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Five predictions for (Bit)coin

timothy posted about a year ago | from the invest-in-apc dept.

The Almighty Buck 179

Contributor Tom Geller writes: "I recently wrote an article about Bitcoin and the law for Communications of the Association for Computing Machinery. In researching it I ran into plenty of wishful thinkers, ridiculous greedheads, and out-and-out nutbags promising a rosy future. I also found the expected blowback from vehement naysayers who think the best way to combat crazy is with more crazy. But despite that, I walked away believing that Bitcoin — or a decentralized cryptocurrency like it (let's call it "Coin") — is here to stay. As an interested outsider to the Coin economy, and a long-time technology commentator, here's what I think its future holds." Read on for Tom's predictions.Coin's primary use will continue to be in international transactions.

While people wonder "When will I be able to pay for groceries and utilities with Bitcoin?", that use might never come. But Coin already shines in international transactions, where it provides a clear advantage over current systems, which are expensive and complicated hassles. That's why PayPal has become the go-to solution: it just works, albeit with typical fees around 3-5%.

Coin reduces that fee to a small fraction of 1% (when sent directly), and is available in places where PayPal fears to tread (Zimbabwe, Pakistan, etc.). Coin transactions occur instantly, with no intermediary, and — for better or worse — without recourse.

That leads to Coin's second primary use: to store liquid value in places where other stores (such as national currency) are unreliable. For all the cries that Bitcoin is "unstable", it seems to have settled quite nicely after its April spike. Certainly it looks appealing to anyone in an unstable country, and it's even tempting for those in places where the currency's been on a long, slow slide, like Argentina.

Coin's big vulnerability is its interface with national currencies ("real money").

None of this matters if you can't get your money out again. And that's where governments are taking a close look at Coin — with good reason. First, Coin exchanges have a terrible track record; second, such points of exchange are bottlenecks through which financial crimes often flow.

In the U.S., the government's Financial Crimes Enforcement Network (FinCEN) issued guidance asserting its right to regulate "Money Services Businesses", and defining exchanges dealing in virtual currencies (including Bitcoin) as such. That's a problem for many existing Coin exchanges, as the costs for complying with regulations are high. But if there's not a stable and reliable way to get national currency in and out of Coin, its value will plummet.

Conversely, Coin's value is likely to shoot up if this interface gets easier. Right now, it's surprisingly hard to buy Bitcoin (et al.) directly with U.S. dollars. Most methods require bank wires, tricky multi-step workarounds, and high fees. (I found Coinbase to be the most accessible, albeit with long delays and a bank verification procedure similar to PayPal's.) If Coin becomes as easy to buy as a gift card and redeemable at every bank, its practical utility will soar for everyday people.

No government will make Coin illegal.

Despite bloviation by a few politicians and baseless statements in the press, Coin is not per se illegal, and there have been no serious attempts to make it so. The FinCEN guidance mentioned earlier explicitly says that ordinary users — those who buy and sell using Coin — are "not subject to FinCEN's... regulations for MSBs". It's possible that other government agencies will continue to claim authority, but there doesn't seem to be much support for it.

A lot of noise has been made about Coin's use in illegal business, for example on Silk Road (where it's the only currency). But law enforcement is realizing that the currency isn't to blame, much as they've started to say that Craigslist isn't responsible for crimes organized through its ads. I predict that that distraction will continue to surface from time to time, but will essentially die soon.

Even if governments attempt to illegalize Coin, there's only so much they could do to criminalize ordinary users. Again, Coin's real vulnerabilities are higher up the chain. However....

If Coin succeeds, governments will get involved — for the better.

"Noooo!!!" scream the cryptoanarchists who are Coin's pioneers. "Keep the government out of this! Coin can't be controlled! Nobody can take away our freedoms!" What they don't realize is that this attitude doesn't reflect the values of Coin's future users. The benefits of "freedom" matter to the innovators; convenience and safety matter to those who follow.

"Government" in this case could also be a government-size corporation, syndicate, or other entity. The important thing is that it's big enough to administer, back, and enforce initiatives to protect the Coin economy. Whatever that "bully entity" is, Coin adopters will welcome it because of two major flaws currently in (Bit)Coin's design.

First, Coin is ridiculously easy to destroy by accident. If you lose the private cryptographic key that identifies your coin, it's gone. Not just stolen, but removed entirely from the economy, so nobody will ever own it again. Consider these stories on Bitcointalk.org, where within a few messages the cumulative total tops 10,000 BTC — currently valued around a million dollars. A central authority could address this in several ways such as tracking, restitution, etc.. People don't care that their cash is anonymous when the rent money disappears.

Second, the entire system is vulnerable to a brute-force attack. Without getting into the specifics, Coin (well, Bitcoin) works because it assumes that at least 50% of the computer power on the network is held by honest players. But a recent 51% attack on Feathercoin (a Coin with much lower capitalization) showed that it's possible for a single party (or syndicate) to trump that.

Let's do the math for Bitcoin, the Coin with by far the highest capitalization, at just north of USD$1 billion (1 x 10^9). To reliably overwhelm the network, you'd need computing power delivering about 100,000 gigahashes per second. Computers optimized for Bitcoin processing are currently available for about $1,000/gigahash, so sufficient computing power can be bought for $100 million. Electricity cost for the deed would be about $200,000/day.

O.K., it's not something a basement hacker could whip up. But there are over 400 people, and thousands of syndicates with a billion dollars in the U.S. alone. Perhaps at least one of them is crazy enough to drop 1% of the wealth to partially control (or completely destroy) a billion-dollar system. (Hell, one of them recently spent 1/10th of that price tag on his wedding.)

Those are only the two biggest technical concerns. Then there's the galaxy of financial services (such as insurance) that's available for fiat money, but which would be hard or impossible to provision for Coin without a central authority. Time could overcome these barriers; a bully entity would overcome them faster, and with greater public buy-in.

Bitcoin is not the end game.

Along those lines, I don't believe that Bitcoin will be the ultimate winner in this game. It's the 1.0, and a brilliant first effort at that. But it's not perfect, and several pretenders to the throne already claim to fix some of its bugs. In fact, shifting conditions may require periodic issuance of new Coin as a matter of course. (As I said before, I believe such issuances will involve a central authority.)

These predictions all assume that Coin will grow, and there are many reasons it might not. However, I'm bullish on it for the long-term. It's already proven its value in use; the public is used to handling Coin-like money (viz. Square Wallet); and its first major hurdles are in the past. Now it's ready to enter a fascinating future.



