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Guest Post: Bitcoin: Money Of The Future Or Old-Fashioned Bubble?
Submitted by Patrik Korda via the Ludwig von Mises Institute,
Bitcoin has been all the rage lately. The stuff, or lack thereof, runs on peer-to-peer technology, is fully decentralized, has no patents, and is open source. Currently, there are almost 11 million bitcoin units in existence and the maximum amount of bitcoin units that will ever be created by the logic of its design are 21 million. For more details on how they work, see the recent Mises Daily “The Money-Ness of Bitcoins” by economist Nikolay Gertchev.
The Issue
While bitcoins are designed so that they cannot be hyperinflated in name, they certainly can be hyperinflated in substance. Already, there are numerous knockoffs such as litecoin, namecoin, and freicoin in place. This is a particularly valid point because bitcoin is a starfish, i.e., it is fully decentralized. As stated by Ori Brafman and Rod A. Beckstrom,
The starfish doesn’t have a head. Its central body isn’t even in charge. In fact, the major organs are replicated throughout each and every arm. If you cut the starfish in half, you’ll be in for a surprise: the animal won’t die, and pretty soon you’ll have two starfish to deal with.[1]
After the music-sharing service Napster went under, Niklas Zennström (the creator of Skype) stepped in with his creation called Kazaa, which had no central server that could be shut down. Eventually, such peer-to-peer programs became more numerous, to include Kazaa Lite, eDonkey, eMule, BitTorrent, etc. While this may be good news for people who like to download and share content for free, it certainly is not for people who are under the impression that bitcoin is a hedge against inflation. Those who compare bitcoin to a language neglect the fact that most people do not have an incentive to create a new language out of the blue. On the other hand, a great chunk of human history consists of people searching for the philosopher’s stone to magically produce gold. There can be no doubt that bitcoin has a built-in gold rush mechanism, which has already spilled over to litecoin and will be sure to spill over to subsequent knockoffs as well.[2]
Money
Does bitcoin jibe with the Austrian stand on money? The only way to find out is to read what the great Austrians had to say. Let’s start with Carl Menger. In Principles of Economics, Carl Menger made the point that money, a general medium of exchange, has always tended to be the most “saleable” (i.e., “marketable” or “liquid”) commodity of the time.
What is saleability? It is not simply value. One may have a Picasso at home, which will fetch quite a sum at a Sotheby’s auction during a boom, but a Picasso, like a poem by Friedrich Shiller, a work of Sanskrit, or a decades-old bottle of red wine can never be the most saleable good. As Menger put it, saleability is the
facility with which [a good] can be disposed of at a market at any convenient time at current purchasing prices, or with less or more diminution of the same. (...) Compare only the number of persons to whom bread and meat can be sold with the number to whom astronomical instruments can be sold.
Menger went on to point out that cattle were the most saleable commodity in the ancient world. This is perfectly understandable in a world where bare-bones subsistence is a reality for most people and the structure of production is virtually nonexistent. As society progressed, however, cattle became less and less marketable.
As civilization progressed, Menger states that,
… peoples who were led to adopt a copper standard as a result of the material circumstances under which their economy developed, passed on from the less precious metals to the more precious ones, from copper and iron to silver and gold, with the further development of civilization, and especially with the geographical extension of commerce.
Gold won out due to a variety of reasons, such as being durable, amalgamable, malleable, divisible, homogeneous, and rare. Yet, the ultimate reason that gold won out is because it was the most saleable of commodities. As Menger went on to write,
Gold nuggets extracted from the sands of the Aranyos River by a dirty Transylvanian gypsy are just as saleable in his hands as in the hands of the owner of [the] gold mine, provided the gypsy knows where to find the right market for his commodity. Gold nuggets can pass through any number of hands without any decrease whatsoever in marketability. But articles of clothing, bedding, prepared foods, etc., would be suspect and almost unsaleable, or at any rate of greatly depreciated value, in the hands of the gypsy, even if they had not been used by him, and even if he had, from the beginning, acquired them only with the intention of passing them on in exchange.
This leads us to another criticism of bitcoin: It can never be the most saleable good. The reasoning for this is quite simple. Until the majority of the 7 billion or so people that inhabit this planet have either a smart phone or frequent access to the internet, a digital currency is out of the question.
Gold, on the other hand, is easily recognizable, as opposed to silver that may be mistaken for other metals such as nickel. Moreover, it melts at a relatively low temperature and is a relatively soft metal, which provides superior amalgamation and partly explains why it historically won out over metals such as platinum. If one questions the role of gold in the present monetary system, one only has to walk down the street in a metropolitan area and see a ‘We Buy Gold’ sign. Moreover, central banks hold gold and lots of it. They do not hold cattle, wheat, soybeans, copper, silver, or bitcoins.
Menger also wrote,
I am ready to admit that, under highly developed conditions of trade, money is regarded by many economizing men only as a token. But it is quite certain that this illusion would immediately be dispelled if the character of coins as quantities of industrial raw materials were lost. [3]
While it may very well be true that some early adopters valued bitcoins with what Menger described as imaginary value, the point of the most saleable good bears repeating. Gold is and has been seen as an object of beauty since the dawn of civilization. Thus, the argument that bitcoins are in accord with the regression theorem because a handful of people consume them as they would a Picasso, is like saying paper money has value because John Law or Ben Bernanke really enjoy playing monopoly. In fact, we might as well say that alchemy works, considering that a significant amount of human history and energy was spent in attempting to find the philosopher’s stone. Some people may enjoy work just for the sake of working. Unfortunately, this is not a sufficient justification for slavery nor the labor theory of value.
Anonymity
With the imminent hyperinflation meme fading away and no longer holding much water, the new reason to hold bitcoins is the anonymity, nay, the freedom that it provides. Want to gamble online or buy something illegal? Bitcoins are the solution. It is a way of circumventing the authorities and uplifting free and voluntary trade, or so goes the story. Unfortunately for many of the misinformed, the reality is toto caelo. It would be best to take it from bitcoin developer Jeff Garzik himself. The fun starts at 3:20.
The ironic part about this is that anyone and everyone who has participated in illegal activity using bitcoins, presumably because they thought it was anonymous, now has a permanent record of every single one of their transactions contained on the public ledger. Those who think they are clever by using add-ons such as Tor are just as foolish as those who think prepaid cards or smart phones are anonymous. Imagine if bitcoins existed 50 years ago. Chances are, none of the last three presidents (including Barack Obama) would have run for office.
Bubble Time?
The question left to be answered is whether or not bitcoin is once again taking the shape of a bubble. The answer is yes. There is present a reflexive pattern of people buying because prices are rising, and prices rising because people are buying. The myopic are extrapolating the price trend of the past four months, which they deem is normal, and in so doing they exacerbate it to the upside, thus attracting even greater fools. The inflection point will come when the continuity of bullish thought is broken. One thing is for sure, the amount of suckers left who are willing to jump on the moving and ever-accelerating train is drawing thin, and so are their pockets.
When prices for any asset go parabolic, it does technical damage to a chart. It is sort of like someone deciding to go full speed in the middle of a marathon. Surely, one would look good for a few minutes. However, at a certain point one would inevitably collapse, with the possibilities of finishing the race being greatly diminished, let alone doing as well as they would have otherwise.
Gold went parabolic toward the second half of 2011 to $1,900/oz., which did a lot of technical damage to the charts that gold is just now beginning to shake off. Like Icarus, who had soared too high and melted the wax on his wings, parabolic moves always end in a correction, and if prolonged, a crash. Ironically, the best thing that can happen for bitcoin naysayers is if bitcoin skyrockets to $300/btc within a week.
There is nothing anti-Austrian about acknowledging that there exists in the market place a lot of naïve, irrational, and misinformed players. During the dotcom bubble, for example, a maintenance and building company called Temco Services almost tripled in a matter of minutes in 1998. The reason is because by 1998 every other layperson was involved in the market. Thus, the level of competence significantly dropped. The ticker symbol for Temco is TMCO, which was fairly close to that of Ticketmaster Online, which was TMCS. Ticketmaster Online (then TMCS) just happened to trade publicly for the first time on the day that Temco Services (TMCO) tripled. Rising asset prices create euphoria, and euphoria significantly drops the IQ of the participants.
