×

Welcome to the Slashdot Beta site -- learn more here. Use the link in the footer or click here to return to the Classic version of Slashdot.

Thank you!

Before you choose to head back to the Classic look of the site, we'd appreciate it if you share your thoughts on the Beta; your feedback is what drives our ongoing development.

Beta is different and we value you taking the time to try it out. Please take a look at the changes we've made in Beta and  learn more about it. Thanks for reading, and for making the site better!

This Whole Bitcoin Thing Could Be Big, Says Bank of America

samzenpus posted about 4 months ago | from the better-than-barter dept.

Bitcoin 276

Nerval's Lobster writes "Bank of America has issued a research report suggesting that the crypto-currency Bitcoin could become 'a major means of payment for e-commerce' on its way to emerging as 'a serious competitor to traditional money transfer providers.' The bank attaches a 'maximum market capitalization' of Bitcoin at roughly $1,300, based on its position as a 'major player in both e-commerce and money transfer' as well as 'a significant store of value with a reputation close to silver.' Bitcoin has come close to exceeding that theoretical ceiling in recent weeks, although its valuation dove today after the People's Bank of China decided to declare it a volatile 'currency' without real legal status; that financial institution is also concerned about its use in money laundering and black markets. Bank of America sees Bitcoins' advantages as low transaction costs, its finite supply (which will protect its value), and its increasing attractiveness as an alternative to 'traditional' cash. As with the People's Bank of China, however, the bank sees the currency's extreme volatility and lack of legal backing as a bad thing, and frowns at the possibility that regulators could step in and increase transaction costs. 'A 50 minute wait before payment receipt confirmation is received will prohibit wider use,' the report adds. 'This is less of an issue for two parties that know each other because they trust the other will not double spend, but when dealing with an anonymous counterparty this creates a high level of unhedgeable risk.' Without a 'central counterparty' to verify transactions and thus mitigate that risk, Bitcoin could fail to break into wider use."

cancel ×
This is a preview of your comment

No Comment Title Entered

Anonymous Coward 1 minute ago

No Comment Entered

276 comments

Of course it could be big. (5, Informative)

FSWKU (551325) | about 4 months ago | (#45616203)

Bank of America is always looking for new ways to screw over their "customers", be it through fees, lying, or trying to steal their (paid off) houses through foreclosure (and blaming it on "computer error" when caught). They're probably drooling like hungry dogs over all the ways they can fleece people with Bitcoin...

Are they the only one ? (5, Insightful)

Taco Cowboy (5327) | about 4 months ago | (#45616455)

Bank of America is always looking for new ways to screw over their "customers", be it through fees, lying, or trying to steal their (paid off) houses through foreclosure (and blaming it on "computer error" when caught). They're probably drooling like hungry dogs over all the ways they can fleece people with Bitcoin...

I'm afraid that Bank of America is not the ONLY bank which screws their customers.

In fact, I have yet to find a bank which has failed to screw their customers.

Re:Are they the only one ? (3, Insightful)

Anonymous Coward | about 4 months ago | (#45616613)

Have you tried a credit union?

Re:Are they the only one ? (0)

Anonymous Coward | about 4 months ago | (#45616615)

Bank of America is the only bank(or credit union) that has NEVER tried to screw me. Not once. EVER. I've held an account with them since 2006. I've fired every other financial institution I've dealt with in under 12 months. BoA may be evil for the 2008 crash, but they're a seductive temptress. NOTE: Banking experiences vary by state, YMMV.

Re:Are they the only one ? (4, Funny)

AlphaWolf_HK (692722) | about 4 months ago | (#45616849)

BoA, Wells Fargo, and Chase are the douche banks. Most banks will do better but not much, but some are pretty good.

I'm with USAA myself - haven't ever had to pay a single fee for anything I get from them. My checking account even yields interest, and features that the 3 douches charge money for are included for free. USAA was actually the first bank to offer deposits using smartphones in fact, and it always has been free.

Re:Are they the only one ? (1)

Paradise Pete (33184) | about 4 months ago | (#45617125)

BoA, Wells Fargo, and Chase are the douche banks. Most banks will do better but not much, but some are pretty good.

I switched from Wells Fargo to Chase for my routine banking and unlike with WF I've been very happy, bordering on delighted. I've never paid a fee for anything. They've even waived wire transfer fees for me. The manager at the local branch is the most helpful banker I've ever encountered, so maybe it's actually more him than Chase, but I'm happy.

Re:Are they the only one ? (0)

Anonymous Coward | about 4 months ago | (#45617171)

Oh fuck off with your logical fallacy. OJ's defense wasn't: There are other murderers, so let's not talk about me, you hypocrites.

Re:Of course it could be big. (2, Interesting)

Anonymous Coward | about 4 months ago | (#45616641)

yes, bofa is a bank, and they will do anything to make a profit a long as it does not cause them lose customers or take on legal fees to the point that they do not profit from their fleecing ways... up to this point their primary competitors are just as 'fleecy' as they are and the customers are stuck with the same fleecing habits wherever they go

bofa seems to be recognizing that bitcoin could become a non-fleecy competitor to their market and they are laying down the claim that good old American Dollars traded through their banking system are both quicker and more trustworthy than bitcoin...

So... what financial processes would be mucked up by a 50 minute lag and what elements of contract law are present in bitcoin that would enforce payment if the bitcoins have been tapped out before you got payment?

there would seem to be a lot of opportunities for scoundrels to game timing and anonymity to their favor... would players like bofa attempt to put themselves as a layer of trustworthiness between bitcoin and consumers?. of course there would be fleecing

Re:Of course it could be big. (0)

Anonymous Coward | about 4 months ago | (#45616859)

Glad someone said it, there just saying this so they can get in on the next big gold rush of currency. As if they (banks) haven't already monopolized, and own people and the country, lets let them turn this into a major cluster fuck. I bet they already have programs generating bitcoins for for them, but shhh they don't want other to know.

