ashray

It doesn't matter. There are plenty of good things about Bitcoin which folks need to do <5mins of research to find out about.

The vitriol on HN shocks me though. I would've thought this community would love something like bitcoin. But instead of good quality discussions most bitcoin threads here turn into haters vs 'fanboys'. You are a 'fanboy'. It's pretty hard to get taken seriously once that happens.... :(

Not all bitcoin usage is speculation but you are right, most of it's current value is probably reflected through speculation.

Now there are two things that give bitcoin it's value:

1. Usage / Adoption

2. Speculation

Right now, China seems to have trouble speculating in bitcoin. There is no question of China ever having any usage in the near future given their government's stance on bitcoin.

Adoption of bitcoin has been on a steady rise over the past few months. No, apple or amazon are not yet accepting bitcoin but there are a growing number of people who are starting to see why they should accept it and why it's a viable payment method.

It's impossible to say what it's value should be based on current adoption. The value right now could be $1 or $1000.

My personal investment style is also biased towards low cost index funds.. I'm a Boglehead. However, Bitcoin is the only exception I have made so far. It's one of those rare moments that I personally see value in what the technology brings and can achieve.

I'm invested, more in terms of building tools/startups around bitcoin than in just buying and speculating, though I'm guilty of the latter too. It's even more fun because I truly believe in it's potential. (gambling by comparison, is less fun ;))

You are right. Bitcoins and bitcoin businesses in general have taken a very American twist. The entire 'bitcoin foundation' had turned into nothing more than a lobby group which is what Gavin happens to belong to. Large bitcoin businesses are dominate by Americans so far: Coinbase and Bitpay.

Happy that Bitstamp isn't US owned but not sure for how long. It's basically a repeat of what happened with the Internet. No one is stopping other regions from taking their own slice of the pie. It just appears that Americans are quicker on the innovation front and seem to understand where future value may lie and thus take appropriate risks.

I honestly doubt that much of this is going into buying and holding bitcoins. Institutional investors are already trading big numbers of bitcoins via Second Market. They don't use regular exchanges and certainly wouldn't need to go through the 'false investment' route.

I do however think a large part of this would go towards Coinbase improving its bitcoin stash. They've been running out of stock every single week.

Hey I just switched over from rDio to spotify. The reasons are that spotify lets you sync different songs/playlists to different devices and rDio does not. Spotify has a better library than rDio.

However, why can I not browse/sync my 'Collection' on spotify's ios apps? Is this feature on the cards ? (I guess having a 'Collection' just on the desktop app makes little sense...) Would love it if you could answer!! Thanks for a great service!

A shameful day in India for sure :(

Spot on. Every single month there is a drop in Indian Rupee value when oil importers sell rupees to buy dollars. It's possibly one of the main things that drives rupee value down and dollar value up. We had managed to reach a deal with Iran to buy oil in rupees but it's started happening only recently and in small percentages.

You pay the same price for coffee but you will certainly pay more for coffee beans, the market will only absorb the difference for a while.

I wasn't drawing an analogy between bitcoins and debit cards. I was taking about how a bank lets me access my money vs me having direct access to it. I cannot get cash in a foreign country without my bank cooperating unless I carry a world recognized currency (USD, Euro) in cash and try to exchange it somewhere.

The problem is that you read a comparison as an analogy. It's a comparison of our current dependency on the banking system vs bitcoins relative independence from the same.

No, my arguments do not fall down. You are making the terribly flawed assumption that bitcoin will always be this volatile. Bitcoin is less volatile than it used to be, and with greater adoption will continue to decrease in volatility.

The volatility in bitcoin today is nothing compared to 2011. Is it still bad ? Yes. Will it continue being bad ? Probably not. The long term trend supports the assumption that volatility will decrease with greater adoption.

Furthermore volatility has little effect on the 'money transmission' element of bitcoin as long as transfers and conversions take place immediately. It's still a viable way to legally move USD from the USA to Singapore with very low fees.