- - - - -
Tom Geller (tomgeller.com) writes about technology and business. He's best known for Drupal-related work that includes eight video courses for lynda.com, a book for Peachpit Press, and corporate work for Acquia, Commerce Guys, and others. He first became involved in computers as a grade-school student in 1976, playing "Hunt the Wumpus" on a 100-pound monster that spewed tractor-feed paper onto the floor. He lives in Oberlin, Ohio.

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Coin? (4, Insightful)

Anonymous Coward | about a year ago | (#44053365)

Is "Coin" the hipster new way to say Bitcoin?

Re:Coin? (2)

i kan reed (749298) | about a year ago | (#44053425)

First sentence the writer made it clear that that's how he'd refer to bitcoins in the article. My guess is he's trying to inject his own dumb idea into the vernacular.

Re:Coin? (5, Funny)

ArcadeMan (2766669) | about a year ago | (#44053453)

Or, to bitcoin a phrase, he's trying to make something from nothing.

Re:Coin? (2)

i kan reed (749298) | about a year ago | (#44053515)

Or, to bitcoin a phrase...

And if I were to kill you, I would go to jail.

Re:Coin? (1)

Reverand Dave (1959652) | about a year ago | (#44053785)

Maybe, the jury might have a good reason to let you go after reading his post.

Re:Coin? (5, Informative)

dotHectate (975458) | about a year ago | (#44053537)

He's invoking the lawyer-talk rule of "hereafter referred to as..." to simplify the article. Why bother with " Bitcoin - or a decentralized cryptocurrency like it - " when you can just say "Coin" instead. If you read the first paragraph you'd know this...

Re:Coin? (1)

synaptik (125) | about a year ago | (#44054439)

No, he's making fun of the fact that the author didn't just use 'cryptocurrency' as the general word.

Re:Coin? (3, Insightful)

Anonymous Coward | about a year ago | (#44054631)

Why bother with " Bitcoin - or a decentralized cryptocurrency like it - " when you can just say "Coin" instead.

Because it's confusing and sounds silly. We're not running low on electrons here. You can spell out what you mean. It might even help to spend some electrons defining what is meant by a "decentralized cryptocurrency". Puzzlingly, the author seems to assume that "Coins" will share rather specific properties of Bitcoin but not others.

For example, we know that "Coins" all have low transaction fees and are available in Zimbabwe and Pakistan:

Coin reduces that fee to a small fraction of 1% (when sent directly), and is available in places where PayPal fears to tread (Zimbabwe, Pakistan, etc.).

But somehow a "Coin" that is managed by a central authority is still a decentralized cryptocurrency:

In fact, shifting conditions may require periodic issuance of new Coin as a matter of course. (As I said before, I believe such issuances will involve a central authority.)

Re:Coin? (0)

Anonymous Coward | about a year ago | (#44053489)

Is "Coin" the hipster new way to say Bitcoin?

A real hipster calls it "Smoke". If you've never heard it called that, you aren't relevant.

Re:Coin? (0)

Anonymous Coward | about a year ago | (#44054081)

And Bitcoin 2.0 will be referred to as "Mirrors"...

Re:Coin? (1)

Anonymous Coward | about a year ago | (#44053567)

No.

... Bitcoin — or a decentralized cryptocurrency like it (let's call it "Coin") ...

the author is using "Coin" to refer to any decentralized cryptocurrency that is or may be similar to bitcoin.

Re:Coin? (1)

Weezul (52464) | about a year ago | (#44053729)

Yeah, bitcoins are mostly all owned by a very small group, so using them effectively centralizes the money supply in a few hand. And that ultimately increases wealth inequality and decreases the velocity of money. I.e. bitcoin is bad for the economy.

If however you create a bitcoin alternative with a permanent constant inflation that pays out through mining then that constant inflation reduces the transaction costs below bitcoin's and serves to redistribute wealth slightly, making the currency very good for the economy.

BiteCon (1)

swschrad (312009) | about a year ago | (#44053651)

you think regulated Wall Street and currency exchange is crooked, we are starting to see the slicks manipulate what I prefer to call BiteCon. because they will turn it into a con, and you will get the bite.

Re:BiteCon (-1)

Anonymous Coward | about a year ago | (#44053721)

If I had the power to hypnotize people to such an extent that I was able to control their actions and even thoughts, the first thing I'd do is hypnotize some women, rape them, and impregnate them. After impregnating the women, I'd discard them a few months later and capture some fresh sows to rape as I please.

Re:Coin? (1)

Steve_Ussler (2941703) | about a year ago | (#44053725)

No....and i am not convinced the author is correct.

Re:Coin? (0)

Anonymous Coward | about a year ago | (#44053879)

Is "Coin" the hipster new way to say Bitcoin?

Perhaps it is a way to group all the digital currency together? Others like Timekoin and Litecoin exist, but the media is fixed on Bitcoin. Perhaps someone needs to create an article about Timekoin and then see if all of a sudden the media is fixed on another digital currency that is suppose to hold back "the man" from interfering with private currency exchange?

Re:Coin? (1)

Livius (318358) | about a year ago | (#44053903)

If the author didn't realize 'coin' was already an existing word, I'm having trouble taking the rest of his insights seriously.

Re:Coin? (2)

akvalentine (560139) | about a year ago | (#44054331)

No, he is using Coin as a generic term for all decentralized cryptocurrencies. Bitcoin is the most popular, but not the only one; he mentions Feathercoin by name and gave this link to a list of others: https://en.wikipedia.org/wiki/List_of_cryptocurrencies [wikipedia.org]

Re:Coin? (1)

Beautyon (214567) | about a year ago | (#44054841)

This article is a perfect example of why Slashdot doesnt matter anymore. Its just not serious; its more like a very sophisitcated troll article, from its infantile renaming of Bitcoin to "Coin" to every other fallacious assertion, economic fallacy and Stockholm Syndrome belief in the State. Its an a-historical hysterical piece of fluff; and what is the point? Honest writing and article posting is still needed online, so why not be like Reddit and post stories honestly? Its more useful, makes more money and does a better job of informing. Of course, Reddit now uses Bitcoin tipping for moderation. This is the sort of innovation that is needed, not this tired, ancient model.

The only reason why I came here was I saw a llink on Twitter. Think about that.

Slashdot needs to change radically if it is to become important and useful again, otherwise, its going to continue to fade away into irrelevance.

Seriously (-1)

Anonymous Coward | about a year ago | (#44053397)

Wtf is a bitcoin?

Re:Seriously (1)

Anonymous Coward | about a year ago | (#44053437)

Judging by the name, some sort of electronic currency? Have you tried googling for it?

Re:Seriously (1)

interkin3tic (1469267) | about a year ago | (#44053773)

The currency of deluded people and unicorns.