I could crack a joke on the irony of the banks being concerned about money laundering, since they are experts on that....

WTF??? (-1)

Anonymous Coward | about 4 months ago | (#45616207)

Bitcoins power Obama and ObamaCare!

I understand how to value (1)

purnima (243606) | about 4 months ago | (#45616225)

shares in a remittance company that is likely to take Western Union to Blockbuster territory. But valuing these assumes you are buying shares that will eventually pay dividends, and when not paying dividends will appreciate because profit was is reinvested.

But Bitcoins are not shares. When you buy a Bitcoin you are not buying equity in the Bitcoin environment. Wonder what model BoA valuers have in mind for this. It weirds me out.

Re:I understand how to value (4, Interesting)

Derec01 (1668942) | about 4 months ago | (#45616289)

Honestly I find that one of the most interesting things about it. There is no intrinsic value. None! And yet it's indestructible* and peer to peer confirmed. Therefore (ultimately) the only cue anyone has to the value is what others value it at. Gold is sometimes considered to have become valuable for similar reasons. Sure, it's pretty, and that likely helped, but it doesn't have enough use to justify its value other than what everyone has previously valued it at.

* I can't say that with absolute certainty, given how software goes, but as a thought experiment it's fascinating.

Re:I understand how to value (5, Insightful)

Anonymous Coward | about 4 months ago | (#45616307)

There is no such thing as intrinsic value to begin with. People place value in things.

Re:I understand how to value (4, Insightful)

Derec01 (1668942) | about 4 months ago | (#45616335)

There is no such thing as intrinsic value to begin with. People place value in things.

Absolutely correct. However, it's that process of how humans value things that make it an interesting case. We have in our economy a network of things that have some generally agreed upon value. When people try to value something, they look at the activity its used for and the value of that activity within the current network, and so the value is subject to the changes in that object's use.

Ignoring mining, with Bitcoin there is no function within the current universe of things we value. The only cue I have is what others have previously valued it at, and what it is currently valued. I think that's very interesting, especially when you consider the kind of objects that humans have used as currency throughout history (gold, metals, durable objects like shells, etc.)

Re:I understand how to value (2)

Kjella (173770) | about 4 months ago | (#45617183)

Ignoring mining, with Bitcoin there is no function within the current universe of things we value. The only cue I have is what others have previously valued it at, and what it is currently valued. I think that's very interesting, especially when you consider the kind of objects that humans have used as currency throughout history (gold, metals, durable objects like shells, etc.)

I don't see what's so novel about that, cash doesn't serve a function either. You might say it's to pay taxes but kings and lords knew how to take payment in real world goods. It's just a value token, there's no intrinsic value to small bits of paper in a post-collapse economy. If the price of something I like doubles, did it get more expensive or did my money become less worth? Potayto, potahto. Your money is only worth what it buys you.

Re:I understand how to value (3, Insightful)

fuzzyfuzzyfungus (1223518) | about 4 months ago | (#45616391)

There is no such thing as intrinsic value to begin with. People place value in things.

Capital-V "VALUE" is a purely mental abstraction, about which one can wax Platonic and ultimately empty; but the distinction between commodities or instruments with substantial utility (iron, aluminum, books, potatoes) and ones that are kept around mostly because they symbolize 'value' ($20 bills, gold, bitcoins) is arguably still relevant.

I don't entirely like the term 'intrinsic value', 'utility' might be closer; but some commodities are like D-list celebrities, who are famous primarily for their fame, and are valued primarily for their value, while others are valued because of the various purposes they serve. The lists overlap (gold, say, has a number of specialty applications in electronics; but would be extremely unlikely to command its present price if it had the same prestige as iron); but even when they do, the delta between the assigned value and the value in utility is usually pretty noticeable.

Re:I understand how to value (2, Informative)

diamondmagic (877411) | about 4 months ago | (#45616595)

Intrinsic value means there's value placed on it other than it's secondary/exchange value. For instance, people buy gold because it's useful for electronics or jewelry. The dollar has no such uses, so it is said to have no intrinsic value.

Re:I understand how to value (2, Insightful)

Anonymous Coward | about 4 months ago | (#45616977)

The US dollar has one unbeatable use: paying taxes. If you hoard gold and bitcoins, the sheriff of Nottingham is going to come after you for some US dollars.

Re:I understand how to value (1)

Anonymous Coward | about 4 months ago | (#45616635)

There is no such thing as intrinsic value to begin with. People place value in things.

Which is meaningless unless you are an invincible robot with a built-in energy source that last for eternity.

Unfortunately, for mere mortals, we have intrinsic need. We need air, water and food just to survive. So in a human society, water and food always have intrinsic value to any human being.

And, from that, by extension, anything that can be used to exchange for food and water will also have value (not intrinsic, though).

And mere mortals can also be coerced. If you live in a society with laws and taxes, backed up by lethal force from the government, then anything that can be used to pay tax will have intrinsic value, including funny paper issued by the government.

Fact is, if someone has the capability to physically harm or kill you, then WHATEVER that someone wants will automatically have intrinsic value to you. This is reality.

Re:I understand how to value (2)

Vintermann (400722) | about 4 months ago | (#45616951)

Some things we are very free to put value in, others we have very little freedom to. If I'm starving, I can't really choose to assign food no value. If I assign value to things wildly out of step with my fellow humans, I'm going to have a hard time ("Give me that sandwich? You can have my car!")

When something is of such a character that we pretty much have no choice in the value we assign it, and there's no plausible way it's going to change, we say that it has inherent or intrinsic value. Maybe a little sloppy, but you know what is meant.

