Bitcoins

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.

btw this is a better explanation of its potential use in money transfers than I was able to muster:

http://nymag.com/daily/intelligencer/2013/11/how-bitcoin-can-mainstream-in-one-easy-step.html

potential use in money transfers and also why today's computerized money transfers are still big and unwieldy and expensive and not just a matter of clicking money from A to B

I'm pretty certain something using protocols inspired or copied from bitcoin will do many of the things that bitcoin was touted to do, but for bitcoin itself, yes, the very structure of it looks designed to be unsustainable and pyramidy from the getgo.

I really really despise the use of 'fiat money' to describe circulating currencies. It really says everything that is wrong with the mindset of goldbugs, libertarians and the like. I'd hate it to enter common usage.

what a wonderful world it would be if we were paying for everything like this

http://s.petrolicious.com/market/fiat/fiat-124-spider-5.jpg

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.

I want to say I've seen bitcoin popping up here and there as a payment option ...

As goes Overstock.com, so goes the nation

this site detailing the various crypto currencies is amazing
http://www.coinwarz.com/cryptocurrency

all in on Noirbits

if someone could explain these things to me simply, it'd be a big help. most of it is down to my dim/abstract understanding of how bitcoin even works

1. i don't understand the mt. gox heist. there was some sort of bug that allowed transactions to be spoofed or double-counted or something -- but isn't each 'coin' essentially a block of alphanumeric characters making everything traceable? i guess i don't get how that meshes with anonymity -- if there's an infinite paper trail, don't they know exactly who has the stolen loot? or at least, exactly where it went?

2. if the nature of the heist was that transactions were faked/doubled -- i thought that the whole point of this thing (how it mimicked gold) is that each chunk of BTC was irreproduceable, only "mineable" via computing the originating algorithm. IS that they heist? they made people think they'd received their goods when the "real" string went somewhere else?

3. what did the losing depositors at mt. gox actually lose, their BTC, or the USD they put in in exchange?

idk i'd like to be able to make fun of this accurately w/o doing a lot more homework.

I can't belive dogecoin is a real thing

I know someone who has sunk close to a thousand on Bitcoin stuff. Coins, mining boxes, etc. I'm pretty fiscally conservative so I think he's nuts, but it's interesting to watch. I guess nobody bought into MtGox that was paying any attention. It's a little heartbreaking to see him spend a lot of 'real money' to get this 'virtual money' but who knows maybe in 5 years he will be a millionaire.

My understanding of the Mt. Gox scandal is that they screwed up in the same way a disinterested cashier at a big box store gives refunds to people who return playstation boxes with bricks inside them with a fake receipt.

I do think the people who started mining early may have made out okay (although the 'best' way to get $$$ out would be to buy drugs, then sell the drugs for cash). mining is insanely unprofitable right now and I cannot see BTC holding much value five years from now.

ah, i see, thx philip

there was a service called "brainwallet" which allowed you to store your private key with a password, and some bot was able to hack into a bunch of these with a dictionary attack that included various Ayn Rand quotes and XKCD references. point is lolbitcoiners

a dictionary attack that included various Ayn Rand quotes and XKCD references

this is the greatest thing ever

I do think the people who started mining early may have made out okay...

― frogbs, Monday, March 3, 2014 10:55 AM (13 minutes ago)

50% of bitcoin wealth belongs to 0.1% of bitcoin owners.

Not one-percent, but one-tenth of a percent.

if there's an infinite paper trail, don't they know exactly who has the stolen loot? or at least, exactly where it went?

you may want to look up what a "bitcoin tumbler" is. I mean I'm guessing you don't care enough to do so but essentially it takes your coins and a bunch of other people's coins and distributes them randomly to a bunch of public addresses and then back again, so you can't know what coins belonged to who. It would be like if I had a service where people could send all their dirty money to me, then I'd throw it all up in the air and give everyone back the amount they sent me. Which means in theory one of these services could just steal all the money, but that hasn't happened yet.

Taking a crack at your questions, goole:

1. Yes, there is an infinite paper trail, but that trail only leads you to anonymous accounts. Linking those to people could be difficult, though I would speculate that someone with the resources of an FBI could probably do it, though not sure the FBI will get involved.

2. That's the bug that Gox is blaming, but I wouldn't be surprised if the flaw turned out to be something else. Only time will tell. I have a feeling the true story hasn't even started to come out yet.

3. I think only the BTC were stolen, but probably even those with USD claims can only hope for cents on the dollar at this point.

well Gox has more liabilities than assets, not even counting Bitcoins. don't forget that the DOJ is "holding" a lot of their money for them..

anyway as o.nate points out this may not even be a theft. apparently a ton of bitcoins sit in accounts that Gox once transferred cash to in 2011 to prove they were still solvent (after they got hacked the first time), and they still haven't moved, so there's a chance that they may have just lost the private key (!!).

I had an extra computer and free electricity last year and mining still made less monetary sense than parting out the computer on Ebay.

i mean that's really the despicable thing about all this, there's soooo much electricity being wasted on this to create essentially nothing

Hmm, apparently also $27 million in cash missing:

http://arstechnica.com/business/2014/03/mtgox-code-posted-by-hackers-as-company-files-for-bankruptcy-protection/

im wondering when the pr0n industry will come up with f***coins

t*tcoins. please.

fartcoins and totcoins

The Japanese government will set rules for trading bitcoins, defining the virtual tender not as a currency but as a commodity akin to gold.

Trading gains will be taxed, and companies will need to pay tax on revenue earned from Bitcoin transactions. But enforcement could prove difficult, as tax authorities will have to track down users.