Re:Seriously (1)

ahem (174666) | about a year ago | (#44054223)

The currency of deluded people and unicoins.

There. Fixed that for you.

Re:Seriously (0)

Lumpy (12016) | about a year ago | (#44053827)

It is a scam that only the low IQ waste their money on.

Re:Seriously (2)

edelbrp (62429) | about a year ago | (#44053849)

It is basically a digital barter currency that people can trade. It has a cryptologic foundation so you can't just claim to own any without actually either being given some or 'mining' it. There's only a finite amount of bitcoins and mining it involves solving a mathematical problem that gets more difficult as each batch/block is solved and issued. Right now the hardware to effectively mine it is very specific and you basically will burn electricity at a cost roughly equivalent to the going rate of bitcoin. The early miners using just a standard PC to mine are theoretically sitting on bitcoins valued in the millions... if they haven't lost them after a crashed drive or such over the years.

Re:Seriously (1)

QuasiSteve (2042606) | about a year ago | (#44054029)

Seriously, Google. Bitcoin.it. Khan Academy series of videos if you want the technical details presented a bit more clearly.

Unless you're okay with the usual replies;
It's a scam
It's for delusional people
It's for drugs
It's for fuck-the-government-I-don't-want-to-pay-taxes
It's doomed to fail
It's designed to fail
It's a pyramid scheme and guess what, you're not at the apex.

Alternatively...
It's the future
It's like money, but better
It's inherently deflationary
It's a pseudo-anonymous way to pay for whatever you want without anybody's approval.
It's a way to receive funds without having to fork over a percentage to payment processors.
It's like chickens. ( I guess asking the question you did means you wouldn't get the reference. )

Or the more neutral - or should I say, opportunistic: It's a stock, the value bounces up and down and if you buy right and sell right you can make some money off of it, but you should never put in more than you can stand to lose. Except you don't get to curse at a CEO for not squeezing the little guy enough to bring up the bottom line and increase the value.

Personally, I just like watching all that goes on around it. It's more interesting than the cryptocurrency itself, the main discussion of which at e.g. Reddit is "help get so-and-so to accept Bitcoin" because in the end all those Bitcoins are useless to have unless you can spend them somewhere, or easily get regular ol' currency for it. Kind of like wandering around the U.S. with a wallet full of Yen, really.. except nobody's suggesting stores should accept Yen. Maybe Pesos, though.
( On the vastly more technical hardware side, the ASIC miners' development is kind of interesting though. )

Re:Seriously (1)

tgeller (10260) | about a year ago | (#44054357)

We are of similar minds. :)

Re:Seriously (1)

rjstanford (69735) | about a year ago | (#44054845)

It's a stock, the value bounces up and down and if you buy right and sell right you can make some money off of it, but you should never put in more than you can stand to lose. Except you don't get to curse at a CEO for not squeezing the little guy enough to bring up the bottom line and increase the value.

See, to me that's the opposite of a stock. A share of stock is ownership in a company, making a bet that the value of the company will increase - over the long term - faster than inflation will. What you're describing is much of a lottery, where you're trying to predict the public perception (and therefore the price of the stock) rather than the intrinsic value at all. I'd agree that that's probably a fair comparison to BitCoin, FWIW, but shouldn't really be compared to fractional corporate ownership.

Or (3, Insightful)

Sparticus789 (2625955) | about a year ago | (#44053423)

I think it would be a better investment to send my money to Barrister Mohammed Gandha from Nigeria.

Re:Or (1)

Anonymous Coward | about a year ago | (#44053465)

It may stick (kinda doubt it). But one thing is for sure. Uncle Sam will want his cut. My uncle once gave me the best piece of advice. "Do not mess with the IRS they will bankrupt you"

Re:Or (-1)

Anonymous Coward | about a year ago | (#44053565)

(re: upvoted parent, not the article)

Oh yay more slashdot hate. You guys are amazing. Bitcoin continues to show success after success year over year, but slashdot will have none of it. iPod anyone?

This really is ruining the value and credibility of slasdot. I'm having an increasingly hard time finding insightful commentary up voted on slashdot anymore, and spend less and less time here.

Please stop upvoting empty flame bate commentary that fails to contribute to the conversation in either a positive or negative direction.

Re:Or (0)

medv4380 (1604309) | about a year ago | (#44053707)

How about you post as yourself, or are you too busy trying to down vote anyone you disagree with?

Re:Or (0)

Anonymous Coward | about a year ago | (#44054047)

Well I'm certainly not the one up voting posts with no information in them.

It doesn't matter though. Other sites with better voting systems and less noise are eating up the slashdot audience, so I guess I don't care. Just too bad is all. Used to love slashdot.

Re:Or (1, Insightful)

Sparticus789 (2625955) | about a year ago | (#44053853)

The success of Bitcoin is the same as the increased value of the Dow Jones (15,000+ right now). It is not based on any real, tangible objects. It is based on the theory that "oh yeah, it's worth something, trust me!" Both values are completely empty and meaningless. Just like the promises from Barrister Mohammed Gandha.

Re:Or (2, Insightful)

Anonymous Coward | about a year ago | (#44054027)

Actually, DJIA is based on market value of companies listed there. And value of companies tend to have something to do with their earnings and dividends. And these tend to be listed in Big Boy currencies instead of bitcoins.

So yes, DJIA is light years ahead in terms of tangible assets over bitcoins!

Now, can we stop with these adverts??

Re:Or (1)

EdZ (755139) | about a year ago | (#44055095)

And value of companies tend to have something to do with their earnings and dividends

So, they're based on how many people want to buy these companies products/services, and for what price? Because Bitcoin's price is determined by how many people want to buy Bitcoins, and for what price. Bitcoin also has an additional inherent service value in easy and cheap international transactions.

Re:Or (0)

Anonymous Coward | about a year ago | (#44054111)

Wow the 'currency with no intrinsic value' argument, that's new and insightful. You seem very well informed! You must be an economist. Impressive work, no really, I bow to your superior analytical power. You've clearly researched this well beyond a casual review of the FAQ, and dug deep into the economic principles that others are missing.

https://en.bitcoin.it/wiki/Myths#Bitcoins_have_no_intrinsic_value_.28unlike_some_other_things.29 [bitcoin.it]

Re:Or (0)

Anonymous Coward | about a year ago | (#44054949)

Oh yeah right, we are going to take as gospel a highly bias source. Fuck off. Your Buttcoins have ZERO value and no linking to a buttcoin source will change that fact

Re:Or (0)

Anonymous Coward | about a year ago | (#44054915)

empty and meaningless... for a second I thought you were talking about my wife.

Re:Or (0)

Anonymous Coward | about a year ago | (#44053597)

I think it would be a better investment to send my money to Barrister Mohammed Gandha from Nigeria.

