Posted on 04/03/2014 7:20:12 PM PDT by Errant
It’s no surprise that Wences Casares, the CEO of Xapo, a bitcoin startup, is a big bull on the digital currency. His company, which specializes in insured Bitcoin vaults, just raised $20 million in a funding round led by Benchmark.
But Mr. Casares belives that other bitcoin bulls, especially those in the U.S., do not fully appreciate the value of the currency, which has proved especially sticky in emerging markets prone to wild currency fluctuations, such as Mr. Casares’ home country Argentina.
In a video interview with the Wall Street Journal, Mr. Casares says he’s not worried about bitcoin’s own volatility hampering its adoption – though he expects significant volatility over the next few years. He predicts that in a decade, one bitcoin will be worth somewhere between half a million dollars to one million dollars.
(Excerpt) Read more at blogs.wsj.com ...
Well lately it hasn’t been doing anything but steadily sinking. Closed at $440.9 today.
Scripture tell us the love of money (or bitcoin) is the root of evil. If the SHTF, a good bible and a good hunting knife (what I used them for) will be worth much more than fiat, gold, or bitcoin.
Don’t blink, you’ll miss all the fun!
"You got to know when to hold 'em, know when to fold 'em, Know when to walk away and know when to run. You never count your money when you're sittin' at the table. There'll be time enough for countin' when the dealin's done."
I heard that the IRS is now involved with the BitCoin. Wow the IRS enjoys getting into every dam hole it can get inside. In other words, keep record of every transaction you make per request of the IRS. They consider Bitcoin as property not currency. Sheesh the IRS needs to be abolished.
Yeah, wish they’d done like other countries and went with a commodity designation instead of “property” at least.
But... but... but...
YOU told me there would be NO NEED for vaults for Bitcoins! You promised! I was the dumb one, remember?
http://www.freerepublic.com/focus/news/3098530/posts?page=66#66
(Funny how some of us see this stuff coming, just like the pending Bitcoin collapse, while others tell us we have no idea what we are talking about. Heh. Good luck!)
You never did answered the question as I recall?
You should have taken the idea and ran with it! You might have been a multi-millionaire in only a few short months by now!
Reminds me of the movie CONVICTS. Robert Duval’s character gives James Earl Jones and his wife some Confederate money for Christmas. The wife says “This is Confederate money.”
Duval’s characters says “Well, you better hang onto it. You never know.”
1. Convenience of use.
I've personally made several purchases from Overstock. They were the easiest/simplest online purchases I've ever made.
So how would my parents, for example, go about it when they are in the store? They have with them a wallet and a debit card. They do not carry a cell phone. They are not exceptionally young, and they know only enough about computers to use email and Skype, and to read books. A large portion of Earth's population is in that same boat.
As matter of fact, I'm sitting here, surrounded by computers, and I'd be somewhat unsure how to pay someone with Bitcoin even if I had any. Well, I have a 0.00005 BTC somewhere in a test account. But I can't send it anywhere because the fees exceed the amount. This will be a common situation when 1 BTC = $1M USD. I have several computing devices; how would I synchronize the wallet among them without using Dropbox and their ilk (which, of course, are not an option with a wallet.) You see, it's infinitely easier to just call the place and tell them the number. Or to enter it into a Web form. I do not need to physically have the money to make a payment. With Bitcoin you have to have the money, here and now.
2. Insurance of accounts
Read the OP, the author is in the business of insuring crypto currency vaults
You can insure a white elephant if you want to. There is a man who will sell you insurance for every possible calamity, real or imagined. However the key word here is "sell." I do not need to pay anything for my bank accounts being insured. There is nothing of the sort with Bitcoin.
3. Guarantee of convertibility
The many numerous exchanges means you can convert Btc into any currencies or other cryptocurrencies.
Yes, they can convert. Or they can not convert. There is no guarantee whatsoever. There is no even guarantee that you will see your money ever again, as it is the case with Mt. Gox. Courts will not make money out of thin air. They can only punish the guilty, if the victims are lucky.
4. Government oversight to prevent shenanigans
The Bitcoin community is self-regulation, but that doesn't mean government doesn't play a part, as we're seeing with the courts involved with the Mt. Gox fiasco.
In other words, that "self-regulation" did not prevent Mt. Gox to take people's money for MONTHS, knowing well that they are running a pyramid. The government got involved only after people filed lawsuits. A well regulated economy *prevents* such situations by requiring that banks follow the rules. There were no rules to follow for Mt. Gox because it was an illegal (in many countries, but not in Japan,) unregulated bank. No surprise that its officers had no clue what's happening (if we give them benefit of the doubt.)
5. Stable value
Check Btc's chart against the dollar's chart since its introduction.
