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Bitcoin In 2014 - The 3 Critical Factors

Tyler Durden's picture




 

In the last year Bitcoin has gone 'viral'. As ConvergEx's Nick Colas notes, a lot has happened in 2013: Price appreciation, yes, from $20 to +$800 – the result of this online “Currency” going from science project to mainstream topic.  Volatility too – disruptive technologies seldom travel a level path. The story, Colas notes, is about to change, and there are three critical gates which bitcoin must navigate in the New Year.  First is regulation, and we will get a good dose of that next Tuesday and Wednesday when the New York State Department of Financial Services holds hearings on bitcoin and potentially issuing a ‘Bitlicense’ to help regulate business which transact in the currency.  Second is adoption – how will existing businesses incorporate bitcoin into their sales, marketing and payment channels.  Lastly will be volatility, which will have to come down in 2014 to encourage broader use. 

Via ConvergEx's Nick Colas,

If the ratio of dog-to-human years is something like 7:1, then a bitcoin year is something like 500 years to one regular 365 day turn of the modern currency calendar.  Money as we know it today – a physical representation of stored economic value that supplants simple barter – goes back to about 600 B.C.. That’s when the Lydians – in modern day Turkey – started minting coins.  It’s a lot easier to buy a sheep or a goat with a coin than working out a barter with the seller, and every advanced civilization since then has used currency in some form to make economic transaction easier.  In 2008, an enigmatic programmer (or programmers) unknown released a paper describing an online payment system called bitcoin.  At first it was basically a puzzle contest for cryptographic hobbyists, with a prize for solving an endless battery of puzzles.  Bitcoins were code-breaking bragging rights that could be exchanged with others.

Then, in 2011, bitcoin began to find an actual following.  Its anonymous nature – the core of the system does not hold name, address and other information typical of a standard banking system – made it ideal for illicit transactions.  Individuals concerned over online privacy – ahead of their time, it now turns out – also appreciated the anonymity as well as the algorithmically controlled nature of the issuance of bitcoin.  No open-ended checkbook (as the Federal Reserve enjoys) in the bitcoin world – every 10 minutes another 25 bitcoin appear.  And that’s it.  For all this adoption, bitcoin remained largely under the radar.

Last year, bitcoin had its debutante coming out party, and its price went from $20 to $230 to $80 to $1000 and closed the year at $800. We started writing about it in February, mostly because we thought it was interesting that society – a portion of it, at least – had sufficient faith in technology to hand over their heard earned shekels to distributed network of computers running a program written by person or persons unknown.  Worshipping in front of a golden calf is one thing – making offerings to a virtual calf seemed to merit our attention.  Over the course of the year plenty of other market observers tossed their two cents in the hat, mostly in hater mode.

Well, its 2014 and the value of all bitcoin outstanding sits at roughly $10 billion.  Does that mean the future of the currency is assured? Of course not – there’s still plenty to go wrong.  But what that hefty amount does demand is a reasoned approach to the fundamentals driving bitcoin’s future.  There are headlines aplenty about bitcoin now – still, I think, with a distinctly skeptical eye.  Which is fine.  But to paraphrase a chant heard at many a street rally, ‘Bitcoin is here; get used to it.’

In thinking through a framework to interpret what will be an eventful 2014 for bitcoin, here are the three points – we’ll call them Bitcoin Buckets for a touch of alliterative flair – to guide the discussion.

Bitcoin Bucket #1 – Regulation.  Since those little Lydian coins in 600 BC, issuing currency has largely been the domain of governments.  Granted, the U.S. itself only followed that guideline after the formation of the modern Federal Reserve 100 years ago.  But in general to issue currency you need some bureaucrats, a standing army, a bank, and some borders on a map.  Bitcoin has none of that, which makes it the currency equivalent of a “Stateless person” at the end of World War II or a White Russian after the 1917 revolution.

 

Initially, there was concern that governments – especially in America – would choose to squash bitcoin for fears over money laundering and illicit activity.  That was, after all, an early use case for the currency and one that continues to this day.  Then in the back half of 2013 two regional Federal Reserve banks published papers commending bitcoin for its low-cost facility of moving money, and it became clear that the U.S. central bank saw some value in the online currency.

 

We’ll have another data point on government’s take on bitcoin at a hearing next week in New York City, courtesy of the New York State Department of Financial Services.  The early buzz, from an interview on CNBC with Superintendent Benjamin Lawsky, looks promising.  He seems to see the potential for bitcoin and related services to provide much-needed competition to the U.S banking system.  Should merchants have to fork over 3-4% for credit card transactions?  Should credit card holders have to wait a day (or more, in the case of a weekend) for payments to post to their accounts?  Bitcoin-based competition – within the confines of modern anti-money laundering and “know-your-customer” laws – could help drive those charges lower.

 

In the end, bitcoin really isn’t competition for national currencies – at least not for quite a while.  It can be competition here-and-now for national banking systems.  It is a disruptive technology for transferring money cheaply, by virtue of the online system’s dual mandate of solving those puzzle and keeping track of all transactions as a requisite for a seat at that table.

 

Bitcoin Bucket #2 – Adoption.  One of the side benefits of getting on the bitcoin story early last year was that I had a lot of very entertaining conversations with computer nerds who had been early bitcoin adopters.  By virtue of their early “Mining” efforts – solving those puzzles in the core algorithm for bitcoins – many of them found themselves quite wealthy.  Not a few hundreds thousand dollars well off, mind you, but serious seven and eight figure wealthy.

 

At least on paper, that is…  But they were reluctant – and still are – to sell those bitcoins on a still illiquid open market.  And that’s where capitalism comes in.  Bitcoin millionaires are a ready-made customer base for a wide range of luxury and near-luxury goods and services.  If you want to peruse a list, look here: https://spendbitcoins.com/places/.

 

The bottom line is that bitcoin adoption by merchants is just going to accelerate.  There’s a reason why Rodeo Drive and Madison Avenue have all the chic shops; that’s where the money is.  And now the money is in bitcoin as well.

 

Bitcoin Bucket #3 – Volatility.  You can’t make an omelet without breaking some eggs, so it should be no surprise that bitcoin was both a big winner in 2013 and extremely volatile.  April saw the largest exchange melt down on huge volume.  Later in the year we had a similar selloff as the Chinese government sought to crack down on asset laundering.  None of this prevented bitcoin from ending the year near enough to $1000 to prove there is some level of organic global demand.

 

To succeed as a method of wealth transfer – which we believe to be the cornerstone of bitcoin’s long term success – price volatility will have to decline.  Yes, that is a tall order for asset with very little issuance and no convenient way to short it.  We have no doubt that merchants will adopt bitcoin simply to access newly minted high net worth individuals.  But to keep them in the fold and increase the usage of bitcoin in other parts of their business, they will need to see some greater stability in the price.

 

To end on a cautiously optimistic note, this appears to be happening already.  The decision by the Chinese government to curtail bitcoin exchange activity could have sent the currency into free fall – the growth in demand inside that country was a big part of the bullish case for bitcoin.  And drop it did – to $600.  But not $100.  Or $10.  Since then it has bounced back to $800-900.  Baby steps on the road to lower volatility.  But steps nonetheless.