I don't know about that - but when I can go to an ATM and get my BitCoins in local currency, then we'll talk.

Re:Or (1)

Graydyn Young (2835695) | about a year ago | (#44053901)

Maybe you can send the money using Bitcoin. I hear it's good for international transactions.

why would you put money into alt-coins? (4, Interesting)

gl4ss (559668) | about a year ago | (#44053449)

the entire reason for bitcoin to be the coin is that it is the coin, exactly because of the 51% attack. the popularity is the safety, in both that it's harder to take over and it's more probable you will not end up with so many of the coins that everyone else on the network just decides "fuck it" and leaves you with worthless bits. if one single entity had all the bitcoins in the world nobody would consider them worth anything.

what puts any credibility into bitcoin clones? wishful early adopters? why would anyone else after them adopt it - just to pay the early greedos?
was feathercoin tradeable to real currency? who in their right mind put any money into it.

Re:why would you put money into alt-coins? (2)

tgeller (10260) | about a year ago | (#44053955)

I think this is a fair question. In my opinion, none of the existing alt coins have a real advantage -- technical or in terms of buy-in -- over Bitcoin. I just think that one (or more) will eventually appear.

Think SixDegrees -> MySpace -> Facebook -> ???. :)

Re:why would you put money into alt-coins? (0)

Anonymous Coward | about a year ago | (#44054177)

what puts any credibility into bitcoin clones?

An alternative that solves the deflation problem, which will be crippling in the long term for BitCoin.

Re:why would you put money into alt-coins? (1)

King_TJ (85913) | about a year ago | (#44054569)

One *might* argue that using the existing "default" fiat currency means we're 100% sure of getting screwed -- as buying power drops with govt. printing more paper to cover increasing debt.

Bitcoin may have the theoretical threat of the 51% attack, but it seems to me this risk drops as more people start using the e-currency? Furthermore, the talk of someone buying up enough processor power to take over the network seems to make an assumption that it would be possible to purchase the latest generation of bitcoin mining gear using dedicated ASICs. From what I've seen, those are more "vapor-ware" than reality today, with backorders waiting months to be filled? That will change, I'm sure .... but right now, I don't know if enough product exists out there to really buy enough for a takeover?

Bitcoin clones may or may not have any credibility. I'd agree some really don't and will probably just die. But others will have to prove themselves.... probably at least partially by giving early adopters the chance to get in on them at a low cost with high probability of the value going up over time. People ALWAYS accept some financial risk hoping for a reward. (Heck, people play the lottery every week despite huge odds against a payout.)

Let me see if I can summarize (1)

jandrese (485) | about a year ago | (#44053507)

So the big advantage of bitcoin is that it lets you send money overseas without the traditionally high service fees, but US (and other countries) are looking to add expensive regulation to the system that will drive up the prices to something similar to what you would find with a traditional service, only without any of the protections a traditional service might provide (which are admittedly pretty slim when sending money overseas).

I can see why the author thinks bitcoin itself is going to wither away. I'm not sure why he thinks some alternate and somehow better scheme is going to take off in its place. He also kind of skips over one of the big markets for bitcoins today: suburban teenagers who are buying mail order drugs and getting their parents to pay for it through their power bill.

Re:Let me see if I can summarize (1)

Anonymous Coward | about a year ago | (#44053883)

"...but US (and other countries) are looking to add expensive regulation to the system that will drive up the prices to something similar to what you would find with a traditional service..."

No. Regulation may be added by government, but it can't be expensive for bitcoin users. Perhaps a tax added to computers like the tax added to writable media at the behest of RIAA *et alia*: but that would necessarily apply to everyone and so would be unlikely to fly. There really isn't any way to add a tax to the bitcoin protocol itself, that would be accepted by the users.

"...only without any of the protections a traditional service might provide (which are admittedly pretty slim when sending money overseas)."

You're missing the point. There are plenty of ways to transmit money that provide all kinds of *consumer* (i.e., buyer) protections. You're talking about chargebacks - why not just say it? However, bitcoin provides protections to *sellers* - a class of people who have been getting totally screwed for years. As a seller on the internet myself (rare books), I think it's about time. My reputation is impeccable, and nobody honest has to worry about getting a refund under honest circumstances. But I won't sell good stuff online *at all* any more - anything over $500 is just plain asking for chargeback fraud without recourse. I've been burned enough by the big sites and the big payment providers. And yes; I've had more and more success selling to my A-list with bitcoin payments only: bitcoin-only website coming...

And, percentage-wise, Silkroad really isn't that big a bitcoin market these days. It hasn't been for a long time. 7%, I think, was the last careful estimate?

In short, your summary ain't so knowledgeable.

Re:Let me see if I can summarize (1)

jandrese (485) | about a year ago | (#44054681)

The regulation would happen at the exchanges obviously, not some sort of weird computer tax. When you convert your currency into coins (or vice versa) the government will have checks to make sure you're not doing something fraudulent or illegal, checks that will be expensive to implement. This is already happening, and is why it is getting harder and harder over time to convert bitcoins into USD and back.

Re:Let me see if I can summarize (2)

icebike (68054) | about a year ago | (#44054025)

Actually, the US is only concerned with two things: 1) large sums of income in bitcoin not declared on your income tax, and 2) large sums transferred to or from criminal activities, drugs, terrorism, etc.

Addressing concern numbe 1: (income tax)...
Bitcoin income is taxable just as barter "income" is taxable. To date this has been a small problem, because when you sell your bitcoin to buy a loaf of bread that transaction comes under scrutiny, and at this point in time, that transaction is the only bit the US government really cares to regulate (as mentioned in the story).

However, when you can buy many things with bitcoin, and it becomes very liquid, you can expect more forms of reporting required by the IRS, because bitcoin income, sans reporting, becomes totally off-the-books income. But for that to be a problem, bitcoin has to become just about as liquid as dollars or euros.

If large bitcoin receipts were reported as miscellaneous income, or barter income on your tax forms, valued at the then-current exchange rate, you will have removed any reason for the US government to be concerned about this as far as your personal tax return. It would be just like Tips reported by waitresses. No way to prove it, but mighty suspicious if you say you wait table for a living and don't report tips.

The US government has no interest in making transactions more expensive, or adding any friction to the system.
They do have a vested interest in knowing about income in the form of bitcoin just as they have an interest in knowing about Paypal income.

Re:Let me see if I can summarize (2)

plover (150551) | about a year ago | (#44054103)

You missed

For all the cries that Bitcoin is "unstable", it seems to have settled quite nicely after its April spike.