It's a rollercoaster alright. What else can one see there? It got to $1,100, then fell to $550, then rose to $800, then fell to $600 ... ? If I send you $1,000 in BTC today, nobody knows how much you will get, in dollar value, tomorrow, after it passes one day and two exchanges.
6. Paper trail and reversibility of transactions
Paper trail is contained within the public distributed ledger. Businesses will reverse your transactions if you are not satisfied (see Overstock's return policy).
So why Mt. Gox won't reverse transactions through which, they say, someone stole their money? The answer is simple: you only can know that account 32904823jrkjl3423432 received the money. No face, no name, no address attached to that account. You cannot send police there; you cannot name that person in a lawsuit. This is not how it works in the banking industry.
7. Acknowledged security of the entire mechanism
The system is very secure compared to CCs and other means of conducting transactions.
Credit cards, even those with mag stripe that we still use in the USA, have far more security checks at the bank than any Bitcoin transaction. But the real deal here is that those transactions are reversible because every payment has a name and an address attached to them. You tell the bank that the transaction is fraudulent and they pull the money back from the merchant's account. You, as the c/c holder, are not injured. (The merchant might be, if he is lax at checking c/c credentials.)
In simple words, if anything happens with your c/c account you have someone to complain to - and that would be the bank that issued the card. You know for a fact that they will listen to you, and most likely they will help you. This is diametrically opposite to Bitcoin. If you mistype an address and send your money there... it's gone. What would you do in such a case? However if I'm at at the Home Depot Web site paying for a wrench with a c/c, I cannot imagine a situation when my payment would go to Walgreens, no matter what I do.
Bitcoin is as easy as sending email.It’s that simple. Maybe get your hands on some more and move it around, you’ll see. This is to a point where there is no turning back.People who won’t get up to speed with this technology are simply going to be left behind.
I have no desire to go bankrupt in the Bitcoin collapse.
In 2000, I was a multi-millionaire on paper from the dot-com boom. I learned a lot of lessons after that collapse, with lesson #1 being, “Don’t invest any time or money in something that doesn’t have the economics to support itself.”
I still work in technology. I’m back to where I need to be financially - better off, even, since it isn’t wealth “on paper” anymore - and I got here by investing my time in real activities that have good unit economics. The unit economics of Bitcoin mark it as an obvious boondoggle.
Step 1: Buy some computers or cloud computing power.
Step 2: Pay money to run these systems to crunch a useless algorithm that has no value except to generate a Bitcoin.
Step 3: Collect your Bitcoin and see where the market has it currently valued.
Step 4: Find someone who wants this slice of waste in exchange for a good/service with actual tangible value.
It won’t last. In a way, it reminds me of the people who used to farm platinum in online video games like Everquest and then sell it on ebay. At least the process of obtaining platinum can be considered entertainment, though, so there is actual entertainment value being generated while the platinum is collected. There is no entertainment value or anything in the computing cycles wasted to generate a Bitcoin. There is nothing.
From a unit economics standpoint, this exercise is bound to fail. It’s not a question of “if,” it’s “when.”
Then the thing about those quickie massive trades that got out front of other trades in the stock market came up. And that brought a thought to my mind, as true coincidence is so unusual. Could those trades and the money they shave in front of regular stock purchases and sales be the source of bitcoin value?
I suppose some people would consider it fun to figure out who can be more efficient at waste.
Maybe you belong in government...? Have you thought about running?
The #1 lesson of investing, is don't invest in anything you don't understand.
#2 would be: Don't put all of your eggs in one basket (i.e., diversify).
I'm glad you're happy with where you're at in life. There are many who can't say that. I'm VERY happy were I'm at as well, so looks like we've got that in common! ;)
I’ll get back to you later on #30 Greysard. Gotta run for now...
The thing that is mined is just very long numbers. It is difficult to find them, even if using special computers. You cannot find them with a regular PC anymore. This labor (such as investment into the equipment, and then expense of electric energy) is called "proof of work." Once you mine your Bitcoin, it then represents the resources that you spent on producing it. The difficulty of mining is adjusted periodically, so that it keeps up with the costs. So in the end a miner exchanges his electric bill for the Bitcoin. He then can expect that his Bitcoin has value - roughly as much as he spent, but in reality only as much as others are willing to pay for it.
The Bitcoin, indeed, has no inherent value. Many currencies are like that, so that's not unique. Only commodity money has intrinsic value; the rest (representative, fiat, coins, paper bills, bank papers, and electronic) are made as cheaply as possible. Bitcoin is an outlier here - its coins are expensive because that's the only thing that stops a random person from minting a trillion of those. This is one of the problems with Bitcoin, as miners have to waste perfectly good electrons to calculate long numbers that are of no value themselves, outside of their use in the Bitcoin network.
