f13.net

lol

I read something good the other day that went along the lines of that when MT Gox started, the market cap for magic cards is like $200k-300k and not sure why anyone is surprised that things went to complete shit and failed when the market cap for bitcoins exploded exponentially beyond that way too quickly.

(http://www.01net.com/images/article/190.845642.jpg)  :why_so_serious:

Bitcoins are like Amway, they made the early adopters rich but everyone after is chasing a pipe dream.

Wonder what Patrick Byrne and Overstock think about this. 

I'm not sure what I've found funnier.  The loss of all the coins or the True Believers saying this is a good thing.  That it's "a necessary growing pain to shake-out the bad actors and become a truly powerful currency."

Erf?

It's a great example of why internet libertarians shouldn't be allowed to run anything.

dogecoin is the real

Charles Stross summed it up:

"C'mon, folks. Mt. Gox was a trading card swap mart set up by an amateur coder and implemented in PHP! And you expected NSA-levels of trusted computing security, so you trusted your money to it?"

He'd know, since his day job (before he hit it big writing books) was doing exactly that -- coding up backends and the like for online banking and credit cards and such when it was all brand new and cutting edge to do such things.

Then he went on to laugh hysterically and mock bitcoins a bit, but I can't blame him. Bitcoins are hilarious, and the way people treat them -- they call them a 'currency' but they act like a commodity. (Hint: Currencies should not be a PITA to spend, and should not be the subject of investment bubbles. Those are bad things in a currency)

The main problem with bitcoins is that you can't realistically spend them.

Manipulation, coupled with technology, coupled with the Greater Internet Fuckwad Theory.

The protest is 2 people, one of which is wearing Google Glass. This is amazing.

(http://i.imgur.com/Ws94T4C.jpg)

Well yeah, although technically that's something they could grow out of. But currency has to be able to be easily spent or traded. The fact that people denominated their bitcoin wealth in their own native currency tended to be a bit of a smash against it being a real currency. Even the bitcoin enthusiasts were treating it like asset trading.

Plus it's deflationary by design, which is pretty stupid on the face of it. Bitcoin is like gold-buggery for technology lovers.

My favorite part is the bitcoiners who suddenly want investigations, regulations, bailouts, etc, arguing with the bitcoiners hanging on to their belief in the decentralized no-safety-net libertarian utopia that bitcoin represents to them.

I'd love to see an effective digital currency take off, but I'm skeptical that bitcoin will ever be the one.  Hugely volatile, illiquid, and zero recourse in the event of scams and whatnot are not exactly "features" I look for in a currency.

I recommend this for Politics, if not now, than soon.

Mt Gox is the kind of thing that is only possible because Bitcoin is nothing more than the pipedream of the money launderers.

Why?  If we get any bitcoin nutters pitching a fit, sure.  Until then, sit back and enjoy the schadenfreude.

Don't laugh. Dogecoin is the 5th largest crypto-currency worldwide!  :grin:


(http://upload.wikimedia.org/wikipedia/en/c/c5/Dogecoin_alternate_logo.png)

We have them. They're called "all the regular currencies". Or "the dollar", I suppose, given it's rather universal nature.

I mean, what are you looking for in a 'digital currency' that the dollar doesn't do? I buy things online with it all the time, pay bills, get paid -- I rarely handle actual cash. It's all digital, numbers changing in machines.

Its not that it doesn't do it... it's that he doesn't have enough of them.

And in the end, that appears to be what folks are really looking for.  A get-rich-before-the-rich-assholes-do scheme.

well yeah. I certainly wish I was bored and surfing the net and saw this stuff 4 or 5 years ago. But then I'd probably be grimly hanging on instead of selling out the first time I saw an article on 'regular' news about them.

(http://d24w6bsrhbeh9d.cloudfront.net/photo/ab5BvGX_460sa.gif)

The irony is that dogecoin will have a better chance at being an actual currency because they're willing to inflate

Small transactions / microtransactions without a lot of overhead.  Better person-to-person payment options.  Credit cards provide useful payment mechanisms, and provide reasonable protection for me as a purchaser, but are expensive(fees)/involved to use to send money to not-corporations or small businesses (cost absorbed by the recipient, but still adds friction).  The existing services for doing this (paypal, amazon payments, google wallet, etc) all have various downsides and none are anywhere near universal.  Not that these are easy problems to solve, and not that I think bitcoin's complete wild west, good luck with that!, approach is the solution, but I think the existing model of credit cards, bank transfers, and online payment processing systems does not really do everything well.

Being less absurdly traced and data-mined would be nice too, but that fights with useful protection features (privacy/convenience/security always at war with each other).

So, yeah, maybe not so much that I want a 'digital currency' as such, but that I'd like to see an electronic payment system that is as frictionless (or close-to) and as universal (or close-to) as cash.

While Visa is almost certainly a monopoly consider that vitrual currencies all face the same costs that Visa does. The idea that BTC can somehow do transactions for free is false; a lie they tell so that they look better. But people have to mine in order to verify transactions and this mining requires electricity which must be compensated. At the moment it is being compensated by seigniorage. But this won't be the case forever(in fact isn't now), and, importantly, seigniorage isn't free.

When doing transaction verification someone has to do actual work, and that actual work must be compensated, whether its a crypto currency or not.

This pretty much exists in all the Nordic countries, and has for several years. When I lived in Iceland, pretty much everything offline was done by swiping a bankcard, which instantly withdrew from your debit account. All bills automatically were sent to your bank and appeared in your online bank for payment, which you paid by hitting a checkbox and clicking "pay". Again, instantly done via fee-free bank transfer. You could transfer between any two Icelandic accounts for free, at any time, and it cleared within minutes (with the weird exception of Sundays because Fuck Sundays or something).