Re:I understand how to value (0)

Anonymous Coward | about 4 months ago | (#45617093)

>There is no such thing as intrinsic value to begin with

How about drinking water?

Re:I understand how to value (0)

Anonymous Coward | about 4 months ago | (#45616327)

There is no intrinsic value. None! And yet it's indestructible*

Actually, it's quite destructible. Think of it as a research paper that hasn't been saved in the last three hours, just before it needs to be printed or submitted, destructible.

That's why everyone is so attuned to describing how your wallet should be backed up, which only creates multiple copies of the coin. Unfortunately that creates an issue, as one need only steal one copy of the bitcoin to have stole the bitcoin.

Re:I understand how to value (1)

Derec01 (1668942) | about 4 months ago | (#45616399)

I didn't say it couldn't be lost or stolen. If it's stolen, it still exists. If it's lost, likewise, it still exists and could be found.

I could commit the wallet code to memory and destroy the hard drive it's on, and theoretically bring it back. If I lost it forever and a million monkeys figured out the code, it would have value in the system.

That's pretty dang indestructible.

Re:I understand how to value (0)

pjviitas (1066558) | about 4 months ago | (#45616401)

The only thing that has intrinsic value to me is water, food , shelter and bullets...all the rest of the smoke and mirrors out there is BS

If there is a currency out there that takes banks and governments out of the equations "thank god"

Gold plating (1)

tepples (727027) | about 4 months ago | (#45616539)

Therefore (ultimately) the only cue anyone has to the value is what others value it at. Gold is sometimes considered to have become valuable for similar reasons.

Apart from jewelry, gold is useful for plating electrical connectors.

Re:I understand how to value (5, Insightful)

Narcocide (102829) | about 4 months ago | (#45616333)

BofA's angle is probably the same as with your money. Charge you to hold it, charge you to transfer it, charge you to talk to a phone support rep about holding it or transferring it, and while holding it for you, gamble with it on the side.

Re:I understand how to value (1)

pjviitas (1066558) | about 4 months ago | (#45616389)

Ummmmm....the model of we can participate in money laundering schemes a lot easier now....just as simple as that

weird gateway currency (3, Insightful)

globaljustin (574257) | about 4 months ago | (#45616521)

I read through the report and it was weird to me as well...

I can't place it exactly...it had a 'Stepford Wives' sheen to it. It seemed fake.

Wonder what model BoA valuers have in mind for this. It weirds me out.

It seems unthinkable to me, but BoA could be looking to be a BTC exchange like Mt. Gox or Bitpay.

It's all about controlling the gateways. BoA loves fees, and they'd make a ton of $$$ charging people to convert BTC to a currency of choice.

Until you can buy gas, groceries, and pay credit card, mortgage, and government fees/taxes with Bitcoin the true power and value of the currency is in controlling the gateway to **actual currency**

That's the final unavoidable pinch point where everyone has to "pay the man"

BoA wants to be that "man"

Re:I understand how to value (3, Interesting)

rtb61 (674572) | about 4 months ago | (#45616525)

Straight up money laundering no fucking about, be you Dictator, Gangland criminal, Corrupt politician, Bank of America is the bank for you, now with untraceable bitcoins and supercomputers to generate more ;D.

Re:I understand how to value (2)

bkmoore (1910118) | about 4 months ago | (#45616769)

But Bitcoins are not shares. When you buy a Bitcoin you are not buying equity in the Bitcoin environment. Wonder what model BoA valuers have in mind for this. It weirds me out.

BoA's model means that they want to sell you BitCoin at $1300. Anytime a bank puts a price on anything it usually means they are looking to sell it at that price. Afterwards they'll probably short it, but that's another story.

Re:I understand how to value (5, Informative)

Stolpskott (2422670) | about 4 months ago | (#45617103)

When you buy a Bitcoin you are not buying equity in the Bitcoin environment. Wonder what model BoA valuers have in mind for this. It weirds me out.

Almost certainly they are using a Commodity Futures Contract model that is used for precious metals, oil/petroleum, wheat and so on, on places like the Chicago Board of Trade or the London Metals Exchange. With those, there is a finite new supply of "product" and for the vast majority of people dealing with them, there is no physical product - the contracts being traded are for future delivery of a specific quantity of a specific product on a specific date. The product will be delivered to a specified place, and it is the responsibility of the person receiving the product (the contract owner as of the contract maturity date/product delivery date) to move it from that delivery point to a storage location of their choice.
As such, the traders who buy and sell these contracts do not want to hold them until maturity, because they have no storage space, so they buy the contracts (for example) 12 months before the delivery date for a specified price, and sell them before maturity, hopefully for a profit.

With bitcoins, there are no physical deliverables, but in every other important sense they resemble these Commodities Futures contracts.
If they became widely accepted and centrally traded, with a central body guaranteeing transaction integrity (basic ESCROW systems would probably be the starting point for that), they would almost certainly be traded as a "standard" currency on FX markets (exchanging Bitcoins for US Dollars, Euros, Japanese Yen, etc.), but without that central body guaranteeing the transactions, they would probably be traded as Commodities Futures.

The "problem" with both of those routes is that there is heavy auditing on every stage of every transaction, so the anonymity aspect of Bitcoin goes right out of the window. The parties involved in any given transaction would be known and recorded, and even if those are brokers acting on behalf of the real Bitcoin owners, the brokers would still need to have records showing who the real owner is.

Failsauce (1)

Anonymous Coward | about 4 months ago | (#45616227)

This just in, BOA needs bailout after investing everything into bitcoin.

Re:Failsauce (1)

bkmoore (1910118) | about 4 months ago | (#45616287)

nope...BOA is probably shorting BitCoin.

