Bitcoins

yeah, but no one is claiming stocks as a new form of currency that will usher in a libertarian utopia

they should! "Can I buy a ham for three shares of Earthlink?"

YES

its pretty differnt than stocks

http://money.cnn.com/2014/02/28/investing/mt-gox-bankruptcy/index.html?hpt=hp_t2

xpost xpost - yes the irony is thick "we do not need the government to deal with money" --- "Oh wait - laws prevent crimes"

seems more like a commodity than stock or currency, with all the speculation, constrained supply, wild spikes in value, like a virtual equivalent to a precious metal like gold

I mean they even call it bitcoin mining

its a fiat commodity

my other car is a fiat Fiat

Currencies are speculated on too, and occasionally a currency has wide swings in value. Hence, bitcoin is what I call a shitty currency.

its an IDEA!

it's a fiscal Esperanto for the digital age!

it's an MMO auction house for IRL!

it's the future!

People with half a brain stopped using Mt.Gox nearly a year ago. We all moved to respectable exchanges such as Coinbase, Bitstamp, and CampBX who strive to be in line with regulators and are run by people who actually understand finance. It's also important for people to understand that Mt.Gox shutting down is about the same as some rural bank in North Dakota shutting down — it hardly affects the value of the currency in which it exchanged. BTC is still hovering arbound $550 and $750 and the blockchain shows there is a buying frenzy going on because, believe it or not, this is considered cheap at the moment.

http://www.coindesk.com/bank-stops-working-bitcoin-exchange-campbx-regulatory-uncertainty/

lol

http://www.theverge.com/2014/2/15/5414610/bitstamp-restores-service-after-targeted-attack

The problems stem from a vulnerability known as "transaction malleability," which refers to an issue that would allow a user to alter transaction details to make it seem as if a transfer failed when it had actually succeeded. This week, Bitcoin core developer Jeff Garzik told The Verge that the issue is more widespread than the team initially realized. "It's mainly a nuisance," he said, "forcing everybody to stop and fix their website software and Bitcoin wallets."

I mean, if I were more cavalier about my spare money I could see throwing some into this just to see what would happen but given that until two weeks ago the whole process could be exploited by spoofing responses, it just feels like a fundamentally bad idea to view this as anything more than a crude gambling opportunity.

seems more like a commodity than stock or currency, with all the speculation, constrained supply, wild spikes in value, like a virtual equivalent to a precious metal like gold

I thought about doing some kind of discount on Magic cards for people who could prove they'd lost money on MTGOX but I decided it would offend the few possible customers who got the joke.

You should have done it anyway!

Can't even remotely relate bitcoins to stocks. I mean, stocks represent something tangible, defined, and regulated, like say a tiny percentage of the market cap of General Electric, a 100+ year old company that has consistently made profits. Bitcoins represent a "currency" that a vast majority of merchants won't accept, whose value fluctuates wildly on a whim, that is not backed by anything considered valuable, that is still growing in supply daily by random ppl willing to burn up gabs of electricity with overworked computers, that you could lose if your hard drive crashes.

this is a dumb question - but how is a bitcoin created? is there like a company that makes a bitcoin and puts it into circulation? or is the total number of bitcoins regulated?

its decentralized, theres a formula that controls their creation (they call the process mining lol), basically you run the mining program and then after a while u get some coins, you are m/l spending computer cycles on bitcoins, the more that are mined the more computer power it takes to mine new ones until eventually no more can be mined

the formula was written by an anonymous creator(s) and released into the wild now its just computers talking to computers

I thought the whole point of bitcoins was to be able to buy drugs on the silk road

if only

this is a dumb question - but how is a bitcoin created? is there like a company that makes a bitcoin and puts it into circulation? or is the total number of bitcoins regulated?

http://upload.wikimedia.org/wikipedia/en/5/50/NES_Super_Mario_Bros.png

Yes, the total number is predetermined though -- not "regulated" but built into the design

They come in a can, we're put there by a man, in a factory downtown

es, the total number is predetermined though -- not "regulated" but built into the design

― james franco tur(oll)ing test (Hurting 2), Friday, February 28, 2014 10:06 PM (1 hour ago) Bookmark Flag Post Permalink

It's this aspect that makes the whole thing feel like a giant pyramid scheme to me. Those who first developed bitcoins or got in early could load up on the things for cheap, as the computer processing power and time to mine one was relatively small in the beginning. But anyone who wants bitcoins now must either pay a fortune on a real-money exchange or mine a new one, which now takes a roomful of powerful computers, air conditioning, and heat sinks.

In any case I'll start calling bitcoins "currency" only when the local grocery store, my dentist, the insurance company et al. atart accepting them as payment. Until then bitcoins are an overhyped (very) speculative investment, valuable only because lots of people currently value them. I suppose most of the Bitcoin crowd are too young to remember tulip leaves or beanie babies....