Out for a night on the town and your account runs dry? Your friend spots you for a few beers and, in the morning, you log on to your netbank and wire over however much you racked up. I did this frequently as far back as 2008. There was no minimum on transfers, either.

I live in Germany now and it's still pretty much possible to do the fast inter-person bank transfer thing, and the SEPA is slowly making this possible for the entire Eurozone. Takes a day or so to clear, so there's room for improvement.

Except it's not free, as Goum pointed out.  The bank has costs to do what you just described, and those costs are passed along at some point.  Just not at the point of the transaction like Credit Cards do.  CCs are a standardized third party in the us handling electronic transactions for a fee. That they are doing so in a monopolistic position is a fault of no other adopters wanting to jump I. Before we came to the digital currency age and the overwhelming cost of doing so now

It's not THAT bad. At my bank giro account + debit card are about ~30€ a year. Anything extra, like a mailed bank statement or weekly account balance via SMS to phone costs extra.

What's really a rip-off is the cash transfer form (if thats the right translation?). Basically if I make a bank transfer from cash to an account (like paying a bill), instead of from your account to another account you pay about 5 € handling fee.

Bitcoins aren't nearly as frictionless and feeless as they appear, and if they did ever take off (hah) we will be in the exact same situation because people *will still be using banks and credit cards the majority of the time*.

First of all for fees, just because me transferring bitcoins to you does not incur fees does not mean you shouldn't factor in that you are not only going to pay fees when you exchange it for USD but the person who paid USD to get bitcoins paid a fee as well.  You also have the possibility of losing some money when exchnaging it to USD if the exchange rate changes slightly by the time you get around to exchanging it. Also, any time you pay a business that accepts bitcoins right now, they almost always use bitpay or something similar to immediately make the money USD, which incurs fees on their end.  

Furthermore, credit and debit cards give you instant transaction verification, bitcoins *do not*.  So all those mini-transactions you are wanting to make actually can take quite a while before they are completely verified (they have to be verified by 51% of the nodes out there).  No consumer is going to want to wait for that to happen.  The ways most major transaction hubs get around this is they connect to a mining pool, which lets them get quick verification by all the machines in the mining pool and get enough of a % to predict if its going to pass or not.  Like Goum said, this is only free right now because you are helping to mine coins but eventually that ability is going to slow down enough to not be worth it for everyone involved.

Also, the non-tracking anonymous thing is kind of a misnomer.  Since all transactions are recorded you can do pretty well by tracing transactions around (people are currently hard core tracing all transactions from any MT. Gox wallet).  Yeah the hard part is associating a specific wallet with a specific person but nothing beats the good old internet mob machine.

*Edit* one last point: It is massively difficult to keep bitcoin wallets secure that I'm not even willing ot go through for my whole total wealth (let alone non-technical users).   Thus I'm still going to be using bank accounts and credit cards for security (and fraud prevention) reasons and thus the fees are still there.

The total cost of having an account up there was something on the order of 10-15 euros a year, depending on how the exchange rate was feeling at the time. Essentially negligible given that you got full-service banking plus the sort of money-moving ability Quinton was pining for.

In Germany, my experience is similar to calapine's, though slightly more expensive - I went with an account option that granted the ability to withdraw money without transaction or currency-exchange fees, worldwide, for something like an additional 2eur/mo. Given how much I travel for work, I easily save more than the 24eur/year.

Because the fees are cheap doesn't mean the cost isn't there.  I don't get why that's a hard concept. Somewhere along the line your banks and US Credit Card companies are generating money to pay for:

1) Security and storage of transactions and their history
2) Anti-hack protections
3) Accountants to go over the books and verify things
4) Infrastructure to support all this

All things that Bitcoin is having the miners or escrow services handle for "free." (i.e. no inflation, no percentage of bitcoin. They're expending real money to do this.)  We see how well that worked with Mt. Gox.


I hadn't heard that before, and this ALONE means it will never gain traction.  Currency works because banks are trusted. Banks are trusted because the government backs the funds and will shut them down if they're bad actors.  Requiring 51% of all banks to say "Oh, yeah, he owns that dollar/ euro/ yen. We'll change it to be owned by Joe now" wouldn't work on the scale of L.A. much less the trillions of transactions happening in the world daily.  What a laugh.

I was not in any way suggesting bitcoin had the properties I'd like to see in a digital currency or online payment system.   I do not own any and do not plan to buy or mine any.  Credit Card / Paypal / Amazon Payments cover most of my online purchasing needs and offer reasonably fast transactions and reasonable levels of purchaser protection.  For sellers, things are different -- paypal has a long record of being painful for sellers, credit card processing is expensive, dunno if Amazon's system is any better for the little guys.

Credit cards are not actually *instant* (things can take days to really clear, etc), but the fees and regulatory environment provide enough safety that they can be effectively treated that way.  Bitcoin is *slow*, most clients apparently deal with that by "hoping for the best", and of course once the transaction goes through there's no way to reverse it -- definitely favors the seller, provided the seller is not in a hurry to convert those bitcoins to a more liquid currency.

a better way to say it Merusk is "just because you don't see the fees doesn't mean they aren't there". The fees are either in flat fees on the account averaged out so that people with small accounts pay a disproportionate amount of money, or in a reduced interest rate, or transferred to the people of Iceland via subsidies.

At the end of the day someone has to do the transaction work, design the transaction system, monitor and maintain the system. This costs money no matter which system (BTC, Credit Card, Bank transfers etc) is employed because designing the transaction system and monitoring and maintaining the system costs money.