Another reason why bitcoin is so susceptible to bubble behavior is because it is perceived as being something new. “New era” thinking always attracts lots of attention. The tulip was introduced to Europe by way of Turkey in the middle of the sixteenth century. (In fact, the word tulip came from the Turkish tulipan, which means turban.) The tulip was perceived as something new to Amsterdam, a country which at the time possessed an abundance of newly discovered gold and silver from the New World. Likewise, the Mississippi bubble, which was perpetrated by John Law, promised vast riches to be had from the New World. The manias in railways, the radio, the internet, you name it, most of them involved something new or something perceived to be new.
There is no doubt that bitcoin is a spontaneous answer to the monetary instability that we see all around us today. On one side of the pond people are worried about the glorified currency peg known as the Euro and on the other about the amount of damage that Bernanke is willing to inflict upon the world’s reserve currency. However, let us not become so enamored of an innovative stateless solution that we forget Austrian economics and hitch libertarianism’s wagon to something heading for a crash.
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I'll think this is a great article once I cash out of my bitcoins.
Anyhow BitCoin is still dirt cheap. You can get 10,000 Satoshi for a couple of bucks.
Can you touch it? No..... Then you don't friggen own it. It's just another digital illusion that can be stripped away with a push of the button.
@Dr. Engali
Conveniently ignoring your < insert currency > is stored on bank servers.
I don't understand the rabid attacks - if we banded together using precious metals and bitcoin - the banking monster would be tamed.
$204 this morning. $240 right now. 42 bucks two weeks ago.
God bless people making money on this, but I dunno.
How liquid is bit-coin?
Mt. Gox provides some liquidity. But it can get tulippy if there's no demand.
More liquid than my gold or silver coins (at many stores), come to find out. The coin shop and eBay are the only places where I can sell my PM right now. And good luck getting the right change in PM, instead of getting fiat change.
Like I said: PM is a store of value, BTC is a far superior medium of exchange.
The one thing that does annoy me about BTC, is all the peripheral business that are popping up, and which are skimming off profits. Places like Flexcoin and Coinbase make me VERY nervous about their business model (fees, an all-too cozy alliance with US banks and Gov. for info-sharing/disclosing). Read their Privacy Policy before signing up. If that's how they operate, where's the benefit of using them, rather than cash or my existing plastic cards? What, more crap to keep track of and manage, and hog my time? If I use BTC, it is to take fiat out of circulation and keep my privacy safe from these entities.
The Tylers would provide a great service to ZH readers if they had their version of the good, bad or ugly BTC ecosystem players.
TPTB don't need an intermediary to track BTC. Go back up and watch the video, it's very enlightening.
Thanks for the education on that one Tyler.
Re: anonymity. Yes Bitcoin is not perfectly anonymous. What is? Even cash has limitations.
There are ways to increase your anonymity if that is a big concern.
https://en.bitcoin.it/wiki/Anonymity
However probably not a good idea to try and launder large sums of money with Bitcoin. Much easier to just go to your friendly neighbourhood TBTF and TBTJ bank and pay them a fee for doing "business as usual".
Not every transaction in cash is tracked.
In bitcoin it is.
Well, suggest you avoid making illegal transactions.
You record your cap gains with BTC and pay the tax on them, you are legal.
But, note you have a cap gain if you trade an appreciated BTC for any good. You must keep track of exchange rate at the time you trade any good or fiat for BTC.
Excellent points.
About btc and pm's.
You get hammered on the vig.
Until that's resolved, you're nothing more than a competing fluctuating currency.
you can have many wallets ok? coinbase makes life pretty easy (they still have low caps though) to get in and out of bitcoins for a much lower fee rate than other avenues.. do you want them to work for free?? use localbitcoins.com if you dont want fees but they'll hit you by ramping up the price
and why do you say 'i can just use cash'? isnt cash the one turning into toilet paper as bitcoins increase in value..
Using multiple addresses may be legitimate if, for example, you're using them to segregate (i.e., account for or track) payees. But if it's arguable that you're using them to obscure or "structure" transactions, then you're going to jail.
ANOTHER bitcon article?
Of course it's a fucking bubble!
No doubt. We all know why bitcoin advocates get tetchy when we don't fall instantly in love with the cut & paste blurb of their cryptographic freedom vehicles of wealth. They're hoping to get rich in the hope that btc will become ubiquitous and make the few rolling around their virtual wallet one day be expensive enough to buy their way out of their mum's basement.
Even ignoring the glaring technical issues that plague it every other month, the speculation is what is wrong with the whole thing. It is already dominated by the founders and early speculators who are keeping back millions of bitcoins for the same reasons as the guy living in the basement.
Bitcoin is not a commodity, it is not a measure of value, it is not an investment vehicle. It is simply a log of all transactions conducted peer to peer. It is meant to be used, not hoarded for speculation, so when every guy and his dog keeps his btc to himself, they are participating in a giant con to enrich the founders and early speculators, of whom there will undoubtedly be big finance.
Legislation to make it readable to law enforcement/commercial credit companies, or even outlawing it altogether is highly likely. I will be sorry to see such a good idea go. But btc only proves the old adage that you can give heaven on earth to man, and man will always find a way to fuck it up.
it's the demographics that throw up a red flag for me: around 95% male, english language, looking to make a profit. . . the "average" use so far is for online gambling, illegal substances, and "gifting" girls to take their clothes off/flash 'em, etc.
I'd say a lot of that falls into the "mum's basement" types, or at least folks who spend a lot of time on computers, heh.
@Cathartes Aura
Yeah, like that damned internet when it started - or whatever the kids are calling it. Who the hell would buy a $1,000+ computer just to check email? We've got stamps and brick-and-mortar stores! Who buys things online?
Warble-warble-warble
Of course they're like that - what did you expect? It's a crypto currency we're talking about.
I could say I am surprised by the high level of Bitcoin adopters vs. early adopters of video tapes..
You got reasonably good grasp of the subject, but you are partially wrong.
I'm an advocate who's not hoping to get rich. I want to help make crypto currencies sustainable so I buy, spend and accept it.
The less need to use fiat the better.
+1
Lol bubble or not I have all the computers in my house mining. Free money. If it turns out they aren't worth anything in a year, so fucking what, not like I spent any time or money on them. But until then, might as well mine.
It's answers like these that make me glad i'm not trading paychecks for bitcoins.
Good, because that's exactly my point.
If bitcoin is in fact a currency, and it can, in fact, buy more stuff with one unit than it could before, then prices in BTC are dropping and it is hyperDeflationary.
That is a big problem. The value of Bitcoins vs dollars is rapidly increasing, but are vendors who accept Bitcoins rapidly lowering their prices?
I guess the Bitcoin payment system is supposed to automatically adjust values based on the MT Gox exchange, but the value is rising so fast, how do you know what to charge?
In the current environment, why would you pay for anything with Bitcoin? There is absolutely no incentive to actually use them for commerce because a single day later, your Bitcoin may be able to purchase 25% more.
A few months ago a few Bitcoins could pay for a pizza and maybe an organic hemp t-shirt. Now those same bitcoins might be enough to buy a cheap used car. With the current hyperbolic moves, the Bitcoins might be able to buy a house by the end of the year.
If you spent the Bitcoins on a pizza, you'd be pretty pissed when a year later that pizza could have been a house.
SO Bitcoins are not a stable medium of exchange at all. It is now 99% made up of momentum chasing speculators hoping to turn a small amount of dollars into hundreds of thousands of digitally represented dollars.
The money isn't there until you transfer it into your hands. Just like any penny stock that jumps to a couple bucks in a few days. The minute you go to sell, the thing drops to zero.
To that point, even if the venders selling goods in BTC auto-adjust their prices, the bid-ask spread on a BTC is so wide these days that there is a big difference potentially between the last trade and the next.
A 10,000 BTC pizza really did cross the market back in the day. There is a cabal of crypto-anarchists out there who may soon find themselves sitting on a Rothschild-sized mischief fund. Will be interesting to see how they use it.
The minute you go to sell, the thing drops to zero.
No way. That would be against the law... .., right?
