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New internet currency Bitcoin grows in popularity

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New internet currency Bitcoin grows in popularity

Unread postby Sixstrings » Sun 04 Sep 2011, 16:07:39

Jaffe: new internet currency Bitcoin grows in popularity

Jeff from Cary, N.C. has concerns about the American economy and the future of the dollar. Bob in Boston is scared of inflation and the stock market. Michael from Selinsgrove, Pa., is out of the market and mostly in gold but wants to diversify further without relying on big government or traditional financial-services firms. Pete in New York just likes investing in new technology.

What they all have in common is that they recently heard about an investment that appeals to their sensibilities. The fact that it comes with performance numbers that are jaw-dropping has made it so tempting that all four either have dipped their toe in the market or say they are about to.

What they are buying is Bitcoin, a new form of currency that is not tied to any country or government, and that doesn’t actually exist in the physical world. It’s an Internet commerce unit, without any central bank or computer behind it. The Bitcoin system is run by the people who use it, a big enticement for the people just hearing about it and thinking of taking the plunge; there are no government officials to step in and mess things up, just the masses purportedly about to make Bitcoin a worldwide market force.

As Bitcoin has gained popularity, so has its value. About nine months ago, Bitcoins traded for roughly a nickel each; they spiked to nearly $30 a piece in June, but have since settled down to just north of $10. For someone who got in last fall, the value of their Bitcoin holdings – despite the big haircut they’ve taken since June – is up more than more than 22,000% annualized.
http://www.nj.com/business/index.ssf/2011/08/jaffe_new_internet_currency_bi.html


You know it's amazing, as much as I'm on the darn internet I missed out on the ground floor of something yet again. :evil: If I'd put just $500 into this back when the bitcoins were trading at 6 cents and if I sold at $30 then that would have been $300,000. 8O 8O

Basically, this an attempt at an "open source" currency, and it's attracting a lot of people who are looking for an alternative to fiat. The currency is backed by computer processing.. what I'm not clear on is whether the processes (mining) which create and back the currency are just meaningless busywork or if this is crowd-sourced computing that serves research purposes?

The project is legit, even though it sounds like a ponzi. They have had some problems.. one of the bitcoin banks got hacked and depositers / miners lost half their money.

Recently the value has been falling, down to $8 now and looks like it has some more to fall. Too risky to get involved now.. and the mining doesn't seem to pay UNLESS you're using solar electicity then it's free money. From what I gather like $150 per mining rig, so if you had the electricity covered then a farm of ten mining PCs would bring in $1,150 per month and it scales from there just limited by electricity and wherever the bitcoin exchange ends up.

(caution.. again.. it seems to me the currency is on the way down so don't go putting money into this :-D )
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Re: New internet currency Bitcoin grows in popularity

Unread postby Oakley » Sun 04 Sep 2011, 17:17:47

This is just another monetary scam. Instead of the counterfeiting being done by the banking system and the Federal Reserve Bank, the counterfeiting is being done privately. Under the current monetary system, the banking system creates "money" out of thin air and loans it to the public at interest. In 1932 the M2 money supply was roughly $50 billion; today it is $9,300. That is a huge increase and one hell of a lot of interest being paid to banks by the public for because government granted the privilege of creating new money out of thin air to the banking system. Is it no wonder that debt has grown to levels that are now crushing the economy. Is it no wonder that the purchasing power of the US dollar is only a fraction of what it was in 1932 at the bottom of the last depression; after all, when the supply goes up the value goes down.

So bitcoins are just a similar scheme, which will be ultimately attacked by the federal government when it finally gets on their radar. Even criminals don't want competition, and if bitcoins ever get to anything bigger than flea size, there will be "legal" consequences to those using and issuing them. Bitcoins come into existence out of thin air and are spent into existence by those who initially got them for creating the system. The fiction that you can mine them by using computer time is a lame subterfuge. The mystique of being electronically generated does not change the nature of this money as fiat, as in counterfeit. Unlike gold and silver, they have no intrinsic value. In spite of assurances that the supply of bitcoins will be limited to the initial issue, there ultimately will be new issues, otherwise the scheme will end sooner instead of being taken to bigger proportions.

This is just another example of a fool and his money being soon parted.
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Re: New internet currency Bitcoin grows in popularity

Unread postby Outcast_Searcher » Sun 04 Sep 2011, 19:15:01

This somehow reminds me of the monetary units that became popular (usually gold coins of some kind) in major online games. People actually would do "farming" (repetitive work to earn coins). These coins would end up having real value in the physical world and being traded places like EBAY.