BTC has a system setup where people don't see the fees because they're either voluntary (people tip in order to get small transactions into the block chain due to the global 7 transaction per second hard limit) or because they're given out in inflation. That is, all things equal fewer BTC means higher BTC price, so every mined BTC, paid for maintaining the blockchain reduces the value of the rest of the BTC's, this is true even if the price of BTC continues to increase. But this doesn't mean, like any other system, that the transaction costs are free, they can't be because it takes real people doing real things in order to do the work.

Not to say the costs don't exist, but I do know the fees associated here in the states are inflated more than you could possibly imagine. The last job I had before going back to school for nursing was writing mainframe jobs for a regional bank here in northeast Ohio. Literally the only human involvement in any of that stuff is a teller entering it in a CICS panel, or some shitty program that runs on a server. ATM transactions have literally no human involvement other than a teller changing the money and deposit cartridges. We didn't even pay for repairs, it was part of the service contract we paid a flat cost for when we bought the ATMs. Processing time was next to nothing, mostly just sorting transactions out and creating files to FTP to other banks so they knew who to charge what.

What took far more resources was the Patriot Act stuff that sent off records of every transaction of every bank customer to the feds. That shit ran 24/7, probably so they never had to wait more than five minutes to see what somebody was up to.

Yeah the transaction time is one of the key reasons that any *coin derivative is pretty much dead as a currency. Even if you overlook all the other huge issues with Buttcoin no-one is going to wait 7 - 12 minutes to do a digital transaction. Purchasing a car? Maybe. But lunch? A computer? A suit?  Get the fuck outta here.

I don't understand the libertarian lunacy over bitcoin.

Also, it is amazing to me, the audacity of banking, I suppose not just in the U.S., but on a global level -- how in the downturn we siphoned billions into failing banks yet at the same time, with the transformation of a great deal of commerce into online space means a windfall for banks in transaction fees. Just like Microsoft obtained a tool booth on everyone's desk by the mid 1990s, banks have a toll meter continuously running, for just throughputting bits.

When I worked at American Express, I remember all the executives being giddy about being reclassified as a bank, meaning that they could charge late fees, and that was giant profit stream they were eager to leap into. That, and commissioning third party processors, mostly in other nations, so that they could collect a fee on every transaction (for carrying the AMEX logo) and let Credit Suisse or someone else incur all the risk while they reaped a guaranteed profit.

Take all the standard libertarian craziness about how they're being held down by the man but they're really Galtian supermen, mix in the idea that the fed is part of the banking conspiracy which makes it possible to siphon money via debt from them, and add in a hefty dose of get rich quick scheme and it should be clear.

Libertarians think that BTC will literally bring down the evil government which is holding them back from being the supermen they know they really are and that they're going to get rich without any work from it.

I am completely down with 'frozen' processing power being a commodity that is traded with a value.  The trick is, it has to be processing power that was expended for something useful.  Processing spent on bitcoins doesn't DO anything; it's an electronic circle jerk where the goal of processor time spent on getting a bitcoin has the end result of... getting a bitcoin.  It didn't fold any proteins, didn't search for alien signals, didn't encrypt the Internet to keep it safe from the NSA, it just played a math game with itself.  That's the part that doesn't make sense to me.

The full money transfer transaction isn't instant for credit cards sure, but the verification part is instant.  The merchant immediately knows if you have funds available to cover it in your credit or debit account.  This isn't true with bitcoins because a bitcoin transaction needs to be verified by 51% of the nodes before the system knows for sure that it isn't a fraudulent double transfer or spending of money that was already spent.

You sir, have described the entirety of the American economic system in one short paragraph.

Again, to be clear, I'm in no way suggesting that bitcoin has this property and I'm not suggesting that bitcoin is a good solution.  ^^

Isn't it, in fact, worse than that? -- since the longest blockchain wins -- I thought technically to be *safe* you'd want to wait for a second or third block past the one with your transaction, but waiting 30 minutes is something nobody does because 10 minutes is already painful.

Well yes, I'm cognizant that the US and all other economies that are no longer backed by precious metals are as inherently valueless as bitcoins.  But if I was designing the digital currency of the future, I'd be trying to base it off of a system that involves a tangible commodity gleaned from the digital currency.

Yeah I get that, just talking about what part I meant when I was referring to credit cards as instant :).

And yeah, you are correct about being safe waiting longer.

Except that they're backed by lots of guns and police authority where bitcoins are backed by the inherent trustworthiness of Magic: The Gathering and Reddit nerds.

You forgot the Winklevoss twins as well  :why_so_serious:

How is mt. gox related to mtg?

Used to be a site for tracking the prices of Magic cards.

(Edit: Sort've, it was more of a free market for them)

"Mt. Gox is a Bitcoin exchange based in Tokyo, Japan. Mt. Gox was established in 2009 as a trading card exchange,[1] but rebranded itself in 2010 as a Bitcoin business"

Magic The Gathering Online Exchange

Supposed Mt. Gox was originally a site to sell Magic the Gathering cards (it's name is based on that: Magic: The Gathering Online eXchange). However there's no proof it actually sold any cards through it:

https://en.wikipedia.org/wiki/Talk%3AMt.Gox#Possible_citogenesis_concerning_whether_MtGox_ever_hosted_an_MtG_trading_site

The fact that the currency doesn't have a commodity backing is a good thing*. Processing power used to fold proteins or whatnot isn't a commodity and the logic which is used to support such a scheme doesn't have anything to do with "real asset backing" but simple utility arguments in the vein of "Dig a ditch/fill it up could just as easily dig canals"

*If there was an actual commodity tied to the system, one that you could trade, then this would imply a minimum value for the currency. Basically, take gold for instance. Gold currently has industrial applications but the applications aren't worth nearly as much as the trade value. What would happen to an economy which traded on gold, if all of a sudden someone discovered an industrial application of gold which was worth more than the trade value? Answer: Bedlam

Better question: What happens to a commodity market if suddenly there is zero demand for that commodity.  There's shitloads of gold out there in the universe.
http://articles.latimes.com/2013/jul/17/science/la-sci-sn-gold-universe-colliding-neutron-stars-astronomers-20130717

Neutron stars too distant for you? It's been theorized, but not yet proven, that the asteroid belt is what accounts for all of Earth's gold anyway, and we'll find oodles of it there.
http://www.reuters.com/article/2013/11/21/us-space-mining-asteroids-idUSBRE9AK0JF20131121

Not entirely true! It turned a bunch of potentially useful electricity into waste heat! For no useful reason. It not only has no intrinsic value, but a good argument could be made that it is of negative value. Truly the currency commodity of the future!