Bitcoin either makes it as a viable medium of exchange or it does not. if it does, and I believe it will, then each coin will have a number of zeros after the #1 in its US fiat equivalent. If it does not then it will crash and burn. I own them, I'm buying more, if it cracks lower I'll buy more still. It's time has come. This is the digital world and will only become more so. There is no way existing fractional reserve central bank controlled debt money survives. Bitcoin fills the void nicely. Thank you very much for selling your coins to me.
Good luck to you dollar cost averaging in.
Please update on your cost basis and wins(losses).
When in the name of bejaysus is it ever different? The stupidity of this thing is blowing me away, what are we talking here 300-400% a week? Im polishing my Muttley snigger already.
Or you could quit whining and sink $40 $80 $160 $240 into it and shut up.
"Another reason why bitcoin is so susceptible to bubble behavior is because it is perceived as being something new."
Is this the same reason for Obama, being black and a left wing facsist activist was elected twice ?
Eh wrong crypto-currency or idea of it has been around at least since 1995. This is what I would call the mp3 step of crypto-currency. Bitcoin just happens to be mp3 there are plenty more lesser at the moment crypto-currencies out there.
Clownbuxs to the left of me, / Jokers to the right,,,
Stealers Wheels - Stuck In The Middle With You - Offical Video + Lyics
http://www.youtube.com/watch?v=8StG4fFWHqg (3:30)
I'll stick with pre 1964 dimes if thats ok.:)
Yeah - in theory, Bitcoins are not a terrible idea - but for the one problem that every time there's a power or internet interruption, you're essentially wiped-out.
If the Bitcoin system were to survive and stabilize - based upon the pre-determined limit, they could/should be worth more than 1 oz of gold.
I had a sneaking suspicion that Bitcoins would explode upward - but the dump will be equally unforseeable and dramatic.
The only reason I didn't buy a few Bitcoins just for pure speculation is because, philosophically, I think PMs are more durable and are going to be the better insurance policy once fiat system really starts to crack-up.
Yeah, because, you know, all the electricity on the planet stops for hours at a time on a daily basis, and the Internet is down for weeks at a time.
If there is no power then your bitcoins' impotency is the least of your worries.
Maybe you can make a suit of armor out of your gold coins.
Stock-up on BCs all you want - they're just a tool. Personally, however, on my limited budget, I'm going to prioritize tangible/durable investments/goods.
My advice: Until someone makes quantitative assessments of BTC growth in terms of criteria that define natural growth (exponential adoption), versus saturation, over-supply vs. price, etc., ALL we have is educated and uneducated opinions.
Talk facts, stats and numbers, or STFU. Or at least by honest that you are voicing "opinion", concerns, hopes or fears about the BTC growth.
Gold, silver, food, water, liquor.
Did I miss anything?
dont forget the ass-wipe..........
And the beer.
+1 for knowing what's important.
um,
dude, yer on ZH - GUNS 'n' AMMO !!!
If MT Gox really stands for Magic the Gathering Online Exchange, that is enough for me to stay away.
I had enough of the cape wearing non showering Magic the Gathering types in college.
The question left to be answered is whether or not bitcoin is once again taking the shape of a bubble. The answer is yes. There is present a reflexive pattern of people buying because prices are rising, and prices rising because people are buying. The myopic are extrapolating the price trend of the past four months, which they deem is normal, and in so doing they exacerbate it to the upside, thus attracting even greater fools. The inflection point will come when the continuity of bullish thought is broken. One thing is for sure, the amount of suckers left who are willing to jump on the moving and ever-accelerating train is drawing thin, and so are their pockets.
Survey says wrong.
Bitcoin is an indicator of trust in the banking system. It is blowing up because the small money is jumping ship from the SS banking system Titanic. It has to go somewhere. When the banks crash the ledger of your wealth remains. You just revalue the coins accordingly without whatever later on as a peg. The relative wealth ratio stays the same. There are a lot of people and more crypto-currencies out there. Of course the growth will level off at some point but trust will determine which currency wins out not some idol worshippers who equate gold to god.So far crypto-currency has been resilient so far. You all sound like a bunch of butt hurt drama queen teenage girls all jealous at the success of the new kid on the block. I would bet the biggest detractors of crypto-currencies besides the TBTF and Central Banks are gold bugs who are feeling threatened because they want to rule money world with their god of gold as the money control mechanism.
Here is a thought for you blind worshippers of shiny things. Why don't you set up your own equivalent crypto-currency style gold exchange, set up the rules and only use the currency as a stock equivalent. If it is fair and unmanipulated, people will jump out of the etf crimex market calling in their gold paper to reinvest in your exchange instead. It will break the price manipulation by pulling all the players out of the market except for the manipulators. I bet they have the gold and silver so rehypothecated it will only take about a 5% or so call in on the paper to crush it. The price of your precious will then revalue accordingly based of free market pricing mechanisms. If it proves better than bitcoin so fucking be it. That is free market, trust will be the ultimate decider as long as the playing field is level. That is something we should all strive for here regardless of any other differences.
Bitcoin IS hoovering small money out of the system and outside of capital controls and theft. A seperate crypto-styled currency(stock) will do the same for hard assets including rehypothicated to the wazoo paper on them when set up as a competing exchange hint *Russia* hint. You'll get your true market pricing on gold and silver while pissing everyone off in the process. What's not to like about it.
Instead of whining about manipulation do something about it. You got all the raw materials needed in front of you to craft into weapons to break the stranglehold on PM price manipulation. You can lead an old know it all intellectually arrogant close minded horse to water........
not downvotin' you Dewey, but serious PM stackers may not be in a great hurry to see the current price of PMs rise. . .
Of course not my point is this is disrupting even the plans of the serious gold bugs who want to control the world by using gold instead of control P as a mechanism to create money. He who hoards the most gold controls the coins (aka money). There really is no difference between the 2 except the method of control used. It always comes down to power and control at the end of the day when you filter all the bullshit out. If all the small stackers did this outside the system they'd make out like bandits and control the process not the biggest hoarders who want to collapse the banks but only if they control the money afterwards.
well, I can agree with you that the "I gots the golds, & I can't wait to buy a city block/a thousand acres/an island/mountains of hookers & blow" crowd (im)patiently tappin' their fingers on the keyboards waiting for the apocalypse so they can SCORE BIGTIME might be part of the haters you're pointing to.
again, I've no inherent problems with the bitcoin miners/users, but this whole thing rather reeks of a scheme some folks are hoping to score with. as a means of quick exchange or transfer of monies between places, yes, I think that's a very interesting concept.
as a speculation tool, perhaps. . . but in the main, I'm in agreement with those who see this as acclimating the minds to global pixelat'd fundings. . . and lord knows, that plays into certain hands spectacularly.
best comment i have read so far....
Are bitcoins backed by anything?
And as for price determination it's obviously the same mad crowd/herd that does nothing for stabilibity - the whole point in getting out of paper.
Me no understand. Gold makes more sense
Agent deebee,
Your post voices FUD (Fear, Uncertainty, Doubt). The best way to cure to ignorance and FUD is to DYOH (Do your own homework).
voicing doubts and questions can influence people to consider the answers for themselves - its a community service announcement.
> Are bitcoins backed by anything?
The existence of the internet. The internet will survive the crash of the Federal Reserve Note.
Absolutely.
Unless we have a silly black swan sun CME thingy...
Guess what everyone's bank accounts are also wiped out so is basically civilization. What happens when the super volcano erupts, what happens when the doomsday comet hits. I think we all have more pressing concerns than our bitcoins, cash or gold for that matter. Remember you can't eat your gold. I can always use my wits to live off the resources left your gold or dollars doesn't cut it at that point with no one to trade with or no one willing to accept it when they can't replenish the basics.
BitCoin is like derivatives.
Most people including those selling derivatives don't understand them.
BitCoin isn't easy to understand either, meanwhile you don't have to understand a green back.
BitCoin is going nowhere. Too complicated for Main Street and you can't hold it.
Holy shit are you really that fucking ignorant or a disinformation troll. It is textbook 101 demand side economics, demand chasing supply without manipulation on the supply side, that is fucking it. Can demand side manipulation be successfully executed we shall see. I'm sure it will be attempted by better minds than yours and mine for that matter.
I resent the name calling as my opinion is honest. Who cares about supply or demand side.