It is tempting to conclude these notes with ‘Bitcoin is going to $5,000!’, but I don’t think anyone can reliably predict where it will trade over the next year.  What does seem more certain is that bitcoin is a very important disruptive technology in financial circles.  If it were a private, venture backed enterprise, it would certainly be worth more than the latest mobile picture app or video game platform.  Which puts that $10 billion total valuation in some context.  But our three buckets put some context around the challenges ahead – regulation, adoption, and volatility.  We think that bitcoin will grow in relevance over 2014; we know it will be fascinating to watch.

 

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Sat, 01/25/2014 - 01:07 | 4365737 Kirk2NCC1701
Kirk2NCC1701's picture

Are you referring to the B or to the FRN?
;-)

Sat, 01/25/2014 - 09:44 | 4366357 nmewn
nmewn's picture

lol...touché!

Sat, 01/25/2014 - 03:47 | 4365920 digi
digi's picture

The protocol was designed with the purpose of digitally replicating many of the features supplied by using gold as a currency. As for being a physical entity you can easily etch a bitcoin private key onto a coin and be holding it in a physical way if you'd like, but when it comes down to it currency systems have never been based on physical presence but more the mass shared agreement of the provided transactional value. In this sense seashells, gold coins, cigarrettes and dollar bills are all very much like bitcoins.

Sat, 01/25/2014 - 08:52 | 4366289 eclectic syncretist
eclectic syncretist's picture

And in another sense, even the great Satoshi couldn't hack into a seashell.

Sat, 01/25/2014 - 09:21 | 4366333 Spanky
Spanky's picture

All currencies are a confidence game. If people have no confidence, there is no game. Bitcoin's "mysterious" origins give me great pause. Throw in SHA-256, developed by and for no such agency, and that mystery begins to look an awful lot like an intel cutout.

I wonder how many folks participating in this discussion remember Phil Zimmerman, the original developer of PGP (public key encryption) back in the early 90s? His is a crypto cautionary tale -- insofar as he used strong, non-no such agency, crypto to provide private communications and identity verification (digital signatures) to the masses. Got slapped with "export restrictions" (for military grade encryption) and all manner of USG harassment centered on his treasonous conduct (i.e.: posting his software on an open ftp site where it could be downloaded by anyone).

He finally gave in, and frankly who could blame him, after which a new developer (RSA) took over the project, changed the crypto to an internationally recognized "secure" algo (read that as NSA approved) and substantially improved the user interface for use by the general public. Shortly thereafter, public key encryption became the standard by which transactions over the internet were secured.

The simple logic of the matter is this: If no such agency desires "total information awareness", strong encryption cannot be allowed to exist "in the wild". How does that logic square with bitcoin and its "mysterious" origin?

How would you, as the USG, introduce a digital replacement for a failing dollar?

Sat, 01/25/2014 - 09:32 | 4366341 JuliaS
JuliaS's picture

Currencies are simple. When there's abundance of goods, barter emerges. Eventually, commerce gives birth to value representation through one of the commonly traded assets. When there is a deficit of goods or of the currency itself, it all collapses backwards. Either the trade reverts to barter, until the new representative commodity could be found, or it goes back further to step one - no economy at all.

Sat, 01/25/2014 - 09:51 | 4366366 tip e. canoe
tip e. canoe's picture

call in Dr. Strangelove and give him an all-expenses paid weekend visit to a tokyo opium den to come up with a cover story?

+1, thanks for the history lesson

Sat, 01/25/2014 - 09:26 | 4366338 JuliaS
JuliaS's picture

Damn right!

Each time I see a shiny yellow coin, I want a shiny yellow coin, not a QR code or a 2GB hash file no human can read.

An actual picture of a bitcoin bears remarkable similarity to the infamous painting of a polar bear in a snowstorm.

Fri, 01/24/2014 - 23:26 | 4365500 GovernmentMule
GovernmentMule's picture

Simply a case of protecting the fiat from competition and anonymity. Control will be fought for to maintain the legitimacy of the current fractional reserve banking system. The banisters will not give it up easily...

Sat, 01/25/2014 - 03:45 | 4365960 TheHound73
TheHound73's picture

Stocking up on popcorn

Fri, 01/24/2014 - 23:27 | 4365501 teslaberry
teslaberry's picture

this tuesday and wednesday are the new york bitlicense hearings. i should be there for anyone who might wanna say high. 

almost no brick and mortar stores accept bitcoin in new york on a regular basis----

 

there are ad hoc times a business might accept it , but generally it's really nonexisten. if and when the nyc government acutally gives out these licenses and lets brich and mortars accept bitcoins no questions asked----then you are in a situation where the brick and mortars will flock to any new customers. first it will start with a few dozen stores, then a few hundred, soon enough the city government will be thinking twice about it. by the time they change their mind, it will be too late. 

and that is why the bitlicense process will most likely be a tainted beauracratized screening process meant to kill any hopes of bitcoin proliferating in the brick and mortar space. you'd have to a complete idiot in government to NOT see the problem with sales tax cheating if bitcoin proliferates. an idiot. or perhaps...something ulterior is in the works?

 

zeek. 

 

Fri, 01/24/2014 - 23:41 | 4365547 adeptish
adeptish's picture

therefore bitcoin is in essence a multi - level marketing scheme...

the biggest barkers are the biggest holders, by proxy most likely

more like amway/herbalife coin...

Fri, 01/24/2014 - 23:56 | 4365581 TheHound73
TheHound73's picture

Yeah, well, the biggest holders are probably not bad-mouthing the whole project, wouldn't make much sense now would it.

If bitcoin started from nothing and is on its way to fulfill its potential, it has to look like exactly how it currently does.  How else could it possibly progress?

Sat, 01/25/2014 - 00:15 | 4365633 satoshi101
satoshi101's picture

Fonestar is 100% scientology.

No doubt when BITCOIN implodes that 1,000's of BIT-TARDS will drink the kool-aide in jonestown and DIE.

 

Sat, 01/25/2014 - 01:14 | 4365753 bitcoinbear
bitcoinbear's picture

That is bullish for scientology. I'm filling out the application form asap.

Sat, 01/25/2014 - 01:41 | 4365808 TheHound73
TheHound73's picture

Use this handy dandy referral link :)   ScientiologistsUnitedForBitcoin.com/?r=TheHound73

Sat, 01/25/2014 - 08:56 | 4366294 eclectic syncretist
eclectic syncretist's picture

His desperation is palpable.  Google trends has searches of Bicoin down 35% last months LOL!

http://www.google.com/trends/explore#q=bitcoin

Sat, 01/25/2014 - 10:03 | 4366380 tip e. canoe
tip e. canoe's picture

it's a wavy thing don't ya know.   doesn't necessarily mean it won't be up again.   especially if it's nudged.

Fri, 01/24/2014 - 23:56 | 4365585 dark pools of soros
dark pools of soros's picture

perhaps have to register the bitcoin addresses that your business will use for processing btc... that way they can check the blockchain on audits if they feel like it..  sure there may be some side biz on addresses you don't list but that is like a lot of biz with shit on the side 'off the books'   well its still kinda on the books, but they'd have to dig a bit more and then they have you liable since you broke the license and now can't accept btc legally..   shit like that probably

Sat, 01/25/2014 - 02:33 | 4365875 Mr Pink
Mr Pink's picture

Bars, restaaurants, coffee shops don't add sales at the point of sale. A btc transaction would be handled the same as cash or cc sales. 