Diamonds are plentiful, and even gem quality stones are able to be made on an industrial scale for tiny fractions of the price paid for at a jeweler. But DeBeers has sucessfully used marketing and price fixing (they are a cartel, after all) to make people believe that they are somehow precious and not able to be resold.

So basically, as long as you have the power to set a price and then flood the masses with advertising it doesn't matter what the "real" value is.

Real value for a thing is what people will pay for it.

You know, bitcoin is one of those things that I somehow just can't really be arsed to fully understand even though there are many reasons why I should, but one thing I'm sure about them is that whatever happens to them and the people who invest in them, all I really hope is that the Winklevoss twins end up completely ruined at the end of it. Maybe even we get lucky there will be something legally actionable when the dust settles?

All I know is that when people start trying to get you to invest in something, it's about to crash.  As seemed to happen here....

I love the parallels between Bitcoin and EvE's banking.  Libertarian finances systems are a scamers dream.

Speaking of Bitcoin shenanigans (http://arstechnica.com/information-technology/2014/03/bank-that-claimed-to-solve-bitcoins-security-problem-robbed-shuts-down/)  :awesome_for_real:

Bitcoin is a ponzi scheme by design. It's an inherently deflationary currency so once all of the blocks are mined and the supply of bitcoins doesn't increase anymore the existing coins will rise in value more and more if there is demand and if Bitcoin shall function as a currency and is used as such there will always be some baseline demand. This means that the early adopters and early investors will get more and more wealthy.

lol

Jesus fucking Christ.

No, no, they SHOULD be allowed to run it so that their pipe dreams can fail so spectacularly they swallow up all the other complete fucking idiots with them.

^^^^^^
7000x this.

Heh, a woman tried to recruit me for Amway last year.  She was super-positive and never mentioned the name of the company once.  She was selling a "marketing business."  It's all web reselling now.

(https://pbs.twimg.com/media/Bh1f1t4CMAA3yLg.jpg)

Thanks Kal, I was looking for exactly that picture myself

Amway changed the name of most of their stuff to Quixtar a few years ago to get rid of some of the stigma. They also train their users to call it "the business".

My dad is big into Amway, unfortunately. Of course he is somewhat of a libertarian which is funny considering that he has been a federal employee for over 40 years.   :drill:

I only listened to her in the first place because she was a pretty blonde and she pitched it as a marketing job, when I was definitely in the market for a new workplace.

Yes, I know. Now tell that to the gold bugs and try to get them to apply that to currency because they like to believe money is worthless because it's not attached to anything "real."


Imma explode from all this schadenfreude.

My firm has several clients that do Amway. I handle none of them for obvious reasons.

Schadenfreude (https://twitter.com/bitcoin_txt)

(http://i.imgur.com/hWyQNtu.png)

(http://i.imgur.com/uVIHs42.png)

Well, if the Mt. Gox disaster means "working as intended" that's not exactly a ringing endorsement..

Of course it worked as planned. The founders made themselves a pretty penny off of a bunch of plebs who were dumb enough to allow MtGox to handle their "money".

While I find all of this interesting, I'm not going to lie - totally don't understand how this works. Why aren't more people mining coins on the side for easy money?

Because at this point, it does not actually make money unless you spend pretty ridiculous amounts on custom hardware. The power usage cost outweighs the amount earned for most people.

The way the mining process works it's gets harder and harder to mine bitcoins over time (each bitcoin mined makes subsequent bitcoins harder to mine). Originally you could just use your CPU and have a reasonable chance of mining coins. Once it got too hard to do it on CPUs people switched to video card GPUs. Now it requires specially programmed chips (FPGAs or ASICs) to be able to mine semi-efficiently:

http://www.tomshardware.com/reviews/bitcoin-mining-make-money,3514-5.html

There's also an absolute limit, sometime between 2025 and 2030, the very last Bitcoin will be calculated and there will be a fixed number from that point forward (this is why it is inescapably deflationary).

--Dave

If you are buying hardware today you probably can't recover the initial investment before the difficulty gets high enough that the energy cost of solving (or contributing) a block exceeds the reward.  I've 'made' $450-600 since Christmas (depending on exchange rate, which is highly variable) on hardware I happened to already have (Nvidia GTX 780 + 2x ATI 6970s).  I'm spending about $15 a month on electricity, and bought some components to run the video cards in a box that is destined to serve as a media server in the living room once the difficulty on popular/exchangeable alt-coins gets too high (probably this summer, though the next Dogecoin might push the 'fun' out further).  Indeed, many graphics cards are more expensive now used than they were new (the three cards I have would be about $1,400 to purchase today).  The people making 'real' money are the guys selling hardware, they've been able to use that hardware when the difficulty was lower and then can resell it once it is no longer viable because people are slow to cotton on to the difficulty curve making their 'investment' obsolete.