Another example, I'd like to add is that I had a large part of my savings in Indian Rupees. They depreciated by 30% over the past 2 years. That's definitely pretty bad but it didn't prevent me from buying coffee. Euros have also swung around by 15-20% over the past 2-3 years. The Brazilian Real lost 25% of it's value last year. Does that make them as bad as bitcoin ?

Your motivation for getting into bitcoin is your personal choice and I certainly hope that you profit from it. However, don't forget that bitcoin is an emerging technology going through fairly rapid adoption, as such, volatility, crashing exchanges, bubbles, bubble pops, etc. will be a part of it. And of course, I have to convert money from USD to BTC. Or from Marks to Euros. Or from escudos to Euros. That's just how it works.

Unfortunately the barrier to this has been counterparty risk management. The players in the payment space are limited by their contracts with Visa/Mastercard/etc. and therefore have to manage risk accordingly. This is what increases the fees. (chargebacks almost always honored, etc. etc.)

Paypal offers micropayments and their rates are by far the most competitive. You know what happens ? I get paid $2 per subscription and Paypal pays me $1.83. That's an 8.5% commission! It's the best rate in the industry! (right now..)

It's just that the more middle men you add, the more fees you're going to need. The current financial system is a truckload of middlemen and yes, they do have their utility and run immensely large networks (visa/mastercard/etc.). The only way to lower fees is to cut them out, whether that's going to be bitcoin or someone else is anyone's guess. But bitcoin is definitely a viable prototype.

You're doing well with your credit card because your bank allows you to do so.

Just a few days ago my debit card was blocked because I was traveling internationally and the bank suspected that it was stolen. That's great, they're trying to protect me. But then, the only way to get it unblocked was to visit the bank in person.. but I was 10,000 miles away! I tried to reason with them over the phone but they wouldn't listen. So here I was, far away from home, without access to my money because my bank was trying to protect me but had a retarded system in place for that. Eventually, I spent a few hours on the phone, got someone to pull some local stunts in my city (went to speak to the manager in person, etc.) and then got my card unblocked. You see the problem ? I don't own my money. I can't pay for my coffee with my debit card unless my bank lets me. I couldn't pay for anything, I had to apologize to my hotel and ask them to wait until this got sorted out.

I run a website that is sustained by online advertising. I usually have two options to get paid by advertisers. Paypal or Bank Wire. Paypal charges huge fees, so I opt for wire. Bank Wires take 5 days to clear (2 if I'm lucky..) and due to multiple different advertisers I end up paying over $200 in wire fees each month. I think of that as the 'cost of doing business' but really, it shouldn't be.

I used to live in Dubai two years ago and send money back home. Every time I transferred money, I would get hit with huge fees. This is a reality for immigrant workers all over the world. Western Union caters to this audience right now.

Yes, banks are good at what they do - to a certain extent. We all know them and use them. But that doesn't mean that I want to be at their mercy all the time. Things are always fine, until they are not. That's what happens to me with banks all the time.

Volatility isn't a feature of bitcoin, it's a market reality - for now. You don't have to pay for your coffee using bitcoin right now, you are right, bitcoin isn't ready for that yet.

But when it is, you'll be able to pay for your coffee, and no single 3rd party in the world (bank, western union, visa, mastercard, federal reserve, etc.) will have a say in it. Not a single entity in the world will stand between you and that delicious brew.

It helps when there are drastic spikes in PM levels outdoors such as during rush hour or during high pollution events like Diwali. (people burn fire crackers en masse during Diwali, creates a ton of pollution)

Also, we do have air purifiers and air conditioners running indoors so those help a bit, but once you put them off, opening the doors and windows isn't going to help with situation.

The article makes decent points but these things are known to most people who understand anything about money, whether that money is Bitcoin or USD.

I have to say though that the opening line of the article is absolutely terrible:

    Bitcoin is based on the idea that money gets its intrinsic value from its scarcity..

That is a terrible thing to say. Bitcoin is not based on that. Bitcoin is currently overvalued due to speculation. It's current value far surpasses it's utility (because we don't need $15 Billion transactions in BTC right now..). This is due to speculation, and yes, that is helped along due to it's scarcity.

