I remember trying to buy some BTC on MtGox for fun, the last time the price crashed.
What an unspeakably horrible service. I thought I was in for hundreds of dollars over budget, but it turns out that not a single BTC was purchased at all.
I only intended to buy ~$50 worth, so I would only have earnt something like $200, but for the love of everything, stay the hell away from MtGox. It's insane how unprofessional they are.
healthcare.gov may be bad, but this is five circles of hell down from that.
I find that many companies related to Bitcoin are extremely unprofessional and they still run their businesses like 3 years ago when Bitcoin was just an internet novelty and not a real currency the way it is today.
Just look at the latest Blockchain fiasco where the guy who runs the company got butthurt over some Reddit comments and got involved in a flame war. MtGox's lack of professionalism is just the tip of the iceberg.
I love BTC and I wish it would take off in a major way, but in order for that to happen people with shitty attitude need to stop running the community. I guess this is why regulation exists in the real world... oh well...
This is part of the scary naivete of Bitcoin boosters. It's as if how to set up and run computers for serious financial systems was never worked out by anyone before. There has to be a Bitcoin exchange that isn't run by clowns ... hasn't there?
Read some of the CoinBase founders exchanges here and elsewhere, and you'll see that they bring some very good customer service to the Bitcoin world (although they really struggled with scaling up earlier this year).
Bitstamp also runs a highly-professional outfit, with customer service usually responding to my queries within a day, often sooner.
The problem is all the companies trying to be legit are being choked into irrelevance by stifling regulation (with a few exceptions like Coinbase). I expect that next year after a few make it all the way through their compliance efforts (e.g. kraken.com, coinsetter), the situation will be much improved.
Until recently there wasn't enough money in Bitcoin to cover the cost of security. Obviously that is changing quickly, but it will take time for serious people to enter the market.
Definitely, which is why I tried to just buy a few (fractions of) bitcoins just for the historical fun of it, but as intensely skeptical I am of all the bitcoin craze, I was still shocked at just how awful MtGox is. I mean, I wouldn't be surprised if I could code something better.
Just to tell people that as amateurish as they may think these exchanges are, it's actually much worse.
Makes you wonder how a company like CoinBase even got funded by YC, come to think of it.
Probably because CoinBase is bringing some professionalism to the game. I admit I had some bad experiences with CoinBase in the beginning, as they were getting scaled up, but they always handled it with professionalism.
MtGox was handling 90% of exchange last year, but now - only 25-30%. Bitstamp is huge now, and Bitcoin-Central.net is easy to use (although it hasn't regained it's past volume yet).
Bitcoin is not reversible after 10 minutes, credit card transaction is not reversible after 90 days in some cases. Guess how much fraud will happen to anyone selling Bitcoin with PayPal, Visa or similarly reversible payment mechanism.
The pain in the ass with buying Bitcoins is due to a simple thing: you never own government currency, you always ask someone else for permission to use it and it's always based on human decision. Gold and Bitcoin you can own. Paper bills you can own to some degree (they print more of them every minute, thus taxing your savings all the time). Digital virtual currency USD or EUR in your virtual bank account - you don't own. Banks can even reverse SWIFT/SEPA transfers if they want.
Not much. Zero-confirmation transactions are quite hard to revert, so they are widely accepted for small instant purchases.
Here's how you normally do it: send a transaction with fairly recent inputs with a zero mining fee. If you are lucky, it will propagate slowly and will reach the merchant sooner than 50% of the network nodes see it. When the merchant sees your transaction, he ships you the product, then you immediately send out double-spending transaction with standard mining fees (sent to your own address). It will propagate much faster and probably will end up mined before the first one.
Fraud with zero-confirmed transactions is most likely in some fully-automated schemes like lotteries, where repeated attempts to reverse the payment pay off immediately.
10 minutes is a rough guideline on how long it takes the network to confirm a payment, and verify that a transaction is not a double-spend or otherwise invalid. For large payments you'd want to wait longer because a theoretical attacker would have more incentive and resources to construct a double-spend.
I think oleganza is referring to the fact a new block should be generated roughly every 10 minutes, and until the transaction has been confirmed you can attempt a double-spend.