The total sales are reported to the state at the end of each month and the sales tax is paid in a lump sum by the business.

Sat, 01/25/2014 - 02:36 | 4365882 Mr Pink
Mr Pink's picture

There isn't any greater threat of cheating sales tax than a cash sale. For mom and pops sales tax is paid on reported sales.

It would be easier to get away with underreporting cash sales than btc.

Just more FUD

Sat, 01/25/2014 - 00:05 | 4365606 ebworthen
ebworthen's picture

This morning TigerDirect.com announced they were accepting Bitcoin.

Not Earth shattering but I was surprised to see it.

Lots of IT vendors accepting it, and selling a lot of hardware for it.

AISC processor farms making the money though and the home desktop route has become a money loser unless you go to Litecoin and Radeon video card setups from what I read.

Sat, 01/25/2014 - 00:12 | 4365627 satoshi101
satoshi101's picture

2 months ago I pulled out the best RADEON card on the market, and installed it on a virgin AMD x6 processor at 3GHZ, installed litecoin, and let the bitch run for a week, I got 2 cents worth of litecoin, using the number 1 litecoin mining pool.

*

And forget about BITCOIN, months ago, I setup some ASICS ( got them for $10 ), and I didn't even make a penny, it wasn't worth leaving the pc's running, and over-heating them.

I might what was the outcome of all this?

I had to upgrade my UPS from 600 watt to 1200 watts to keep  the system from shutting itself down, that cost me $300,

So how much did my 2 months of litecoin/bitcoin research cost? About $600, and what was the return? about 3 cents, which I never claimed, as when I was finished, I deleted all wallets and files and folders.

Lastly, I had put a NEW OS on the system, because every fucking MINING software that I downloaded put viruses on my system. Every fucking one is full of viruses.

*

I only did the above to learn about BITCOIN, ... I learned, I saw and now I know.

 

Sat, 01/25/2014 - 00:17 | 4365640 Spanky
Spanky's picture

Got many delivery problems out in rural yak-land?

Sat, 01/25/2014 - 01:15 | 4365756 satoshi101
satoshi101's picture

I mentioned before, it takes 3 days by rural bus to go to KUNMING to buy HW.

I think my BTC learning experience cost me 2 trips, the first was to find the top Radeon board, and the 2nd trip was to buy the new UPS.

The ASIC's are easy to get, and can be delivered by post anywhere in CHINA.

 

Sat, 01/25/2014 - 07:08 | 4366166 madtechnician
madtechnician's picture

You just cannot stop spouting shit can you ? What is your problem man ? That 1 dollar PhD in Computer Science finally arrived from Nigeria and it was hand written or what ?

Sat, 01/25/2014 - 12:04 | 4366579 Urban Roman
Urban Roman's picture

Thanks for the 1st person report. I was wondering if it was worth repurposing some the the equipment in my computer museum to mine Litecoins.

Now I know it isn't worth the trouble, effort, and electricity.

Sat, 01/25/2014 - 00:47 | 4365703 Unpopular Truth
Unpopular Truth's picture

Yes, you learned one of the 3 truths about bitcoin the hard way
1. Mining without serious ASIC does not pay

Here are the other two truths:
2. Held as an investment is very risky
3. Used as a transaction medium (without holding any) it is awesome.

Good luck

Sat, 01/25/2014 - 01:12 | 4365751 satoshi101
satoshi101's picture

I never had any illusion of making money, I just wanted first hand knowledge,

I might also add that being a software expert I did glance at the code, and it was SHIT,

Which is why everytime FONEY talks about "MATH" in BITCOIN it makes me mad as hell, cuz BITCOIN is a fucking hack,

Also upping the MAX from 21 millon to 21 quadrillion would be easy,

Everything that the PUMP&DUMPER's tallk about is 100% bullshit.

the block chain is a kludge, ...

That's another item I missed above that just to play either litecoin or bitcoin, it takes a whole day to download the fucking block-chain, which essentially needs to be re-downloaded with you leave the bitch alone for a day.

Fuck for what it takes to downloaded a block-chain on one day, I could download 10 movies from pirate-bay :)

*

Well transaction medium, as in $100 in to buy $100 worth of cocaine, but eventually the other party wants his real $100 USD OUT, ... how does he get it?

Everywhere I look I see it virtually impossible to turn BIT-TURDS back into real USD, without a 50% haircut.

 

Sat, 01/25/2014 - 01:38 | 4365803 TheHound73
TheHound73's picture

If you want some centralized momma to keep processing your transactions, go right ahead and keep using the current system.  If you want a decentralized payment system, shutup and download the frickin blockchain, pansy.

I, for one, have never had problems exchanging fiat to BTC at market rate and vica versa.  Jealous much?

Sat, 01/25/2014 - 02:11 | 4365850 satoshi101
satoshi101's picture

Tell us how you do it?

I want to know?

When I research what I get is BUY $900, SELL $600 ( max $30 ),

In summary, they'll take my $900 for a BTC, but will buy back no more than 1/20 of a BTC, at a 30% haircut.

That my dear fonestar is BIT-FUCK.

Sat, 01/25/2014 - 02:33 | 4365877 TheHound73
TheHound73's picture

I took the trouble to get hooked up at Coinbase.com, Localbitcoins.com, BTC-e, and Mt.Gox.  I'm under the impression you applied at an exchange but started writing nastygrams to them on par with the material you spluge on here so they sent your application to the trash bin.

Your research is localbitcoins.com, no?  Those are indivudual sellers and they can quote whatever they want, doesn't mean anybody has to buy from them.  That's like dismissing Gold because some dude on ebay advertised an oz. $500 over spot.

Sat, 01/25/2014 - 02:37 | 4365884 satoshi101
satoshi101's picture

Yep,

That's pretty much like it is,... When you BUY bitcoin, they kiss your ass, but when it comes time to SELL your bitcoin and get your money USD($$$) back from the BITCOIN MAFIA, you had better get down on your knees and lube your asshole real good with k-y, and just maybe they'll pity you and someone will come forward and not BIT-FUCK you too hard on your exit from the biggest PYRAMID SCAM of this millennium so far.

Sat, 01/25/2014 - 02:41 | 4365889 bitcoinbear
bitcoinbear's picture

Bitcoin is nearly opposite of a pyramid scheme in a mathematical sense. Because Bitcoins are algorithmically made scarce, no exponential benefit is derived from introducing new users to use of it. There is a quantitative benefit in having additional interest or demand, but this is in no way exponential.

Sat, 01/25/2014 - 03:02 | 4365906 satoshi101
satoshi101's picture

FONESTAR: The Definition

A Fonestar scheme is an unsustainable business model that involves promising participants payment or services, primarily for enrolling other people into the scheme, rather than supplying any real investment or sale of products or services to the public.

 

Sat, 01/25/2014 - 03:00 | 4365914 satoshi101
satoshi101's picture

A pyramid scheme is an unsustainable business model that involves promising participants payment or services, primarily for enrolling other people into the scheme, rather than supplying any real investment or sale of products or services to the public.

*

There is nothing 'mathematical' about a Pyramid-Chain-Scam. A pyramid-scam is a sociological abstraction where those on the top of the pyramid the first to create the COIN, the first to market and PUMP&DUMP, get all the money, and those at the BASE of the pyramid get fucked.

