Who here is using Bitcoin?
 

I got involved with it about two weeks ago when it was $800/coin, bought half a coin then. I now have about .65 worth, and the value of a coin is about $1200.

I'm doing it more as an interest in the system then just straight investment, it is a very cool concept I think that has the potential to make worldwide money transfer really simple.

I'll also be accepting it for payment if I put anything for sale here in the near future.

Anyone else here into it? For it? Think it's all going to come crashing down? :2cents:

Ponzi scheme - Wikipedia, the free encyclopedia :giggle:

I wouldn't be dumb enough to publically announce that I was if I were.

I am not.

I have an acquaintance who just pulled 15k out, and has around 200 more that is going into property overseas in countries where it's doable.

Dann

Like any extremely high risk investment, you have to be ready to lose it all. I don't think it gets more volatile than bitcoin.

If you are buying into it because you see it as some form of investment, then you are doing it wrong and will most likely loose money. If you are buying some because you want to actually use them to purchase goods or services then I say good job. I personally have a few bit coins spread around a few wallets. I use them to purchase things online that I have no desire to be traced back to me. For instance my Seedbox and VPN connections are both paid in bitcoins and have been for a few years now.

Bitcoin is the epitome of a fiat currency. It has no basis for its worth. There is no intrinsic value in it. That being said, I wish I set up a farm when I first learned about it years ago.

"fiat" means "by gov't fiat" or law. "fiat" does not mean "unbacked".

Bitcoin doesn't fit the definition. There are no fraudulent claims of the money being invested somewhere.

This just came up on our local board. One guy got 272 bitcoin along with a website that he bought several years ago. It was worth about $1000 total back then. He had basically forgotten about it. He's been researching it for the last few months to see when to sell. Sitting on a smooth $300K today. Not bad. Not bad at all.

That depends on which economist you ask.



I also rather appreciate an observation made by Martin Shubik in "The Theory of Money," part of the Yale University Cowles Foundation Discussion Papers series. In it, he writes:

It is usual to contrast fiat money with a commodity money in terms of the former having the store of value property purely through the bootstrap of the dynamics of expectations, whereas the latter has an intrinsic store of value in its use in consumption or production. This dichotomy is by no means clean. In fact, in spite of the ideal condition that a trade utilizing an ideal commodity money should be intrinsic value for value, historically gold has usually carried a transactions value premium; i.e., there are individuals around who have no consumption desire for gold but who value it for its services as a means of payment.

In other words, the use of gold as a currency is in many ways functionally indistinguishable from the use of fiat money, since the transactional value of gold is artificially inflated greatly above its commodity value.

I really kick myself for not taking that early adopter spot that was offered to me. I thought it was going to fizzle into nothing. Damn that was stupid. The amount I would have had would made me 5%er on net worth.

Like I said I don't really consider it an investment, I count the money I spent on it as actually spent/gone. I would like to use it to buy stuff as it gets more popular, we will have to see where it goes. It had an interesting little crash this morning from a press release from China, it seems on it's way back up now through.

Also what Joe said.

If you actually want a REAL commodity money, you'd have to forget about gold and instead convince people to accept payment in something like wheat futures contracts.

Fiat money - Mises Wiki, the global repository of classical-liberal thought

The important point is it's better to call it "unbacked", to distinguish it from unbacked debt-based government-monopolized legal tender, wherein said gov't enjoys seignorage privilege. There is no such central authority with Bitcoin. Its value is dependent on market forces. (and some manipulation, like any other traded good)

Semantics aside, the growing competition among and from virtual currencies will be very interesting.

In Neal Stephenson's novel "The Diamond Age", the futuristic society's governments had withered away due to the rise of crypto-currencies, which meant governments slowly lost their ability to tax all economic activity.

Agreed, and it's the size of the economy behind a currency that gives it short-term stability. It's predicted (I forgot by whom) that new currencies will greatly increase in value and be volatile in the beginning as their acceptance spreads.

