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On March 06 2014 01:26 GoTuNk! wrote:Show nested quote +On March 06 2014 00:32 urboss wrote:
I've heard that a bitcoin transaction takes about 60 seconds because everyone on earth with a bitcoin wallet has to be notified of the transaction, only then the transaction is complete.
That also seems to be the reason why bitcoins cannot be used for stock trading.
Also, the more people join the system world wide, the longer this transaction interval will become, making the system unusable at some point.
I've only heard about this, so I'm wondering if this is correct? No it is not. The wallet takes a moment to check the first string of code is legit (so it's a real bitcoin). Afterwards at regular intervals it checks bigger chunk codes, but faking a bitcoin is extremely costly so small transactions are legit with 1 check (first 60 seconds) and 2nd and 3rd are only needed for extremely large money sums.
But as far as I know, large transactions are validated after 6 blocks only (so on avg 1 hour), and trading, especially high-risk trading, will involve large amount of stock and minimal fluctuations. I think this can be a problem, right?
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I don't think you would use it for stock trading. For rapid transactions like that you probably want to drop the pseudanonymity for speed. Trade offs.
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So how easy it is to cash out on Bitcoin?
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On March 06 2014 03:19 DoubleReed wrote:
I don't think you would use it for stock trading. For rapid transactions like that you probably want to drop the pseudanonymity for speed. Trade offs.
It's more like a commodities market, bit coin values always going up encourages hoarding continues to make it less of a currency more of a speculative bubble.
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On March 06 2014 07:58 semantics wrote:Show nested quote +On March 06 2014 03:19 DoubleReed wrote:
I don't think you would use it for stock trading. For rapid transactions like that you probably want to drop the pseudanonymity for speed. Trade offs. It's more like a commodities market, bit coin values always going up encourages hoarding continues to make it less of a currency more of a speculative bubble.
Yep.
And there are a limited number of bitcoins (probably all mined out by 2040), which means it will have inevitable deflation. And deflation in currency means people hoard it instead of spend it (because it's 'gaining in value'). So you'll get a deflationary spiral eventually. Remember kids, deflation is 1000x worse than inflation.
But that's a much more long-term problem. By that time, people could just transfer out to another cryptocurrency. I assume it will crash way before then. Maybe by the end of the year.
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On March 06 2014 10:06 DoubleReed wrote:Show nested quote +On March 06 2014 07:58 semantics wrote:On March 06 2014 03:19 DoubleReed wrote:
I don't think you would use it for stock trading. For rapid transactions like that you probably want to drop the pseudanonymity for speed. Trade offs. It's more like a commodities market, bit coin values always going up encourages hoarding continues to make it less of a currency more of a speculative bubble. Yep. And there are a limited number of bitcoins (probably all mined out by 2040), which means it will have inevitable deflation. And deflation in currency means people hoard it instead of spend it (because it's 'gaining in value'). So you'll get a deflationary spiral eventually. Remember kids, deflation is 1000x worse than inflation. But that's a much more long-term problem. By that time, people could just transfer out to another cryptocurrency. I assume it will crash way before then. Maybe by the end of the year.
What people do is actually mine other cryptocurrencies which cost less to mine and convert them into bitcoins to exchange that into dollars. The whole cryptocurrency market is nothing but a giant bubble ready to burst, it's just a matter of how reckless you are.
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Zurich15313 Posts
Profile of the (likely) creator of Bitcoin, really fascinating:
http://mag.newsweek.com/2014/03/14/bitcoin-satoshi-nakamoto.html
Best part:
Mitchell suspects Nakamoto's initial interest in creating a digital currency that could be used anywhere in the world may have stemmed from his frustration with bank fees and high exchange rates when he was sending international wires to England to buy model trains. "He would always complain about that," she says. "I would not say he writes flawless English. He will pick up words and mix the spellings."
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intrigue
Washington, D.C9933 Posts
yea very interesting. though the whole article is exactly what he's been trying to avoid this entire time. hard to pull that if you're gonna create bitcoin i guess =[
the pix of his house is a bit over the top. hi world, this super rich privacy freak with health problems and his 90+ yo mom live here alone!
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How has the bitcoin price been affected by the Newsweek article?