Over time, due to the "farming" the value of the coins would almost always fall SIGNIFICANTLY in the real world, over time.

http://en.wikipedia.org/wiki/Virtual_economy

Considering "real" money is mostly stored/tracked electronically now, and considering how UNtrustworthy (IMO) the governments (via politicians) are that supposedly stand behind standard paper money -- I'm not so sure it makes that much difference.

Get screwed by scam A or scam B, take your pick.

To me, this just points out why commodities, and even stocks of real companies with real assets and earnings power have done better than holding currencies over time. At least there is something tangible -- unlike the promises of various lying politicians.
Given the track record of the perma-doomer blogs, I wouldn't bet a fast crash doomer's money on their predictions.
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Re: New internet currency Bitcoin grows in popularity

Unread postby Ferretlover » Sun 04 Sep 2011, 22:38:22

The fact that it comes with performance numbers that are jaw-dropping has made it so tempting that all four either have dipped their toe in the market or say they are about to.

Keep in mind that old saying: "If it sounds too good to be true, it is."
Jaw-dropping profits = scam.
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Re: New internet currency Bitcoin grows in popularity

Unread postby prajeshbhat » Sun 04 Sep 2011, 23:13:19

Sixstrings wrote:You know it's amazing, as much as I'm on the darn internet I missed out on the ground floor of something yet again. If I'd put just $500 into this back when the bitcoins were trading at 6 cents and if I sold at $30 then that would have been $300,000. ...
(caution.. again.. it seems to me the currency is on the way down so don't go putting money into this )

I personally think bitcoin is a good idea. Since there is no government backing it, I think it will only be used for small scale day to day purposes. Like buying books on Amazon. I don't just don't see people taking out credit to build hydroelectric dams and paying the laborers in bitcoins. That kind of operation would require a national currency.
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Re: New internet currency Bitcoin grows in popularity

Unread postby babystrangeloop » Wed 07 Sep 2011, 08:05:33

I think the problem is the frame of reference that is being put around bitcoin is completely wrong. How can you compare something like Bitcoin to a dollar?

To illustrate, how can you compare barter to a dollar? You assign dollar values to the items being bartered right? But you can buy a chicken for $5, $10, $25 dollars so what values are actually being exchanged when bartering for a chicken?
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Re: New internet currency Bitcoin grows in popularity

Unread postby babystrangeloop » Wed 07 Sep 2011, 08:10:20

Meanwhile...

Bitcoin
Wikipedia / Scraped September 7, 2011


... Bitcoin's design allows for pseudonymous ownership and transfers. Because of this, Bitcoin has anonymity properties weaker than cash but stronger than traditional electronic payment systems. Although the complete history of every bitcoin transaction is public, it is not possible in general [28] to associate bitcoin identities with real-life identities. This property makes bitcoin transactions attractive to some sellers of illegal products.[29][30] ...

Did you notice that?
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Re: New internet currency Bitcoin grows in popularity

Unread postby babystrangeloop » Wed 07 Sep 2011, 08:15:06

I never really looked at Bitcoin before this morning.

Bitcoin
Wikipedia / Scraped September 7, 2011


... Current Bitcoin clients lack functionality for encrypting the wallet; however, the current development tree contains this feature and it will be available in the next release. ...


Talk about jaw-dropping. I can't believe they overlooked that. There is no excuse; x509 implementations are given away for free these days, complete with bug fix and upgrade support. There could easily be criminal intent behind deliberately overlooking this let alone negligence. They should be sued.
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Re: New internet currency Bitcoin grows in popularity

Unread postby babystrangeloop » Wed 07 Sep 2011, 08:36:37

Weak Bitcoin Cryptography Prompts Action
Written by Jason Mick / InternetEvolution / July 11, 2011


... Bitcoin exchange Mt. Gox admitted last month that up until a couple of months ago it used an unsalted MD5 hash to encrypt its 60,000+ users' passwords. :lol: 8O

MD5! Hello?

http://en.wikipedia.org/wiki/Birthday_attack

let alone

http://en.wikipedia.org/wiki/Rainbow_table

In related news Bank of Fujiwah was found to have hired a small child to store your deposited money safely in a cardboard box.
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Re: New internet currency Bitcoin grows in popularity

Unread postby babystrangeloop » Wed 07 Sep 2011, 09:09:00

Sixstrings wrote:
Jaffe: new internet currency Bitcoin grows in popularity

It’s an Internet commerce unit, without any central bank or computer behind it.