However there is one important difference between gold and gov't fiat-money. Gold can't be inflated willy nilly by any central authority.

Except for Auric Goldfinger. :noob:

I think that's what makes it even worse than a Ponzi scheme (at least as an investment medium). It's just like one, except they aren't even lying to you about investing the money. It's just "bitcoins go in, money comes out, can't explain that."

Not that the situation is bitcoin's fault.

Nor can it be stabilized by the same central authority.

That's the ugly little secret which goes un-acknowledged by proponents of either commodity-based or "independant" monetary systems. You might as well use shares in a DJIA-tracking index fund for all the Full Faith and Credit that any reasonable person would have in such a system. Now, not only can your retirement savings be wiped out by a speculatory bubble, so can the contents of your checking account and the money you have in your wallet and under your mattress.

You use the word "inflation" as though it is inherently evil, and yet nothing in life is as black-and-white as your newsletter would have us believe. While central banks are certainly guilty of of mildly inflationary behavior from time to time, Alan Greenspan and Ben Bernanke might as well be an Amish deacons as compared to the behavior of the collective insanity which we refer to as the "free market."

I trust an appointed federal officer to benevolently manage the value of my currency a lot more than I'd trust Gordon Gekko to do the same.

I wouldn't be so negative towards central bank legal-tender money if they targeted 0 inflation as opposed to 2-3% steady inflation.

Such inflation steals from savers and those on a fixed income. Even Keynes said that steady central bank inflation is a means of reducing the real income of wage-earners. 2-3% inflation as opposed to 0%, makes it much more difficult to save money for the future and requires people to play investor. This funnels a lot more money into the stock market than otherwise, again subsidizing the financial industry, and arguably increases the volatility of said stock market.

Secondly such steady inflation distorts the market to subsidize individuals and corporations that can effectively borrow at or near inflation rates, at the expense of said savers. And it obviously dis-incentivizes saving, and incentivizes borrowing and spending. One can argue that this biases the masses towards taking a short-term as opposed to a long-term view, and is thus a net negative.

Thirdly the money-creation power itself gives the gov't/central bank the ability to bail out the financial industry which as a result enjoys privatized profits and socialized risk. The cronyism is immense.

All completely true and valid points.

And none of them are anywhere near as bad as subscribing to a monetary system which is controlled principally by speculators rather than by a chartered federal agency which is directly accountable to the congress.

The same congress, by the way, which is specifically granted the power, in Article I Section 8 of the US Constitution, to create money and regulate its value.




It's like the old joke about how democracy is the worst possible form of government, with the exception of all the other ones which have been tried. You're pointing out how bad the central bank is, and yet the only alternative which you can offer is far, far worse.

The volatility of a currency is there while it's new, and diminishes over time as it gains wider acceptance.

AFAIK the original meaning of the founders was that Congress regulate the weights and measures of money. They were against unbacked "paper" money, with the exception of Hamilton.

So, humans have been using gold as an exchange-medium in some form or another for the better part of ten thousand years now. When will the price of gold stabilize?

You are using the concepts of "currency" and "commodity" as though they were interchangeable.



If this were the case, then they would have written that into the constitution. Article 1, in particular, is extremely specific about every little detail of the Congress. Here is the exact text of the relevant section:

"To regulate the value thereof."

Doesn't say anything at all about backing, paper, etc. It says that they get to regulate the value of money.

Don't take too literal an interpretation of the word "Coin" in section 8. In the late 18th century, the word, when used as a verb, meant simply to create new monetary instruments.

The Continental Congress had actually been printing paper money since 1775, a year prior to the revolutionary war. And almost immediately after the adoption of the constitution, in 1789, the Congress chartered the First Bank of the United States and authorized it to issue banknotes.

Far from the founders of the US being opposed to unbacked paper money, they'd been issuing it themselves for years, and continued the practice after federalization.

And the so-called Gold Standard? It wasn't even adopted until 1900. (The first US Dollar was actually pegged to the Spanish Milled Dollar, and it bounced around all sorts of different standards from 1785 to 1899.)