BitCoin is not secure, as evidenced by what happened by DOS interruptions and other system issues. The US government can close BitCoin as it did with dot.com's services.
If there is a power disruption or internet outage, guess what? Your BitCoin is useless. At least cash can buy necessities.
You want to store money in that?
Not I.
You can't close a decentralized based network without destroying all trust in it or shutting down the whole internet. It is one or the other. DDOS can disrupt any network and in this case they are only disrupting the exchanges not every private node in the network. The pricing and trading is disrupted not the transactions going on individually outside the exchanges. Can't say the same for the banking system if they DDOS it and disrupt the central servers in the atm machine network for starters. Secondly no the US can't it is decentralized I can easily ecrypted data streams obfiscate traffic and trade with it just fucking fine. They haven't stopped the silk road have they? If there is power disruption guess what your gold is also useless unless you are in Utah for purchasing basic necessities. Cash right now is king in that scenario. And the reality is there is so much back up capacity that power going down won't overly disrupt transactions since you can store your coins offline on something like a usb drive in a digital wallet. A major disruption in oil or gas I would be more concerned about than a disruption in the power grid going down because the amount backup generators out there.
Just remember one thing all detractors. No one is FORCING anyone to use bitcoins. It is a voluntary system built on trust. It will ultimately live or die on those merits. In a FREE market people will choose what fucking sound money is not some economic theory intellectually arrogant fan bois by what they want to use and that is going to be driven largely by their trust in it. If you don't trust it fine don't use it. The rest do will. Let the best man win. It is a level playing field once you are able to break the price manipulation on your PM's. I already outlined how to do it using a decentralized network and crypto-currency as a stock equivalent. This shit is a swiss army knife once you understand how to wield it. The end result is there will never be one "sound money" store used across the whole system no matter what. It is going to be a mish mash of them in a free market. That is the whole point of a free and unregulated currency system. Some will have more trust than others but some people will accept more than one as in trade for goods and services. The more trust the more acceptance simple as that.
21st century digital iteration of Gresham's law bitchez.
They can shut down Buttcoin without shutting down the entire internet anytime they want to.
But there are far more useful ways to conduct the execution. If the murder of some pretty-boy-du-jour helps to reinforce people's fear of currency alternatives, or reinforce some peoples insane belief in the omniscience or omnipotence of central bankers, then the world is that much more fucked.
it's not hard at all
https://coinbase.com/ link two-way to your bank account and an online wallet
https://blockchain.info/wallet/ use moneygrams to send money to an online wallet
http://coinabul.com/ buy gold and silver when you want to cash out
so hard really?
I don't know where you saw claims that Bitcoin is a store of value...
In the case "the InternetS" go down how do you envision paying a remote supplier with gold if not through your friendly local banker who will persuade you to exchange your gold for his paper certs if you want to pay a lower transaction cost.
Well Bitcoin is a paper-like certificate issued by your geek instead of your bank. The both are not as good as the real thing but they can come handy in some situations...
@cherry picker
Riddle me this - if the government can shut down bitcoin - why haven't they yet?
(Spoiler: Because they have the same chance as a snowball in hell of giving someone frostbite.)
"Can demand side manipulation be successfully executed we shall see."
OK, can you present a convincing argument that it's not the exchange setting the price whereever higher it wants it to be, to let the newcomers, that are cashing in in the belief it's an ultimate benchmark price, pay up for those who are currently cashing out? #notaponzi
I don't know the under the hood mechanics at this point but the code is open source and can be easily perused to see how the pricing works whether the real value vs nominal is determined at the exchanges or by the network itself. The real value is simply going to be the amount of dollars into the system divided by coins in the system. How the the coin to individual currency like USD and EUR I don't know right now. It is all in the code and other bitcoin forums to be discovered by the great unwashed. It is not hidden in the darkness but out in the light to be seen for all that wish to look.
you put the arguments very well dewey I have defended btc here since $5 a piece and believe me their is a swing in sentiment to btc. Tylers would admit this. I hae conerted loads btc money to ag now and still give respect to the oldest forms of money. but btc is agile enough at the moment to be the best weapon..i also think that government/bank interference at this stage will be the same as prohibition it will only help us grow... keep contributing.....the real zhers love it...
You can't buy it "cheaper" outside of the exchange (OTC) and there are multiple exchanges which, being greedy and all, have all incentives to sell cheaper to increase their market share, etc. Anyone can become an exchange and use lower prices to undercut the leader.
The absence of supply side manipulation is something of a benefit, no? Let's ask Blythe Masters.
cherry picker: "...BitCoin is going nowhere. Too complicated for Main Street and you can't hold it."
I hope you get to keep your day job, because I could use your argument for things like:
"Credit cards are is going nowhere...
"The Internets is going nowhere... Too complicated for Main Street and you can't hold it."
"Email is going nowhere. Too complicated for Main Street and you can't hold it."
etc, etc. You'd be amazed how long the examples are of Naysayers being wrong.
Truth is we do NOT know for absolute certainty what its exact future and ecosystem will look like, but we can be quite certain that it will have some sort of a future. Like all new technologies and killer apps.
It's the same knock heard throughout history regarding disruptive technologies.
And without exception, has always been spoken by those who simply lacked the imagination to see beyond the current paradigm, or those who were vested in it.
Where do I buy? Fuckit I'm dropping some into this away from my stawk account.....
bitinstant.com for starters
If you can't hold it, you don't really own it, ie., effectively exclude all others. No one can pull the plug on a Krugerrand.
I don't mean to offend 'anybody', but any person who uses the words "Bitcoin" and "bubble" in the same sentence is still thinking inside that old fiat currency box. That person simply does not recognize what is happening right before our very eyes. Bitcoin is a revolution, a global revolution against the theiving ways of the global banking pigs. There is absolutely no question about what is going on here with Bitcoin... Cyprus launched Bitcoin onto the global stage, front and center. The selfish fucking bankers asked for it, and now they've got it... a financial revolution of epic proportions. AND THEY ASKED FOR IT.
Bitcoin is going parabolic for the simple reason that the collective mindset of the citizens of the world is going parabolic in pure unadulterated disgust and hatred for the bankers who are responsible for every fucking problem that ails this planet and all who dwell here. Bitcoin is a reflection of the defiance and determination to save what little we have left. How do you think Bitcoin looks to a Japanese who's currency is falling like a rock and who's prime minister (Abe) is absolutely determined to destroy it completely? How do you think Bitcoin looks to any European who just watched in horror what happened in Cyprus two weeks ago and knows with certainty that he's next, because the governments of every country have as much as said so? They said so by passing recent laws that pave the way for the theft of savings accounts across the board. In Canada, the one country reported by the IMF to have the most sound banking system in the world they passed a law on March 23 with the national budget that allows them to steal from bank accounts any time they like from this day forward. What in hell does that tell you?
Sure, Bitcoin had a spectacular run-up today and then fell $60. So what? It'll be $300 within a week and when it hits $2,000 it won't even have gotten started yet. Is Bitcoin a bubble? Not a freaking chance. No even freaking close. It won't be a bubble at $2,000. Is it a bit overbought on a short term basis? Nope, not even that. Not after correcting a very overbought condition that happened today.
People have to forget about the fiat money system in order to understand what the hell is going on here. The entire fiat money system is dying right before our very eyes because the stupid fucking bankers have just proven beyond the shadow of a doubt that it no longer works. The trust in that old antiquated system vanished forever when those blundering fucking idiots decided to rob the people of Cyprus blind. Now it's the bankers' turn to bend over. It's their turn to take it up the ass for the next 300 years just like we the people have done for the last 300 years. Party on.
Exactly, I've said this awhile back here that Europe is going to be the proving ground for the viability of crypto-currency. As trust decreases in one it increases elsewhere. Now the full onslaught on system is commencing, so far it has been resillient if keeps holding up the trust factor will increase and so will its value (bubble) until it hits a saturation point and if more money is still jumping out of the SS Centralized Banking System Titanic it will naturally park into other crypto-currencies that are open source and build from the coding template put forth here. At some point the big money will come en masse when the resilliency is sufficiently proven to the holders of it.
Although I own PM myself, ill bet you a few Bit that a lot of these naysayers are ardent gold bugs. And that these same people would feel validated if their PM went up 10x.