That's the one that got me. Two months where the price only fluctuated by less than 40% does not a pattern of stability make! There is no trend on this chart that leads me to believe it's ever been any more stable than the Iranian Rial.

Re:Let me see if I can summarize (1)

jandrese (485) | about a year ago | (#44054665)

See, for me the stability is less of an issue because for the primary uses of Bitcoins you aren't holding on to them very long. It doesn't really matter what their current value is because you're buying only what you need to transfer your money to the other guy and then getting out.

Re:Let me see if I can summarize (0)

Anonymous Coward | about a year ago | (#44054629)

I'm moderating and sooo wish I had an option to mark "idiot" instead of the options they gave me.

First: You can't actually create the kind of fees you are talking about. Sure you can say they will, but you can say 2+2=23 and be just as correct.

Second: The author didn't say he thought bitcoin was going to wither away. He was very careful not to say anything like that. The voices in your head telling you that he agrees with you are just as wrong as the one you let do your typing.

Third: He didn't skip over the criminal use of bitcoin, he spent some effort explaining how significant he thinks it is.

So basically everything you said is not just wrong, but shows you have an inability to comprehend what you are reading.

Please try reading the article again. Maybe have a friend read it to you. Maybe ask one of the orderlies to give you another Ritalin.

Hay Guise! (2)

Mashiki (184564) | about a year ago | (#44053511)

It's the weekly bitcoin article, are we done with it yet? No? Damn it...

Re:Hay Guise! (2)

TheNinjaroach (878876) | about a year ago | (#44053641)

Unlike the last several Bitcoin articles, this one at least had some meat to it.

Re:Hay Guise! (1)

tgeller (10260) | about a year ago | (#44053891)

Why thank you! :)

Sixth prediction: (3, Funny)

Black Parrot (19622) | about a year ago | (#44053531)

We'll have two more bc articles on Slashdot this week.

Re:Sixth prediction: (1)

Anonymous Coward | about a year ago | (#44053605)

This is the only one that will turn out to be true.

Let's not call it coin (3, Insightful)

Eightbitgnosis (1571875) | about a year ago | (#44053559)

Because no one calls it that, and it's actual name is cryptocurrency

Re:Let's not call it coin (1)

tompaulco (629533) | about a year ago | (#44055115)

Because no one calls it that, and it's actual name is cryptocurrency

Isn't there already something called coin? Like...coin?

Numbers way wrong (2)

ZeroNullVoid (886675) | about a year ago | (#44053583)

His numbers on Bitcoin Hardware are way off with ASIC's.  Just visit Butterfly Labs, I have a rig doing 11GH/s, cost about $260 USD and uses ~ 50 watt of electricity.  It costs less than $5 a month to run.  BFL has some other hardware that has not shipped yet that can do 500 GH/s.

They sell their ASIC chips for $75 each (50 each if you have a coin credits) with min orders of 100.  I assume each chip can do 2.5GH.

His numbers seem to stem back about a year or so ago.

Re:Numbers way wrong (1)

ZeroNullVoid (886675) | about a year ago | (#44053613)

I also want to add that the 51% attack is not what he thinks it is, it allows you to block transaction verification and recall your own transactions.

Re:Numbers way wrong (2)

tgeller (10260) | about a year ago | (#44053915)

Nope, I knew that. That's why I wrote that a 51% attacker could "partially control (or completely destroy)" Bitcoin. I think the ability to block transaction verifications would "completely destroy" Bitcoin... but I welcome arguments to the contrary. I might be missing something.

Re:Numbers way wrong (1)

ZeroNullVoid (886675) | about a year ago | (#44054523)

The transactions are still recorded in the block and chances are the community will upraise against the main controller, get more powerful and past transactions will process.

Re:Numbers way wrong (5, Informative)

tgeller (10260) | about a year ago | (#44053873)

I actually considered doing the calculations based on Butterfly Labs' machines, which claim 1 gigahash performance for only $50 (!). But their machines aren't actually available! The waiting list is, what, nearly a year now? So I said "currently available"... which doesn't include BL's machines, which are (for most people) pure vaporware.

--The author

Re:Numbers way wrong (4, Informative)

ZeroNullVoid (886675) | about a year ago | (#44054637)

Thanks for taking the time to reply,

While there is a huge backorder, BFL is shipping products.

They are catching up on backorder fairly quickly.
(About 9 months off now)
The current trend every week and a half, they catch up on a month. The current delay is in actual power brick availability and they are contacting people asking if they want to wait or get it shipped without a power supply and the owner can provide their own.
BFL Judy posts every few days on shipment updates.
https://forums.butterflylabs.com/blogs/bfl_jody/ [butterflylabs.com]

As for the actual chips, they are rated at 4GH/s and have a delivery term of 100 days. However, the actual chips shipped will be of mixed grade, meaning they will have at least 12 working engines in them and up to 16 working engines. I would say about .25 GH/s per engine, so we are looking at 3-4GH/s no matter the chip grade. With stale shares in mining pools and the speed of these chips, my previous guestimate of 2.5GH/s each would probably be the expected output of a D grade chip.

Re:Numbers way wrong (1)

rjstanford (69735) | about a year ago | (#44054933)

Of course, if BitCoin was really legit and stable, why would they be selling those machines in the first place when they could just farm BC, swap it for dollars, buy more machines, lather, rinse, and repeat?

In any silly boom (some of which (tulips for example) get exceedingly silly), the solid, predictable money is made selling to the intrepid entrepreneurs. Not that long ago I had a friend who made a mint building custom enclosures for Emu and Llama down here in Texas - and anyone who invested in UPS/FedEx during the free shipping wars did just fine.

Reminds me of all the commercials for people telling you that the USD is worthless and that you should by their gold - which they're willing to give you if you'll give them your USD...

Re:Numbers way wrong (1)

sstamps (39313) | about a year ago | (#44053999)

That's one of the problems with so-called "writers about technology" -- when one writes a fact-backed article, one best do his research.

Not very impressive work, to say the least.

I can't wait.. (1)

edelbrp (62429) | about a year ago | (#44053595)

to cash in my Flooze stockpile when I retire! It's the future. Whoopi Goldberg told me herself!

Re:I can't wait.. (1)

edelbrp (62429) | about a year ago | (#44053617)

(Edit: Flooz, not Flooze :')

Some call it bitcoin.... (-1)

Anonymous Coward | about a year ago | (#44053645)

...I call it shitcoin. As has been seen already, it's far too easy to destabilize.