I don't like BITCOIN called a PONZI, because ponzi's always pay interest, and BTC pay's no interest.

Bitcoin comes closes to a classic "PYRAMID CHAIN LETTER" scam, where everybody that gets a letter, mails a $1 to the guy at the top of the list, and sends out the copy's of the letter to his friends that do the same. Eventually the guy the originated the letter is rich, and everyone else is broke.

*
A typical chain letter consists of a message that attempts to convince the recipient to make a number of copies of the letter and then pass them on to as many recipients as possible. Bitcoin block-chain, fulfill the same abstraction on computer.

*
A pyramid scheme is an unsustainable business model that involves promising participants payment or services, primarily for enrolling other people into the scheme, rather than supplying any real investment or sale of products or services to the public.

*

Satoshi in his original paper called COIN a 'BIT CHAIN LETTER", not unlike a PYRAMID CHAIN LETTER.

Sat, 01/25/2014 - 03:11 | 4365925 bitcoinbear
bitcoinbear's picture

There is nothing 'mathematical' about a Pyramid-Chain-Scam

Do you think your wall of text will protect you against mathematics?

http://www.mathmotivation.com/money/pyramid-scheme.html

There is a quantitative benefit in having additional interest or demand in bitcoin, but this is in no way exponential as in a pyramid scam.

The only scam here is you!

Sat, 01/25/2014 - 03:28 | 4365940 digi
digi's picture

All of your reasoning is futile when you take into consideration that bitcoins provide value and utility as a means of transaction. All pyramid schemes and chain letters never provide any value or utility or else they could just take that and use it to make actual profit legitimately. The only way you could stretch this further to try and fit bitcoin into a warped definition of a pyramid scheme is to declare all things that fluctuate based on an open market value to be pyramid schemes. I understand this might not be so difficult a thing to envision considering how rare an occurrence a truly free market is today, but I would say bitcoin is currently one of the best examples.

Sat, 01/25/2014 - 11:17 | 4366398 tip e. canoe
tip e. canoe's picture

true, but only up to the limit where it is prevented from being mathmatically divisible.   as hound admitted, that limit right now is somewhere > .002 BTC.

guess that's what satoshis are for, that is, IF the limit gets that far in penetration, somewhere over the rainbow.

with that said, transparently placing scarcity in an algorithm instead of creating an artificial reality around it (which the current Great Game does) is quite an interesting concept from a game theory perspective imo and should be not be summarily dismissed by any means.

Sat, 01/25/2014 - 02:39 | 4365888 bitcoinbear
bitcoinbear's picture

I might also add that being a software expert I did glance at the code, and it was SHIT

it would shorten the list if you told us about the subjects you are not expert in. fakesatoshi

Sat, 01/25/2014 - 07:13 | 4366169 madtechnician
madtechnician's picture

This Satoshit101 guy I am now thinking is a group of clueless shills working out of China. They're arguments are totally inconsistent and totally lacking in any fact. Sometimes the posts come across like somebody from an asylum.

Sat, 01/25/2014 - 12:24 | 4366626 chemystical
chemystical's picture

"They're (sic) arguments are totally inconsistent and totally lacking in any fact."

And your post was totally hyperbole and totally devoid of citations on which to base your assertion.

I give more credibility to posters who take time to at least offer a scintilla of reason; particularly when they make such over-reaching and absolute statements.

Sat, 01/25/2014 - 21:05 | 4367577 madtechnician
madtechnician's picture

Yeah, you win  - bitcoin is a Ponzi Tulip Pump & Dump Scam Shill Rip-Off that crashes every year and rip's off everybody who has ever been involved. It was simultaneously written by criminal hackers , the Fed and the NSA to con and scam everybody and every person and programmer who ever got involved with it.

Yes , You are right , you win. congrats ,

Sun, 01/26/2014 - 07:49 | 4368076 bitcoinbear
bitcoinbear's picture

Ignorance is strength

Sat, 01/25/2014 - 03:51 | 4365964 eclectic syncretist
eclectic syncretist's picture

Sounds like bitchcoin is like the Hotel California..... You can check out, but you can never leave.

Sat, 01/25/2014 - 07:23 | 4366185 GetZeeGold
GetZeeGold's picture

 

 

It's kinda like Obamacare......once you're in.......you're in.

Sat, 01/25/2014 - 09:06 | 4366311 eclectic syncretist
eclectic syncretist's picture

Yeah, it's kinda like the problem with virtual things like virtual currencies,,,,,is that they're VIRTUAL!!!

Sat, 01/25/2014 - 01:41 | 4365806 Kirk2NCC1701
Kirk2NCC1701's picture

Good to know. So, using your logic, if I can't afford to mine silver or gold anymore (now that the CA Gold Rush is over), I shouldn't bother with them?

Sat, 01/25/2014 - 02:36 | 4365879 satoshi101
satoshi101's picture

By all means MINE, .. I mean get on with it,... I just got bored seeing my machines overheat,... for fucking what?

*

It's a BIT-FUCK(TM)

*

It's a free world if you want to bit-fuck each, get on with it, just count me out.

*

FYI, I spent many years gold panning ( for fun ), dry mining in the desert mines ( for fun ), ... never found much gold, but had much fun.

Sat, 01/25/2014 - 06:20 | 4366103 DontGive
DontGive's picture

Sounds like you have a lot of fun doing things (for fun). Chalk up 'trolling' and/or 'shilling' as one or two more hobby(s).

Sat, 01/25/2014 - 02:05 | 4365842 ILikeBoats
ILikeBoats's picture

Yeah, you are full of crap, or, you had absolutely no clue what you were doing.  A midrange (not high end) Radeon does 400Kh/s, given the approximate difficulty of Litecoin back then you would have earned at least 0.12 LTC per day; over the course of a week, almost 1 Litecoin, which has varied in value from $15 to $30 during that period.

 

What ASICs did you get or use for your Bitcoin setup?  Specify manufacturer and model numbers.

Sat, 01/25/2014 - 02:22 | 4365864 satoshi101
satoshi101's picture

Your basing all on theory, I was running the top of the line Radeon and I never got near 400Kh/s, almost your theory as based most likely on 'private-mining' I told you I hooked with the number 1 lite-coin mining pool, again this was a test, and I said I only let the bitch run for a week, and I saw just a few cents, and I didn't even try to turn that 2 cents worth of LTC into real money.

*

WRT to the ASICS they're USB dongles putting out the expected ~300 Mega-Hash/sec, but the problem with BITCOIN is that you need to be doing Tera-Hash to make nickels, Mega-Hashing BTC will get nano-penny's.

*

Stupid to even talk about this, the only people who can defend bitcoin mining is companys selling 'mining hw'
Even fonestar doesn't advocate mining, he advocates selling real gold and buying BTC :)

Sat, 01/25/2014 - 04:11 | 4365983 ILikeBoats
ILikeBoats's picture

Nope, try again ... I know what I am talking about.  See for instance, this list - the Radeons you are talking about are the R9, the R9 270 is midrange and does 445kh/s reliably. https://litecoin.info/Mining_hardware_comparison

Nothing you have said about Litecoin mining makes any sense, I know from personal experience... but even if you don't believe me, go to coinwarz.com, put in "400" in the kilohash/second field, click calculate and search for Litecoin.