Bitcoin is an interesting beta release for digital currency.  It is a solution to the byzantine generals problem, but not necessarily a viable currency as it stands (currency has utility in exchange, the current implementation leads to hoarding). 

The wait time for transactions should not be the same for all transaction values.  For small quantities a few confirmations are sufficient, for large values many more confirmations are required.  All you are doing is calculating how much it would cost for bad actors to overpower your transaction (in computation), comparing that to the value of your transaction, and looking for +1 confirmation to call it good.  Someone could 'cheat' you out of your money, but they'd be spending more to do it than they'd get from succeeding in reversing the transaction (overpowering the network).  The system is probably geared for one huge rollback against a hard confirmation limit e.g. someone accepting 20 confirmations for arbitrarily sized transactions, but thereafter no one would trust the entire system with anything of value and all the investment in building a pool big enough to beat the entire system would be lost - it would have to be a really big transaction to be worth the risk.  Far easier to 'make money' here by taking it from other humans the traditional way.

Most of what you see about bitcoin 'cheating' in the news is good old fashioned social engineering and scam artistry clustering around the newest fad.  The Mt. Gox thing in particular looks to have been an implementation error compounded by poor customer service planning (trusting the client and not resending the 'same' coins that were reported 'not sent').  Bad actors simply told the Mt Gox that "no, we haven't been paid yet, try sending again" and the Mt. Gox servers sent it again, and tried sending coins from a different account.  Basically, any shopping cart exploit you can remember from the early web days is likely to work on one coin exchange or another - these guys aren't rocket surgeons.

I certainly don't 'trust' any of the coin sites; when/if my cash-out account gets burned I've just lost my hardware upgrade fund and nothing that can compromise my life.

I still don't get the point of Bitcoin.

What's it do that cash doesn't? Heck, what is a utopian perfect future release of Bitcoin supposed to do that cash doesn't?

Besides, you know, waste a ton of electricity.

It's digital cash, meaning it's much easier to quickly transfer from one entity to another (which isn't as easy with cash because it requires you to physically hand over). 

Of course, the digital aspect makes it much less secure than cash as well.

(https://dl.dropboxusercontent.com/u/1739972/web-images/bitcoin.png)
... THE FUCK????

It's a libertarian gold bug thing. It's not fiat currency, it's based in processing power. LOL.

I did not know that.

I think I have officially found the STUPIDEST THING EVER.  :why_so_serious:

Ya, but so is the internet.

And there we go...again!  :uhrr:


(http://i.imgur.com/aR4mGyi.png)

Biggest mistake was not calling it Cloud Cash. I'm copyrighting that shit.

No I'm not.

If I was to be cynic I'd say the true success will belong to iCoin. Not sure I am joking even... Douchebags all around the world would fall over themselves to own the hip new Apple currency.  :oh_i_see: :oh_i_see:

rainnwilson (https://twitter.com/rainnwilson/status/441193744323604481):

Illegal activity.  You can transfer lots of liquid assets without "the government" being all over it, OR having to move literal tons of physical currency.

Don't confuse Bitcoin with an actual currency, everybody keeps saying that it is but the way it is designed means that it's really not and that it cannot ever be one. It's the implementation of the wet dream of internet libertarians. The digital equivalent of the 'gold standard' or at least what those dimwits think the gold standard was and entailed.

Bitcoin was designed with three main goals.

- act 'gold-like'. In the minds of most gold bug libertarians the western world was a capitalist utopia when the gold standard was still in place and the end of Bretton Woods signalled the end of national economies acting  'responsibly' and 'fiscally conservative' because they could simply print money and they no longer needed to back the 'virtual' value of their currency with 'actual' value like gold. They usually throw the term 'fiat money' in there somewhere for good measure. So Bitcoin is inherently deflationary.

- make it impossible or infeasably hard for a single nation to control the supply, transfer or trade of Bitcoins. Everyone can trade Bitcoins with everybody else all over the world. You technically need no bank or exchange, the infrastructure to transfer funds is built into the Bitcoin system. So it's virtually impossible (short of completely outlawing Bitcoin itself) to keep track of or control the flow of Bitcoins. This also means that it's hard to prevent people from transferring funds and it's also hard to tax those funds. It also ties into the first point because with Bitcoin 'printing money' is impossible so no pesci govermnet threatens the 'value' of your wealth by increasing the money supply.

- make it easy to track transactons but make it hard to identify individual owners of Bitcoins. You can always see and track every bitcoin and every trasnaction that was ever done since Bitcoin started but it's very hard to identify the real world person that ownas them. Another precaution to prevent a government from identifying you and taxing you.

Bitcoin is basically gold but without the need to physically store and protect it and a sort of gold that is much easier to transport, transfer and hide from the IRS. They've also managed to design something that they call a 'currency' but that lacks every aspect necessary for a thing with value to actually work as a currency and worse features design tradeoffs that actively prevent it from ever becoming one.

It's design means that you can't really use it to pay for stuff so it's hard for Bitcoin to establish a semi-stable inherent value. Combined with it's deflationary nature it lead to Bitcoin always being more attractive as speculative investment than as currency. This has further hampered any push to use Bitcoin as actual curency and so the Bitcoin value has always been tied to an actual currency and exchange rate. Just like any other sort of derivative.

Since no nation can back it or regulate it even if they wanted to, you have no central bank, no banking system, no deposit insurance and no FDIC. This means nobody that uses Bitcoin for anything can have any assurance of anything and has no legal recourse. You can theoretically store your Bitcoins on your own computer but then it's even more pointless as a currency but since exchanges and 'Bitcoin banks' aren't legally required to be banks they face no regulation and can basically do whatever the fuck they want.