The 51% attack myth (2, Informative)

fireteller2 (712795) | about a year ago | (#44053673)

People continue to be distracted by the 51% mining control issue when in fact that is not the issue, or it is not the issue they think it is. This sort of attack doesn't only happen at 51% it can happen at any level of computing power, but the probability of success increases and the attackers relative computing power increases.

https://en.bitcoin.it/wiki/Weaknesses#Attacker_has_a_lot_of_computing_power [bitcoin.it]

Further once and attacker has such power the ability they have to do damage to the system is limited to specific things. Things that importantly don't include taking all your bitcoin savings.

The 51% attack is fatal (0)

betterunixthanunix (980855) | about a year ago | (#44055149)

The fact that a polynomial time algorithm can violate key properties of the system -- enabling double spending, preventing others from spending their money, killing the mining reward -- is fatal, at least from a cryptography standpoint. If it took half the users of Bitcoin to collude, that might be acceptable; but the fact that one user with lots of computing power can do this calls Bitcoin's value as a secure system into question.

Of course, the lack of a security definition for Bitcoin makes this point moot anyway.

Bitcoin is not just for international transfers (2, Interesting)

sethotterstad (2947867) | about a year ago | (#44053687)

Bitcoin has a huge smorgasboard of advantages over anything else out there that make it vastly superior: Decentralised and free from control, Always running 24/7, International, No/low fees, New privacy model, Transparent system, Divisible, Secure, Fast transfers, No chargebacks, Environmentally friendly / efficient, Digital It increased in value by 1,750% in 2011, 186% last year, and 1,000% this year, more than any other asset class. Time to load up imo. This is a radically superior money compared to pieces of paper and gold, even if you only count what it can do right now, and this is just the beginning. All kinds of cool stuff is getting built into the protocol. He is right about it being able to destroy them if you handle them yourself though. Many solutions are being worked on for that problem.

Re:Bitcoin is not just for international transfers (2, Insightful)

Anonymous Coward | about a year ago | (#44054083)

Bitcoin has a huge smorgasboard of advantages over anything else out there that make it vastly superior: Decentralised and free from control,

Decentralization is not automatically an advantage. As we've seen with Bitcoin, where in practice most of the activity takes place on one centralized exchange.

Always running 24/7,

Except when that one exchange shuts down trading for reasons ranging from "we cobbled this system together from sticks and chewing gum" to "oh shiiiit bitcoin is crashing we have to hold back the final bubble pop!!!" Oh, let me guess, though, you're counting the way that you can still do all-bitcoin transactions even when the exchanges are down. Never mind that you can't actually buy much of anything (except drugs) for bitcoins. And even the druglords expect to be able to convert bitcoins to real money in the end -- if the exchanges have problems that are too serious that bitcoin "economy" (translation: money laundering scheme) will disappear overnight.

International,

He says as if existing systems aren't.

No/low fees,

Ah, my favorite part of bitcoin advocacy -- the part where the advocate actually knows less about bitcoin than the critics. With a standard client, someone submitting a transaction has to opt out of including a fee. And if you choose not to pay a fee, or too small a fee, recently there's been a good chance your transaction simply won't go through, or will take a long time. Because lots of the big miners are simply choosing not to include such transactions in their blocks.

New privacy model, Transparent system,

Yeah, it's SO PRIVATE GUYS. It's totally not possible to figure out exactly what someone is spending and getting paid once you link a name to an address! (oh wait it is)

Divisible,

He says as if existing currencies aren't.

Secure, Fast transfers,

"Fast"? That is the exact opposite of the truth. The difficulty adjustment system is supposed to be tuned such that the network averages mining one block every 10 minutes. That means you have to wait an average of 5 minutes for a transfer to go through. While in one sense that's fast, in another it's not -- a conventional system can do it in seconds.

As for security, sure it's secure -- if you're familiar with a bunch of esoteric technical subjects. If you're not, well, let's just say that lots of people have had bitcoins stolen from them.

No chargebacks,

I realize that you've been programmed by Bitcoin groupthink to believe this is a positive feature, but it's not. Really, truly, it's not. Chargebacks are only a negative thing to merchants. To consumers, they're amazing, for legitimate reasons. That's why they exist in the first place -- payment processors are competing for consumer business by providing for them. Believing that "no chargebacks" is going to help Bitcoin rule the world is a sign that you're delusional.

Environmentally friendly / efficient,

Wow. This is it. Out of all your crazy, this is the crown jewel. Not just wrong, but offensively wrong.

Fucking Bitcoin is environmentally friendly and efficient? No, stupid. It is not environmentally friendly to pointlessly burn energy on "mining" just to keep your toy libertarian funbucks moving. Mining is deliberately, flagrantly inefficient. It's cryptographic proof-of-work -- the miners are all brute-force searching a giant mathematical space for a solution to a difficult problem, but once the solution is found it's easy for every node on the network to verify that it is a valid solution. The brute-force search is monumentally inefficient, and only gets more so (thanks to difficulty adjustment) as the size of the mining network grows (i.e. as more people join the gold rush).

The conventional competition solves this problem with central authority. When you know that you have a trusted system tracking the amount of dollars in an account, processing payments is just a matter of performing database transactions. There is no need for that trusted system to burn tons of CO2 proving that it was a big manly computer capable of lots of gigahashes.

But hey, thanks for advocating more global warming just because you want your money to be libertarian or something!

Digital

He says as if the competition isn't.

It increased in value by 1,750% in 2011, 186% last year, and 1,000% this year, more than any other asset class. Time to load up imo. This is a radically superior money compared to pieces of paper and gold, even if you only count what it can do right now, and this is just the beginning.

What is it, an investment scheme or a currency? Make up your mind, it can't be both. The value of a currency to an economy depends upon how easily it can be used to facilitate trades of real goods and services. Rapid deflation is a very bad property for a currency to have because nobody will ever want to spend it -- it's always going to be worth more tomorrow. If it's the only currency available, guess what? The economy stagnates. Wages drop.

If it's an investment scheme, what are you investing in? There's less real world economic value backing Bitcoin than the classic example of a bubble, tulips. At least tulips were nice flowers. Bitcoin is just a transaction block chain built by wasting tremendous amounts of compute power (and therefore adding lots of CO2 to the atmosphere). What value does that provide to individuals, or civilization as a whole?

Bitcoin is just a penny stock for libertarian nerds.

Re:Bitcoin is not just for international transfers (0)

Anonymous Coward | about a year ago | (#44055321)

Game... Set... Match

Sixth prediction (0)

Anonymous Coward | about a year ago | (#44053737)

BitCoin just sinks as the other virtual currencies : The boat sinks [youtube.com]

Crap. (1, Insightful)

magic maverick (2615475) | about a year ago | (#44053747)

A lot of crap. First we have this "Coin" business, instead of Bitcoin. If you want to talk about various *coins, say cryptocurrency or cryptocurrency based on Bitcoin.

