacement by bitcoin. Maybe precious metals, heirloom seeds, or guns?
      - 14y ago

bozho 14y ago

I was surprised the other day when I was testing the bitcoin integration for a project of mine (here's a how-to: http://techblog.bozho.net/?p=1114 http://techblog.bozho.net/?p=1114), that the price is so high. I bought my bitcoin a couple of months ago at 10 times lower prices, and it was a pleasant surprise.

mamcx 14y ago
Unfortunally for us not in USA, be part in the bitcoin stuff is still harder. Can't be buy easily at all..
- bozho 14y ago
  I'm outside the US and it was no problem. Wire some money to a bank account, get the bitcoin.

miles 14y ago

Out of curiosity: I submitted the exact same link 6 days ago: https://news.ycombinator.com/item?id=5369899 https://news.ycombinator.com/item?id=5369899 How is it possible for the same link to be submitted in such a short time again? Old link: http://www.aljazeera.com/indepth/opinion/2013/03/2013391325331795.html http://www.aljazeera.com/indepth/opinion/2013/03/20133913253... New link: http://www.aljazeera.com/indepth/opinion/2013/03/2013391325331795.html http://www.aljazeera.com/indepth/opinion/2013/03/20133913253...

niggler 14y ago
Because it was PG that submitted the new link :)
- Xcelerate 14y ago
  The person who submits the article affects its votes? That's weird. (Even if it is the founder).
  - andrewtbham 14y ago
    I suspect people follow pg's submission. https://news.ycombinator.com/submitted?id=pg https://news.ycombinator.com/submitted?id=pg
  - jpwagner 14y ago
    Think about all the other factors as well: time of day, day of week...
SODaniel 14y ago
Because every time BTC jump 20% the same article will be 'interesting again' due to the large number of Bitcoin owners that frequent HN. CAPITALISM!!
- deleted 14y ago
  [deleted]
14y ago

martythemaniak 14y ago

My problem with BTC (and I say this as a supporter) comes from a pg essay - you make what you measure. The BTC community measures BTC/USD exchange rate so it ends up optimizing for that, but I can't understand how focusing on that is a good thing. It already produced one massive crash and we're in the middle of another one. The actual number (BTC/USD) is mostly irrelevant, but volatility is quite bad for people who actually want to perform transactions with BTC. I hope BTC is able to get over this and continue growing.

kiba 14y ago
It already produced one massive crash and we're in the middle of another one. Why do you believe a crash is forthcoming? The actual number (BTC/USD) is mostly irrelevant, Why do you believe it is irrelevant? The market capitalization is only 500 million dollars. Can you imagine operating an entire economy with only 500 million dollars? It's a proxy for adoption, although that is muddled by price speculation and so on. but volatility is quite bad for people who actually want to perform transactions with BTC. I hope BTC is able to get over this and continue growing. The bitcoin economy is very tiny. Google probably makes more money than the entire bitcoin economy in a year several times over. Of course, it's going to be volatile. That's because we are growing. It would be a more legit concern if that the economy is worth 100 billion dollars or a trillion dollars.
- martythemaniak 14y ago
  1. Because it has jumped 3x in 2 months. Either the bitcoin economy has exploded over the last 2 months or speculators are feeding the hype machine. I see no evidence for former, but plenty of the latter. 2. It is irrelevant because you can use any sub unit down to satoshis to transact. If you want to use BTC as a currency and perform transactions, the exchange rate number is irrelevant, because it doesn't matter if a widget costs 1BTC and the rate is 1 BTC/USD or if the widget costs 1 satoshi and the rate is 10,000,000 USD/BTC. If you're a currency speculator OTOH, yes the rate matters immensely. Which goes back to my point - is BTC there to provide an alternate currency and associated economy, or just an easy way to gamble? 3. You're using the terms "market capitalization" and "economy" interchangeably. The economy implies the size of goods and services produced in the BTC universe - this number is important but seems largely ignored by the BTC community (in fact, it seems to not exist). Market Cap here means # of bitcoins multiplied by the USD exchange rate. This number is closely followed by the BTC community, but is large meaningless. It has spiked 3x in two months, but what has happened to the BTC economy itself? It seems to have grown, but can anyone say definitively?

deleted 14y ago

[deleted]

vinayan3 14y ago

Despite it rising who in the right mind would hold bit-coins besides for speculation? The exchange rates are so variable. As a very risky investment great idea but day to day currency? I suppose it isn't a bad way to pay people abroad and avoid foreign transactions.

jacoblyles 14y ago
If you're looking for growth, it's better than the stock market where the deep pockets have already gotten in early and eaten up all the speculative value in promising ventures.