A Continental paper third-dollar:

https://www.miataturbo.net/attachmen...ine=1386363725



A First Bank of the United States $10 note from 1798:

https://www.miataturbo.net/attachmen...ine=1386363725

Whiew, the market has been having a hell of a day...

Gold was used due to its features that make it well suited as a currency.

The price of gold now is not stable because it is not currency/money, due to legal tender laws. As I mentioned earlier, it is the size of the economy that a currency is used in, that stabilizes its short term fluctuations. If gold had remained currency, it would have been more long-term stable than the USD, which has lost 96% of its value since the creation of the Federal Reserve.

No, currency is something that is widely accepted as payment. Gold is not currency, has not been since FDR confiscated it from citizens in the 1930s.

Relevant.

Such as being easily counterfeited and difficult to ascertain the true worth of?

Gold, all by itself, has never been a practical tool for day-to-day financial transactions outside of a few extremely isolated pockets of time and space (eg: gold flakes and dust were commonly traded in those parts of the North American continent which experienced gold rushes in the 19th century.)

One of the biggest problems with freestanding gold as a transactional medium is that it's hard to accurately measure, and not just because you need a good scale. The tools and knowledge to alloy gold have been commonplace for hundreds of years now, such that if I know what I'm doing, I can easily take a lump of 24k gold and alloy it down by 20-30% without adversely affecting its color or malleability. How is the girl at the cash register supposed to verify the purity of the lump of gold I'm handing her?

Sure, you can mint gold into coins, but that defeats the purpose of using gold in the first place (as opposed to, say, steel or paper.) At this point, you're involving a government and a central bank, and so you're right back to where we started. The gold is now worth whatever the government stamps on the front of it, but only so long as the face value of said coin, plus the hassle of melting the coin down and transporting it to another country, exceeds the expected return from doing so.






Unless I'm missing something blindingly obvious, you seem to be presupposing that the USA is the only government on earth, and that the American people are the only society who have any interest in gold.

The Fed can no more dictate the price of gold on the world market than it can dictate the price of oil.




Gold has never been currency in the US. At best, we exchanged pieces of paper issued by a central bank which were redeemable for gold on demand, at an exchange rate dictated by the market rate. In other words, the amount of physical gold represented by a $10 note varied from day to day, just as it does now.

Also, since you totally ignored the bulk of my previous message, I'm just going to go ahead and re-post it verbatim:


If this were the case, then they would have written that into the constitution. Article 1, in particular, is extremely specific about every little detail of the Congress. Here is the exact text of the relevant section:

"To regulate the value thereof."

Doesn't say anything at all about backing, paper, etc. It says that they get to regulate the value of money.

Don't take too literal an interpretation of the word "Coin" in section 8. In the late 18th century, the word, when used as a verb, meant simply to create new monetary instruments.

The Continental Congress had actually been printing paper money since 1775, a year prior to the revolutionary war. And almost immediately after the adoption of the constitution, in 1789, the Congress chartered the First Bank of the United States and authorized it to issue banknotes.

Far from the founders of the US being opposed to unbacked paper money, they'd been issuing it themselves for years, and continued the practice after federalization.

And the so-called Gold Standard? It wasn't even adopted until 1900. (The first US Dollar was actually pegged to the Spanish Milled Dollar, and it bounced around all sorts of different standards from 1785 to 1899.)


A Continental paper third-dollar:

https://www.miataturbo.net/attachmen...1&d=1386610311



A First Bank of the United States $10 note from 1798:

https://www.miataturbo.net/attachmen...1&d=1386610311

I got into bitcoin/litecoin mining about 6 months ago just for fun as an experiment. It kind of turned into a hobby and with the recent inflation in price, I used the coins I mined to purchase a 3 T/H miner rig as a longer term investment. The key to the mining side of "game" is to have the biggest miner possible as soon as it hits the market.