But even with greater speculation, if the value starts going up, it becomes much harder to swing the market. Studying history is important. Bitcoin went from $30 to $2, then from $266 to $70. $1200 to $600 isn't even close. (there is of course the chance that it will go lower, much lower, but we'll see if/when it does..)

Volatility decreases with adoption. Adoption may decrease with volatility but so far, the crazy volatility has favored adoption and awareness. Volatility will truly become a problem if mainstream adoption takes place and it continues. However, it's harder to swing a bigger market, mainstream adoption is what will protect bitcoin from volatility (speculative, or otherwse). It's much easier for a person or a group of people to swing a $1MM market, vs. a $15 Billion, vs. a $1 Trillion market.

So far, every huge volatility event has helped bitcoin become less volatile and gain value/adoption/mindshare.

I can see how someone who just found out about bitcoin is going to focus on it's volatility. This has been true of every single media agency on the planet in the last few weeks. However, anyone who has been in this long enough or has studied it will recognize that volatility is actually decreasing as the market expands (an expected result). Somehow the other HN post about people not liking creativity/alternate solutions seems to come to mind [1]. (not an attack on the author but on the general sentiment, "BITCOIN WILL FAIL EVEN THOUGH I HAVEN'T STUDIED IT AND KNOW NOTHING ABOUT IT!!!! IT'S PONZI, OR ILLEGAL, OR DRUGS, OR SOMETHING!")

TLDR; Bitcoin is way less volatile than it used to be. Bigger numbers ($1000 vs $10) don't mean more volatility.

[1] - http://www.slate.com/articles/health_and_science/science/201...

Had the exact same problem with my parents in New Delhi. Father was suffering from lung disease. Wanted to sit outside on the balcony - fresh air, apparently. I tried to explain to him that the air is laden with dangerous levels of particulate pollutants. He didn't care. He died earlier this year.

PM10/2.5 levels continue to be disastrous (1900+/700+ on some days especially around Diwali). Mother still likes to open balcony doors and room windows to let 'fresh air' flow through the house.

Neither are/were uneducated. Post grads in SCIENCE FFS!

Cannot. Explain. It.

There is a purpose. Several sites that depend on document submissions of different formats (like pdfs, ppts, word docs, etc.) might need an efficient way to render these document previews on a page. Those sites can use an api from scribd, documentcloud, etc. to display these files inline.

There is a certain very valid and extremely useful use case to sites like this, of course, linking random internet users to pdfs through them shouldn't be one of them ;)

I am in no way affiliated with any of these services, just came across this use case while building something for someone in the past.

Also, I'd like to add that most of the FATAL FLAWS (TM) that the mainstream press is discussing today were discussed in great detail on bitcointalk since 2009.

It just happens to be a community that has had a great interest in creating and seeing bitcoin succeed. Of course, with growing numbers, the noise hides the signal, but take a look at the relevant subforums and you will indeed see serious discussions about bitcoin viability, previous challenges, future challenges, network security, scalability, etc.

Not sure if you're being sarcastic but just incase.. Exchanges are not banned. They are being regulated with KYC/AML for customers. They also need to register with the telecom authority.

I'm confused about what constitutes a payment institution. Does this mean that credit card processors cannot price in bitcoin ? Or does this mean that Starbucks cannot price in bitcoin ?

There seems to be a distinction between a business and a payment institution. Or maybe what's said here is that a bitcoin transaction is like a 'coupon code' and not governed under the same rules that paying with money would be.

The restrictions appear to be placed on banks and other financial institutions creating any bitcoin related instruments (ETFs, etc.) or dealing directly with bitcoin (eg. exchange RMB for BTC or the reverse). Also, it would essentially prevent a bank using it's reserve for a bitcoin investment.

Exchanges can still operate as exchanges and can continue to have bank accounts as long as said banks do not deal themselves in bitcoins.

Individuals and businesses are free to use bitcoin. This is actually very good news. The government was silent all this while and though they haven't said "Bitcoin is the new reserve currency", the Chinese stance is essentially the exact same stance that the US Senate took last month. I'm sure US banks also cannot deal with something that isn't a 'valid currency'.

This is a much better translation of the bitcoin notice: http://www.reddit.com/r/Bitcoin/comments/1s5hzl/my_human_tra...