Thiz 14y ago

Bitcoin is here to stay, can't deny that, but I believe e-gold will be the future e-currency if somebody nails it. Buy gold shares with your dollars, use it as e-currency, exchange it for e-goods, merchants sell the shares and get dollars back. I'd invest money in that venture, and money in that currency.

simcop2387 14y ago
That's essentially what gold backed currency used to be. It'd be "easy" to do that for bitcoin backed currency right now.
- Thiz 14y ago
  Gold backed credit cards are flourishing in europe, that got me thinking about internet transactions in gold.
deleted 14y ago
[deleted]
muyuu 14y ago
The problem with that is... who backs it? it's a radically different concept, not comparable to Bitcoin.
vbuterin 14y ago
http://ripple.com http://ripple.com It's a cryptocurrency system that lets you store ANY currency that someone, somewhere is willing to support through it. So far it's just USD, AUD, EUR, CHF, BTC and a few others, but gold and silver are definitely going to appear soon.
mcantelon 14y ago
The problem with e-gold is it's hard to verify that the gold exists. This isn't an issue with physical gold or BTC.
wintersFright 14y ago
Sounds like a few steps faster than the inevitable death of a gold standard: Gold coins, then bank storage, then gold lending, then gold certificate use, then lending of certificates, then certificates are declared paper money, then overprinted, then gold backing removed…

rockyleal 14y ago

Hey PG, I'm Nicolas Mendoza author of the article. Any comments? Anything you specially liked about it?

rdl 14y ago

I've always liked the idea behind bitcoin (decentralized cryptocurrency), but I think ultimately it will serve the role of "specie gold" with something more useful on top for transactions -- either book-entry accounting at a wallet provider, or ideally some kind of blinded token system. Bitcoin has numerous inherent deficiencies as a transaction system. It's also not a great store of value -- you ultimately want something equivalent to debt or equity in productive enterprises, rather than a commodity, to hold the majority of wealth -- that's the whole point of fractional reserve banking or mutual funds/investment accounts. It may or may not be an ideal unit of account. Right now, USD is undeniably the default unit of account, and even bitcoin vendors tend to price in USD (with the runners up being EUR, JPY, etc.; other fiat nation-state currencies). So, some kind of blinded token system where issuers of blinded tokens hold public amounts of bitcoin, and where the tokens are redeemable upon demand for bitcoin ("specie") would work a lot better than trying to shoehorn transactions into bitcoin directly.

rmc 14y ago
Many in the bitcoin industry /community think that fractial reserve banking was a bad idea, and there would have never been the recent banking trouble if all the USD could be converted into gold (just ignore the banking problem when there was a gold based currency and ignore other countries that had banking problems).
- rdl 14y ago
  There's potentially an argument for a currency itself to not have investment/fractional reserve features, but there is really no viable argument against investment assets existing independent of the currency at all (but denominated in that currency, potentially). Also no sound financial argument for anyone (except those with short term needs or exceptional risk aversion) to store the majority of his wealth in a non-appreciating asset (like currency, even fiat USD) vs. income-bearing assets.
febeling 14y ago
I think ultimately it will serve the role of "specie gold" I agree with this. (I don't understand the blinded token idea.) I think it is quite easy to imagine that banking services are build on top of BTC. These would be account receivables against banks, much like current accounts and CDs in USD or EUR work today. The transaction features of bitcoin are amazing, in my opinion, if you compare them with gold bullion. Granted it can take up to hours for a payment to become fully confirmed, but this is the cryptographic specie being transfered from one individual party to the other. It is a lot more direct on this account than even a fast bank transfer, because in that you still only have a receivable against your bank, much like equivalent ones in todays credit system denominating in USD, etc. Plus you have the safety that no-one can inflate much value out of the currency, because it is specie-based. At least not for a very long time. (Unless the "closing of the bitcoin window" trick is pulled again. "Closing of the gold window" was the language the was used euphemistically, when redeemability of USD into gold was ended in 1973.) If you wanted instant transactions, that is just as easy as today, with a lot more pressure on banks to make transfers real-time, because one main business model would be to beat transaction speed. And that has an upper bound of max. a few hours in plain BTC.