Also, alternative bitcoin based currencies are mostly scams or failures for various reasons. There is no way there will be a 51% attack on Bitcoin. Sure your math says there could be. But it ain't happening. Sure Feathercoin got attacked. But what the fuck are they? What can I buy with that?

The transaction fee is 0% at present. Most miners will still accept your transaction, even if you don't pay a fee. And any fee is voluntary (except if you use the default client, in which case it will, in some cases, enforce a 0.005 bitcoin, I think, fee).

Oh, and its easy to lose your bitcoins. Gee, just like "paper" money. Whoops I ran my hundred dollar bill through the washer a few times. And now it's indistinguishable from lint. Or, hey, my house just burnt down, and I lost my life savings ('cause fuck banks). In fact, if you pay attention (i.e. take backups like you should with any digital stuff you want to keep; run a decent OS), it's harder to lose your bitcoins.

So Bitcoin is wonderful. Alternative cryptocurrencies may or may not be (but probably not). And the author should have done a little more research.

Re:Crap. (1)

tgeller (10260) | about a year ago | (#44053997)

<blockquote>Oh, and its easy to lose your bitcoins. Gee, just like "paper" money.</blockquote>

It's a matter of degree. I think it's an order of magnitude (i.e., 10x) easier to lose Coin than paper currency.

Re:Crap. (1)

brit74 (831798) | about a year ago | (#44054007)

Oh, and its easy to lose your bitcoins. Gee, just like "paper" money. Whoops I ran my hundred dollar bill through the washer a few times. And now it's indistinguishable from lint. Or, hey, my house just burnt down, and I lost my life savings ('cause fuck banks).

Yes, well, people tend to have a lot more money in bitcoin than in physical dollars. I don't think I ever have more than $80 in physical money at any moment in time. The rest is in the bank. And if your house burns down, burning your money, you were stupid to have much money stored in your house. I'd be a little paranoid if I had more than a few thousand dollars in cash in my house. Yet, I've heard of people losing $80,000 and a million dollars worth of bitcoins in harddrive crashes. (And harddrive crashes happen a lot more often than houses burning down.) If someone lost $80,000 cash because their house burned down, my first question would be, "Why the f*** would you keep $80,000 cash in your house?" If your attitude is "f*** banks, I'm keeping my life savings in my house" then you've got a major flaw in your thinking. Essentially, all you've done is give examples of people being really stupid with physical money, and then saying, "Yeah, but bitcoin is safer than if you did this stupid thing!"

Humans are stupid. (0)

Dareth (47614) | about a year ago | (#44053771)

Humans are stupid. You can tell this by what they "value".

Seriously? (2)

ADRA (37398) | about a year ago | (#44053793)

" Coin's primary use will continue to be in international transactions. While people wonder "When will I be able to pay for groceries and utilities with Bitcoin?", that use might never come. But Coin already shines in international transactions, where it provides a clear advantage over current systems, which are expensive and complicated hassles. That's why PayPal has become the go-to solution: it just works, albeit with typical fees around 3-5%."

The reason why existing systems cost so much and take non-trivial delays is because these systems can be attacked or exploited in ways that cost people real substantial amounts of money. If you see BitCoin carrying millions of dollars of transactions daily / hourly / in minutes, do you still think it'll be the hot sexy magical fairy of transactions that it is now? No, you'll have to raise fees to buff up the infrastructure against attack, and build in extra fees to compensate against fraud, or no legitimate business will deal with it.

There are a ton of bank to bank transfers that are generally a lot slower, but you're all but guaranteed against fraudulent transfers (and the ability to claw back accidental ones). BitCoin may be a fun geek interest area like HAM radios and DIY projects, but the realities of international commerce are fraught with realities that go far beyond any of the problems solved by this technical solution.

Re:Seriously? (1)

tgeller (10260) | about a year ago | (#44054229)

Your points are why I think a government-like body will get involved -- and I do believe that there will be an increase is costs when that happens.

Will those costs be greater than for current systems? I don't know. I'm guessing they won't, if only because of Coin's inherent self-defense mechanisms (crypto). On the other hand, most attacks are against "wetware" -- i.e., tricking the people who hold value. Those attacks will need just as much protection -- at just as great a cost -- as for any other medium of value.

Anyway. I don't see much difference between Coin and existing electronic transactions in the situations you describe.

Re:Seriously? (1)

Anonymous Coward | about a year ago | (#44054271)

BitCoin may be a fun geek interest area like HAM radios and DIY projects

Well, my "geek" friend just sold his "DIY project", a BitCoin-based shipping and logistics startup to Maersk for 18 million Euro.

Not the "greenest" currency (1, Insightful)

tehlinux (896034) | about a year ago | (#44053825)

How is bitcoin mining not a waste of electricity?

Re:Not the "greenest" currency (-1)

Anonymous Coward | about a year ago | (#44053993)

Yeah, but like, there's like this, like pixiedust stuff like, and it like, makes money to pays the electricity and stuff. I don't know much about like, errr, moneys and stuff like, cuz like, my mummy pays the electricity bills and stuff like. I've asked for like, four GTX titans like, and they'll like make make me loaded and stuff yeah? and then I can like, buys an iPad like. It's just like free money and stuff ennit?

Re:Not the "greenest" currency (-1)

Anonymous Coward | about a year ago | (#44054009)

Bitflation essentially requires the value of the coins to be tied to the cost of the electricity used to produce the last coin. This is how the founders plan on cashing in on the ponzi^H^H^H^H^Hinvestment.

Re:Not the "greenest" currency (2)

TeknoHog (164938) | about a year ago | (#44054051)

How is bitcoin mining not a waste of electricity?

Because hauling cash around in armoured vans, and credit card networks, are not exactly free and clean.

Regulators irrelevent (3, Insightful)

Anonymous Coward | about a year ago | (#44053973)

I read the article, I think the conclusion is flawed. What the regulators want or can do is pretty much irrelevant.
Bitcoin is already out of the bag and is designed to make an end run around the "normal" ways of secured money transfers. I'm guessing they're not fighting this harder because they're trying to avoid the Streisand effect, as well as legitimize it as a threat to "normal" banking business by saying it is.
A rose by any other name... doesn't give a damn what it's called.

About the Streisand effect, the article mentions the recent jump in value from 20 to 250 to 120, but didn't mention the first jump over a year ago from 7 to 37 to 20 when senator Chuck Schumer pointed out how easy and untraceable it was to buy illegal drugs off silkroad using bitcoin through tor and how it should be stopped. Best bitcoin advertising ever!