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On March 07 2014 00:55 intrigue wrote:
yea very interesting. though the whole article is exactly what he's been trying to avoid this entire time. hard to pull that if you're gonna create bitcoin i guess =[
the pix of his house is a bit over the top. hi world, this super rich privacy freak with health problems and his 90+ yo mom live here alone!
The article is little more than a journalist's obsession with outing a man who's been working to maintain his anonymity for the past 5 years. It goes into detail about gaining his trust through feigning mutual interests over e-mail, and they even posted a picture of the poor guy's house without bothering to distort his license plate. Good thing journalistic integrity still exists.
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Baa?21242 Posts
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Oh my god, a bitcoin CEO in Singapore committed suicide.
Bitcoin CEO found dead in Singapore, suicide suspected
http://rt.com/business/radtke-bitcoin-death-singapore-134/
A young American woman who ran the First Meta bitcoin exchange was found dead in her Singapore apartment last week. Police are investigating the “unnatural death”.
Autumn Radtke was found on the morning of February 26 after Police received an emergency call from an apartment building. She was pronounced dead at the scene. A preliminary police investigation has ruled out foul play, but neighbors told police they suspected Radtke jumped from an apartment.
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OMG! Someone found the CEO of Bitcoin?!
Also Andreas is holding a fundraiser for Dorian Nakamoto, to try to make it back to him for all hassle that the newsweek article probably caused him (link to the original reddit post). You can see the donations live here. 18 BTCs have already been donated at the moment and its rising quite fast.
It is quite likely that the newsweek article was total crap (a cop knowing of the creator of Bitcoin and how rich he should be? A man that never admitted to creating bitcoin to his family but discloses it to a random journalist after calling the cops on him?), and they not only posted a picture of the man but of his house as well. Quite the opposite of what journalism should be imho.
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On March 06 2014 10:06 DoubleReed wrote:Show nested quote +On March 06 2014 07:58 semantics wrote:On March 06 2014 03:19 DoubleReed wrote:
I don't think you would use it for stock trading. For rapid transactions like that you probably want to drop the pseudanonymity for speed. Trade offs. It's more like a commodities market, bit coin values always going up encourages hoarding continues to make it less of a currency more of a speculative bubble. Yep. And there are a limited number of bitcoins (probably all mined out by 2040), which means it will have inevitable deflation. And deflation in currency means people hoard it instead of spend it (because it's 'gaining in value'). So you'll get a deflationary spiral eventually. Remember kids, deflation is 1000x worse than inflation.But that's a much more long-term problem. By that time, people could just transfer out to another cryptocurrency. I assume it will crash way before then. Maybe by the end of the year.
This isn't necessarily true. While there may be some deflation, it won't be due to coins being mined out. Unlike real money, bitcoins are digital and milli, micro, and nano (up to 10^-8) denominations exist. As 1 bitcoin is currently around 650 US dollars, a .1 bitcoin transaction for $65 is valid. Hence even with 21 million coins, a octillion or whatever the unit is would be able to exist digitally - more units of currency than the entire world has right now. There isn't even a likely amount of a quadrillion US bank notes floating around. As for what I outlined in red, I'd like to hear an explanation for that in how it applies to digital currencies. A lot of the noise I've been seeing about bitcoin, like by noted economist Paul Krugman, is due to misunderstanding of what bitcoin is, and classic economic principles being applied to something that is "new".
People aren't exactly hoarding coins either. At least, not the majority. bitcoins are seeing actual use and volume movements across the blockchain. It has actual utility which means coins are always in circulation.
On March 06 2014 21:36 zatic wrote:Profile of the (likely) creator of Bitcoin, really fascinating: http://mag.newsweek.com/2014/03/14/bitcoin-satoshi-nakamoto.htmlBest part: Show nested quote +Mitchell suspects Nakamoto's initial interest in creating a digital currency that could be used anywhere in the world may have stemmed from his frustration with bank fees and high exchange rates when he was sending international wires to England to buy model trains. "He would always complain about that," she says. "I would not say he writes flawless English. He will pick up words and mix the spellings."
Funniest part is all the flak Newsweek is catching for putting this guy's personal info out there and horrible journalism. He isn't the creator of bitcoin or even knows what it is. He is just an engineer who happens to be Japanese. She looked up a phone book for Satoshi Nakomoto (lol) and went snooping. They are getting the rightful backlash they deserve for publishing a horrible story.