Unless you want more than barter. If you want to exchange Bitcoins and Dollars you want Mt. Gox.
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Bitcoin reaches $1,000

Unread postby Sixstrings » Mon 02 Dec 2013, 14:05:54



Yikes, kicking myself here.

I wouldn't buy it at this pricepoint, but.. yikes I remember when these things first came out, I could have bought them for a few dollars. I could have a made a lot of money on very little investment if I'd got into these things early on.

There's an island in the UK that's talking about minting physical bitcoins too, hooked up with the royal mint so I guess a legal tender. Bitcoin are already big in Asia and gaining prominence as a form of payment.

Anyhow I'm not pushing these things, I wouldn't buy it now, you don't want in at the top. Just.. wish.. I had bought and held back then.. grrrr
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Re: Bitcoin reaches $1,000

Unread postby Gordianus » Mon 02 Dec 2013, 16:30:35

Sixstrings wrote:
There's an island in the UK that's talking about minting physical bitcoins too, hooked up with the royal mint so I guess a legal tender.


Do you have more information or a link which explains this? I am curious to know how this would work.
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Re: Bitcoin reaches $1,000

Unread postby Sixstrings » Mon 02 Dec 2013, 16:58:43

Gordianus wrote:Do you have more information or a link which explains this? I am curious to know how this would work.


UK Royal Mint Working On Plans To Issue Gold-Backed Physical Bitcoins
http://www.thebitcoinchannel.com/archives/28347


I'm not pushing this stuff, I assumed everyone else had heard of it already. Here would be my guess, long-term -- there will probably be another big spike on bitcoins as they get more international governmental approval and then wider use will explode. These are already bigger in Asia than I realized before.

Anyone else have thoughts on this?

Personally I'm not buying these darn things at a thosuand bucks a pop. My guess would be to watch it for a while, wait for a crash, stay up on the news with it. There's been price crashes in the past when a bitcoin exchange site got hacked. So I always thought this whole thing could go away, but now there seems to be some real staying power with governmental approvals. The main issue has been that bitcoin exchanges have to come into compliance with money laundering laws.
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Re: Bitcoin reaches $1,000

Unread postby Gordianus » Mon 02 Dec 2013, 17:17:15

Sixstrings: Thanks for the link! Unfortunately the original article in the FT is behind a paywall. Here is a quote from the article at Zerohedge, attributed to the FT:

The special Bitcoin would be part of the Royal Mint’s commemorative collection, which includes limited edition coins and stamps that are normally bought by collectors. It would have a gold content – a figure of £500-worth has been proposed – so that holders could conceivably melt and sell the metal if the exchange value of the currency were to collapse.


As the article points out, this proposed coin does three things: it represents a bitcoin, contains gold, and is backed by a government, hence it mixes up three types of currency. Bonkers!

Good thing it is only 'commemorative' I suppose, although I think UK commemorative coins do have the status of legal tender.
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Re: Bitcoin reaches $1,000

Unread postby Gordianus » Mon 02 Dec 2013, 17:50:12

Sixstrings wrote:I'm not pushing this stuff, I assumed everyone else had heard of it already. Here would be my guess, long-term -- there will probably be another big spike on bitcoins as they get more international governmental approval and then wider use will explode. These are already bigger in Asia than I realized before.

Anyone else have thoughts on this?

Personally I'm not buying these darn things at a thosuand bucks a pop. My guess would be to watch it for a while, wait for a crash, stay up on the news with it. There's been price crashes in the past when a bitcoin exchange site got hacked. So I always thought this whole thing could go away, but now there seems to be some real staying power with governmental approvals. The main issue has been that bitcoin exchanges have to come into compliance with money laundering laws.


I am optimistic: I think that Bitcoin or a similar cryptocurrency will become widely used. Consider how it performs by the definition of money:

* As a medium of exchange it can't be beaten - transactions are very fast (<10 minutes) and transaction costs are zero or negligible. Compare with Paypal or credit cards, especially for international transactions.
* As a unit of account, it works the same as any other currency.
* As a store of value ... depends on how successful it is.