Those options are expensive. Why should the rich and powerful give up profit margins for better public health and so that other countries don't get typhoons ? Unfortunately, money is much more powerful than any other motivation. The government helps curb such attitudes but the government listens to the people (atleast in theory..), and the people are indifferent.

From a climate change perspective, yes. But from just a general air pollution perspective, a lot of effective regulation needs to happen for industries to stop pumping noxious gases into the atmosphere. There are hardly any limits on industries and they can pump whatever they feel like into the air. Catalytic convertors for factories ? Almost non-existent!

I know that the discussion of general air pollution is slightly off topic here, but it really is very bad in New Delhi, and eventually does reach the subject of climate change.

Another perspective: If India doesn't care about air pollution within India which affects it's own population, it's unlikely they will care about some glaciers melting far away sometime in the future and affecting people in far away countries.

The problem with these talks are that from a developing country's perspective it looks like developed nations used cheap energy to get ahead. Now they want to curb usage of cheap energy in developing nations because:

1. Suddenly, they're affected by climate change, or claim to be.

2. It's just a ploy to increase energy costs for developing nations and keep them behind.

This may or may not be true but with this kind of perception, such talks will never go through. Also, there are choking levels of pollution in New Delhi [1] and Beijing. The cities are really uncomfortable, and there is a growing body of research to show that air pollution is carcinogenic. [2]

These countries would do well to curb pollution and use clean energy just in the interest of public health. Unfortunately, public health is very low on the agenda.

New Delhi is on the brink of ecological collapse (or maybe beyond that depending on the definition). There is no clean air, clean water, or clean soil. There are no numbers to indicate how many pollution related deaths occur in India annually or what kind of productivity is lost. Frankly, no one cares either. Until someone is personally effected (in a drastic way, like NO2 poisoning and dropping dead..) there will be no change. A very large percentage of children in New Delhi are diagnosed with asthma. [1]

Climate change is a far cry from getting discussed if domestic air pollution isn't a cause for concern.

Source: I am Indian and spend a lot of time there quite often.

[1] - http://bkpk.me/cigarettes-arent-that-bad-after-all/

[2] - http://edition.cnn.com/2013/10/17/health/geneva-air-pollutio...

How many of those 'requirements' are because of powerful entities abusing the system?

What are the forces that have caused those requirements to arise with traditional currencies?

Did you mean inflationary spiral for Southern Europe? Or are prices for things dropping there right now? Not sure.. But again, a lot of what happens is because of constantly 'hacking' the system (raise the debt ceiling, print more money, etc.). Using that as the norm and presenting an argument against the 'hack ability' of the new system seems flawed. Maybe there needs to be better research into what happens, why it happens, and how it can be prevented. Inflationary currency most likely isn't the right answer considering the issues it has caused so far... Deflationary may not be either.

True, and bitcoin does stick to this norm. The rate of bitcoin production is predictable for the next 100+ years. More can be produced with more effort, it's just not as easy as printing notes.

So it is adjustable and it is growing. The price rise is caused by speculation and demand, not because new bitcoins aren't being produced.

Thanks for adding that, I am of course personally aware that these discussions have taken place time and again on bitcointalk.

I meant to say that these problems have been exposed more by the general press, etc. lately.

There are other issues that the recent spike in value/volume have introduced:

- bitcoin clients, usage, security are too complex for the average consumer

- minimum miners fee is now too high ($0.10)

- some miners are cherry picking transactions with higher fees so some transactions are taking longer to confirm

- fear that the transaction bottleneck might be hit (imagine if all the internal movements on exchanges were on chain transactions, this would've already happened)

- a lot of ill feeling and negativity from tech folks who could've been early adopters but missed the bus. Truth is, it's still early times. Also, services still need to be built, tech folks can always do that! :)

There are limitations because the exchanges are not that liquid. There are no hard limitations as such. People have been converting $2-3MM from bitcoins easily but larger numbers will still be hard to convert at the current price.

This conversion limitation however should not affect the average joe.