If I was buying into the currency now, I'd buy heavily into Litecoin. Right now Litecoin is still Scrypt based mining (using GPU) and is effectively tied to BTC (think gold/silver). I think the longer term projection for LTC will be ~ 60-100 whereas it currently sits around 32 USD.

The reality is - I consider bitcoins similiar to options trading, its all based on opportunity and the ability to make a quick investment and not care what happens to the money :)

I just read up a little on bitcoin mining and all I took away from it is that I'm not especially smart...

It's basically become a digital arms-race, in which certain small groups of people are spending large amounts of money to create dedicated, high-performance mining machines based on custom ICs designed specifically for the purpose (not even FPGAs are good enough anymore, we're talking about literal ASICs at this point.) In doing so, they have caused massive deflation of the currency and driven down the "price" of bitcoin mining to the point where casual mining (eg: using a high-end gaming PC at home) has become pointless.

Thanks to this, it literally costs more in electrical power to mine bitcoins with a general-purpose PC than you will earn from the task.

Much as a very small percentage of the US population controls a very large percentage of the total wealth in the US, this small group of miners have created a bitcoin 1%, and control the majority of currently-extant bitcoins.


To give you some sense of scale as to the futility of trying to compete with the bitcoin 1%, here are what some typical present-day bitcoin mining rigs look like:

https://www.miataturbo.net/attachmen...ine=1386701882

https://www.miataturbo.net/attachmen...ine=1386701882

https://www.miataturbo.net/attachmen...ine=1386701882

Yeah I just read the blub in wikipedia and I'm having a hard time grasping the link between doing a bunch of shit in virtual space and bitcoins being acquired. Are you like actually making bitcoins or like stealing them or what that fuck.

You hit the nail on the head - the big tera-hash rigs are running 10k a pop and I'm seeing people buying in excess of 10-20 per order. The only good news is that people who were mining using GPU are still able to mine litecoin as scrypt is resistant to ASICs (for the time being).

I gave up trying to explain to people who don't typically deal with this stuff on a daily basis. When explaining to my friends, I basically send them this video :)
http://www.techfaster.com/what-is-bi...ng-work-video/

But that is *exactly* the point. The inflation rate of bitcoin is set in the code from the beginning.
"Mining" bitcoin is like mining gold - it's supposed to be expensive and difficult to mine, which reduces its inflation rate, so bitcoin's value doesn't dilute from inflation.

Physical gold is NOT easily counterfeited. Its density is too high to make that easy.
Central banks are LEGAL counterfeiters. They print more money and dilute its value.

Again if gold were widely accepted we wouldn't be walking around with coins. We'd be using receipts i.e. gold-backed paper money, or VISA or charge cards denominated in gold units.

Jefferson, Madison and some others saw the destruction of the Continental and hated paper money in general.

This was the result of the Federalists led by Hamilton, who wanted centralized power. The whole Constitution was a centralization of power. It's unfortunate that Hamilton was a much more devious politician than the Anti-Federalists.

Don't confuse the use of gold or silver coins ("specie") with "the gold standard". The former arose naturally in the market, the latter is a gov't decree.

Greenspan himself wrote a great article on gold and why central bankers want to decouple paper money from any commodity:
http://www.constitution.org/mon/greenspan_gold.htm
Try to understand what he's saying.

It has been used as currency in many cultures for thousands of years, independent of gov't decree. And if gold were widely used today as currency, we would still have VISA cards and charge cards, with units of gold. That's not "inconvenient".

You missed my point that a widely used currency gains short-term stability precisely because a lot of people sell stuff denominated in it. The reason gold fluctuates now is because it is NOT a currency.

The use of gold as currency does NOT mean we walk around with gold coins.

??? I'm not presupposing anything.

Gold and silver were the preferred medium of exchange from before the Revolutionary War, up to around the creation of the Federal Reserve. Again it arose naturally in the market.