ETA: As for the Mt.Gox fiasco, unfortunate a mix of greed and popularity led to a lot of money being stolen. This is why you shouldn't put a lot of money in any bitcoin exchange (wtf why?) and do your research. Mt.Gox had known about that transaction malleability "exploit" 3 years ago. This is what happens when the guy who originally set up Mt.Gox knows nothing about dealing with online transactions. whoops...
http://i.imgur.com/7w0LVEW.jpg
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On March 08 2014 18:16 Ace wrote:Show nested quote +On March 06 2014 10:06 DoubleReed wrote:On March 06 2014 07:58 semantics wrote:On March 06 2014 03:19 DoubleReed wrote:
I don't think you would use it for stock trading. For rapid transactions like that you probably want to drop the pseudanonymity for speed. Trade offs. It's more like a commodities market, bit coin values always going up encourages hoarding continues to make it less of a currency more of a speculative bubble. Yep. And there are a limited number of bitcoins (probably all mined out by 2040), which means it will have inevitable deflation. And deflation in currency means people hoard it instead of spend it (because it's 'gaining in value'). So you'll get a deflationary spiral eventually. Remember kids, deflation is 1000x worse than inflation.But that's a much more long-term problem. By that time, people could just transfer out to another cryptocurrency. I assume it will crash way before then. Maybe by the end of the year. This isn't necessarily true. While there may be some deflation, it won't be due to coins being mined out. Unlike real money, bitcoins are digital and milli, micro, and nano (up to 10^-8) denominations exist. As 1 bitcoin is currently around 650 US dollars, a .1 bitcoin transaction for $65 is valid. Hence even with 21 million coins, a octillion or whatever the unit is would be able to exist digitally - more units of currency than the entire world has right now. There isn't even a likely amount of a quadrillion US bank notes floating around. As for what I outlined in red, I'd like to hear an explanation for that in how it applies to digital currencies. A lot of the noise I've been seeing about bitcoin, like by noted economist Paul Krugman, is due to misunderstanding of what bitcoin is, and classic economic principles being applied to something that is "new". People aren't exactly hoarding coins either. At least, not the majority. bitcoins are seeing actual use and volume movements across the blockchain. It has actual utility which means coins are always in circulation.
The fact that you can split coins up is pretty much irrelevant to this. If the volume of trading in bitcoin increases, that means that more people need bitcoins. And if everyone starts trading in millicoins because a lot more is needed to cover the amount of trade, that means that the guy who has not been trading, and just kept his one coin, now has a lot more money. But if he waits a bit longer, and they spread even more, his coin is worth even more.
Basically, the more they are used, the more valuable each coin becomes, which makes it more unappealing to actually use them. It is a very weird mechanic, and it is probably not an attribute a currency in actual use should have. Because it makes people try to convince others to use their coins while they hoard theirs, because of deflation. How much you can split them up is irrelevant.
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Sigh....
The value of 1 bitcoin does not change. All we're doing is dividing coins into smaller units. 1 BTC is just ten units of .1 BTC. That's all. We aren't creating new coins. There isn't a lot more of anything that needs trading. All we're doing is dividing the currency into more units which will be reflected in the price of goods.
This may seem foreign because physical money can not do this. If you wanted to jump on Coinbase right now and purchase a .001 bitcoin unit guess what? You can. The actual decimal place, a "1.0", or ".1" bitcoin does not matter to the actual value itself. As an actual example, you can buy stuff in .05 BTC transactions, or even .002 transactions.
In fact I'll make it simpler:
https://blockchain.info
Notice anything about the size of the transactions?
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Zurich15313 Posts
On March 08 2014 21:12 Ace wrote:Sigh.... The value of 1 bitcoin does not change. All we're doing is dividing coins into smaller units. 1 BTC is just ten units of .1 BTC. That's all. We aren't creating new coins. There isn't a lot more of anything that needs trading. All we're doing is dividing the currency into more units which will be reflected in the price of goods. This may seem foreign because physical money can not do this. If you wanted to jump on Coinbase right now and purchase a .001 bitcoin unit guess what? You can. The actual decimal place, a "1.0", or ".1" bitcoin does not matter to the actual value itself. As an actual example, you can buy stuff in .05 BTC transactions, or even .002 transactions. In fact I'll make it simpler: https://blockchain.infoNotice anything about the size of the transactions?
That's not the point. The point is that the build in deflation should give people an incentive to not invest their Bitcoins but to hoard them.