Re:Failsauce (0)

Anonymous Coward | about 4 months ago | (#45616343)

This just in, BOA needs bailout after shorting bitcoin.

Re:Failsauce (1)

Anonymous Coward | about 4 months ago | (#45616755)

This just in, BOA needs bailout after shorting bitcoin

Help me. I'm a dimbulb.

If bofa needs bailout after shorting bitcoin, does that mean bitcoin's worth actually increases after bofa shorted it ?

Re:Failsauce (1)

Anonymous Coward | about 4 months ago | (#45617253)

How would you short bitcoin?

we've all been here before (5, Insightful)

bkmoore (1910118) | about 4 months ago | (#45616229)

  1. An "investment" vehicle that is based on an arcane mathematical model that nobody understands...check.
  2. A gold rush mentality and lots of media interest...check.
  3. Banks and other prominent "investors" that are saying that "this time it's different"...check.

“I can calculate the motion of heavenly bodies but not the madness of people.” -Sir Isaac Newton after losing a fortune in the South Sea Company bubble.

Re:we've all been here before (-1)

Anonymous Coward | about 4 months ago | (#45617177)

Ignorant snub from slashdot fossil... check.

First (0)

Anonymous Coward | about 4 months ago | (#45616245)

they laugh at you, then they fight you, then you win, right?

Replacement for cash not bank accounts (1)

Derec01 (1668942) | about 4 months ago | (#45616257)

One thing that I don't think is usually appreciated is that Bitcoin isn't necessarily a replacement for a bank account. It's supposed to be a replacement for *cash*. Bitcoins can be stored in a wallet, lost, stolen, and handed to the wrong person just like cash can, except with the added advantage (danger) that I can transfer it to anyone on the planet almost seamlessly. Credit cards, bank accounts, etc. that offer me asset protection and such will be just as useful for Bitcoins as they are for cash, but they will be denominated in a currency independent of any given country.

Honestly, I don't see the transfer time as a huge issue. Let intermediaries spring up to make that faster; it's probably safer to keep instantaneous transfers on a separate level than the asset itself.

Re:Replacement for cash not bank accounts (2)

Billly Gates (198444) | about 4 months ago | (#45616301)

No its like gold which is a way to get rich.

It is not worth the risk to use it like cash. It is worth it to gain more of it though

Re:Replacement for cash not bank accounts (1)

Derec01 (1668942) | about 4 months ago | (#45616355)

The deflationary part pretty much assures that. I do think that some of the other cryptocurrencies that incorporate a simply determined inflation rate are more likely to achieve a stable value.

Re:Replacement for cash not bank accounts (1)

gl4ss (559668) | about 4 months ago | (#45616671)

you can chop the coins up to a certain pretty high point - and bitcoins had an inflation rate of sorts built in, the mining itself.

but with any cryptocurrency since the value is determined by what people are willing to trade it at, you can't just have a "simply determined inflation rate".

Re:Replacement for cash not bank accounts (2)

mysidia (191772) | about 4 months ago | (#45616691)

I do think that some of the other cryptocurrencies that incorporate a simply determined inflation rate are more likely to achieve a stable value.

Perhaps.... banks such as BOFA; should love a deflationary cryptocurrency; if that is indeed what Bitcoin turns out to be. The problem is; much economic activity is unlikely to happen, if the currency is indeed deflationary

For folks borrowing money (E.g. Borrowing Bitcoins) ---- many consumers with credit cards;

A deflationary currency sucks, because over time, you will be paying back your loans over time in deflating BTCs that are worth more and more in real money terms, than the money you borrowed.

BTC can't replace "cash" (1)

globaljustin (574257) | about 4 months ago | (#45616573)

It's supposed to be a replacement for *cash*.

You're mistaken there. BTC is simply an electronic record of a sum. BTC is not hard currency.

You can't use BTC for any non-electronic transaction. That's alot of transactions.

That's not a replacement at all. BTC can't replace currency...unless it *becomes* a physical currency.

Re:BTC can't replace "cash" (3, Insightful)

Vintermann (400722) | about 4 months ago | (#45616989)

> You can't use BTC for any non-electronic transaction. That's alot of transactions.

You can, if you're really good at doing math in your head.

Seriously, though, you can use tricks to print redeemable coins on bits of paper. Using these, you can make transactions enitrely offline... but since the recipient can't know that the paper is worth anything until he uses a computer to check it, you need a bit of trust.

Since these days even poor people prioritize getting a cell phone, there's really little need for non-electronic transactions.

Not for cash but for valuable metals (2)

dutchwhizzman (817898) | about 4 months ago | (#45616667)

Cash is a piece of paper that is only worth something if the issuer is still somebody. If you have one billion German Reichsmark, you have a piece of memorabilia, totally worthless. That is because the government that issued it declared it worthless.

Valuable metals are nothing more than shiny stuff. Yes, they are of some use in the industry because they tend to corrode very little and have a good electrical conductivity, but almost all their value is based on the fact that they are rare and we humans all agree on their value. The big difference is that there is no signle government that can declare gold worthless and however you have of it is only going to be worth something if you put it through their systems, thereby revealing yourself. Bitcoin and other e-coins are the virtual equivalent. If you want to do a payment and not rely on some form of government-backed currency, you used to pay in gold, silver, diamonds or something like that. Since physical payments don't work very well on the internet, the internet needed a virtual equivalence. This is virtual gold, silver, diamonds or whatever trinkets you fancy, not virtual cash. We have that already in the form of paypal, e-banking and all that.

Re:Replacement for cash not bank accounts (3, Interesting)

mysidia (191772) | about 4 months ago | (#45616679)

Credit cards, bank accounts, etc. that offer me asset protection and such will be just as useful for Bitcoins as they are for cash, but they will be denominated in a currency independent of any given country.