The surge from having Cyprus banks skim value out of accounts will probably end up being a rather small bump once people realize that every time the US government creates more debt (and more money) by spending beyond what the collect in taxes, they are effectively pulling value out of the entire dollar-based-economy (everyone's pockets and savings). It will be interesting to see how they try to prevent people from moving their savings from one that perpetually looses value to one that is designed to perpetually grow in value.

Re:Regulators irrelevent (2)

tgeller (10260) | about a year ago | (#44054269)

I'd moderate this up if I could. :)

"Coin exchanges have a terrible track record" (4, Informative)

Animats (122034) | about a year ago | (#44054011)

Coin exchanges have a terrible track record...

Right. Many of them have gone bust, usually without returning the money. Bitcoin is the con man's dream - untraceable, irrevocable one-way money transfer from sucker to anonymous scammer. No worries about the mark coming back with the cops, or a few friends with baseball bats.

Getting money out of the various exchanges is hard. Even Mt. Gox has severe limits on withdrawal rates. That's suspicious. They should have 100% of the assets entrusted to them by their customers, and should be able to deliver them on demand. Because they resist that, I suspect they don't have all the assets they should. Withdrawal rate limits are commonly associated with Ponzi schemes and "high yield investment programs", where if the customers take out their money, the whole thing collapses.

Re:"Coin exchanges have a terrible track record" (1)

Anonymous Coward | about a year ago | (#44054183)

So are banks ponzi schemes then ;-)

Re:"Coin exchanges have a terrible track record" (1)

Anonymous Coward | about a year ago | (#44054345)

Withdrawal rate limits are commonly associated with Ponzi schemes and "high yield investment programs", where if the customers take out their money, the whole thing collapses. ...also associated with highly automated exchanges, such as your local ATM, as a means to throttle any fraud. Do you really want someone with temporary access to your account to be able to empty it in one transaction?

Re:"Coin exchanges have a terrible track record" (0)

Anonymous Coward | about a year ago | (#44054793)

"Getting money out of the various exchanges is hard. Even Mt. Gox has severe limits on withdrawal rates. That's suspicious. They should have 100% of the assets entrusted to them by their customers, and should be able to deliver them on demand. Because they resist that, I suspect they don't have all the assets they should. Withdrawal rate limits are commonly associated with Ponzi schemes and "high yield investment programs", where if the customers take out their money, the whole thing collapses."

You seem to know little about banking which is based on lending (crediting to borrowers accounts) several times the value of the assets the banks actually own. Any modern bank will run out of money soon if even a small fraction of customers want to withdraw their cash at the same time. Most of the cash never existed.

Re:"Coin exchanges have a terrible track record" (1)

IamTheRealMike (537420) | about a year ago | (#44054587)

If you knew anything about how exchanges work John, you'd know that withdrawal limits are typically imposed by the banks themselves and/or AML rules. Not your entirely unfounded theories about them being fractional reserve. Mt Gox has made many references over the years to having to negotiate with banks to up the amount of money they're allowed to transfer per day. Just one more reason why the banking system sucks. There are typically no withdraw limits on the Bitcoin side once AML verification and good security are set up.

Re:"Coin exchanges have a terrible track record" (1)

Animats (122034) | about a year ago | (#44055045)

If you knew anything about how exchanges work John, you'd know that withdrawal limits are typically imposed by the banks themselves and/or AML rules.

Yeah, right. Mt. Gox regularly blames the businesses they deal with for their own problems. If you have unencumbered assets with a a real brokerage firm, and you want it converted to cash and sent to your bank account, you can have it in three days, or they're in big trouble. Brokerages routinely deliver amounts in nine figures on demand. Mt. Gox wants a delay of two weeks to over one month [mtgox.com] for just US$10,000.

And we haven't even covered the Dwolla/Mt Gox/Mutum Sigillum LLC/Homeland Security debacle. [uproxx.com] Mt. Gox apparently claimed their money-transfer business unit wasn't in the money transfer business. That didn't end well for the customers.

Mind blown... (1, Troll)

TheAmazingChestaro (2942643) | about a year ago | (#44054487)

Really... this virtual scrilla *still* has value? How?! It is backed by literally nothing in the real world? What you gonna do when the apocalypse, e-pocalypse, zom-pocalypse, etc, etc, etc happens? Your 'Coins' will be inaccessible or unusable. That's why I invest in bullets, guns, beer, and women. You girls can keep your nancy boy 'Coins' and throw your USB sticks or external hard drives at a zombie's head. I'll be plugging 'em from a distance, where it's safe, while eat a sno-cone, making out with my woman and drinking a beer.

Long Before 2140, The Gig Will Be Up (2)

cmholm (69081) | about a year ago | (#44054789)

Bitcoin, itself, will remain a niche currency. The author's point about places where banks fear to go is good. Otherwise, the built-in deflationary tendency will make it increasingly irrelevant in the larger economy.

A few bitcoin uses (1)

ZeroNullVoid (886675) | about a year ago | (#44054803)

Some use cases for bitcoins for the techies and privacy conscious people are

1) VPN payments (AirVPN, there are many others)
2) Server payments (PRQ, there are many others)
3) Game Server Privileges (Various) - Many gamers have rigs and may be young, they can mine a few fractions of bitcoins in a pool and donate for admin or VIP status without needing money or to be old enough for paypal/debit cards etc.
4) Debrid Services - Multi-host download services
5) Exchanging for goods or money, places like bitcoin-otc act as web of trust communities to trade for whatever you want. Most tx seem to be for currency, but I have done things like xbox live codes, etc.
6) Merchants, you can use bitcoins to purchase giftcards that can be used at online and brick and mortar locations.
7) Barter IRL - Many people who follow currency news has heard of bitcoins and are curious about it, but reluctant to invest in them directly or acquire mining hardware. I have successfully bartered for many services using bitcoins as payment. This also helps promote the idea of cryptocurrency to the general public.

Combine using Tor to register and transmit bitcoins and login to such services, you can keep the trail fairly clear.

Wallets such as electrum make it fairly quick and easy for people to get into bitcoins and provide a failover generation method to backup/rebuild your bitcoin wallet and not lose your bitcoins in case of losing your wallet.

Re:A few bitcoin uses (0)

Anonymous Coward | about a year ago | (#44055427)

For all of the hype bitcoins get, I'm not impressed at all when I can still do far many more useful things with my airline miles or my Marriott award points.

The Real Cost to Attack Bitcoin (0)

Anonymous Coward | about a year ago | (#44055181)

The cost to attack bitcoin is now much lower than the author's calculation. Using the retail price of ASIC machines it would cost about $7,000,000 to perform a 51% attack on the network. If you had a botnet ready to block the major pools with a DDOS attack then you could make your coordinated 51% attack for much less.

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