I think it's too early to make any definite calls on how Bitcoin will behave in the future, but at least that is what SHOULD happen.
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Sure, there could be a hoarding behavior, but as of now that isn't going on at a large scale. As more businesses around Bitcoin pop up and real world commodities can be purchased, hoarding will only get you so far. Unless you own a crapload of coins and the people that need them can't find sellers you can sell them for a high price. The utility of the currency is the key here, and just like real world currency no one runs around hoarding it unless they are moving to an environment where that currency is scarce. IE I go to Japan with US dollars and it's seen as highly valuable, I will get lots of yen off of a single dollar.
As bitcoin is a global currency that may become wide spread if it's deflation does hit it may not be like what some people are thinking of now. There isn't much hoarding behavior going on because people actually find use for it beyond speculation at the moment.
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On March 08 2014 21:12 Ace wrote:Sigh.... The value of 1 bitcoin does not change. All we're doing is dividing coins into smaller units. 1 BTC is just ten units of .1 BTC. That's all. We aren't creating new coins. There isn't a lot more of anything that needs trading. All we're doing is dividing the currency into more units which will be reflected in the price of goods. This may seem foreign because physical money can not do this. If you wanted to jump on Coinbase right now and purchase a .001 bitcoin unit guess what? You can. The actual decimal place, a "1.0", or ".1" bitcoin does not matter to the actual value itself. As an actual example, you can buy stuff in .05 BTC transactions, or even .002 transactions. In fact I'll make it simpler: https://blockchain.infoNotice anything about the size of the transactions?
Yes. One coin will always be a thousand millicoins, or however you want to split it up. However, the total amount of coins will also always be limited. Now, if more stuff gets traded, this means you require more currency. If you reach this goal by using smaller parts of coins, that means that a whole coin is now worth more. Which means that you have deflation.
If the value of one coin does not increase, then once again the fact that you can split them up is utterly irrelevant. There is a maximum amount of times any given coin/millicoin/whatever can switch hands a day. This means that without deflation, there is a hard limit to the amount of goods that can be traded for bitcoins daily. And at the current value, that limit is actually pretty low.
For example, apparenty one bitcoin is currently worth ~600$. At 21 million bitcoins, that would be a total of 12.6 billion dolllars. There are currently ~1.26 TRILLION dollars in circulation, and that is only physical money, not counting non-physical money transfers. So if you assume that a bitcoin will be traded ~ as often as a dollar, for bitcoins to be used as non-niche currency, you need enormous deflation from their current value. This fact discourages you from using it as an actual currency, because if you assume that it will be used in that way, you should keep your bitcoins, because they will greatly increase in value.
And it doesn't stop here. If bitcoins are the main currency at some point, and the guys who hoarded theirs are now absurdly rich because the one bitcoin they had is now worth at least a 1000 times what it is worth today (this is absolutely necessary for bitcoins to become a big currency), the fact that they are limited in amount still means that they will grow in value by the same amount that the economy grows. So why would you ever spend them. So they are an inherently deflationary currency. And it should be obvious why an inherently deflationary currency is really bad for the economy.
And the reason that nobody hoards real world currency is because it is inherently inflationary due to the way our banking system works. Thus, it would be retarded to hoard it.
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On March 08 2014 21:41 Simberto wrote:Show nested quote +On March 08 2014 21:12 Ace wrote:Sigh.... The value of 1 bitcoin does not change. All we're doing is dividing coins into smaller units. 1 BTC is just ten units of .1 BTC. That's all. We aren't creating new coins. There isn't a lot more of anything that needs trading. All we're doing is dividing the currency into more units which will be reflected in the price of goods. This may seem foreign because physical money can not do this. If you wanted to jump on Coinbase right now and purchase a .001 bitcoin unit guess what? You can. The actual decimal place, a "1.0", or ".1" bitcoin does not matter to the actual value itself. As an actual example, you can buy stuff in .05 BTC transactions, or even .002 transactions. In fact I'll make it simpler: https://blockchain.infoNotice anything about the size of the transactions? Yes. One coin will always be a thousand millicoins, or however you want to split it up. However, the total amount of coins will also always be limited. Now, if more stuff gets traded, this means you require more currency. If you reach this goal by using smaller parts of coins, that means that a whole coin is now worth more. Which means that you have deflation.