Correct me if I'm wrong, but isn't it impossible to withdraw USD from MtGox at this point? How can this be a viable source of BTC->USD comparison when the only thing you can do with a USD balance on MtG is buy?
Stupid question maybe, I believe I still have a few bitcoins laying around (I got them when we were speculating how crazy it would be if Mt Gox ever reached $1)
I'd like to buy a pro copy of google sketch-up, and buy some lumber at this lumberyard that is cash only.
Register with Bitstamp, provide paperwork (passport + U.S. drivers license is probably best bet), wait a few days for them to process, sell Bitcoins, wire transfer to your U.S. bank account, wait ~ 5 days to clear, profit!
Once you've done this once, everything will go a lot faster next time.
Don't bother with mtgox, there's a reason why there's such a price discrepancy and we all use Bitstamp as the real exchange rate.
EDIT: I just read elsewhere that mtgox is still highly liquid if you're in Japan or China, which means that there may be a good reason for the price discrepancy (high demand in China). But don't bother with gox if you're in the U.S.
Please don't spread this bullshit. I hear it every once in a while and cannot understand why people repeat it. There's nothing you can tell about the company from the TLD. It's just a string. It's like saying "don't trust companies with an E in their name".
Yes, I own an info domain. Because I liked it and it was cheap. That's it.
I said that mostly in jest. If you're starting a site though, just don't fucking pick .info, is my .02. Don't be a cheap ass, spend the extra $6, and get a 'real' TLD that doesn't have it's reputation destroyed by russian spammers.
I don't believe a TLD can have a reputation (apart from that related to the government controlling it). That's exactly why I went for a cheep TLD. .com is a gold plated connector on a digital data cable (or whatever monster uses these days) IMO - raising the price for no reason at all. An average person shouldn't care.
I cashed out all my coins at $144 over a month ago now and I've still been waiting for money to show up. One the one hand I feel annoyed at losing out on the huge rise in value, on the other hand this huge delay makes me feel justified in escaping this terrible system.
I constantly read about people waiting for months on their money from MtGox so I tested it a few weeks ago: I did a withdrawal of 250 EUR from MtGox to my European bank account and it took exactly 12 days. Not blazingly fast, but for sure not impossible.
Well now it must definitely be too late to invest. Don't even think about it guys. It's a ponzi scheme slash not real money slash libertarian wet dream. I'd rather trust helicopter Ben with my savings than some obscure open source software that eats 10Gb of my disk space.
The market capitalization of US dollars is (correct if I'm wrong) $3 trillion.
The current market capitalization of BitCoin is above $5 billion.
There will only be around 21 million BitCoins.
If the market capitlization of BitCoin even gets close to a national currency like the US dollar, each BitCoin will be worth hundreds of thousands of dollars.
We are about to be at $500. Unless governments crack down on BitCoin(possible) I don't foresee this stopping anytime soon.
To me government intervention to the point of banning BitCoin seems like it would be, at this point, somewhat pointless. The Federal Government has known about BitCoin for some time and has yet to take any major regulatory action against it. I think if they wanted to shut it down they would have long before millions of people started using it, and long before major backers like Peter Thiel and the Winklevi had time to establish BitCoin-based companies and lobbying groups. You want to nip something like this in the bud before it becomes an entrenched interest - and they haven't done that yet.
The US gov waited until eGold was doing ~2 billion in transactions annually before it moved to shut it down. Given the growth rate of btc it just recently became big enough to get the attention of the federal gov. I think it is certain the US government will attempt to shut it down more a question of when and how elaborate their attempt is (e.g. Will they try to: arrest a few btc users, dump large sums of money into the btc markets to destabilize it, or build a cluster larger than the entire btc network).
And if they had already built the largest cluster of asics in the btc network we wouldn't even know as long as they distribute it enough and even join most pools for good measure.
A classic pump-and-dump(PnD) is when a large amount of an instrument (security/commodity/shares/etc.) are bought by a few entities (people/institutions/early investors/etc). Thus creating a scarcity of the instrument which when executed well will be followed by enough hype, as the common people usually see the "meteoric growth" as proof of a good investment and "a large number" of people believing in its future, rather than the reality of a handful.
This creates a situation where a lot of these novice/late investors start buying the security, usually using market orders (i.e. accepting the sellers offered price). Now since a handful of entities own a large number of the instrument and they offer few shares incrementally at higher levels, and keep selling more and more as the hype/momentum/# of small investors increases.