I don't think that this was unintentional either. Bitcoin was designed with a libertarian mindset. Free market, no government control, acts as gold-ersatz, no devaluation by irresponsible entities, hard to track, hard to tax. Is deflationary.

This means Bitcoin has a first mover advantage (aka Ponzi scheme), it legalizes fraud (unregulated market) and it has become a bonanza for money launderers, and as a method to transfer funds gained via all kinds of ilegal activities. All on the back of wild-eyed internet libertarians and greedy fucks looking for an easy way to get rich.

I'd say that it is working as intended

I think we need to stop looking at people who want an easy way to get rich as greedy. An "easy way to get rich" is the holy grail of the current state of our planet. Anyway, greed isn't bad. Insatiable greed that leads to corruption is bad.

I wish I had bought bitcoins when I first heard about them at ~$8 and sold them for 100x that. Tons and tons and tons of them. Doing so would have been smart business, not greed.

Anyway, Bitcoin is still stupid and should have NO value whatsoever.

http://www.dailymail.co.uk/news/article-2573863/Bitcoin-exchange-CEO-dead-home-suspected-suicide-age-28.html

lol

edit: I'm sorry, death isn't funny but bitcoin and everything around it still is andddddddddddd this is related to bitcoin. Ergo, a somber lol.

Why are all the Bitcoin CEO-types Americans living Asia?

weaboos

No.  We don't.  They are.


Are you fucking kidding, yes it is.


Man, this sums up exactly what the fuck is wrong with 'the state of our planet'.  Retarded.

Greed, much like most things, isn't as black and white as you make it out to be. Wanting to be rich is a solely selfish affair no matter how you couch it. Considering greed at its most base level is a selfish desire to be rich, I find it hard to fault most people who want as much given the current structure of society. When that greed turns you into a unreasonable awful asshat, that's when things get sketchy. The mere desire to be personally wealthy, however, is not something I find "evil."

I think the problem with greed is that by its nature, it is insatiable. Because once you have SOME, why not have MORE?

Was just about to post that.  The desire for wealth isn't necessarily a bad thing, but greed by definition means "excessive or rapacious desire."  Match that up with the ideas that money is power, and power corrupts, and you have a Bad Thing.

¯\_(ツ)_/¯

I can't decide how to interpret that, please explain your answer.

I don't know whats confusing about one of the greediest modern humans who became probably the best philanthropist in the history of the world once he acquired all that wealth and power.

This has always amused me. If the government really couldn't track who was transferring all that money, I am absolutely sure they would have been shut down long long ago. The fact that they haven't been and there has been some overt acceptance of something that could be used to launder money so easily tells me that there's some guy in Treasury with a list of every single transaction on his monitor.

When did Schild become an unemployed Gordon Gekko?

The Winklevii bought their spaceship tickets with bitcoin (http://valleywag.gawker.com/the-winklevii-are-going-to-space-1536917038)…

Wait, no....titcoins!

Generally more lax currency laws i am guessing. Mt Gox for instance got hit with U.S. currency transfer laws (which basically require them to know who you are and report transactions over 10k) and had been trying to get around it.

Not all of them are in Asia of course, its suspected that the people who run BTC-e(now the largest market) are Russian but no one actually knows who they are.


So the long answer is that you can attack accounts to faces but its not particularly easy. The government certainly has the resources to do so if it so chooses. There absolutely is a "list of every single transaction ever" but mining the transaction data to determine who owns an account is technically difficult because its easy to tumble coins around to various accounts, which if done well, should be indistinguishable from a "legitimate transaction" though this does make actual transactions harder.

Its one of the reason why Russia and China have banned BTC businesses. Why hasn't the US? Possibly a couple of reasons. China and Russia don't have nearly so large a population of libertarians and they certainly don't have any in office. Its probably much easier for the US to track BTC transactions. The US has a "wait and see" culture with regards to these types of things. Figuring out who has authority over the system enough to ban it (minus legislation which can't pass because of Republicans) in our current system is probably difficult.

Nothing to add really but wanted to say that for me following Bitcoin news is a lot like following EVE Online.  I have no intention of playing either game, but I find the betrayals, thefts and massive falls from grace to be oddly compelling.

Always has been, you just haven't been reading the cues properly.

Eve is more fun.

Don't they both basically just involve lots of spreadsheets? :why_so_serious:

Yeah, unfortunately for bitcoin, ISK is actually a stable currency with significant volume. Truly, an Icelandic spaceship currency is the path to the future.

My goldbug/ libertarian barometer would like you all to stop being sheep and realize this was actually a government hit to keep bitcoin down.  Along with the 8 recent suicides by GS bankers.

But then I'm sure you're all hearing the same.  :awesome_for_real:

Also, it's much easier to make a living trading ISK for cash.

Long article in Newsweek, about the supposed inventor of Bitcoin:

The Face Behind Bitcoin (http://mag.newsweek.com/2014/03/14/bitcoin-satoshi-nakamoto.html)




I think it's time to award Jeff Kelly a medal!  :grin:

Going by this thread, it's probably a virtual medal. I'll also have to make it myself by employing excessive amounts of processing power and it will get stolen by hackers eventually.

And half a year from now a lot of people will come up with lots of different and much cooler virtual medals most likely featuring popular internet memes.

So I heard an interview with the author of that article on the creator of bitcoin on the BBC radio station on my way to the grocery store after I left work today. Apparently he is "no longer associated" with bitcoin but he owned close to 1million bitcoins at the time of the article which is well over half a billion dollars at the recent exchange rate.

Bitcoin is looking more and more like a Ponzi scheme every day. Esp since another bitcoin exchange "lost" a ton of money today.