They are SO vested in their Precious at an emotional level, that they're turning green or are ready to puke, when they see their metal going nowhere in comparison. Envy is a powerful force.
Excellent post by albertarocks Also a really good article posted by Jeff Tucker at Laissez Faire books today.
http://lfb.org/today/what-bitcoin-is-teaching-us/
Bitcoin is in a "bubble" the same way that Gold is in a "bubble". They're both reflections of widespread and growing mistrust of the prevailing wordwide US petro-dollar based fiat money system.
The "bubble" is rather in unsustainable Central Bankster controlled fiat money and credit. Not in Bitcoin or Gold which are perceived as ways to survive a coming shitstorm. Ultimately it is the people who decide what has value. Not TPTB or the Banksters. Trust: once it is gone, it's GONE.
Party on, Garthe. Well said.
Bitcoin is going parabolic because it has a lot in common with a Multi-Level Marketing Scheme.
Your have a realtively fixed supply of currency (which costs the early adopter basically NOTHING) being divided amongst a growing user base (who directly profits by additional users being brought in or additional goods and services)- all chasing that finite amount of currency.
Some of what you posted is borderline INSANE, you need to get a grip before you lose it, making money/profit is good, but an UNREALIZED gain is NO GAIN.
"It'll be $300 within a week and when it hits $2,000 it won't even have gotten started yet. Is Bitcoin a bubble? Not a freaking chance. No even freaking close. It won't be a bubble at $2,000. Is it a bit overbought on a short term basis? Nope, not even that."
You chose your name well. Bitcoin has no resemblance whatsoever to a multi-marketing scheme. WTF are you talking about dude? You are correct though when you point out that a growing user base is chasing that finite amount of currency. So what part are you not understanding?
I don't need to get a grip my friend because obviously I'm miles ahead of you. You've got a steep learning curve ahead of you. It's actually 'you' who needs to get a better understanding of what is happening to the precious currency in your bank account. Then wake up and buy some gold or some Bitcoins. Here's one that you should mark down. You can thank me later... "Bitcoin will surpass the price of gold within two years".
Ignorance must be bliss. I'll stand by what I wrote.
Fair enough. I agree with you totally that "ignorance is bliss". I stand by what I wrote as well. And I'm certainly a buyer on this fabulous dip today. By the way, I'm really happy to see that without any manipulation by the bankers the price action in BTC is based purely on the human emotion of those who trade it. So I'm starting to see that Elliot Wave Theory is working in that market better than any other I've ever seen. That's what's supposed to happen in markets that aren't manipulated by bankers. It's great news actually.
Friendly gentleman's bet. I'll bet BTC is over $1,000 USD by year end at the latest. I'll bookmark this page and check in every once in a while to see if we can have a friendly ongoing, "once in a while" discussion about what's happening between now and Dec. 31. If it can't be cordial I won't be interested. But if it's cordial enough I look forward to keeping tabs on this with you.
I wouldn't take that bet because the numbers say Bitcoin can go higher than $1000 by year end.
There are some markets that can process a hell of a lot more than seven txns/sec that might blow up and send people scurrying, and will dwarf the current supply/demand imbalance. My point is that at "some point" there is likely to be (for all intensive purposes) a crash, in the interim there will ups and downs which can be traded and profited from, but if you have a large profit, riding the horse at full speed towards the cliff edge without even a plan to change course is somewhere between bravado and lunacy, NASDAQ was lunacy long before the final three months of that ride, and your post reads like what a lot of the people who weren't in on the joke were writing around the turn of the millennium.
As to the MLM comp, look at the cash flow structures, and how they benefit early adopters more than late adopters. Bitcoin mining is even falling off the proverbial EROI cliff. Some bitcoins need to change hands to supply newer entrants to the markets, but the divisibility of bitcoins does nothing but enrich the those who have been holding on since day one+, and they derive a significantly out-sized profit compared to the recent entrants - a key trait of MLM.
I have never said Bitcoin is a Ponzi scheme, MLM is quite distinct from a Ponzi scheme, and there are several legitimate successful large MLM companies, but they are MLM.
Because of the fact that there is truly no large body out there who could crash the Bitcoin market I felt that any sizeable selloff was highly unlikely. The action today alone might be showing that I was wrong about that. I say "might be" because the selling doesn't appear to be coming from any one source.
The most interesting aspect of today's crash is that it is on very light volume considering the size of the selloff. It's also being reported that the sell off is due to the fact that at Mt.Gox investors are finding that the ability to "cancel" their orders has gone down. I know this is true because yesterday I placed a very small "test" order on Mt.Gox and found that I when I hit the "cancel" button nothing happened. 10 minutes later that button finally worked again. So all stops are being hit today because investors who wanted to cancel a sell order cannot do so. And obviously they were small orders too since volume is low. Also, all charts coming out of Mt.Gox (the only supplier of data for charts in the world) has also gone down and has been down all day. I think Mt.Gox has some explaining to do and they probably will issue a statement later today I would think.
When you say Bitcoin is like a MLM scheme, you didn't say anything about the fact you were referring to the mining aspect. How was I supposed to know you were referring to that? I don't disagree with that opinion at all. But the mining game has nothing to do with the interest in owning Bitcoins globally and that's what I'm talking about, not mining.
"I have never said Bitcoin is a Ponzi scheme."
And I never said you did. Besides, in the truest sense of what a "Ponzi" is, it is impossible for Bitcoin to be a Ponzy because Ponzy is based on taking in money from one investor to pay off the investor previous. That type of activity is not possible with Bitcoin.
"...there are several legitimate successful large MLM companies, but they are MLM." No argument there but that has absolutely nothing to do with owning Bitcoin itself. Perhaps with the mining aspect though.
I don't think today's price movement changes anything in the larger picture unless a specific cause comes to light. Parabolic volatility is always a bitch when your on the wrong side of it. If you get bank run in a country with a GDP larger than 20 billion and wider knowledge of the existence of Bitcoin then you get a parabolic demand increase against a relatively flat supply assuming they can process transactions in a timely fashion and the tape doesn't fall behind (which has a tendency of creating panics).
A lot could be done with a proper analysis of the block chain data itself (which I don't care to do since I'm sitting this one out other than giving some ZH cheerleaders a hard time)- in terms of modeling the creation, flow, and current "owners" of the money supply. Without even normal statistics on average velocity of money and volume and concentration of money with absolutely zero velocity it is impossible to properly value Bitcoin. But as it matures (assuming it's allowed to) that analysis would be created anyway, and if there are significant concentrations of idle Bitcoins potentially looking a for a profitable exit and potentially destabilizing then it will be known.
And if you live in the US, make sure you have a VPN or at least a TOR express internet tube out of the country to a foreign Bitcoin server...
Both - bubble and something useful.
Right now the real threat is crypto-currency hoovering too much of the 1s and 0s off the balance sheets of the banks. The cash crisis will come next and guess what the acceptance of bitcoins will increase in proportion to by businesses. The banks will have to flood the system with hard cash (upping QE monetization in the process) to keep from getting caught short because they are stretched way too thin on reserves they are rehypothicating against in their fractional reserving systems. If it is not cash it still becomes a hyperinflationary death spiral with those holding coins the winner at the end. They at least still have the same quantity of crypto-coins, same as if it was the analog equivalent in gold and silver. How it revalues and what it pegs against then is anyone's guess. Either way the real value balance sheet in the crypto-currencies and hard assets like gold stay unchanged. The Central Banks eat the death bullet and the rest of us are left standing, poor maybe but the fucking central banks are dead as doornails without stealing all our assets.
"Ch1 paging Ch1. Cleanup on thread BTC."
http://peculium.net/2013/04/08/bitcoin-is-a-bubble-only-if-you-think-the...
Or...the rise of disinformation....
> disinformation....
You're on the internet now spreading some. I know you're spreading disinfo because you have no clue how Bitcoin works but you see fit to comment on it anyway.
The very fact that you, and millions of other people, can use the net to cluelessly bloviate to your heart's content is what gives Bitcoin value.
If you don't understand that, you'll always think Bitcoin is a scam.
they all probably work in the financial sector and cling to it even as they get stomped on...
They're just pissed because they know we'll be buying gold in a few months for dollars on the ounce.