Eventually taking it to a point where a large amount(still not the majority) of the instrument is now owned by a large number of small investors hoping to make 10x-1000x like the early investors did. At which point they have a few choices/combination of choices(all :
1) Offer a large amount at a price point where the gen. public will not find it valuable, thus leaving only one direction for prices to go
2) Create a small sell-off by selling large quantities through a market order, thus making smaller investors panic
3) Wait it out to let the news, govts or some other external source to present a good opportunity for people to panic, and do one of the above
4) If they are big enough they can actually create #3
A well executed would further buy back the instrument while it crashes for a round of rinse-and-repeat.
There are a lot of examples of pump-and-dumps, a lot of them are legitimate, most are well established and usually don't intend losses for the later investors. The "dump" can just be profit taking, reducing risk, being satisfied with the earning etc. All companies that have raised financing can technically be classified as PnD
ex 1(legitimate):
(i) 2 individuals + 2 computers + 1 idea (100% share) [$10,000 valuation/opportunity cost.] => (ii) YC give 3-8% of share for $20k [25x to 67x profit on equity given] => ... so on ..
ex 2(classic PnD - There are plenty worth mentioning):
Crude oil futures rally from mid '08 - to its subsequent crash in early '09. I can write a thesis on this one. It was great fun, good times.
ex 3(currently playing out): Bitcoin :
This does not undermine the quality of the idea or its execution. Just the fact that a small number of early miners control a large quantity of the instrument. Prices are being driven up by mostly small order-sizes being executed on the sell side (not to be confused with [0]). There is a higher probability that these bitcoin's are being sold by early adopters.
It may be a few weeks early to say if it is a classic pump-and-dump. If it is I would expect to see <$250 possibly even <$100 prices in the next 3-12 weeks. The rational for this is too lengthy for this reply, might just be cognitive dissonance on my part.
I was more curious about why you thought bitcoin is a PnD, but the other info does provide useful context, thanks. There is some evidence that many miners have sold most of their early stockpiles. The min-1-year bitcoin-days-destroyed chart (sum of [coin amount * coin age in days] for coin groups older than a year [1]) shows this to a degree. The metric is also an underestimation of older stockpile movement, as any transaction (even between one's own addresses) will reset age to 0. But it is still hard to say for sure.
One twist about bitcoin is that most early adopters are strongly invested ideologically and/or emotionally, reducing some of the potential dumping power. The next year or two should be rather interesting. I could see some large corrections, but each month that passes gives bitcoin more staying power/legitimacy. So far, each downtrend has only resulted in a later movement to much higher levels.
That works the other way too...people who invest during a bubble are quick to say "it's not a bubble!" - I'm not saying this is a bubble (I won't pretend to know enough or have clairvoyance), but it's not a valid defense to say something isn't overvalued just because people had said that at prices it has since eclipsed.
Indeed. Saying that it's too late or that it's just a bubble means nothing, because the truth is that it could be either of those things, and no one will know which until everyone knows.
What happens to the price when only people with 500Ghash/sec+ can make coins next month?
Early adopters are rightfully getting a nice reward now, but how do you get "fresh blood" when the difficulty is off the chart unless you have several thousand dollars in hardware?
wat. The important figures for miners are the btc/usd conversion rate, the network difficulty, your hash rate itself, how much you initially paid for your rig ($/Gh) and how much power you're drawing ($/watt). All of these factors are important, but what will dominate over the coming months is power cost. Someone mining a 100 GH/s rig will make 5 times less BTC per day as someone mining a 500 GH/s rig, it's true, but if the 500 GH/s is sucking up proportionally more than 5 times the electricity then it can be better to mine with the lower hash rate. If the conversion rate improves that delays the period where electricity costs outweighs the income. For the difficulty to rise another order of magnitude (which would make BFL 60 GH/s Singles worthless), there needs to be about another 30 PH added to the network -- where's that coming from in only a month? In any case, people dropping their rigs because they're too power hungry may cause the difficulty to go down and make it worthwhile again for some who live in low-electricity-cost areas... There are variables you're not taking into account, hence the wat.