I agree that Bitcoin requires specialized ASICs, however.

Sat, 01/25/2014 - 05:41 | 4366051 satoshi101
satoshi101's picture

The spec's are written by those selling HW,
That's why I just dumped my personal experience.

Re-Read what I wrote, I said the 'mining pools', I didn't do SOLO mining,

Have you actually ever mined or you do you just report stat's?

Go back and read what I wrote, ... I let the bitch run, and the mining pool had only given me few cents after a week of making my machine completely worthless.

Also the ranges have some many factors,if you actually ran the software, you would know there are 100's of variables that can alter the HASH, the 400k maybe the best, but what I found was 300-400, because sure I could have gone higher but would have fried my machine and power supply.

My feeling is the MINING-POOLS major fuck the people over solo mining, but I found apples to apples comparison it was best to use mining pools so I could compare which had the best return, I found most equal.

I think its impossible to talk about MAX THEORETICAL return when the MINING-POOLS keep the most for themselves,

*

I don't want to waste anymore time, I would suggest if you were serious, find a terra-hash HW, and do solo mining on BTC, if it true that LTC has lost its value.

This is only a game for rich kids who like to play with HW, and I would prefer to burn my video cards with MATLAB doing physics and math for real, I have both cards RADEON and GIGABYTE ( CUDA & OPEN CL ) and have worked with both top of the line.
*
I wasted a week with Virtual mining just to see for myself what it was all about, and like I said in the first comment, its just a toy, unless you like to burn up your machines.

*
To get FULL HASH out of BTC or LTC you got to run your machines in the RED zone full over-load and I don't do that to my machines.

Sat, 01/25/2014 - 07:13 | 4366170 madtechnician
madtechnician's picture

This Satoshit101 guy I am now thinking is a group of clueless shills working out of China. They're arguments are totally inconsistent and totally lacking in any fact. Sometimes the posts come across like somebody from an asylum.

Sat, 01/25/2014 - 11:21 | 4366496 tip e. canoe
tip e. canoe's picture

somebody from an asylum

you guys should switch names then.
or maybe you already have?
;~)

Sat, 01/25/2014 - 04:41 | 4366007 Advoc8tr
Advoc8tr's picture

I knocked up a 5 x water-cooled R9 280X box for Litecoin mining while I wait for my 2TH ASIC units for BTC.  Configured my own P2Pool node and plugged it into my server rack at the office.  Little baby pulls in around 1 LTC per day 7/365 (varies with difficulty changes) electricity is absorbed into tax deductible business bill.  Every 28 coins I exchange for a BTC.  1 BTC per month from your own 'money' printing machine is a nice feeling :)

 

I'll just accumulate and wait and see. Nothing ventured nothing gained.  Mind you now the wife is on board and has discovered we have enough BTC to book a worldwide trip outright without exchanging them (1 click and we're off) ... the kitty may not last long :P

 

 

Sat, 01/25/2014 - 08:04 | 4366243 frenzic
frenzic's picture

what was that song again... Pump Pump Iran something like that

Sat, 01/25/2014 - 09:36 | 4366346 JuliaS
JuliaS's picture

Get something for nothing - that's the American dream, alright! No wonder BTC is so popular.

Sat, 01/25/2014 - 12:52 | 4366700 freedogger
freedogger's picture

If all you made off of a high end, 600 dollar GPU was 3 cents, then you are doing it wrong.  RTFM as they say. You should be able to pull eight bucks a day off of that card on an average day right now. 

http://www.cryptobadger.com/build-your-own-litecoin-mining-rig/

 

Sat, 01/25/2014 - 00:21 | 4365647 One World Mafia
One World Mafia's picture

You want to get serious about an alternate currency, then throw out the NSA approved hackable Bitcoin protocol and start fresh.  From NSA designed SHA256 to hackable RIPEMD160 to secpk1 (not fully rigid curve), toss them or else the NSA keeps its backdoor to mining and private keys.  Defending it to the end rather than confronting its NSA demons is just confirming cryptocurrencies are more toxic than dollars.

Sat, 01/25/2014 - 00:52 | 4365714 bitcoinbear
bitcoinbear's picture

All the king’s horses, and all the king’s men, Couldn’t put Humpty together again....and now you just need to present some proof that what you just said is true ...

The SHA family of hashes are subject to intense scrutiny by the smartest mathematicians and cryptologists from around the world. After 12 years under the microscope, they are still nowhere near a meaningful attack on SHA-256. The NSA has some smart people, but they don't have a race of atomic supermen the likes of which the cryptography world has never seen.

Sat, 01/25/2014 - 02:04 | 4365839 bitcoinbear
bitcoinbear's picture

I was hoping you would prove that P does not equal NP so we can put this to rest :). 

nevertheless...

To prevent length-extension attacks bitcoin uses double-SHA-256. These attacks are a known weakness in the current SHA hash functions. The double-SHA-256 is sort of a workaround to this vulnerability. And as no significant attack on SHA-2 has been demonstrated it will do for now. And i guess sha3 may be implemented in bitcoin in the future.

Sat, 01/25/2014 - 09:09 | 4366318 eclectic syncretist
eclectic syncretist's picture

Bitcoin is just the NSA's bitch that they're using to track illegal money flows.

Sat, 01/25/2014 - 09:16 | 4366326 satoshi101
satoshi101's picture

Even fonestar concurs as much now, but he says "NEVER MIND",...

Now we have entered the wizard of oz, moment where foney say's "NEVER MIND THE MAN BEHIND the CURTAIN, ... I KNOW HE's THERE"

Funny 2+ months ago foney denied such a possibility, and today he calls it 'obvious'.

*

Yes, to track but really to deny 'micro-payment' worldwide so that nobody can eat or move that makes a disturbance.

A permanent, pubic record forever of every thing a person does, everywhere he goes, and nobody can call it "SPYING", cuz its 100% public.

Fucking geniass.

Sat, 01/25/2014 - 09:22 | 4366336 TheHound73
TheHound73's picture

Yep, with a whopping $10 billion market cap counting many coins that haven't moved in years, Bitcoin has been the perfect tool to track illegal money flows.  The dragnet is now complete with Overstock and TigerDirect coming on board.

Sat, 01/25/2014 - 13:12 | 4366379 One World Mafia
One World Mafia's picture

The NSA knows about double hashing and would not design and release for public use cryptographics that could be made fool proof just by double hashing.

And as no significant attack on SHA-2 has been demonstrated it will do for now.

What about the link I posted about the NSA getting into bank accounts?  Banks use SHA256. And why will it "do for now" when bitcoin could be using cryptography that the NSA didn't design? 

All the SHAs are NSA designed.  Why are you looking for another NSA design for relief?


Sat, 01/25/2014 - 12:26 | 4366632 Spanky
Spanky's picture

Bet the Russians and Chinese don't use SHA-256 for their communications, no matter how much the smartest mathematicians and cryptologists from around the world praise it.

And who needs a race of atomic supermen when you have an unlimited budget and access to all the resources of the USG?

Perhaps you remember Operation Ivy Bells?

https://en.wikipedia.org/wiki/Operation_Ivy_Bells

Sat, 01/25/2014 - 12:17 | 4366608 Urban Roman
Urban Roman's picture

OK, if you don't like the NSA, you could get yourself some Copperlark. 