I've been voting up many of your comments re; bitcoin, but this one is plain wrong.
If anything, this bitcoin run-up should prove to one and all that PMs will have their day. Bitcoin is showing - on a TINY scale - what PMs will do when their suppression ends.
Tulips! This will end badly. I am not supporter of paper money, but this is not the answer. It goes from worthless paper to a worthless computer program?
amazing that people are afraid of "paper" money will buy in "electronic" money, at the end of the day if the dollar becomes worthless, I still have toilet paper or kindling or a device I can entertain myself with (dollar poker, origami, etc). and bitcoin or any other electronic currency you don;t even get those luxuries.
no, you get a great store of value - what a concept
why are you on the internet.. these are just pixels, you can't touch them.. go buy a newspaper
a fool and his money are soon parted... if your going to argue with logic, it helps to use some as well... just a note for future responses to well thought out and articulated posts.
@ozzz169
Exactly - every punter on this website has some kind of trading account that stores its balances on a HARD DRIVE using those notoriously abstract ELECTRONS.
Am I taking crazy pills? Why is one form of STORED ELECTRON CHARGE acceptable, but bitcoin is "Woah man, too out there and abstract."
Pure muppetry, my friend.
I have most of my money in gold. But I believe Bitcoin will do more for me in the long run.
Just send your bitcoin to 1PcrqXBoogFe4KqH3baUuSBiW5gKQxuecT if you are desparete to get rid of them, I will give you paper gold in return. :p
The problem with bit coin is it never had an inherent value or usefulness. Paper currencies are backed by the government and economy/country that issues them, bit coin is a completely random and unbacked invention. Gold and the like have industrial demands and consumer demands, paper currency (originally backed by gold or silver), have value in so far as a medium exchange and are backed by the economy issuing it and the politicians that represent the people. you wont ever see items priced in bitcoin and then converted to dollars, yen, euros, etc. Even when banks issued notes and there were many different currencies running around they were still backed by the institution issuing them.
Bitcoin has non of these. And you could see 1000's of other "electronic currencies" arise. so no matter what bit coin trades for it will eventually die out, as it wont ever be accepted as a legitimate for of payment. You see failing economies that are desperate to get rid of their local currency backed by a failing government will buy anything to not be in the local currency, and when physical goods run out they will buy bitcoin as a last resort, bitcoins volatility works straight against it ever having a chance at being anything but a speculative vehicle. A currency has to have some sort of stability to be useful, and bitcoin does not have this. so while techno-geeks may love this it wont ever be main stream and you can buy all you want but good luck getting your profits out, as you will have to find someone willing to buy it.
Bitcoin was ment to simulate gold, but it is not gold, there is no usefulness to it and no value other than the idea behind it. there is no cost to produce it and nothing prohibiting competing electronic currencies. So good luck to all the bit coiners out there I will stick to (physical dollars >> electronic dollars) and gold >>>>>>>>>>>>>>>> Bitcoin (at one point sea shells had value as currencies because enough people agreed to exchange them as such but they like bitcoin had no inherent rareness or usefulness (hence value).
Here is a very simple question to prove bitcoin is pure speculation. How many bitcoins is a loaf of bread?
so glad to hear your two cents of total random bullshit
why don't you go grab a few and take them for a ride.. you can buy gold with it.. I bought a few coins the other day with them
are you a 27 year old living in your mom's basement? again.. try using some sort or coherent logic when trying to make a point, just cause you drank the coolaid doesn't mean that you have any logic or common sense. If you have something intelligent counter points make them and we can have an intellectual discussion. but just saying that you and a few thousand/100 thousand people like bitcoin and agree to use them as currency doesn't mean that they are worth anything to anyone else. I could get together a few friends and we can use monopoly money to trade services doesn't mean that monopoly money is suddenly any more valuable to the public as a whole then it was before. now I know that is logic and you have acknowledged you have no grasp of the concept, but give it a shot, your pea brain should be able to understand the simple concepts explained in response to the bitcoin virtual currency.
@ozzz169
How many electrons store your current ATM balance? How many describe your mortgage, or monthly rent check? How many ABSTRACT patterned charges represent your direct deposit?
We're in the world of the virtual, and anyone kidding themselves will find out how powerful this can be.
Did you bother to even read the post before you commented on it.... try reading then commenting it will make you not look stupid... just saying. I noted PHYSICAL DOLLARS are worth >> (much more) then ELECTRONIC DOLLARS, IE putting money in a bank account or brokerage account or what not.
I am a past bitcoin miner and current holder. I am saddened by the lack of stability in the currency (if it is a currency).
As someone familiar with bitcoin I am most comfortable storing my wealth in physical gold.
@snblitz
Its a bit of a problem when the developed world is beating a path to your door, and that door is only large enough to accommodate so many at a time.
Good luck with the physical, but I maintain that bitcoins AND PM's are the best way forward.
Sounds like you are saddened that you sold out too soon. That's gotta sting.
Hello my dear friend in loving our God above!
My name is Babba Toomiwumba, and I am a Nigerian prince.
I have a vastly sum of 1,000,000 bitcoins and am looking for a partner to share in my wealth.
Yes, my family does not want me to do this, but I wish to share my fortunes with you.
Click here.
I still think bitcoin is mostly just a trade mechanism for agoraphobic teens not wanting to turn away from their Redhat server long enough to buy the latest comic book.
I'm out - those in should take advantage of it while it's hot....but caveat emptor.
(or maybe I should say - 01100011011000010111011001100101011000010111010000100000011001010110110101110000011101000110111101110010)
@Smuckers
Redhat, how... embarrassing for you.
Yes, turn your back on patterned bits and bytes - after all, they only describe most of your life in the form of your ATM balance, your debt balances, your mortgage or rent payments. You know, all that ABSTRACT stuff the "kids" use (and you) with computers.
Are you serious? Or just simply.... out of touch?
Nice binary rant! Reminds me Flight Of The Conchords - The humans are dead
"...Binary solo!
(Bret)
0000001, 00000011
000000111, 00001111
0000001, 00000011
000000111, 00001111
(Jermaine)
Come on sucker, lick my battery..."
Humanity never learns.
The insane Amerikans who believe that "technology" solves everything gave us the trading platforms that allow the bankers control of all world markets and infinite digital money creation.
Now they are trying to con everybody again with "bitcoin" one of the most useless recent creations I can think of.
It's simple:
1) If you are a wolf, buy and use precious metals.
2) If you are a sheep, buy and use bitcoins.
bury these crypt keepers... was there an internet or a smartphone in everyone's hands back when cattle was king?
bitcoin is not a bubble, what it is, is disruptive technology and you can see all the old guard, from all sides, lash out at it since it challenges their world
The same open source technology that certifies BTC's legitimacy tracks every transaction.
That's enough to frighten me away.
you can have as many wallets as you like.. ah fuck it.. just miss the boat who cares
I like that approach. Gonna use it more often.
256-bit encryption is unbreakable by today's tech and will be for many years...ah fuck it.
"256-bit encryption is unbreakable by today's tech and will be for many years...ah fuck it."
<flailing robot arms> !!!! BULLSHIT WILL ROBINSON !!!!! BULLSHIT !!!!!! <flailing robot arms>
Code crackers break 923-bit encryption record
In what was thought an impossibility, researchers break the longest code ever over a 148-day period using 21 computers.
Before today no one thought it was possible to successfully break a 923-bit code. And even if it was possible, scientists estimated it would take thousands of years.
However, over 148 days and a couple of hours, using 21 computers, the code was cracked.
Researchers from NICT and Hakodate Future University hold the previous world record for code cracking, which required far less computer power. They managed to figure out a 676-bit, or 204-digit, encryption in 2009.
http://news.cnet.com/8301-1009_3-57457470-83/code-crackers-break-923-bit...
They broke bit pairing-based encryption, not public key encryption. Bitcoin is based on public key crypto.
256-bit public key crypto is unbreakable via brute force by today's tech and will be for some time.
A much easier approach would be to just subpoena your computers after suspicion of fraud and tax evasion - or break in via any of the blackdoors built into the core software.
But still, encryption means jack shit if they want it.