That makes sense for joe average consumer. Let a third party "bank" do the heavy lifting of keeping your wallet and private keys; the bank is responsible for security and providing convenient access.

When you want to go to a store and buy something; you do something that directs your bank to execute the bitcoin transfer.

By the same token; you can go online, withdraw some bitcoins from your bank account to a local wallet -- and pay the vendor.

Now the other party says there are two Americas (-1)

Anonymous Coward | about 4 months ago | (#45616261)

Don't you believe that either.

I have visited our troops in Iraq, Kuwait, Bosnia, Germany and all over the world. I've visited our troops in California, where they train before they go overseas. I have visited our military hospitals. And I tell you this: that our men and women in uniform do not believe there are two Americas. They believe there's one America and they are fighting for it!

Bitcoins will always suffer their reputation... (1)

KrazyDave (2559307) | about 4 months ago | (#45616267)

because there is no secure entity backing them up. Bitcoin are the mathematical equivalent of ca. 1999 Beanie Babies.

It's official (1, Troll)

simonbp (412489) | about 4 months ago | (#45616277)

Whelp, it's official. If Bank of America thinks it's a great investment, Bitcoin is going to expand rapidly to biggest bubble anyone has ever seen, and then murder several developed economies when it bursts. Look for the Countrywide Bitcoin Exchange coming soon!

Could be worse though, they haven't come out with a Beanie Baby Bitcoin yet...

Re:It's official (5, Insightful)

Derec01 (1668942) | about 4 months ago | (#45616297)

I'm not going to argue that Bitcoin won't dip in value in the future, perhaps precipitously, but the fascinating thing about Bitcoin is that after that happens....it will still be there. They don't disappear, and other than signalling from other participants in the market, nothing will have changed about it.

Beanie babies fall apart. Penny stock companies go bankrupt. Tulip bulbs and all that eventually rot, burn, or get destroyed.

I don't think that persistent state is a trivial difference. Bitcoin will still be there, with a price history that will encourage speculators again. The Bitcoin network will be running on some networked computers on the planet for decades to come, no matter what. The net present value calculation for Bitcoin really does have to go out much much farther than almost any other object besides precious metals and gems.

Re:It's official (2, Interesting)

jafac (1449) | about 4 months ago | (#45616421)

When the maximum number of bitcoins has been mined - who is going to have an incentive to run miners? At that point, nobody's going to compute hashes, and transaction chains won't be verified any longer. It works great as long as all those people out there dedicate their clock cycles to pounding out hashes. But without an incentive, it's all going to evaporate.

Re:It's official (0)

Anonymous Coward | about 4 months ago | (#45616461)

When maximum coind will be mined, the sun is going to explode. By then we would have transitioned to a other digital coin system and will never really mine the last bitcoin.

Re:It's official (0)

Anonymous Coward | about 4 months ago | (#45616759)

I doubt it. Righ now, I bet there is a company that has set up a GPU farm just for the purpose of grinding these out. Bitcoin sounds great on paper, but at the end of the day corporations know how to squeeze out all of the resources required and it will just become another tool.

BTW, when the EMP hits and computers go down, Bit coin is not going to exist.

Re:It's official (0)

Anonymous Coward | about 4 months ago | (#45616807)

Mining coin become exponentially harder, the last coin will never be mined. We will have moved to a new system long before that happen. And unlike the ip4-ip6 migration, peoples staying with the old stem will eventually lose all their money so there is a monetary insensitive to migrate.

When your mystical EMP hit, the US dollar, along whit all the world's economy, will also cease to exist. So what your point?

Re:It's official (1)

Anonymous Coward | about 4 months ago | (#45616953)

The last bitcoin will be mined around 2140, assuming anyone is still mining them. This is well known, so I don't know why anyone's arguing over it. There is a general assumption that mining will remain profitable after that due to fees, but realistically I doubt the system will survive that long.

There is an exponential component to mining, which reduces the reward for mining over time. However, the dominant factor is the automatic adjustment of difficulty, which keeps the rate at which blocks are generated to about 6 per hour. You can't make a farm of GPUs (or anything else) to mine them much faster than that, because the network will compensate by making the task harder.

Re: It's official (5, Informative)

greenrom (576281) | about 4 months ago | (#45616481)

Miners will still receive the transaction fees for all the transactions included in the blocks they mine. There's a recommended transaction fee formula built into the clients, but you set any transaction fee you want. Set it too low and some miners may choose not to include your transaction in their block, causing your transaction to take longer to complete. Thus, there will be incentive to pay miners sufficient transaction fees to make it worthwhile to process your transactions.

Re: It's official (5, Interesting)

Anonymous Coward | about 4 months ago | (#45616627)

Miners will still receive the transaction fees for all the transactions included in the blocks they mine.

Transaction fees are key but there's a subtle issue here: while there are a finite number of bitcoins, there are an infinite number of (possible) digital currencies.

Sure, a few years from now bitcoin is going to be supported by transaction fees. But what happens when, say, Google, comes along with their own digital currency and offers lower (or even no) transaction fees? And what happens when (not if) someone develops a currency that is clearly technically superior to bitcoin - e.g. with a more (space) efficient mechanism to record transaction in the block chain.

One way or another there's eventually going to be another digital currency that is clearly superior to bitcoin. And people are going to start flocking to the hip new digital currency. So, not only will bitcoin be fundamentally inferior, it will also be losing value (i.e. massive inflation) - while the other currency will gaining value making it all that much more attractive.

That's not to say that there isn't a lot more money to be made it bitcoin before that happens - just that eventually someone's going to be left holding the bag (i.e. a whole lot of nearly worthless bitcoins.