It comes from Russia, so no NSA backdoors there. No idea whether the FSB is involved..

Sat, 01/25/2014 - 19:42 | 4367464 The Axe
The Axe's picture

Private key---in a collective block chain..that is a voting block is unhackable by the NSA

Sat, 01/25/2014 - 01:19 | 4365759 Seize Mars
Seize Mars's picture

Sorry this is a cut and paste job, and I've shared this before, but I think this is pretty important. This comes from our fellow ZHer Occident Mortal:

>>>>>>>>>>.

In 1989 the NSA released cryptography hash MD2, but it was found to have a mathematical backdoor.

So in 1990 the NSA released cryptography hash MD4, but it was found to have a mathematical backdoor.

Following this revelation in 1992 the NSA released cryptography hash MD5, but by 1996 it was found to have a mathematical backdoor.

SHA-0 was published by the NSA in 1993, but was shortly withdrawn as it was found to have a significant flaw.

SHA-1 was published by the NSA in 1995, and was used by everyone until 2010 when it transpired a weakness in the hash had been the subject of various attacks since 2005.

The latest NSA published cryptography hash is SHA-2, which is what Bitcoin is based on.
 
Good luck with that.

MD2 was open source.
MD4 was open source.
MD5 was open source.
SHA-0 was open source.
SHA-1 was open source.
SHA-2 is open source.

Bitcoin is built on SHA-2, the 6th generation of published NSA cryptology hash's, all of the previous 5 generations were open source and all were eventually discovered to contain unpublicised mathematical backdoors.

http://groups.csail.mit.edu/mac/classes/6.805/articles/money/nsamint/nsa...
HOW TO MAKE A MINT: THE CRYPTOGRAPHY OF ANONYMOUS ELECTRONIC CASH
National Security Agency Office of Information Security Research and Technology
Cryptology Division
18 June 1996

Satoshi Nakamoto is a pseudonym of the NSA cryptologist Tatsuaki Okamoto who wrote about a dozen papers on digital crypto currencies from 1991 to 1995.
e.g.

1. Tony Eng and Tatsuaki Okamoto, Single-Term Divisible Electronic Coins, Advances in Cryptology EUROCRYPT '94, Springer-Verlag, pp. 311-323.

2. Tatsuaki Okamoto, An Efficient Divisible Electronic Cash Scheme, Advances in Cryptology - CRYPTO '95, Springer-Verlag, pp. 438-451.

3. Tatsuaki Okamoto and Kazuo Ohta, Universal Electronic Cash, Advances in Cryptology - CRYPTO '91, Springer-Verlag, pp. 324-337.

Patents:
Okamoto also owns a string of patents which cover Bitcoin and are still valid for another 3-5 years, so he has every right to sue you for triple damages in a US court any time.

How are you only learning about this now??

Electronic cash implementing method using an anonymous public key license (1996)

https://www.google.co.uk/patents/EP0772165B1?cl=en&dq=ininventor:%22Tats...

Electronic cash implementing method with a surveillance institution, and user apparatus and surveillance institution apparatus for implementing the same (1997)

https://www.google.co.uk/patents/EP0807910B1?cl=en&dq=ininventor:%22Tats...

Method and apparatus for implementing hierarchical electronic cash (1997)

https://www.google.co.uk/patents/EP0810563A3?cl=en&dq=ininventor:%22Tats...

Electronic cash implementing method for issuer having electronic cash balance counters, corresponding issuer equipment and recording medium having recorded thereon a program for execution of the method (1998)

https://www.google.co.uk/patents/EP0926637B1?cl=en&dq=ininventor:%22Tats...

Sat, 01/25/2014 - 01:34 | 4365797 TheHound73
TheHound73's picture

Lol, I'll just wait for my summons to court then. :)

"Mathematical backdoors," you mean weaknesses were discovered.  This is part of the process of developing robust crypto.

Sat, 01/25/2014 - 03:47 | 4365949 digi
digi's picture

Indeed, weakness does not equal backdoor.

When your mp3 player glitches out and skips to the next song every 30 seconds, this is more likely a software error than a backdoor. I would think that is obvious to all but the most paranoid.

Sat, 01/25/2014 - 03:54 | 4365966 TPTB_r_TBTF
TPTB_r_TBTF's picture

just because i am paranoid,

that doesnT mean that bitcoin doesnT have any weakness.

Sat, 01/25/2014 - 07:28 | 4366187 GetZeeGold
GetZeeGold's picture

 

 

How do you mine bitcoins for free again?

 

If you can mine them for free.....why would I want to pay for them?

Sat, 01/25/2014 - 11:26 | 4366507 tip e. canoe
tip e. canoe's picture

process of developing robust crypto.

so then, wouldn't it make sense to have a algorithmic evolving key then, like primecoin?

Sat, 01/25/2014 - 10:06 | 4366383 Metal Minded
Metal Minded's picture

Is that you, Toolshed?

Sat, 01/25/2014 - 02:06 | 4365841 FullFaithAndCretin
FullFaithAndCretin's picture

Everyone seems to have forgotten something. The problem with bitcoin is that is doesn't qualify as money.

I know there is an upper limit of x on mineable bitcoins but that's a parameter isn't it. I must put my faith in a parameter?

Even if this parameter is fixed for all time, there is no upper limit on the supply of digital currencies. Therefore there is no scarcity. Therefore they will all return eventually to their intrinsic value of zero. Ergo, no use as a store of value or medium of exchange.

Anyway the USD isn't backed by the full faith and credit of the government, its backed by the full military capability of the government. You can't match that.

Maybe its just me.

 

Sat, 01/25/2014 - 02:20 | 4365861 bitcoinbear
bitcoinbear's picture

Bitcoin offers another more sustainable solution than to nuke those who do not agree that the dollar is money. The bitcoin solution is called Laissez-faire. 

Sat, 01/25/2014 - 03:01 | 4365911 Bunga Bunga
Bunga Bunga's picture

Bitcoin is consensus while Dollar is force.

Sat, 01/25/2014 - 03:45 | 4365957 FullFaithAndCretin
FullFaithAndCretin's picture

lol

Sat, 01/25/2014 - 02:25 | 4365867 TheHound73
TheHound73's picture

Sure, go ahead with the status quo if you like.  If you use bitcoin you must trust that not more than half the other bitcoin users will decide to destroy the value of their bitcoins by changing the upper limit parameter at the same time.  

Dilution of Bitcoin via other crypto-currencies is potentially a problem... It all depends on if they will have any resale value in the future...  I, for one, will have nothing to do with them.  A response to a Litecoin advocate.

Sat, 01/25/2014 - 02:51 | 4365902 FullFaithAndCretin
FullFaithAndCretin's picture

Sure, deny the realities if you like.

Sat, 01/25/2014 - 03:46 | 4365961 digi
digi's picture

Those alternative digital currencies you mentioned, they aren't bitcoin. The past couple centuries have shown us that the world wants a global reserve currency and has brought down quite a few nations in an attempt to implement some type of working transaction system. So it can't really be bitcoin and litecoin and dogecoin playing on an equal level. One will be the reserve currency and the rest will all be special use cases.

Sat, 01/25/2014 - 04:03 | 4365973 FullFaithAndCretin
FullFaithAndCretin's picture

"the world wants a reserve currency" Is that even true? Who wants that exactly?