From 2007:
IT MIGHT seem like an esoteric achievement of interest to only a handful of computer scientists, but the advent of quantum computers that can run a routine called Shor's algorithm could have profound consequences. It means the most dangerous threat posed by quantum computing - the ability to break the codes that protect our banking, business and e-commerce data - is now a step nearer reality.
Adding to the worry is the fact that this feat has been performed by not one but two research groups, independently of each other. One team is led byAndrew White at the University of Queensland in Brisbane, Australia, and the other by Chao-Yang Lu of the University of Science and Technology of China, in Hefei. Both groups have built rudimentary laser-based quantum computers that can implement Shor's algorithm - a mathematical routine capable of defeating today's most common encryption
------------------------
Derivatives of Shor's algorithm are widely conjectured to be effective against all mainstream public-key algorithms including RSA, Diffie-Hellman and elliptic curve cryptography. According to Professor Gilles Brassard, an expert in quantum computing: "The time needed to factor an RSA integer is the same order as the time needed to use that same integer as modulus for a single RSA encryption. In other words, it takes no more time to break RSA on a quantum computer (up to a multiplicative constant) than to use it legitimately on a classical computer." The general consensus is that these public key algorithms are insecure at any key size if sufficiently large quantum computers capable of running Shor's algorithm become available. The implication of this attack is that all data encrypted using current standards based security systems such as the ubiquitous SSL used to protect e-commerce and Internet banking and SSH used to protect access to sensitive computing systems is at risk.
Encrypted data protected using public-key algorithms can be archived and may be broken at a later time.
(like a block-chain that contains everything)
FYI "There are two meet-in-the-middle preimage attacks against SHA-2 with a reduced number of rounds. The first one attacks 41-round SHA-256 out of 64 rounds with time complexity of 2253.5 and space complexity of 216, and 46-round SHA-512 out of 80 rounds with time 2511.5 and space 23.[1] The second one attacks 42-round SHA-256 with time complexity of 2251.7 and space complexity of 212, and 42-round SHA-512 with time 2502 and space 222"
Well, you don't even understand what bruteforce is (which is trying all possibilities) so I will say it bold. Preimage attacks are not just bruteforce! Therefore, SHA is not only breakable, but not only via bruteforce.
41 days * 300 redirects layered with the redirects each using a 256 bit different encryption key between each hop and user names and passwords to connect into some of those vpn proxies. Break that in a timely manner. I'll be long gone by that point. Besides as the computing power increases so will the complexity of the alogorithms in proportion to the amount of keys they can generate.
41 days for a 256 bit encryption key is a lifetime when you it comes harvesting actionable intelligence in a timely manner.
It took them 148 days? Great, now break the code for the 148*24*4=14208 blocks that interceded while you were cracking the original block...in zero time. Hurry, you gotta catch up.
Are you saying that the two-year old video in the article about tracking BTC's is false?
If so do you believe that TPTB are able to track peer-to-peer file sharing sites?
Bitcoin addresses can be tracked by anyone. Good luck finding out who is attached to the address. It's a numbered and encrypted Swiss bank account with no Swiss bankers to knuckle under to any government.
Go here and watch the new transactions coming in:
https://blockchain.info/new-transactions
Good luck finding out who's connected to what. Any IP address on the Bitcoin network could be a VPN so there's no telling where transactions are actually being relayed from.
The only way they can tie your name to a bitcoin address with a probablity of being correct is if one is dumb enough to use your bank account to get on a Bitcoin exchange. Even then, they can't tell what bitcoins you have, only that you might have some.
The way to stop being afraid of what isn't understood is to educate yourself on what you don't understand. It's like watching savages react to their first exposure to a cigarette lighter.
Thanks for answering the post.
It is my belief that with the US's new electronic currency rules, you will start seeing arrests being made this summer for unreported monetary transfers and money laundering.
Yeah exactly pretty as many wallets as you want(savings accounts) and every single IPv4 or now Ipv6 IP address minus private subnets becomes a potential checking account from which you can to do a digital transaction. The banks are done as far as savings accounts and commerce goes, they go back to investment vehicles mainly. DDOS that offline bitchez. You can't without shutting the whole fucking internet down. Commerce can always commence somewhere in the network unlike a traditional banking system. If someone even comes close to disrupting the whole thing that would most likely mean it is an outright attack by a sovereign government using the equivalent of nuclear stuxnet bomb type of internet weapon. People WILL NOT take kindly to that. It will cause colateral damage and unintended consequences once you do it once. Remember that little thing about trust. You'll see the guillotines rolled out since that is the digital equivalent of turning the guns on the populace and firing them.
The best investment is probably some farm tools and the skills to use them. Probably 30%+ per year for a few years.
right now, this will make you enough to forget about working... good luck getting one
http://launch.avalon-asics.com/
Just like every gold rush, the ones who sell the miners the products get rich.
Bitcoins are at best a fad. Most likely, and at worst, it's a ponzi scheme. If you put your money into bitcoins, you're basically emailing your ssn and bank account data to every 14 year old with a zombiebot army begging them to steal from you. You're better off buying some Facebook or Apple stock. They guys that created the Euro are saying, "Even we didn't f$ck it up that badly!"
The internet is at best a fad. Most likely, and at worst, it's a ponzi scheme. If you put your money into a dialup account, you're basically emailing your ssn and bank account data to every 14 year old with a zombiebot army begging them to steal from you. You're better off buying some Exxon or JP Morgan stock. They guys that created the postal system are saying, "Even we didn't f$ck it up that badly!"
God you are fucking clueless. And knowledge is only a few mouse clicks away.
I think generally... if you see something spiking up like that you know really hot money is flowing in... and easy come easy go, you just don't know when they'll trigger the out flow. IF this is just money moving between locations temporarily, then this is a game of musical chairs when the outflow has completed and serious investors are left holding the bag wishing for the good old days of $200, $300, etc BCs.
I'm amazed at how ignorant the vast majority of ZH bitchez appear to be re: Bitcoin. Many of you constantly trot out the same debunked objections to BTC, over and over and over again. This article is no exception. I thought you all were traders, risk-takers, men and women of big balls, etc. Let me tell you how it is...
1. BTC is new so of course there's going to be a risk. As we've seen so far, lots of risk.
2. The foundational system of BTC should not be confused with organized exchanges. That is, how BTC works is not the same as how you trade fiat money for pre-existing BTC.
3. All of the well-publicized hacks to date have hit the organized exchanges. None of the attacks have dented the underlying BTC system.
4. Many people imply that Bitcoin is valuless unless it is massively and widespread adopted. They suggest that if you cannot buy pizza or skittles with it at the local pizza store then it's useless. Not true. The market is a big place and there's room enough for several competing currencies, each of which are useful for particular types of monetary use. The fact that many people may be unable to use this currency does not mean that many other people cannot find value in it. The German language is inaccessible to me and yet some people find it useful.
5. The underlying BTC system is a cryptographic thing that has proven itself to be secure in the wild, wild, world of hackers looking to steal money. When and if this system is broken, your ordinary online banking will be equally insecure.
6. When and if enough shit hits enough fans that the Internet goes dark your BTC money will probably be as worthless as your 401K. Money will be the least of your woes. Until then, the system works.
7. The quantity and schedule of new BTC creation by the system is hardwired into the source code. There are exactly 25 new BTC created on average about every nine minutes. The quantity created is scheduled to halve occasionally and the total quantity will eventually reach 21,000,000 several years from now. You're free to examine the same source code that everybody else uses by looking at https://github.com/bitcoin.
Although anybody can easily make a copy of the source code and change it for personal consumption, the new edition would simply not interfere or interact with the existing system.
8. There is no single set of balls to squeeze in order to do anything with (or to) the underlying system. The source code and everything needed to re-create the system, complete with all of the balances, and continue its operation is massively and redundantly distributed.
9. The best use of BTC, IMHO, is to use it as a speculative vehicle and as a means of storing value. It's really nice to do international travel and still have BTC stashed away somewhere out of sight of prying eyes.