Assuming he still has his key.  :why_so_serious:

The Newsweek article is looking like it might very possibly be complete bullshit. It's hard to know, but the guy they named as the creator is totally denying it, doesn't seem to have a lifestyle that suggests someone who owns hundreds of millions of dollars in bitcoin, and the sourcing for his connection to bitcoin is increasingly looking like "he has the same name as the guy that bitcoin traders say created it and we found this guy in the phone book". The thin thread that the story stands on is the reporter's insistence that in a brief interview he told her he was "no longer involved in bitcoin" which he says was "I am no longer involved in government work" and the reporter chose to misinterpret or misunderstand that.

IIRC, the people that invented bitcoin effectively got a giant chunk (10%+) of all the bitcoins that could ever be actually made.

Which makes bitcoin the most lucrative piece of software ever, at least going by "dollars profit per line of code". :)

Also: An inherently deflationary currency is retarded. Deflationary currency is one in which people hoard wealth, not spend it. And the point of a currency is spending it. I don't look at Japan over the last decade and think "Wow, amazing economy based on a deflationary currency there, Japan!"

Well the creator of BTC hasn't spent any. That we know by looking at the blockchain. So its not exactly inconsistent for him to be living a normal life. As far as I can tell this guy jives best with the other information we know about Satoshi.

Here's something interesting: guy named Ryan Selkis who says he's going to release a bunch of information that will expose a lot of dirty dealings at the Bitcoin Foundation.

http://two-bit-idiot.tumblr.com/post/78868284696/coup-or-death-for-the-bitcoin-foundation

wow he takes bitcoin seriously

worse than larping

I thought the whole point of Bitcoin was to remove the power of regulators from currency?

This part is a headscratcher much like anarchist movements having leaders, rules and organizers is a head scratcher.

Sheep need to be herded, regardless of how much perceived freedom they may have. Also, only dipshits fuck around with the currency equivalent of larping, so it's not exactly shocking.

This was totally disappointing.  I checked back today to see the epic reveal or news of the board capitulating to his demands and instead just a blog post about how his last blog post was a bad idea even though all his accusations are 100% true!

Hilariously incoherent.

You had high expectations from a guy named Two Bit Idiot?

Free market, people! Come on!

If mtgox was unsafe and poorly run, surely it would have been out-competed by other exchanges. Everyone would have naturally shifted to the most trustworthy exchange, or gone off and started their own. That it was the largest and most successful shows how strong and ethically pure it was. The market has spoken.

Regulation is just a way to allow insiders to control and manipulate markets, while this completely uncontrolled system is immune to such things. Individual freedom to choose one's own explicit trading partners and protect one's own investments has produced a safer, more robust ideal towards which all future currency regimes will aspire.

It's funny how fast Bitcoin turned from "cool"  to "I am stupid!"  :grin:


(http://i.imgur.com/RMTYFfU.png)

Some big name Wall-Street companies are now spinning up their own Bitcoin exchanges (http://arstechnica.com/business/2014/03/move-over-small-time-bitcoin-exchange-startups-wall-street-has-arrived/).   It at least gives some legitimacy to Bitcoin as an investment commodity. 

For about 20 minutes. None of the people are involved are the real big boys and yeah, it's some adventurous jackholes with more backing than sense.

Full disclosure, I was approached by some former colleagues at Morgan that were starting their own Hedge with a focus on bitcoin. I told them to fuck right off.

Should've just jumped in only to jump out immediately with a nice parachute, like anyone else who will ever make money with this scam.

Wall Street would only get involved if they could take a bunch of people for a shitload of money. There's no actual future in the current version of cryptocurrency.

Sounds like BitCoin is right up Wall Street's alley then.  :why_so_serious:

To be fair, it was always stupid.

I remember reading a business journal thing for executives on why you should accept bitcoin, back when this first blew up.

It boiled down to a pharmaceutical ad style 'here's a list of what could go horribly wrong....but you'll look like you're trendy!'

And I laughed and laughed while also hoping the gadget loving co-workers never got wind of it.

Wall Street buying into a speculative bubble? Well i never.

Businesses can accept bitcoin at their Second Life storefront!

The IRS has ruled (PDF (http://www.irs.gov/pub/irs-drop/n-14-21.pdf)) that Bitcoins are "virtual currency" and taxed as property. This will effectively kill Bitcoin as a form of currency here in the US as Bitcoins are no longer equivalent to each other because of differences in taxes (capital gains) that will be owed depending on each Bitcoin, as explained in this article (http://www.creditslips.org/creditslips/2014/03/bitcoin-tax-ruling.html) by a banking and finance law professor (http://www.law.georgetown.edu/faculty/levitin-adam-j.cfm).

I'd never take on a client that had Bitcoin. Too much headache.

He is wrong and doesn't actually know what he is talking about. Everything that you purchase for resale has differences in taxes (capital gains) which is owed depending on which piece you sell. Typically there are rules like "last in first out or first in first out" which govern how tax basis on commodities work. And those things (like gold, and foreign currency, and oil) are still fungible.

If BTC has a delineated system such that you can choose which BTC you sell this simply makes things advantaged for BTC owners since they have the option of selling whichever BTC is most tax advantaged.

The basis for the buyer is still the same regardless of the BTC purchased. Ergo the only effect this would have would be on the accounting that a BTC owner would have to be doing and if they don't have a specific rule enforced by accounting standards or the IRS then they would be able to choose which BTC was the most advantageous to sell, actually giving it a leg up on other non-USD currency and currency equivalents.

The only way in which this ruling is disadvantageous is that BTC-Cash transactions may be subject to sales tax in jurisdictions which take the IRS's definition of property

I don't see how what you just said makes him wrong. He's saying Bitcoin is no longer "fungible (http://en.wikipedia.org/wiki/Fungibility)" because of the IRS ruling. Therefore it no longer can be considered a currency. Yes you can still do things with it cause it has value (to some people) but it's not a form of currency.