Anyone with MH/s-level farms from GPUs have turned them off months ago (or moved to Litecoin). There's some new 28nm ASICs that use less power per hash than the larger nm ASICs, so eventually those will face the same fate as GPUs from power costs (not so much from hash rate -- there are only a few TH machines on the near horizon), but the next 30-60 days isn't enough time to make that happen.
Isn't Litecoin's value more or less pegged to BTC? I did a quick calculation with one of the online calculators [1] and it seems that it's a challenge to turn a profit from Litecoin GPU mining too.
It's hard to make a profit with litecoin, but a single 7950 can still make you around USD $1/day right now after electricity costs. I have a friend who started mining with 4 of them when summer began, they (and the motherboard, power supply, etc. he used for his setup) ROI'd a while ago. I don't know if it makes sense to buy new GPUs anymore... But at least if it does become unprofitable for all but those who have the best GPUs on the market in the cheapest electricity areas (or even for everyone in the event that litecoin dies completely), you still have very excellent gaming GPUs you can resell at a good price to people on Craigslist/ebay. With the "next gen" of consoles that have just come out being so under-powered, a gamer can expect a 7950 or better to handle any PC ports that come out of this gen...
Difficulty does not affect the price at all. Bitcoins are produced at a more-or-less stable rate regardless of the amount of mining competition.
In fact, before hashrate was that high a lot of investors' money was going into mining, not to exchanges (30% growth every 10 days over the last 6-7 months). As mining becomes more and more competitive, less money will go there and more to BTC holders, thus moving the price drastically.
If Bitcoin is only about mining then it deserves to die. If Bitcoin wants to be an actual currency then it should be able to work like any other currency where you can't print money.
You cannot make bitcoins with a shitty CPU, or a shitty GPU. You can try, but the difficulty is too high, and is always increasing.
If this is a new concept to you, imagine:
When I first received my BFL Jalapeno (ASIC 5G mining rig) and started mining, to the time I sold it, the difficulty had increased enough that I was seeing a .05 BTC gain in twice the time. So now you can imagine how eventually only people above a certain mining speed will be profitable.
At the next difficulty estimate, an i7 with free electricity mining all the time at 8 MH/s would make about 9 US cents in a month. Since the difficulty will probably go up again in less than two weeks, make that less than 2 US cents per week. Since very few people actually have free electricity it's not worth it.
Okay, in the hypothetical world where 1 satoshi is worth some huge amount of USD more than it presently is, if you suck up the electricity cost now (which I believe would be less than $1 USD per day for an i7) you can get a few satoshi that may one day make that up-front cost worth it...
Whether you can actually get a single satoshi from a pool is another story. If the pool uses PPLNS, you might not ever. I think most would object to you for being misleading. If you want bitcoins, buy them, or get an ASIC miner and don't use a sucky-ass CPU or GPU.
By the calculations above, you would be far, far better off just buying Bitcoins on an exchange than you would be mining them with non-free electricity.
For those who are interested, pleasingly it's considerably easier to buy/sell btc in the UK these days, [32] and [33] are very functional - I used [32] to buy coins and then [33] to sell some just today. [33] looks much better value both ways but [32] is about as easy as it gets.
* Using comedy numbering scheme in reference to [1337].
I wouldn't want to short the one asset that's been on an exponential growth curve. It can only go down 100% but who knows how high it could climb. At least put a ceiling on it.
Short selling is a different game. In essence you're betting that the price will go down. Right now the price could go down $500, and you'd make $500. However if the price rose $10,000 you'd lose $10,000.
If you're investing by purchasing the item, then yes, you can only lose 100%. However, if you pay the current rate ( + lending fee ) to borrow a BTC to sell expecting that when you go to repay the BTC you'll be able to purchase one at a much lower rate due to a bubble popping, thus banking the difference, and instead the cost raises exponentially, it could cost you considerably more than 100% of the amount you initially invested when borrowing the initial-sale BTC to buy the BTC you need to replace it.
That is, yes for long positions, no for short sales.
Shorting bitcoin sounds like very bad idea. If you're going to "invest" in Bitcoin, then going long term is definitely the way to go. Even if you invest say right now, but then Bitcoin drops to $300, it's best to keep it a year longer, and then watch it pass $1000 or whatever.