Good article on the Fed's reaction to Bitcoin. Lots of Doublespeak in their paper:
Has the Fed Met Its Match? - Ludwig von Mises Institute Canada

I tried mining some litecoins, but after 2-3 hours getting cgminer to run, and 5-6 hours of mining, the pool I had signed up for still showed I had no progress. The way the pool runs, supposedly I should get a percentage of each block found based on how much work I had done, but the pool wasn't ever reporting my worker doing anything. So I gave up.

I'm still waiting for people to start accepting partykitty.gif's as currency. they are released from the "mine" at every birthday of each mt.net member.

some 4chan user bought a gallardo with bitcoins:
The Daily Dot - This 4chan user bought a Lamborghini with $200K in Bitcoin

Actually, the fact that it can be mined in the first place is one of the things which makes gold (and bitcoin) different from money.

Money is something which is used to represent value. We create value when we perform a service which of use to others (building a house, painting a picture, giving a blow-job), when we excavate a material that is useful in some process or industry (oil, aluminum ore, etc), and so on. As such, the supply of money in most economies is regulated to approximately track the rate of the creation of value.


By contrast, gold and bitcoins both allow individuals to "create" money directly, without actually creating anything of intrinsic value.

And, unlike money, the supply of gold and bitcoins are, as you said, finite and nearly impossible to regulate. As such, they cannot track the rate of the creation of value within the economy, and will tend to lead to deflation which, according to any reasonable interpretation, is worse than inflation because it encourages the hoarding of money.

Well, I guess we can add metallurgy to the list of things that Jason claims to be an expert on despite all available evidence.

You are, I am sure, familiar with a chap by the name of Archimedes. He figured out how to tell whether or not gold has been diluted by immersing it in water.

Sadly, we haven't really improved on this technique in the 2,200 years since he did his best work. So in order for your theory to hold water (pun intended), we'd need the minimum-wage drone working the register at the grocery store to immerse everyone's payment in a hyper-accurate graduated cylinder and measure the volume of liquid which it displaces. Bad enough on the face of things, but then consider the sort of precision you'd need to determine a few percent difference in density in a sample having a mass of less than a gram.

In other words, the difference between theory in practice is that, in theory, there is no difference between theory and practice, while in practice, there is.






Regardless of how a few individuals felt about paper money, the only thing that actually matters is what was written into the constitution. And you can't go dismissing the inviolate sanctity of the constitution that without also dismissing the entire concept of the federation of states outright.

No, I get it.

You just seem to be ignoring the fact that other countries exist. If the US were to standardize on gold as a peg for its currency, the fact that gold is speculated upon as a commodity in every other nation in the world would mean that its value would continue to fluctuate as it does presently.


The only way your idea could possibly work would be for all of the industrialized nations of the world to simultaneously agree upon a single currency, and that's the sort of thing that the tin-foil-hat crowd would tend to point towards as the harbinger of the antichrist or some kind of masonic plot.


https://www.miataturbo.net/attachmen...ine=1387227274

up uP UP

up?

Bitcoin plummets as China's largest exchange blocks new deposits | Technology | theguardian.com

So, is now the time to buy or the time to get off a sinking ship?

It's a couple days old, but I found this interesting: These Three Graphs Prove That Bitcoin Is a Speculative Bubble | Ordinary Times

The transactions vs market cap graph is quite telling. Nobody is using bitcoins as money, they're hoarding them waiting for the price to hit $10k

Now's definitely the time to buy.

I wouldn't say that "nobody" is using them as money, as that is what I use mine for. I do think that way to many people have gotten involved recently just because they want to "invest" in it and that it is in a bubble stage. I think most of those people will be hosed in the long run. Especially when alternative digital currencies start gaining ground.

You're right, not "nobody," just a lot fewer than there used to be, relatively. I'm not at all surprised that the transactions vs market cap graph starts to plummet at the same time the price starts to go up.

You also have to factor in silk road closing. That happened a few months ago, but I believe a bit before the value really started going up.

For sure, it dropped after Silk Road got shut down. But it had already dropped considerably more than 6 months prior (Silk Road was shut down October 2nd). I'm no macroeconomist, but that seems to be what would be expected for a deflationary currency (that it be hoarded for future value rather than spent on goods or services).