If you are right, the reserve virtual currency will be the one backed by the biggest non-virtual army.

Sat, 01/25/2014 - 09:55 | 4366370 Metal Minded
Metal Minded's picture

Is that you, Paul? How long is it you've been at the Times?

Sat, 01/25/2014 - 12:15 | 4366603 FullFaithAndCretin
FullFaithAndCretin's picture

Yes it is. I forget how long. That metal in your mind, what is it? Hint: wood isn't a metal.

Sat, 01/25/2014 - 02:44 | 4365892 Bunga Bunga
Bunga Bunga's picture

The naughty America is in mass adoption:

http://www.coindesk.com/naughty-america-bitcoin-acceptance/

Sat, 01/25/2014 - 03:41 | 4365951 Rock On Roger
Rock On Roger's picture

Fuck it - tomorrow I'm going to shoot a bison and eat the bitch.

That's reality.

 

Stack On

Sat, 01/25/2014 - 07:19 | 4366180 Sufiy
Sufiy's picture


Bitcoin vs Gold Debate With James G. Rickards And Roman Skaskiw

Jim Rickards debates Gold case vs Bitcoin. Can Bitcoin ever become the "Gold 2.0"?

http://sufiy.blogspot.co.uk/2014/01/bitcoin-vs-gold-debate-with-james-g....

Sat, 01/25/2014 - 07:42 | 4366217 thurstjo63
thurstjo63's picture

Good article. As for Bitcoin volatility, as new technology for providing derivatives on bitcoin such as Reggie Middleton's ultracoin comes out, you will see the businesses better able to hedge against the volatility versus fiat currencies. At that point, bitcoin growth will go exponential.

Sat, 01/25/2014 - 07:56 | 4366235 Mcat
Mcat's picture

Bitcoin is a payment system, not a currency. If it were, Gov't would surely regulate it and control it and they are not. There are no barrier to entry, so you will see more competition in the payment system market place. 

Sat, 01/25/2014 - 10:00 | 4366375 fijisailor
fijisailor's picture

It's only a half assed payment system.  How can I buy a cow in Africa with a bitcoin?  How can I buy a mojito in Cuba?

Sat, 01/25/2014 - 16:26 | 4367127 Amagnonx
Amagnonx's picture

Stunningly (to me) this incredible shortsightedness seems so prevalent - how can anyone who is supposed to be an investor fail even concieve of what might be going to happen next year, or in two years?

 

If the sellers of cows and mojito's accept BTC, and you can pay with the swipe of a card - would that be acceptable?  Because that is very likely to be the case in a few years time.

Sat, 01/25/2014 - 08:57 | 4366296 fijisailor
fijisailor's picture

I don't see how bitcoin will ever be successful given that it is not user friendly to the average person.  Downloading a block chain?  What the fuck is that good for when I need a burger?

Sat, 01/25/2014 - 09:30 | 4366339 TheHound73
TheHound73's picture

If you like your blockchain you can keep it.  The Multibit wallet don't need the fullchain, though. My android phone has bitcoins loaded on it (Mycelium wallet) which I've used , for instance, to buy fajitas in Tokyo.

Sat, 01/25/2014 - 09:47 | 4366364 fijisailor
fijisailor's picture

OK.  Let's say I have a bitcoin wallet (that long string of numbers and letters).  Give me step by step instructions that any average person could follow to add to it and use it.  I don't have a clue.  I just want something that's close to as easy as swiping a debit card.

Sat, 01/25/2014 - 11:35 | 4366478 TheHound73
TheHound73's picture

Debit card: easy, sure, but first you had to fill out and mail in the forms, wait for their credit check and receive your card in the mail.

Now, adding funds to your bitcoin wallet... Only an idiot sells bitcoin via credit card or Paypal because as soon as he transfers the bitcoin, the buyer reverses the charges.  So that means buying bitcoin for cash through localbitcoins.com or through you bank account hooked up to Coinbase.com

If you post your address I'd send you a beer's worth to play around with.

Sat, 01/25/2014 - 15:05 | 4366959 fijisailor
fijisailor's picture

1BHJJ9NUDfMt6tbsJyukzsPoEDfzLfqWsG

Sat, 01/25/2014 - 20:17 | 4367508 TheHound73
TheHound73's picture

Cheers, enjoy a tasty beverage.

Sat, 01/25/2014 - 20:24 | 4367519 fijisailor
fijisailor's picture

Thanks.  That was nice of you.  You've gotten me interested now.  I'll find a bar that takes it and toast to you.

Sat, 01/25/2014 - 20:38 | 4367542 TheHound73
TheHound73's picture

Coinmap.org keeps a list of merchants that accept BTC.  Not everybody is listed on there but it is a start.

Sat, 01/25/2014 - 09:18 | 4366330 paint it red ca...
paint it red call it hell's picture

I have been convinced from the beginning bitcoin is the pilot model for the global electronic currency created and sold (just where did it come from or out of?) as the anti-currency in the public backlash of monetary excess. Signs of this model being embraced by the status quo are all around and growing monthly. Who cannot see this? Who cannot conceive that competing digital monies will be made popular through their autonomy, convenience and early value growth only to get linked up to create a true electronic bondage for the masses through controlled exchange of wealth for goods?

Under whose control????? Let no crisis go unexploited.

If anyone thinks debt, inflation and organized crime at the highest level enslaved with velvet cuffs and gamed the public once bound, just wait until ALL your transactions are electronic, controled by corporate/government permission and taxed as seen fit. Monitary controls, arn't we seeing that now on cash removal large and small at even local banks? Just wait til no cash exists to withdraw.

Meet the new velvet cuffs, same as the old velvet cuffs with improved tighter hold for closer more thorough shearing of the sheeple.....

Sat, 01/25/2014 - 13:29 | 4366797 mrbadexample
mrbadexample's picture

I couldn't agree more. Capital controls are coming back and digital USD is incredibly easy to launder provided you have enough to make it worthwhile for your overseas "partners". Zero's and one's, once converted into paper currency or assets, are not traceable. Bitcoin, if precautions are taken, is very secure against fraud and theft but one thing it is not and was never designed to be is "anonymous". I've read the famous 1996 "NSA Paper" and if I understand it correctly the entire "digital wallet" system was expressly designed to prevent criminals using it for anonymous transactions. The fact that some have and gotten away with it is simply a matter of enforcement priority, not any inherent anonymity. Dread Pirate Roberts can attest to that fact. Bitcoin will be to financial transactions what social media was to personal relations, i.e. a means to denigrate and ultimately undermine privacy and civil rights and transition us to a government backed crypto currency for all transactions above a certain level. I'm not calling it the end of cash, just the end of $100 bills. Bitcoin and its competitors are just an NSA marketing scheme for the transition that is coming and I have little doubt that a massive "bitcoin crash" or similar manufactured event is in the offing already. Bitcoin has numerous (and documented) technical weaknesses that would allow a sufficiently large mining cabal to completely control the market. But who has THAT sort of computing power just lying around. Oh, right...

http://nsa.gov1.info/utah-data-center/

 

Sat, 01/25/2014 - 10:02 | 4366373 fijisailor
fijisailor's picture

I can see it now.  Trying to bribe my way across an international border with fucking bitcoin.  How many illegal aliens have paid off their coyote with bitcoin to get into the US?