10. I hear you can buy drugs using BTC. I also hear you can do the same using fiat money.
11. "market cap" on this is presently about $1.6 Billion. The price is rising much faster than the quantity of new coins and is the dominant driver of the market cap. A 10x increase in price puts the cap at $16 billion which is still chump change in the grand scheme of things. A 100x increase gives us BTCUSD = 16,000 and a market cap of $160 gigabucks. The reason I care about market cap is that at this stage of the game BTC is still a gnat pissing in the Cheerios of TPTB so BTC has plenty of room to grow. We all know that exponential growth is not infinitely sustainable. However, short spurts of it are great to get a piece of. Eventually though, TPTB will probably take notice and try to fuck this up. But that's all they _can_ do. But at what point does this become TBTF ? Go ahead punk, make my day.
12. It's easy to start a new BTC like system by copying the software. Let's call that BTC2. The BTC2 system will easily co-exist with BTC and will not interfere with it. The BTC2 system can use an exact copy of the source code and work identically with BTC or can alter the software as much as desired. There have been numerous attempts to do this and a handful of these new currencies have gained some traction.
For those of you who are truly lusting to get in on the action of these alternate currencies, before the runup in price, I refer you to Vircurex. There, you can trade five other alternate currencies with BTC. Scam or not, these other currencies are attracting interest from the boundless pool of greater fools. A typical price for one of these coins, at this instant, is BTCPPC = 0.00204. As you can see, there are several orders of magnitude of potential price rise still available. I leave it as an exercise for my aspiring billionaires to compute how much "real" money would be required to boost these prices.
I posted the link to Vircurex a few days ago and within hours their server was down. I was embarrassed to have linked to what might have been the latest hack. However, the last few days have revealed that their server was crushed by a vast increase in new users and is presently back on line. You may see them at https://vircurex.com/welcome/index?referral_id=204-9665
Regardless of your opinion about this, why not take a look? If you don't feel comfortable selling the golden stack in order to go all in on BTC, then don't. But it's something very interesting and it's certainly worthy of closer inspection.
BTW, if it makes you all feel better, you should read some of the comments about money, and the nature of, and all that over on the BTC forums. They are just as confused when they venture out of their sandboxes. Please send
BTC donations to 1PS8kSgtY67TDD4KmEhndB9SZ7c8c98o8X
BTC is interesting. I have a wallet. I cashed out some weeks back. Oops. I have some advice for you...take some profit. You do not have to sell it all. Cover your mining expenses. I have not notices that a lot BTCers think about important things like that. I have a buddy who's been in since the inception.(when mining equipment was 15K) He's had a few issues with convertabilty and ditched Mt Gox yesterday.(or so he said)
What Zh'ers, before you trash us all, are really asking is how you get out of BTC once you are in? Me? See second to last sentence above. Can't you see the parabola in the charts? That's speculation and nothing else. Check out the one week and three month charts for BTC. Anyone who has traded anything for more than a few years sees a screaming sell signal there.
What BTC'ers need to recogize is that ZH is not saying it is a bad concept but that the shoeshine boy is now telling everyone to buy BTC. In fact, I think ZH has been very fair on the concept of bitcoin over the past months. Pigs get fat, hogs get slaughtered.
Now tell us how to sell them and we would take an interest. And because I have been involved with BTC for sometime, I know that is your area of weakness. What is the dump mechanism? Where is the panic putton? Point 13?
Here's the shoeshine boy... The Google meta on NPR right now. That's your clue.
http://www.npr.org/blogs/thetwo-way/2013/04/09/176708504/bitcoin-surpasses-200-mark-continuing-epic-rise
I agree the runup has evacuate-now written all over it. <sarc>But, but, but... this time time it's different! </sarc>
A major impediment in dealing with BTC is the conversion between BTC and fiat. And the responsibility for that woe lies 100% at the feet of the purveyors of fiat. They are the ones who insist on the rules that make this difficult. _If_ BTC were to prove itself and it's claims (via more time still standing), then it would truely be a great place to store wealth. As we're seeing, the fiat system is not so good at this.
Assuming BTC proves itself to be a great place to store wealth, then, how much wealth might be interested in residing there? There's only a small number of BTC available so each one would become very valuable. Even though this looks like a bubble, perhaps it's just the beginning of a long runup to some plateau in the future?
Ok, Ok. I recognize your tone as it is the same as a very good friend of mine who is in the same position. At least he was into some AuAg action earlier on.
I was on the Ron Paul side in 2008 and 2012 and spent more time at conventions and at executive committee meetings than almost anyone on this board. I have been there. I see it for what it is. I understand your angst. Listen closely now, OK? BTC'ers are starting to get selective hearing of late I have noticed.
BTC is a great effort to decentralize banking. I know it is P2P but are you all so sure that there is not an ISP server or two in there somewhere? What is to prevent a shutdown of the net by .gov? That's a serious security problem that some of us more experienced ZH'ers are just not going to risk. The question is, you are winning now, you think, but will you be winning later?
BTC is being used as a workaround to capital controls right now IMO. That's where you are seeing the spike in price. You are misidentifying the market demand as though everyone has fallen in love with BTC. Go ask 20 people in Wal-Mart if they know what BTC is and report back. Come off it man and put the money in your pocket. You did great. You slapped the world's central bankers in the face with BTC. ZH'er love that sort of thing.
You show your age when you pump the BTC over gold and silver. You have still not provided an exit strategy for the position nor has any other BTC'er thus far. I already know you are fucked and some BTC'ers are looking at Slovenia. You are all going to dump your profit into the EU?
You guys are good at computer science, no question there. Finance? How much do you owe yet on that miner? What were your expenses involved in mining a bitcoin? Cost per unit? Until some of the at least middle aged ZH'ers start to see some PL white sheets from your BTC endeavors, we "Luddites" have no reason to believe that you are actually profitable in your per bitcoin mining operations even at $5000 per BTC.
Can you prove otherwise?
I've seen the same headline about BC crossing the 200 mark on multiple international news outlets.
There is no way it would really spread like that, unless someone gave them the go ahead.
Bluehorseshoe loves BC.
You can likely bet that some hedgies and wall streeters are in BC right now. Who built these mt Gox and other exchange sites with their financial charting and stuff? IMO there would have been financial consultants for the programmers who have likely gotten in on it. Possibly not related to any wall streeters or other big boy financials, but read there was one (I think now defunct) exchange that was manipulating the exchange rate minisculely in order to influence people to buy/sell BCs.
Yeah, it's a scam. Stay out of it. Dirt is nutritious and work makes you free.
If a new element were discovered tomorrow which was like gold, but the element could be instantly teleported by the holder to anywhere on earth, goldbugs would be scrambling to get into it.
That element was discovered, and it's called Bitcoin. It has the backing of the l33test hackers. The early adopters are the ones who understand how game-changing this is. The very early adopters are the new global elite. The rest are jelly haters.
I look forward to more ignorance and hating in the future, even while it hits $1000 and beyond.
Tulips and houses are not a store of wealth. Bitcoin and gold are, except bitcoin is better than gold. I should have known that even Zerohedgers are sheep.
I'd be more interested in the teleporter
BitCoin is for people who haven't learnt the esoteric allegory of the Philosophers Stone and are trying to get rich by cutting corners.
What I don't get about the price stability criticism is either bitcoin had to come out the gate worth $X billion, which would emply someone precreated all the coins and refuses to sell them for anything less than $X dollars.
Bitcoin on the other hand needs to be monitized to a point were users are able to send millions worth all the time, with a market cap of < $10 billion thats pretty hard.
If Bitcoin is to be successful it needs to have a market cap of at least the size of something like Apple $400 billion or $30k a coin, which would make the smallest unit worth about $0.0003 that could be transfered.
Is Bitcoin going to be successful, I have no idea, I'm betting it has a good chance but not betting the farm.
BTC'ers gave away a lot of their bitcoins at first, as was the case with me as recipient, and helped set up blockchain wallets et al just to give us hard ASSet guys a demo and to build a web. I think the idea was to spread digital wallets to everyone they knew. The problem now is that they are having trouble converting to cash if they want out and some do want out. Some of these folks, especially the first ones in have a pile of money/debt sunk into their systems and are often professional computer graphics designers or some such other who needs a crapload of computing power.
They are having trouble cashing out. That would explain why, to the rest of us, this BTC thing has gone parabolic. It's Hotel California, you can check in but you can't seem to check out. Unless someone can correct me, that is a major liquidity trap and I believe it was intended as such.