Comparison with tulip bulbs is not unreasonable. In both cases the items are acceptable tokens that represent some amount of something that has value. Bitcoin is a valid, mostly secure (in theory) electronic token. Only a few problems of Bitcoin are related to its nature, such as the need to use a computer and be fluent in bitcoining.
Bitcoin has no inherent value, as opposed to cost. (You can spend a million dollars doing useless work, for example, but nobody will buy your product - so its cost is larger than its value.) The value of a Bitcoin is softly limited on the bottom by costs of mining it at a given time. There is no limit at the top - people can trade it at whatever they want. A Bitcoin holder may "sell" his coins from his left pocket into his right pocket, for a million dollars each... and this will help establish the exchange rate for others. Ways to play the exchange are known since the first stock exchange opened (probably somewhere in ancient Egypt.) Intentional and unintentional (but still cascading) forces can be applied to the market, resulting in the Tulip bubble and the South Sea bubble, and the Housing bubble. Bitcoin is not safe from being pumped and then dumped - people who are doing this are not computer scientists who are fascinated with cryptocurrencies. It is done by experienced FX operators who can't care less what the currency is, as long as they can buy it low and sell it high. The early adopters of Bitcoin, who are now sitting on the unrealized wealth of about 1/3 of the planet's worth (if Bitcoin becomes an accepted currency,) have no objection to that.
This is a perfectly good hobby, just as any other. However a car enthusiast does not define the car market, and barely (if at all) affects car production.
In this case Bitcoin started and took off on shoulders of crypto geeks and cypherpunks. I studied the basics in my time, and I even used RSA in one of my products. I used symmetric ciphers in many products. This is a good technology, and it's fun to code, and it's useful.
The concept of a cryptocurrency is also an interesting one - from the theoretical point of view. However one must be careful with cramming a theory into the real life; a square peg into a round hole. The Bitcoin mechanism is fast-tracked by enthisiasts who clamor for its adoption, even though the Bitcoin cannot even solve a trivial problem of instant payment - something that we enjoy every day when we swipe our cards in stores. How long does it take for the card to become approved? A couple of seconds? Well, Bitcoin cannot do that, for very technical reasons. (For the uninitiated: there is no central authority who could instantly say yes or no; the Bitcoin network, as in "many privately owned computers," has to "vote" on your purchase. This takes up to 15 minutes; sometimes longer.)
This accelerated, forced even, adoption is of concern to everyone who can look at the problem objectively. The Bitcoin as a unit of money is perfectly good for the planet. But several important questions must be answered. To begin with, the "early adopter" advantage must not exist. I will not take "money" that you printed in your garage and offer as money. Why is Bitcoin any different from paper that you print on your laser printer? You may have printed a ton of those papers before you went public with the money, so you unfairly own a lot of wealth now. Money's purpose (in its ideal) is not to make wealth but to represent wealth. Early adopters sit on monies that represent no wealth.
This said, how could a cryptocurrency be improved, such as it becomes a planet-wide money? You could begin with *replacement* of existing money (that represents real wealth) with crypto coins. This means that each crypto coin must have very low minting cost (ideally, zero.) Replacement would be done by central authorities, just as it is done today with paper bills. So now we have a new requirement: the new system must generate coins at low cost. As a simple example, you take a sufficiently long nonce and sign it with the issuer's key. Then you publish the nonce. (This also handles revocation.) Naturally, the generation mechanism must be controlled, to maintain inflation at the desired rate. At the same time, the new system must have variable (unlimited) number of coins, because as the society expands it needs more and more money to execute trades. (This relates to built-in deflation of Bitcoin, which is awful.) How to control printing of money? It's easy. Each "coin" can be cryptographically signed upon minting; and since its use is registered in the blockchain (if we adopt the BTC scheme) one can ensure that all coins are unique. The problem of the network anarchy can be controlled by payment processing centers who would be able to instantly accept a payment. The problem of double-spending would be solved by reversibility of transactions... which, in turn, would require that each coin, at any time, has a unique ownership that is tied to a specific individual, or a wallet that is also associated with an individual - which, in turn, requires that everyone who receives or sends crypto money must be registered with the planetary government.
This is only a rough outline, and it barely scratches the surface. As you can see, I am not against replacing all those paper monies with a crytocurrency that is reliable, controllable by the people, and that has a paper trail. However Bitcoin is a few light years away from being even *usable* as a planet's universal money. Bitcoin is a great hobby money; a money that is suitable for the real world has quite a few additional requirements that Bitcoin does not satisfy. It is not practical to ignore those deficiencies. They should be fixed. Once you have Bitcoin-II, for example, that *is* a good replacement of paper, then I will be glad to use it. But not before.
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