It's very easy to withdraw from MtGox with Japanese and Chinese currencies. BTCChina is very close to GoxUSD in terms of price. The MtGox price is actually pretty accurate, bitstamp is the one that is lagging behind.
For the purposes of hashing, double SHA256 is very far from being "broken" or drastically accelerated. If there's some ultra-fast chip that increases hashing by a factor of million, there are still enough of non-zero bits to have unique block hashes. And if, by chance, two blocks have the same hash, it does not break anything at all: each block has a unique serial number ("height") anyway. Hash is only used as a proof of work for a given height.
One of the most interesting things about discussions regarding bitcoin is you can always count on a few people getting quite angry and spiteful, as if they are personally offended by its existence.
Depends on your investment goal. Personally my main reason for holding bitcoins is so I don't feel like punching myself every time it goes up another $100.
And it draws into question whether bitcoins can be a useful currency. Can you trade fractional bitcoins? I'm ignorant on the subject, but if not, well carrying around $500 bills is pretty limiting.
so I can buy them as a cheaper price point and the current market gain is just people buying to making 10% gains daily and not really to use the coins as currency.
Options for purchasing for someone in Australia? Coinbase appears to be US only. Their support docs suggest international support in early 2013, but no sign of that being realised.
Most probably, quantum computer will not be invented overnight. Hash functions are not seriously vulnerable, but ECDSA signatures are. Fortunately, most funds are sitting on never-used addresses which are basically the hashes of the public keys, which are not instantly crackable by a quantum computer. People will probably have time to switch to a new signature method which is resistant to QC. Like Lamport Signatures, for instance. http://en.wikipedia.org/wiki/Lamport_signature
The price will dip, but may recover pretty quickly, like when the famous v0.7/v0.8 fork that happened this March.
If the Bitcoin can't be fixed and becomes unusable, its value will instantly become zero and everyone's savings in it will become permanently lost.
No matter your take on bitcoin's long-term viability (or lack thereof), it can hardly be argued that this isn't damn interesting to watch unfold.
A cryptocurrency with zero backing that exists only in digital form is now worth many billions of dollars. Is it a bubble? Will this foment a currency revolution of sorts? If it doesn't crash, how will governments react? If it does crash, what will replace it? Obviously there is a demand for a decentralized currency, and as more people realize that something like this is possible, I can only see demand for it going one way: up. Most people have never even heard of bitcoin; I've only talked to a few people in my own life who are even familiar with the word, and fewer still who know what it actually is. Yet with even such a small awareness, bitcoin's value has grown from zero to billions in a few years. Unless governments step in and find some way to put the kibosh on decentralized currencies in general, it seems unlikely that demand is going to shrink as awareness continues to increase. We're so used to governments essentially owning currencies that it is very difficult to imagine a world where they don't, but obviously, if cryptocurrencies take off in a big way, the implications for the future are profound.
1. Any money is a bubble in a sense. It's a feedback loop of speculation that the commodity at hand will be widely accepted by other speculators in the future. The only basis for this speculation is that people need some money to trade. The money bubble pops only if there's some other, better commodity on the horizon that speculators may bet on. http://unqualified-reservations.blogspot.fr/2013/04/bitcoin-...
2. Some governments are very supportive (at least, not intrusive): Germany, China, Hong Kong, Canada. In United States Bitcoin is effectively 90% forbidden already. Banks close accounts for Bitcoin businesses with no reason, regulatory approval is very slow and very-very expensive (need to get it from all states), past history of very aggressive raids on financial experiments.
Not really, no. Peter Thiel's explanation of bubbles is great. He says that bubbles arise when there is (1) widespread, intense belief that’s (2) not true. During the dotcom bubble, people were pouring money into companies simply for having a domain name; the intense belief was that the companies were worth a ton of money, and that simply was not true. A similar reasoning led to the housing bubble: the intense belief in that case was that houses are great investment vehicles and they always appreciate in value. Turns out that also was not true.
Currently, the main thing that is driving Bitcoin's price is speculation. There is widespread, intense belief that it will become a major currency. Is that belief true? The simple answer is we don't know.
But that's not true with just any money. The dollar for example is not a bubble: people believe it to be a reliable medium of exchange, and the fact that it is backed by the US government makes that belief true. Therefore it is not a bubble.