jacoblyles 14y ago

The coolest thing I've seen with bitcoin is the reddit bitcointip bot: http://www.reddit.com/r/bitcointip http://www.reddit.com/r/bitcointip The second coolest thing are twitter tip bots. It's amazing what you can do with a digital-native currency. Creating accounts on the fly is as easy as sending an http request to the bitcoind client.

jacoblyles 14y ago
I also really like that you don't need login information with sites like Satoshi Dice and bitbet: http://bitbet.us/ http://bitbet.us/ Your sending address is your authentication. So frictionless, so good.

pnathan 14y ago

I find it fascinating watching people's reactions to bitcoin. As near as I can tell from an informal eyeballing, the antipathy to bitcoin is correlated to how mainstream the person is.

vy8vWJlco 14y ago
I don't think I'm mainstream at all (anti-social, anti-copyright, my preferred political parties can never seem to get elected, ...) but I can't get behind Bitcoin for a few reasons... The biggest being the pyramid-scheme-like distribution of coins slanted towards early adopters. I want an un-regulatable digital currency too, but I can't get excited about trading one financial plutocracy for another when money is tantamount to voting power. Money is just an IOU; money doesn't need to be scarce (like gold), just enforceable (legal tender). If Bitcoin's enforcebility depends on it's exchange with other currencies that have the power/threat of governments and militaries behind them, what ground has been gained?

bitgossip 14y ago

I have heard from people who have heard, that the government of China is through proxies aggresively buying large amounts of Bitcoins for future strategic advantage. I am not sure at all how accurate those reports are, it is probably just hearsay. But it makes one think.

rmc 14y ago
It's probably easier and cheaper for the Chinese government to just mine them. They'd control enough computing power.
- bitgossip 14y ago
  I don't think so, the number of miners is giant nowadays.

DanielBMarkham 14y ago

In the last couple of months, Bitcoin has passed the phase of "BC is nature's way of teaching economics to nerds" and entered the phase of "BC is natures's way of teaching political power to nerds" Reading through the recent Treasury Department guidance this morning, it looked to me like the U.S. is initially attacking where hard currency comes in and leaves the system -- no matter where in the world that takes place (plug: http://freedom-or-safety.com/blog/the-other-bitcoin-shoe-drops/ http://freedom-or-safety.com/blog/the-other-bitcoin-shoe-dro... ) I imagine they'll leave that decision out there for a while -- months or years -- before they start heavy enforcement. But enforcement is coming. And reading through the AJ link, it looks like BC is beginning to integrate quite nicely into the EU banking system. So now I have an anonymous virtual currency -- that governments can track the movement of. Which might require special licensing, permits, and insurance to broker. Perhaps I'm missing the point here? We're getting to the point where the big boys step in, and my bet is that it's not going to be comfortable for the people who started the whole thing. I expect more "integration" into the traditional banking system, at least until there's no value-add between cash and BC, and then we've reached our starting point. BC becomes nothing more than "collecting sharp sticks" in such a fashion as to be closely monitored by world governments.

lukasb 14y ago
Anonymity isn't the only value of Bitcoin. There's also the matter of exchanging money electronically without paying fees to banks, Visa, or Mastercard. Regulation might make transacting Bitcoin more expensive but still leave it cheaper than traditional approaches. I'm not a fan of Bitcoin personally (too much speculation for me to be comfortable using it as a medium of exchange, much less a store of value) but I think people underestimate how badly we're getting screwed by the current payment oligopoly.
- jacoblyles 14y ago
  This is exactly why I don't like the transaction fee model of funding mining in the long-term, and would prefer a coin with a slowly-growing uncapped money supply.

tvladeck 14y ago

This is why deflation matters: http://en.wikipedia.org/wiki/Capitol_Hill_Babysitting_Co-op http://en.wikipedia.org/wiki/Capitol_Hill_Babysitting_Co-op

wiradikusuma 14y ago

Is this the right time to buy bitcoin for "investment" purpose? (e.g buy now and expect +++ return next year)