Hi,

I suggest that you check out bitpay.com

They will bill your customers in bitcoin and will transfer out USD to you so that you don't have to worry about the exchange rate at all. You setup your items in USD as well and they handle the price fluctuations.

They do daily payouts to 30 countries in several currencies. I've been using them since April and it's amazing!

Sincerely, A happy bitpay customer :)

Edit: oh and I must add! They used to take 1% commission but have introduced new packages that have 0% commission from $30/month! Also, the daily bank withdrawals are free.

The analysis in this article is so flawed that it's hard to take it seriously. A more balanced analysis might have helped. Sure, bitcoin has several terrible characteristics that have been exposed over the past few weeks (volatility, tons of speculation, new users don't understand wallet security, etc.)

But to insinuate with absolutely zero understanding that the creators of bitcoin did this to get rich is just plain nasty. Maybe they did want to get rich (in dollar terms) but there is nothing obvious on the block chain that proves that they cashed out. The argument seems to be that they can't cash it all out so they are waiting for something. Well, they haven't cashed anything out yet as far as anyone who looks at the block chain can tell. It's already possible to cash out $5-$10MM easily over bitstamp which would represent a fraction of their holdings. Why not do that and make sure your future is taken care of? At least that?

Furthermore, for several years it did not look like bitcoins were going anywhere. However, the people behind it continued to work on it, and still continue to do so, but under much new pressure because suddenly they are evil ponzi dealers.

Applying old school economics and psychology is great, but I must ask this question. What kind of value appreciation did gold see when people suddenly for no reason decided that it was worth a lot? Following this value appreciation did people not use it as a means of exchange as well as a store of value? Why can't bitcoin be thought of as gold 2.0? We started valuing dollars, pounds, euros, airplanes, cars, oil, and those didn't exist for much of human history.

Bitcoin isn't like something we've ever seen before and that includes Ponzi schemes. It may end up crashing and burning and it may end up doing really awesome stuff.

I just wish the naysayers would come up with better researched arguments instead of this crazy witch hunt.

Great write up! Only fools think that a $100 investment in bitcoin today will turn them into millionaires. This has to do with risk vs reward. A $100 investment in 2009 may have turned people into millionaires but at that time the chances of losing $100 were quite high. Now, with a lower risk than back in 2009 you're going to have to have greater skin in the game. $10,000 may see you with some good returns. You may still lose it but the chances are lower than back in 2009.

How high can it go? While your analysis based on market cap is mostly correct, unfortunately it's just a good guess. Bitcoin has the potential to replace currencies, MasterCard, Visa, Paypal, and more! Which of these will it do (if any)? Nobody knows. But if it replaced stuff, it's market cap would be way higher than the conservative 1% of X niche that you've estimated.

Personally, I'm optimistic for $10k. That's 10x now vs the 10,000x gain already seen since '09.

I have no clue whether it will go to 10k, 100k, or 1MM per bit coin. I'm on for the ride though and it's been pretty fun so far. I'm excited to see which problems bitcoin will solve and which industries it will disrupt.

There are very few direct ways in which you can currently use bitcoin, I completely agree with that. People are using indirect ways now though, for example, a lot of people are using target gift cards bought off gyft to make their grocery purchases. Of course, this is a highly impractical solution but there will be middlemen helping out until actual retailers start accepting bitcoins. Now you can buy a subway sandwich, soon newegg will start accepting bitcoins (yes, not everyday purchases but a big retailer endorsement is still a big win!). When something happens in a fragmented way around the world it gets harder to gauge it's momentum. Say 10,000 retailers in SF started accepting bitcoin, it'd be huge news vs 10,000 retailers all over the world - no one would notice.

The rampant volatility of bitcoin is bad for business but it's analogous to several people jumping onto a boat and rocking it a lot. Eventually we get a bigger more stable boat that isn't so easy to rock any more. (a $1.2MM sell off a year ago would have tanked BTC value, now it doesn't even dent it.., this happened yesterday while I was watching the bitstamp order book)

As the market cap of bitcoin increases it will get harder and harder to cause huge swings in it's value (sort of like the 51% attack is now impossible.. or adding a server farm to take over the bitcoin network).

But to get there it will have to go through this process.