As I stated before, there will be more units in circulation than the world has in total currency now. That is more than enough for everyone. 10^-8 units is a massive amount. The US Government can keep printing money till they feel like it but there are enough physical units of dollar bills in the world already. IF Bitcoin somehow said 10^-8 units isn't enough to represent currency, it's as easy as changing the Bitcoin protocol to move the decimal place more units to the right. This would mostly affect exchanges at first but it's really not a big deal. In your doomsday scenario they just move a few decimal places to create more digital space for storage.
I don't know if this was missed by my blockchain.info comment but I'll explain it again: If "1" coin were the standard and the price of goods didn't reflect that change then yes, there would be deflation as that would obviously be the base unit. But two things are happening here - A.) The base unit is not "1", it's .00000001 and B.) the price of goods being traded is in milliBTC.
If the value of one coin does not increase, then once again the fact that you can split them up is utterly irrelevant. There is a maximum amount of times any given coin/millicoin/whatever can switch hands a day. This means that without deflation, there is a hard limit to the amount of goods that can be traded for bitcoins daily. And at the current value, that limit is actually pretty low.
For example, apparenty one bitcoin is currently worth ~600$. At 21 million bitcoins, that would be a total of 12.6 billion dolllars. There are currently ~1.26 TRILLION dollars in circulation, and that is only physical money, not counting non-physical money transfers. So if you assume that a bitcoin will be traded ~ as often as a dollar, for bitcoins to be used as non-niche currency, you need enormous deflation from their current value. This fact discourages you from using it as an actual currency, because if you assume that it will be used in that way, you should keep your bitcoins, because they will greatly increase in value.
And it doesn't stop here. If bitcoins are the main currency at some point, and the guys who hoarded theirs are now absurdly rich because the one bitcoin they had is now worth at least a 1000 times what it is worth today (this is absolutely necessary for bitcoins to become a big currency), the fact that they are limited in amount still means that they will grow in value by the same amount that the economy grows. So why would you ever spend them. So they are an inherently deflationary currency. And it should be obvious why an inherently deflationary currency is really bad for the economy.
And the reason that nobody hoards real world currency is because it is inherently inflationary due to the way our banking system works. Thus, it would be retarded to hoard it.
Can you expound on the point in red please? I think you are confusing actual bitcoins and bitcoin transactions.
I already posted on the actual amount of coins in flux earlier, but I'll expand on it a bit to make it simpler. Let's ignore what the maximum amount of bitcoins will actually be once mined. Let's make this extremely simple. If there are 21 million 1 unit Bitcoins in circulation, but we're dealing with micro units in transactions then there are more than 21 million pieces of currency floating around. I'll try and simplify this again:
Prices in the US are based on denominations of the $1 dollar. Easy for all of us to understand, right? Just about anything worth buying is $1 or more, with relatively very few micro transactions making up the economy. Well, Bitcoins work the same way except you keep looking at 1 BTC as the unit of currency - but it isn't. It's .000000001. There are more than enough digital units of currency to go around, trading them isn't the issue. Obtaining them is because it isn't widespread yet.
Second bolded - this is what I was getting at earlier, who's economy is this bad for? How does deflation for national currencies relate to deflation for a decentralized currency?
You know what, here's an even simpler thought experiment: Do you hoard dollar bills?
And the reason that nobody hoards real world currency is because it is inherently inflationary due to the way our banking system works. Thus, it would be retarded to hoard it.
Awesome, now we're getting somewhere. No one hoards real world currency because every nation in the world has a central authority that governs their money supply. They can just willy nilly print more money. Now, this is a very important question, because I assume you know how bitcoin actually works - why would this also not apply to bitcoin? There is nothing that says the bitcoin economy can not increase the supply of money with fractional reserve banking. This is the system used the world over now.
ETA: I think stackexchange and the bitcoin wiki do a better job of explaining it than I do. I may be misunderstanding here but the crux of the argument is about the actual supply of coins available. Which you seem to think is fixed at a limit which I'm saying is not only unapproachable, but easily raised by moving some decimals in the bitcoin protocol.
http://bitcoin.stackexchange.com/questions/408/does-hoarding-really-hurt-bitcoin
I think where your going is "Alternative Argument" section from the wiki here (bottom of page):
https://en.bitcoin.it/wiki/Deflationary_spiral
correct?
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EPT