Sat, 01/25/2014 - 10:51 | 4366451 mobius8curve
mobius8curve's picture

A phone app, biometric ID, bitcoin, and corporations like Walmart who will adopt this method of payment.

Looks to me like we are not very far away:

Revelation 14:9-10  And another angel, a third, followed them, saying with a great voice, If any man worshippeth the beast and his image, and receiveth a mark on his forehead, or upon his hand,  (10)  he also shall drink of the wine of the wrath of God, which is prepared unmixed in the cup of his anger; and he shall be tormented with fire and brimstone in the presence of the holy angels, and in the presence of the Lamb:

It is your mind(trust) and hand(working) for and in this beast rather than a physical mark:

Revelation 14:12-13  Here is the patience of the saints, they that keep the commandments of God, and the faith of Jesus.  (13)  And I heard the voice from heaven saying, Write, Blessed are the dead who die in the Lord from henceforth: yea, saith the Spirit, that they may rest from their labors; for their works follow with them.

Sat, 01/25/2014 - 12:20 | 4366614 adr
adr's picture

I work for a Japanese company and have a contract to pay me a specific salary in dollars. My salary doesn't change daily based on the JPY/USD trade. I guess if my company wanted to they could set up Bitpay so they could buy Bitcoin with Yen and then I would get paid my salary in dollars, but what is the point of that?

That is where Bitcoin fails. If I decide I want to be paid with Bitcoin for my labor, how would it work? I would want a contract for 6 Bitcoin per month. How does my company acquire the six Bitcoin per month? They could invest a few hundred thousand dollars in mining equipment and spend a thousand dollars a month on electricity and hope they win a block to pay my wages. On top of my wage the cost of mining becomes a cost of my emoyment. Or they can buy Bitcoins to pay me with.

At first it might be fine. They buy the first month's six Bitcoin and it costs them around $6000. But then Bitcoin goes to $2000 and it now costs $12k to pay me my six Bitcoin monthly salary. In one month the cost of my employment has doubled, yet I make the claim I am still being paid the same. My contracted six Bitcoin. I don't think I will last another month with my employer.

If the value of Bitcoin falls, my employer would love Bitcoin. The cost of my employment will go down. If Bitcoin was an accepted currency and the value of goods priced in Bitcoin was stable, I might not care. What I bought last month for .005 Bitcoin should still cost .005 Bitcoin. But that is not how it works. Merchants accepting Bitcoin are doing so based on a conversion rate. If Bitcoin loses half its value, I now have to pay .01 Bitcoin for the item. My pay just got cut in half. I ask for a raise and my employer says no, you signed a contract for six Bitcoin and you get six Bitcoin.

So for now Bitcoin is not an acceptable trade for labor, a big problem. The value will need to stabilize and fluctuate in a very small range. But then Bitcoin will lose its appeal as a speculative investment with no way to become a Bitcoin millionaire buying low and selling high. This also causes problems with the fact that each new block of Bitcoins costs more to mine, unless the value increases there is no incentive to mine. Yes I know that if less hashes are used the block awards are easier. But that would mean there is less interest in Bitcoin and declining value.

That brings us back to Bitcoin's true value. A monetary transfer mechanism. There is still the problem that I must buy Bitcoin to use it to transfer money. With Paypal or a credit card or Western Union, I don't have to buy a different currency to use them. If Bitcoin had a stable value it wouldn't matter, but a $35 charge to wire $10k is nothing compared to a 10% loss in the value of Bitcoin. Bitcoin essentially becomes Paypal with lower transaction fees. But then holding Bitcoin has no value.

If Bitcoin becomes stable then there is the problem that $10 billion in Bitcoin simply isn't enough supply. Billions of new Bitcoin will need to be awarded to grow the money supply to be useful for commerce. But Bitcoin was created with a limited supply that is supposed to increase in value as more people buy into it, the definition of a pyramid scheme. If Bitcoin always increases in value, then why would anyone spend one? People become paralyzed, afraid to spend becuase of the belief their holdings will continue to increase in value. People didn't sell thier Beanie Babies even when offered insane amounts of money because they believed they would be worth more a short time later.

Right now Bitcoin is a pyramid scheme rewarding early adopters, like any successful pyramid scheme. Which are technically illegal. For mass adoption the value needs to stabilze, but that causes massive problems because the incentive to spend more and more money to mine new Bitcoin is no longer there. The value of Bitcoin is an anonymous way to transfer money, but if you are just transferring money, there is no value in holding Bitcoin.

Sat, 01/25/2014 - 16:04 | 4367099 Amagnonx
Amagnonx's picture

A very long, long, long way to say that BTC is volatile - then you complain that if volatility decreases it becomes 'worthless' because it is no longer a speculative play - then you say that more BTC (!?) need to be created to make enough value for commerce.

1. Volatility - BTC will remain volatile until it has sufficient market penetration and infrastructure to support its use - and we need derivatives, shorts, distributed exchanges and so on - all this is being built right now.

2. Speculative value - Speculators will speculate with anything, even FX markets where movements are small - because then they just use more leverage.  However, I do NOT believe that the bulk of BTC's value comes from speculation - it comes from anonymity, ease of use, store of value (savings) and many other properties - some of which will be available in the future (many coming in 2014).

3 Market cap - now this last is absurd of course.  It is not the number of BTC that will increase, it will be the purchasing power of each BTC that will provide the market cap.  So this argument is purely absurd.

Sat, 01/25/2014 - 21:14 | 4367553 TheHound73
TheHound73's picture

I get paid in BTC. I've worked both types of jobs: fixed contracts and a floating exchange rate.  On fixed contracts my employers acquire BTC at a known price at the time of contract signing. I on the other hand take on the exchange rate risk -- but it has usually worked out to my advantage.  Mostly I work on a floating rate basis based on USD equivalent -- a couple months ago being paid 10 BTC a week, now less than 2.  Just as Overstock.com immediately exchanges BTC received into USD, it works the other way: Employer exchanges USD to BTC on payday.  In both cases employers take on 0 volatility risk. 

Sat, 01/25/2014 - 13:14 | 4366760 the 300000000th...
the 300000000th percent's picture

All the haters are the ones that didnt buy it months ago when it was $13 a share. Love it or hate, who f%cking cares. Why all the hate?? Its interesting as f$ck, thats for sure. 

Sat, 01/25/2014 - 14:12 | 4366897 Spanky
Spanky's picture

-1

For...

All the haters ... Why all the hate?? -- the 300000000th percent

Political correctness. So that's what we're calling reasoned skepticism in newspeak? Guess I'd better report the Ministry of Truth for re-education.

But we do agree that its [sic] interesting as f$ck...

Sat, 01/25/2014 - 20:24 | 4367521 madtechnician
madtechnician's picture

The hatred is for themselfs

Sat, 01/25/2014 - 17:02 | 4367204 The Axe
The Axe's picture

Currently in Miama at a Bitcoin Coin Conference...the story on ZH regarding HSBC is ONE big reason to love Bitcoin...I drank the Kool-Aid I am all in on BitCoin(actually 10%in)  Remember Cyrpus.  

Sat, 01/25/2014 - 17:18 | 4367224 Amagnonx
Amagnonx's picture

Those who love gold but hate BTC, either dont understand gold, or dont understand BTC - most likely its both.

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