Re: It's official (0)

Anonymous Coward | about 4 months ago | (#45616731)

Maybe. Maybe not. If your looking at bitcoins as an investment your doing it wrong. Its a means of doing business. When I receive bitcoins I don't keep those coins in significant quantities. I do the same thing with dollars. I don't leave hundreds of thousands of dollars sitting around in my checking account. I buy things that will result in profits over time. Either stocks, bonds, money market accounts, or real assets, like cars (they have value to me even if its not making me money directly), houses (I need a place to live after all and its cheaper than paying someone elses mortgage), etc.

Re:It's official (0)

Anonymous Coward | about 4 months ago | (#45616733)

Actually that is not true. There is an option to charge for running hashes (processing transactions) Right now it is pretty much free due to the miners.

Re:It's official (0)

Anonymous Coward | about 4 months ago | (#45616993)

Miners decide which transactions they include in the next block. If a miner decides to only accept transactions with some minimum fee, then he won't process your "free" transactions. The difference between incoming and outgoing value is the fee, which is automatically given to the miner who adds the block to the block chain. It is not a fixed amount set in the protocol. This creates an interesting market situation: While there is no motivation to include zero-fee transactions, even the smallest possible fee only adds to the miner's income (the marginal cost of including a transaction is practically zero), so this fee will always be very low as long as there is a working market of miners.

Re:It's official (4, Informative)

TubeSteak (669689) | about 4 months ago | (#45616619)

There's no particular reason to assume that bitcoin is the cryptocurrency that will win the future.
There are plenty of contenders and nothing to stop [large financial institution] from latching on to one of those.

Re:It's official (3, Interesting)

Vintermann (400722) | about 4 months ago | (#45617009)

Not to mention states. There has been talk of a government-run electronic payment infrastructure for a long time (why shouldn't there be one? After all, paper bills and coins are government-run payment infrastructure too).

But the owners of the private payment infrastructure (Visa, Mastercard, Paypal, banks) lobby against it with tooth and nail.

Now the little people, cryptographers, libertarians and online geeks, have actually managed to build up a decentralized payment infrastructure without government or corporate help. That's a damn impressive achievement, but one of the consequences is that it'll be harder for governments to sit on their behinds and let their own payment infrastructure remain in the 7th century.

People Aren't *That* Irrational (4, Insightful)

cervesaebraciator (2352888) | about 4 months ago | (#45616303)

Chill. Relax. Folks aren't going to throw money into an investment with no value beyond fleeting popular perception. Nothing like that will ever happen. Just calm down. Enjoy life. Stop and smell the tulips [wikipedia.org].

Re: People Aren't *That* Irrational (5, Informative)

Njovich (553857) | about 4 months ago | (#45616501)

I wonder if people who make the tulip comparison actually get what happened there. Tulips take years to grow, and can be multiplied. Suddenly a new type of tulip came into existence because of a viral interaction. A handful of rich traders (and some others trying to get in on the action) tried to corner that market, so the initial bulbs were extremely valuable. They took very large future options on them. Then at the height of the bubonic plague, the society temporarily collapsed and tulip prices went along with them. As it was mostly option contracts, they were largely not executed, so it didn't end up being a major issue. There are some lessons to learn there, but even if Bitcoin collapses, it will be completely different.

Re: People Aren't *That* Irrational (0)

Anonymous Coward | about 4 months ago | (#45616705)

Lol, I love it when people who parrot cliches get told off by people with superior knowledge of the topic at hand.

It only makes sense (1)

Anonymous Coward | about 4 months ago | (#45616311)

in light of all recent frauds on bitcoin of course BofA is interested... Theyre always looking for new and interesting ways to commit fraud.

It was only a matter of time. (3, Insightful)

tlhIngan (30335) | about 4 months ago | (#45616317)

Initially the Wall Street guys were against Bitcoin because they couldn't figure out how to make money off of it. But now they've studied it and studied it and studied it, and now you're seeing the results of the research - they've found ways to manipulate it in the same fashion as regular currency markets.

BoA is just the start - expect the rest of Wall Street to start investing heavily in Bitcoins as they try to eke out fractional coins on every transaction. And the Bitcoin infrastructure is near the point where it's "too big to fail" - even if it crashes, there's too much entrenched to abandon it completely, creating a perfect opportunity for the suits to actually acquire even more cheaply.

Oh yeah, they'll probably also find a way to do HFT using it, so get ready to parse billions of new entries in the blockchain. Don't underestimate the mathematical prowess of bankers - once they show interest, they've found ways to make money off it.

Hahaha!!! (2)

fuzzyfuzzyfungus (1223518) | about 4 months ago | (#45616331)

Hmm... good thing that Real finance has honest, dependable, known, counterparties like AIG to keep risk in check!

(Please note, the above should not be construed as implicit endorsement of bitcoins; but merely an observation that so long as the rewards for gambling with other people's money are so good, people will find ways of doing risky things in basically any asset class.)

Get your red hot Tulips right here! (-1)

Anonymous Coward | about 4 months ago | (#45616395)

I'm also selling pet rocks, beanie babies, and a shit ton of stuff from liberty mint.

Re:Get your red hot Tulips right here! (0)

Anonymous Coward | about 4 months ago | (#45616623)

I see that a moderator is hoarding bitcoins hoping for another 1000x gain before the bubble pops.

Go Away, BoA (0)

Anonymous Coward | about 4 months ago | (#45616403)

The day my mother walked into a BoA, where my account was, tried to cash a check that I had written her, and was told that they wouldn't cash it unless they got her thumbprint was the day I withdrew $40,000 and took it to a credit union. Haven't done any business with BoA since, and never will.