What are the risks:
* The money supply built into bitcoin is slow, hence the rapid price when everyone wants it. If it rises too much, people will buy and horde it, not spend it.
* A major government (US or EU) could outlaw it. That would probably be enought to kill it, at least for a while.
* It remains very volatile: you can't really set prices with it at the moment.

There is now a whole zoo of cryptocurrencies - anyone can create one: simply fork the Bitcoin source code, think of a snappy name and start mining at block 1. In my opinion, the one to watch is Litecoin: transactions are faster, and the way it is mined is considered more equitable than Bitcoin (though this may change). Litecoins can be exchanged almost as easily as Bitcoins, which is not true of the other alternatives (yet).

For the opposing view, here is an article which rejects the recent gushing over Bitcoin in the media: http://www.huffingtonpost.co.uk/jeremy- ... 58947.html

Full disclosure: I own a small number of Bitcoins and Litecoins.
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Re: Bitcoin reaches $1,000

Unread postby Keith_McClary » Mon 02 Dec 2013, 21:43:30

A 10 part explanation of how it works:
Bitcoin part 1: Bits Nemo 2013-03-23 19:20
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Re: Bitcoin reaches $1,000

Unread postby Lore » Mon 02 Dec 2013, 21:47:21

Hey, wake up folks, you're on Peak Oil. The future means stock up on beans, bullets and toilet paper to barter with.
The things that will destroy America are prosperity-at-any-price, peace-at-any-price, safety-first instead of duty-first, the love of soft living, and the get-rich-quick theory of life.
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Re: Bitcoin reaches $1,000

Unread postby Keith_McClary » Tue 03 Dec 2013, 01:16:46

Virtual Bitcoin Mining Is a Real-World Environmental Disaster
Here's a puzzle: How can a virtual currency, existing in digital form on computer hard drives, demand real power and real fuel, and have real-world environmental costs? If you're struggling to think of an answer, welcome to the world of "Bitcoin mining."

As a lot of folks know now, thanks to all-hands-on-deck media saturation, Bitcoin is a medium of transaction created in 2009 by an anonymous programmer to facilitate anonymous digital transactions (there’s an excellent history here). In the recent speculative mania, the value of Bitcoins skyrocketed. Before Bitcoins can be traded, though, they need to be created.

That's where "mining" comes in. Mining is a process in which powerful computers create Bitcoins by solving processor-intensive equations. The idea is to keep the supply of Bitcoins from multiplying too quickly. Bitcoin mining, like mining of precious metals, is supposed to be arduous. By design, the more miners there are, the more processing power is required to mint new coins.

Most people aren’t used to thinking in terms of the energy it takes to solve math problems; a few minutes of Excel may not take much energy. But make the problems complicated enough, and things change. “Mining” Bitcoins takes so much processor power that it’s often done with specialized computers optimized for rapid repetitive calculations. So how much power can that take?

Blockchain.info, a site that tracks data on Bitcoin mining, estimates that in just the last 24 hours, miners used about $147,000 of electricity just to run their hardware, assuming an average price of 15 cents per kilowatt hour (a little higher than the U.S. average, lower than some high cost areas like California). That, of course, is in addition to the money devoted to buying and building the mining rigs. The site estimates the profits from the day of mining at about $681,000, based on the current value of Bitcoins. So mining, at least for the moment, is a lucrative business.

The trade-off here is that as virtual value is created, real-world value is used up. About 982 megawatt hours a day, to be exact. That’s enough to power roughly 31,000 U.S. homes, or about half a Large Hadron Collider. If the dreams of Bitcoin proponents are realized, and the currency is adopted for widespread commerce, the power demands of bitcoin mines would rise dramatically.

If that makes you think of the vast efforts devoted to the mining of precious metals in the centuries of gold- and silver-based economies, it should. One of the strangest aspects of the Bitcoin frenzy is that the Bitcoin economy replicates some of the most archaic features of the gold standard. Real-world mining of precious metals for currency was a resource-hungry and value-destroying process. Bitcoin mining is too.
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Re: Bitcoin reaches $1,000

Unread postby PrestonSturges » Tue 03 Dec 2013, 09:27:37

How much is that in Beanie Babies?
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Re: Bitcoin reaches $1,000

Unread postby Sixstrings » Tue 03 Dec 2013, 09:55:50

I just checked mt. gox, I figured it would dip after that $1,000 mark but now it's up to $1,158, that's up 158 in a week. Here's a 30 day chart:

Image

Anyone have any thoughts? How far will this runup go?
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