Holy crap this bitcoin mining thing is confusing...

On the discussion of currencies..

1) I think that not one government of the world will let a non governmental entity control the money supply. Nor do I think it is a smart idea. (not that I think the US central bank is is doing a particularly good job but they too are limited in their capacity)

2) I believe as China returns back to the top as biggest world economic power, and with India and the rest of Asia in the mix, we are talking about having over half of the worlds economic activity happening in the continent of Asia in perhaps 30-40 years. As economic influence of the US wanes, a new world reserve currency will rise from the Asia region.

3) With that said, I believe that the American dollar will continue to remain the world currency for many many decades and even when they loose that position, it will remain to be very influential in the world economy, just as the Euro. The US still has allot of natural resources, land, capital, military and wheat/corn and these will remain important in the world economy.

This thread got me thinking again about currencies so in reference to gold as a currency. I'll throw my basic assumptions of mine but am open to learn and discuss..

1) Theres not enough gold, and even if there was, it cannot be created fast enough to keep up with the wealth/money being created in the world economy. (for gold backing)

2) Gold as money, is not flexible and creation of credit is difficult. Credit expansion is needed for growth.

3) Most people and countries want and need growth or governments will face revolution. (this is putting aside the fact that environment will be trashed from the always grow idea)

With that said, I do understand gold as a way to hedge against the devaluation of the dollar. BUT, I don't know of the regulations and what not to buy, sell and trade large amounts of gold in or from US to other countries... Are there not barriers and fee's to buying and selling gold internationally? I would be afraid that even if I had physical gold while living in the US, it would be rendered must less useful because of government intervention.. If I am trying to maintain wealth rather than being risky and trying multiplying it, IF I were to live in the US, I would probably try to find save investments in Asia, then in 40 years when the value of the US dollar is much lower, cash in on the international investments and buy land in the US...

BUT, I plan on moving to Japan so that's another story. :)

False. This presupposes the value of a currency cannot appreciate. Besides, a currency does not *have to* equal the value of all the wealth in the world. Where does this assumption come from?

False. You can still have expansion of credit, much greater than the total market capitalization of a currency. You can still have fractional reserve banking.

This is orthogonal to the above discussion.

So is real estate, and stocks, etc.

To question this assumption, you can look at history. Money arose in the market, independently of central authorities. It was later that central authority wanted to control money. When gov't started controlling currency, it was primarily a means of profit and power, not as a "good thing for the people". You may want to read the free PDF book "What has gov't done to our money" by Rothbard.

I suspect the concept of a single or central world "reserve currency" will diminish in importance. There may be more than one in the future.

The non-American non-European users of the USD and Euro will also see that holding large reserves of it, if it devalues, is a losing proposition, and will switch if so. Besides, the idea of hoarding a reserve currency as a sign of economic strength, is rooted in *Mercantilism*. See Adam Smith vs. Mercantilism.

You must be unaware of the history between the Bretton-Woods agreement after WW2 and Nixon's unilateral abandonment of the USD-gold peg. The USD was redeemable for gold.

One problem was that despite the "peg" (fixed price wrt gold), the Federal Reserve kept on inflating the USD, and of course other countries then kept redeeming their USD for gold, until Nixon refused. The other problem was that US citizens couldn't do the same, only foreign governments. Redeeming a commodity-backed paper currency for said commodity is an automatic check on over-creation of said paper (beyond how much commodity there is), unless of course a law prevents you from doing it.

You will note that the rate of inflation increased after what Nixon did.


(Needs to have a log Y axis but good enough:
http://dailybail.com/storage/chart-d...=1345082038883

To an extent *gold* functions as money between the central banks of the world.

All that chart proves is that inflation exists. It has no other meaning.

I don't think anyone is questioning that notion.

Can we stop talking about how bad the gold standard is and get back to talking about how bad bitcoins are?