Know your customer (2)

tepples (727027) | about 4 months ago | (#45616611)

How much of that is related to federal know-your-customer laws passed to slow down money laundering? A lot of those laws kick in for cash transactions over about $9,900.

50 minutes? (5, Insightful)

greenrom (576281) | about 4 months ago | (#45616431)

How long does it take a check to clear or do an ACH transfer? Longer than 50 minutes? In reality, you don't have to wait 50 minutes to be reasonably certain a transaction will complete. You can see the transaction broadcasted to multiple peers within seconds. For small transactions, that's probably enough. Usually a transaction will make it into the blockchain in about 10 minutes. At that point, the only way to invalidate the transaction would be for a miner to fork the blockchain by computing an alternate longer chain. Since there are many competing miners, in practice this would be very difficult. After a few more blocks have been added to the chain, it would be virtually impossible to reverse the transaction. For very large transactions involving thousands or millions of dollars, it probably makes sense to wait 50 minutes for multiple confirmations, but for smaller transactions it's definitely overkill.

wait and see... (0)

Anonymous Coward | about 4 months ago | (#45616443)

It would be stupid to think that govts would allow an independent untraceable currency flourish..

it's banned in china as of today.

Let's start another! (0)

Anonymous Coward | about 4 months ago | (#45616555)

Perhaps we should start one more, I'm to late to the bitcoins game.
Perhpas something like cryptedecoins.com

Just sit on a big bunch of them, and wait until they get any value.
Might as well start a dozen competing coins, you'll never know which one gets big :)

In other news... (1)

p00kiethebear (569781) | about 4 months ago | (#45616587)

...Lead researchers at the Massachusetts Institute of Technology have also determined that water is occasionally wet.

Imagine that (3, Insightful)

Smerta (1855348) | about 4 months ago | (#45616621)

Huh, imagine that.

Bank of America saying that a "central counterparty" is required to verify the transaction and mitigate risk. Wonder if they have anyone in mind?

We should all like this Bitcoin *concept* (5, Insightful)

mathimus1863 (1120437) | about 4 months ago | (#45616659)

We should all like this Bitcoin *concept* even if we don't all like Bitcoin itself or the culture that has evolved around it (and the get-rich-quick Bitcoin fan-boys). But all the bashing of the Bitcoin concept is disappointing, because Bitcoin represents everything that us nerds reading slashdot should like: It's a mix of cryptography, freedom of speech, computing, networking, finance, economics, and even politics. Most of us here dig that stuff.

Get over the hype and take Bitcoin for what it really is: a fascinating experiment that has, so far, withstood the amazing barrage of publicity, hacking attempts, legal uncertainties, and remains valuable for reasons completely contrary to everyone that says it's worthless. It may become worthless one day, but consider the possibility that Bitcoin is disproving all your wildly oversimplified assumptions about what makes something valuable. It is completely different than anything else we know, and there's plenty of reasons to believe that it could succeed as much as it could fail. (and in many ways it has already succeeded as a proof-of-concept of the idea of decentralized currency)

Why does gold have value? Nothing is backing gold, and if it was for its material properties alone, its value would only be a fraction of $1,300/oz. Yet it maintains value because of its properties to behave as a transferable store of value: scarcity, fungibility, density, identifiability, etc. Bitcoin shares a lot of those qualities and adds some new ones: ease of transfer over the internet, negligible transfer fees, fungibility, scarcity, storage efficiency, near-anonymity and built-in escrow. I don't think it's any more ludicrous for Bitcoin to have value than it is for gold to have value. And in the end, when I want to sell WoW weapons, buy webserver space, or play a few games of poker online, why would I use credit cards or paypal, which all require me to remember log-in creditials, give away personal information to be [improperly] protected by a third-party and/or pay a bunch of fees. There's plenty of value in being able to pay people across the world, instantaneously, without sacrificing your privacy, and without paying any fees. Why is that not valuable?

When you want to bash Bitcoin by saying it has no intrinsic value, ask yourself this: "what other system of payment/transfers allows someone to move $10,000,000 worth of value, to or from anywhere in the world, 24/7, nearly instantaneously, without fees, can't be debased or printed, irreverible, and without anyone being able to freeze or seize it (without direct access to your wallet)?" Regardless of its downsides, that's pretty f***ing powerful. There's a reason it's "could be a big deal."

Re:We should all like this Bitcoin *concept* (2, Insightful)

Anonymous Coward | about 4 months ago | (#45616725)

...ask yourself this: "what other system of payment/transfers allows someone to...

An infinite number of them actually - but they haven't been invented yet. An optimistic future for bitcoin is that owning bitcoins becomes like owning foreign currency: a handful of major (digital) currency exchanges allow people to buy and sell from a selection of thousands of different competing digital currencies. A less optimistic future is that bitcoin goes the way the Mosaic web browser - a major player in the early days but now superseded by other, more capable, technology.

Re:We should all like this Bitcoin *concept* (0)

Anonymous Coward | about 4 months ago | (#45616743)

I find it facinating that Bitcoin could be the single little needle that will pop the gigantic political/financial system that squats down on everything in the world. Right now the leak of air is slow, but I can hear the whistle getting louder.

Re:We should all like this Bitcoin *concept* (1)

dbIII (701233) | about 4 months ago | (#45617065)

See also the Afgans that thought they had destroyed both the USSR in the 1980s and the USA in 2008 for the same sort of thinking.

Re:We should all like this Bitcoin *concept* (1)

dbIII (701233) | about 4 months ago | (#45617051)

We should all like this Bitcoin *concept*

That's the thing - to be a confidence trick baited for geek it needs the window dressing to make it attractive for geeks. It's as if somebody read crytonomicon - saw the digital currency described there and then removed all the portions that made sense leaving only a shiny layer of tinfoil.
The whole "mining" thing is a distraction and a mechanism to force a pyramid structure. Those people buying mining rigs or farming compromised hosts now are missing the point that they are too late to the scam which initially did not require serious hardware or botnets. I suppose at least it's getting some of the botnets out of the hands of spammers so that's something good about bitcoin.