I don't really think tulips or beanie babies are a good analogy for whatever bitcoin is. Tulips and Beanie Babies never had any theory behind them beyond "this will be worth more tomorrow than it is today." Bitcoin is a really elaborate and clever, if highly flawed, experiment in virtual money. Yes, it's also being bought as a speculative item, but not everything speculated on is automatically the equivalent of Beanie Babies, which literally served no conceivable purpose.

I also don't really understand how "pyramid scheme" works as a metaphor.

the originators stand to make the most money (top of pyramid), and the suckers at the end (bottom of pyramid)

I'm a little surprised more noise isn't being made about the unsustainable nature of storing every transaction.

why is that unsustainable?

you can embed information in each transaction, turning the blockchain into a "permanent" distributed database. this has already caused a certain amount of problems by the kind of content people have stored, but it's not hard to anticipate a level of activity that esssentially outstrips the rate of however fast storage costs go down. I can pass fractions of bitcoins between two accounts a ton of times to encode an mp3, for example, abusing the system to be a wildly inefficient music library, forcing everyone to eat that cost.

I don't really think tulips or beanie babies are a good analogy for whatever bitcoin is. Tulips and Beanie Babies never had any theory behind them beyond "this will be worth more tomorrow than it is today." Bitcoin is a really elaborate and clever, if highly flawed, experiment in virtual money. Yes, it's also being bought as a speculative item, but not everything speculated on is automatically the equivalent of Beanie Babies, which literally served no conceivable purpose.

― james franco tur(oll)ing test (Hurting 2), Saturday, March 1, 2014 12:14 AM (2 hours ago) Bookmark Flag Post Permalink

But a digital blockchain has a *purpose*? Yeah, I know all about how part of the virtual-currency push is "let's stop money from being controlled by governments or banks", but the same could be said for tree leaves or stuffed animals if much of civilization deemed them highly valuable and worthy of being used as payment for goods or services.

Shitcoins

the originators stand to make the most money (top of pyramid), and the suckers at the end (bottom of pyramid)

a pyramid scheme requires more than just that in to qualify as a pyramid scheme

call it a pyramid-shaped scheme

lol

http://image.shutterstock.com/display_pic_with_logo/513334/141029668/stock-photo-pyramid-on-one-us-dollar-bill-banknote-detail-macro-shot-141029668.jpg

Krinkle8 ‏@Krinkle8 20h
Imagine a system where a man gives you a chuck-e-cheese token every hour you let your car idle. Realize that system exists and it's bitcoin

lol

the originators stand to make the most money (top of pyramid), and the suckers at the end (bottom of pyramid)
a pyramid scheme requires more than just that in to qualify as a pyramid scheme

― °ㅇ๐ْ ° (gr8080), Saturday, March 1, 2014 11:58 AM Bookmark Flag Post Permalink

call it a pyramid-shaped scheme

― lag∞n, Saturday, March 1, 2014 1:22 PM Bookmark Flag Post Permalink

That just describes any bubble -- it's called "find a bigger fool." People who buy and sell before the thing pops make money, people who get left holding the bag lose.

bubbles are round fyi

http://m6.i.pbase.com/u34/ctfchallenge/upload/41293426.IMG_9501.jpg

http://www.gocheapvegas.com/images/The-New-Craps-Game-Las-Vegas-Full-Machine.jpg

The reason i think Bitcoin qualifies as a pyramid scheme and not a mere bubble is that the design of bitcoins intrinsically made them easy and cheap to mine when they were first developed (i.e., when they were new and almost nobody knew about them, though <ahem> the creator and his friends obviously did and likely kept many for themselves), but those who get in late (i.e., now) need to burn up a huge amount of electricity or pay hundreds in a real currency to obtain a bitcoin as the blockchain becomes ever larger.

I've been following the Herbalife case a bit and there are some weird (and it seems to me, arbitrary) numeric precedents over what legally constitutes a pyramid scheme and it has something to do with a percentage of actual goods/services sold vs kickbacks.

slim thug was big into herbalife and he just got his own day in houston

The reason I don't think bitcoin is a pure pyramid scheme is that I think the technology really will find more valuable uses in the near future. It's perfectly possible that it will be a copy of or improvement on bitcoin instead of bitcoin itself. Smart coder people I know say the coding behind bitcoin is very impressive and not something easy to copy, but I'm just taking their word for it, and it does seem like if enough money backs the project of doing so, it can be done. But I do think bitcoins are an interesting new thing and not meaningless techno-baubles. I don't know whether that translates to bitcoins being worth $1 or $1000 or $100000 each. But I think anyone who claims to be certain it's a "bubble" at a given price is just blustering, and so is anyone who's sure it isn't, because there are too many variables and unknowns as to what bitcoin winds up being, if anything. With something like the housing bubble or the tech bubble you could look at a set of underlying historical norms, fundamentals, etc. With something like Beanie Babies it's easy enough to see, where there's literally no value to the thing other than the potential to become worth more one day. With a pyramid scheme or a ponzi scheme you can look at the structure of the thing and see that it can't be perpetuated indefinitely by nature. I don't think bitcoin is that simple a call.

So even though it's fun to laugh at techno-utopian paultards and the like, and even though I partake in that often, I say the jury is out on bitcoin.