USD is a bubble too because everyone speculates that tomorrow trust in USG does not drop. Which is much more fragile speculation taking into account recent events. When other countries start massively dumping their USD savings one of two things will happen:
1. Either USD goes straight home, raises the prices and destroys remnants of the US economy.
2. Or govt erects an iron curtain of capital controls to keep the influx of USD at bay which destroys remnants of the US economy.
The war is not an option because it only works when you fight with one country while the others are maintaining the value of USD that you print to fund that war. When there's no one to give you stuff voluntarily for USD, the state goes bankrupt way too quick. And the first guys to notice the raising prices are heavy industries and military complex. US would have to transform to something like Hitler's Germany to force people to build and fight. But more likely is the scenario of Weimar's Republic which hopefully transitions to Bitcoin before complex economic connections between all producers are completely broken down.
And the same isn't true for the USD ? It's only true to the extent you believe the US government can't fail to increase economic activity YoY. Or, say, for a small currency like the famous Swiss franc ? There are plenty of currencies where the stability of the state behind it is in doubt. I would say dictatorships like Dubai or Kuwait or ..., who have very badly paid "slaves" who far outnumber their own population are at a very significant risk of revolt. Or rather, they would never be able to prevent an even mildly popular revolt from taking over the state. They're not worthless, in fact they can be quite valuable.
And then of course, there's currencies of states that have little qualms of open currency manipulation like the Renminbi.
But even the USD, or at the very least it's value, but I'd argue the US state itself as well, has several critical dependencies. Oil would be the most obvious one, but easy and safe access to the seas, not just around the US, but all over the planet. And I'm sure there's dozens of other things.
In short : The US is not invincible, and I'm pretty sure the status of the USD currently does reflect that belief.
Note that this is a falsehood. Speaking on an indefinite timescale, it's an absolute certainty the US will fail. And economic output will falter with a much greater certainty. So it's a matter of when, not if. And the USD may have lasted longer than average for a currency, but it's nowhere near the top (that would be the Holy Roman Empire and it's Guilder (later replaced, and it's complex, depending on regions, ... I guess when a state celebrates a millenium's existence some issues crop up with the currency and they have to play around with it. Some day the US may be lucky enough to have to do the same. The "real" currency can be said to be silver).
It's also humbling to think that this very, very, very long running state did fail eventually (yes, you can make an argument that it didn't really fail, only parts did, most made smooth transitions to their currently existing forms ... I wouldn't agree with that argument but it's not indefensible).
Moldbug is great. What do you think of Urbit? From what I understand, it's attempting to create property rights in digital identity like bitcoin does for digital money.
As an economic hobbiest I wonder how much of this is part of BitCoin and how much is part of the restriction on the 'float' of available coins. Specifically several recent actions, from the Silk Road take down to the wallet services going away have reduced the quantity of available coin that can be used for transactions. Is that the driver behind the price? After all the drug trade didn't just "stop" when Silk Road was taken down. And if you've got obligations to pay in BitCoin and your wallet provider just went off the air with your stash? Now you are out trying to get coins to finish the transaction before the other side of that transaction declares it invalid right?
I lost hundreds of them due to a disk crash a couple years ago (they were worth I think $0.06 then). I think that's the biggest downfall of the currency. As time progresses, more and more coins will be "lost" and the replacement rate will slow to, well, 0.
It will become as much a currency then, as rare baseball cards or antique physical coins.
Here we go again. A thread full of financial experts, conspiracists and excessive naysayers. Let's keep Bitcoin off the frontpage until it crashes, okay? With this trend it will reach an all-time-high every week or so which every tech blog will wrap in a bag-full-of-fluff-blogpost, there will be new analysis et cetera.
It was a proposal and my current opinion on the Bitcoin spam every few days on Hacker News. I wasn't expecting anyone to agree with me, but for one am free to state my opinion.
What an unspeakably horrible service. I thought I was in for hundreds of dollars over budget, but it turns out that not a single BTC was purchased at all.
I only intended to buy ~$50 worth, so I would only have earnt something like $200, but for the love of everything, stay the hell away from MtGox. It's insane how unprofessional they are.
healthcare.gov may be bad, but this is five circles of hell down from that.