Re:We should all like this Bitcoin *concept* (1)

petes_PoV (912422) | about 4 months ago | (#45617067)

But all the bashing of the Bitcoin concept is disappointing

All it amounts to is an individual holds an asset. They can transfer part or all of that asset to another individual without going through a governemnt monitored agency.

Ho hum

People have been using gold in exactly that way since humanity started bartering. The concept is thousands of years old. The only thing that is novel with Bitcoin is the implementation - not the concept. And we have yet to have all the problems, weakenesses and drawbacks of this system come to light. For the one thing we can guarantee is that there will NEVER be a foolproof, faultless and totally secure "financial" system - there's too much (illicit) money to be made).

Re:We should all like this Bitcoin *concept* (2)

Kjella (173770) | about 4 months ago | (#45617133)

When you want to bash Bitcoin by saying it has no intrinsic value, ask yourself this: "what other system of payment/transfers allows someone to move $10,000,000 worth of value, to or from anywhere in the world, 24/7, nearly instantaneously, without fees, can't be debased or printed, irreverible, and without anyone being able to freeze or seize it (without direct access to your wallet)?" Regardless of its downsides, that's pretty f***ing powerful. There's a reason it's "could be a big deal."

Except that value is entirely independent of the value of bitcoins themselves. It doesn't matter if I need to buy 1 BTC @ $10M or 1 billion BTC @ $0.01 and if you argue there's not actually 1 billion BTC, we could do it $100 at the time. It's a money scheme where it pays to get in early, which usually means it's bloody stupid to get in late. It's just not clear when "late" is just yet.

Birds of a feather... (0)

SeaFox (739806) | about 4 months ago | (#45616763)

Bitcoin has proven popular with criminals already thanks to Silk Road so I'm not surprised Bank of America is interested in it.

Maximum market cap of $1300??? (1)

Anonymous Coward | about 4 months ago | (#45616791)

Already ONE single bitcoin is worth over $1000, so how do they get a total market cap of just $1300???

Central counterparty? (1)

Pallas Athena (2855215) | about 4 months ago | (#45616891)

"Without a 'central counterparty' to verify transactions and thus mitigate that risk, Bitcoin could fail to break into wider use." Really? And no doubt the BoA would gladly take up that role of central counterparty, if it could? I'd say WITH a central counterpary bitcoin will definitely fail to break into wider use - because what would be the point of bitcoin?

47.000 USD per coin ? (1)

Anonymous Coward | about 4 months ago | (#45616997)

This is a gross under estimation of the potential value of bitcoin as a store of value.

Although it is highly uncertain, there is at least 10 trillion USD equivalent in cash in the world.
In addition, there is 171.300 tonnes of gold, or about 7.3 trillion USD at current market price (I cound all gold, but do not count silver, platinu8m etc. for simplicity).
That is 17.3 trillion USD.
Assuming 5% of is is replaced by bitcoin (+very+ likely, given that 20% of the economy is "grey"or "black"), that gives us very roughly 1 trillion USD for the "market size" of bitcoin.

Per bitcoin, assuming 21 millions bitcoin, that is 47.000 USD per coin. There is still a long way to g(r)ow...

pump and dump and dump and dump (0)

Anonymous Coward | about 4 months ago | (#45617209)

NOTE: This concept is used a lot in the stock market (penny stocks) and would seem to work best when there is a low float (basically limited availability) of whatever it is that is being pumped. Low float = bigger price movements on action in the direction of the market (buying higher/selling lower).

The basics of pump & dump:
1: Buy up tons of $whatever and watch the prices soar as you buy buy buy
2: Seizing the upward price momentum you've just created, get the masses to believe that $whatever is a wise investment for smart people who follow the moves smarter people.
3: Sell them all the $whatever you just bought.

IMO, I expect all many different big players will pummel BTC in this manner until people are scared shitless of keeping "money" in this form of currency, nevermind holding it as a longer term "investment".

Tulip market (0)

Anonymous Coward | about 4 months ago | (#45617217)

You can't win at tulip trading if the thing you're buying tulips with is in near infinite supply to your opponent.

Bitcoin has lots of value (3, Interesting)

Anonymous Coward | about 4 months ago | (#45617251)

Americans or Europeans could probably not understand it, but in some countries in the world taxes are almost on confiscating levels, leaving nothing to people.

I send glasses to Argentina and they tax 15$ per item, way more than the 3$ it cost to make and send, then they tax again and again like crazy. End result is that what used to cost 9$ to the final customer now cost 100$.

This happens all around South America now, Venezuela, Bolivia...

The same happens with money transfer, governments consider money from the people their own, they tax it to death and they spend the money mostly on their own, using military force and police to subjugate them.

So bitcoins means the people could transfer money very easily and fast, without being watched so they could survive.

Again this is something that people in the first world can't really understand. Their "crisis" is a joke compared with what most of the people in the world have to life.

Load More Comments
Slashdot Account

Need an Account?

Forgot your password?

Don't worry, we never post anything without your permission.

Submission Text Formatting Tips

We support a small subset of HTML, namely these tags:

  • b
  • i
  • p
  • br
  • a
  • ol
  • ul
  • li
  • dl
  • dt
  • dd
  • em
  • strong
  • tt
  • blockquote
  • div
  • quote
  • ecode

"ecode" can be used for code snippets, for example:

<ecode>    while(1) { do_something(); } </ecode>
Sign up for Slashdot Newsletters
Create a Slashdot Account

Loading...