The disadvantage is the IRS has no actual way of tracking the basis, thus making our lives a living nightmare trying to file if they want to question it.

Actually they do. Bitcoins have a transaction history. You can explore some here:

http://blockexplorer.com/

Yes except that its still entirely fungible. Just like everything else i listed is fungible but has the exact same properties he is claiming BTC now has that makes it not fungible. Unless you believe that GBP aren't fungible and therefore will fail as a currency that is. Or if you believe that BTC wasn't fungible before this ruling because differing basis for BTC taxation purposes were the norm when they were considered currency.

If I bought GBP with dollars 3 years ago and then bought more 1 year ago and then today sold my GBP for dollars i would have some amount of profit or loss. The amount of profit or loss i would have to declare would be different depending on which GBP i sold. Currently accountants have rules which stipulate upon which basis the foreign currency transaction operates (depending on how much is sold relative to when the amounts of GBP were purchased). But GPB is still 100% definitely a viable currency and 100% definitely still fungible.

This is exactly how BTC operates now with the exception that, if assigned as delineable the seller can choose which BTC they sell and so take the most tax advantaged basis. That is not a knock which makes BTC not fungible, the person buying still doesn't care which BTC you sold him(his basis is the sale price regardless). If you traded 1 BTC for another BTC this might force you to update your basis and pay tax on the appreciation (or get a write off on depreciation) but probably not, and why are you trading 1 BTC for another BTC unless you're money laundering.

The idea that this makes BTC not fungible is wrong and misunderstands what the term means.

There's also the Section 1256 (http://en.wikipedia.org/wiki/1256_Contract) of US tax law. Any trader who gets themselves set up for Mark to Market accounting can act as if several specific types of derivatives and, importantly, foreign currency trades are 40% long term (taxed at the regular rate) and 60% short term (taxed at 15%), regardless of when they were bought and sold... giving them a functional top marginal rate of 23% on Bitcoin speculation.

If they're property, any Bitcoins they hold for less than a year get the short term capital gains rate... which is to say, they're taxed as regular income. If they hold them for more than a year they can still get the special 15% rate on their exchange, though. Trouble is, since they're not securities, anybody paid in Bitcoins will get taxed on them as income that year, at their market value at time of payment... and pay regular income taxes on them. No stock options advantages.

Isn't that the whole point of BTC?

I thought BitCoins were the foolproof system we'd use to stick it to the Man, destroy fiat currencies as institutions and usher in the Singularity (all Hail Schmidt, CEOsident of America inc.)

That and buying child porn.

I am genuinely interested in Goum's rebuttal though.  What are the tax implications of buying 50 euros now for X, 50 euros in a few months for Y, then selling them back to US for Z (where Z is an amount higher than X and Y)?

He's an economist not an accountant.  Our accounting friends would be the ones I'd ask for that question now that it's been declared how the IRS will handle them.

I didn't mean I was interested in Goum offering his opinion on the matter, I just meant I am interested in the idea he brought up.

Having a transaction history, and actually relaying that to the government in a way they can operate is unfortunately two different things. Even the top brokerage firms still fuck up basis calcuations due to prior sales or transfers, and the IRS is the one who came up with the brilliant idea of mandating people sending in 1099s to vouch income. Nevermind that if you don't do it, they would literally have no way of proving you did instead of a full-fledged audit, wasting countless hours.

My point is that the tax implications do not change whether or not the item is fungible, which is a core property of the item itself*. Varying tax implications exist for foreign currencies, commodities, stocks, bonds, etc etc etc. But all of these things are still fungible and all of these things, if they're good at being currencies can be used as such (and often are though not often for normal goods because "actual money" is easier)

*the only real exception is stolen goods/illegal gains exceptions. But these apply for everything. That is, stolen currency is not fungible with regular currency. The seller of a good actually cares whether or not currency is stolen or not because they can be liable for returning the money(pretty sure on this). But even with these laws we still consider those goods fungible.

Well it might actually change and be defined differently for currency than for property, which is the exact reason why I was asking....

Fungibility just means that two instances of the same item are more or less indistinguishable. Dollars are fungible, you don't care which one you are paid with. Cars are not fungible, if you go and buy a specific car you don't want to get a different car. "Theoretically" you could say they're fungible if they have the same make, model, production plant, and miles but this is kind of quibbling. But a BTC is a BTC is a BTC, if you put them in a metaphorical pile then give an equal amount back to everyone who put stuff in no one can tell the difference between what they started with and what they ended with. It might be the case that such an action would be taxed(probably not) or would force you to update your basis(also probably not) but the key part is that that sort of thing works because the goods themselves are indistinguishable. You can do this with BTC(fungible) but you can't do this with phones(my phone is not the same as yours, such not fungible)

And the argument would be that since each BTC has history (the transactions it has been in), it's not like a stack of dollars.  I know at some point a physical dollar was issued by the mint and that I'm holding it, but I may not remember specifically who gave it to me and I have absolutely no way of finding out where it was before that (even though it has a unique serial number and it's theoretically possible to track them, they generally aren't).

Gold is truly fungible, if you take a bar with a serial number and melt it down, it's still a lump of gold with the same weight and value, but there's probably no way to prove it's the same gold.  BTC, not so much.  Frankly, that's one of the reasons I sometimes wonder if BTC are some kind of trojan horse.

--Dave

Only if the history matters to the next person using it. Insomuch as it does, that history also matters for any other good. If you melt down a bar of gold and that gold was stolen all you're doing is obfuscating the theft, like a tumbler obfuscates the owner of a BTC from its prior owners.