Good article that details exactly why the bitcoin is a pyramid scheme

[Junkenstein]

The chuckles just keep on coming:
http://www.bbc.co.uk/news/technology-22152213

Who would have thought one of the tech wizards behind a global currency would live in a squat.

Amir Taaki is a developer who works with a virtual currency called Bitcoin. His home and office is an abandoned Buddhist temple. The dwelling is covered in brightly painted but slowly decaying murals of Buddha, with the odd makeshift bunk bed and flotsam furniture like a couch with no pillows.

His fellow squatters are members of the Occupy movement and Mr Taaki's Bitcoin philosophy is very much in line with theirs.

"Bitcoin is for pure financial freedom of speech," he says. "It really changes the dynamics of how money works."

His voice exudes passion for the currency.

"Bitcoin is the proper perfect economy," he says. "The technology needed to participate is open, the entry and exit is basically very cheap or free, there's no barriers to competing in that network."

The currency exists exclusively online and is independent of any government or company.

It was spawned in 2009 by an unknown person or group of people calling themselves Satoshi Nakamoto. Early adopters, including Mr Taaki, were mostly tech-minded people with distrust in regulated banking institutions.

I'm starting to suspect that a couple of folk at the BBC have bought some and are seeing if they can pump the price.

[Cain]

Why Bitcoin is more stupid than fiat currency (and also a bubble):

It might seem that Bitcoin is just like a fiat currency issued by governments. Writing in the Wall Street Journal, Jack Hough says precisely that it's a purely online currency with no intrinsic value; its worth is based solely on the willingness of holders and merchants to accept it in trade. In that respect, it's not so different from fiat currencies like the dollar or Euro, but whereas governments back such money, Bitcoins lack central control.

But this is a misunderstanding of what money does and where it came from. The "fiat" (meaning "let there be") in "fiat money" reflects the power of governments to command and tax. Because of their power to tax, governments can make money by fiat, simply by declaring their willingness to accept that money in repayment of tax debts.

Historically, money arose from, and in conjunction with, this power. (This point has been made repeatedly over the years, most recently in David Graeber's controversial Debt: The First 5000 Years, a surprise publishing hit for an anthropologist. )

By contrast, Bitcoin looks more like the "just so" story, commonly told in economics textbooks, in which money arises to simplify what would otherwise be complex and cumbersome barter transactions.

That would be fine if Bitcoin were simply a unit of account, used to keep track of transactions. But all the interest in Bitcoin is in the idea that it is a store of value, one that may be expected to show steady appreciation rather than depreciation. So Bitcoin needs to be evaluated as a financial asset.

Viewed in this way, Bitcoin is perhaps the finest example of a pure bubble. It beats the classic historical example, produced during the 18th century South Sea Bubble of "a company for carrying out an undertaking of great advantage, but nobody to know what it is." After all, the promoter of this enterprise might, in principle, have had a genuine secret plan. Bitcoin also outmatches Ponzi schemes, which rely on the claim that the issuer is undertaking some kind of financial arbitrage (the original Ponzi scheme was supposed to involve postal orders). The closest parallel is the fictitious dotcom company imagined in Garry Trudeau's Doonesbury, whose only product was its own stock.

[The Johnny]

this might sound dumb or simplistic but:

the more people buying bitcoin, the more valuable it becomes, therefore, the day, which will ultimately come, when people start to cash out or trade their currency for real one, the bubble will explode? for the act of less people backing it or having trust in it since it doesnt have gold or whatever to back it up

[Faust]

this might sound dumb or simplistic but:

the more people buying bitcoin, the more valuable it becomes, therefore, the day, which will ultimately come, when people start to cash out or trade their currency for real one, the bubble will explode? for the act of less people backing it or having trust in it since it doesnt have gold or whatever to back it up

Yes exactly, but it has a knock on effect because it's trading value wont go 1:1 proportion dip, the loss of confidence sends it soaring down.

[The Johnny]

this might sound dumb or simplistic but:

the more people buying bitcoin, the more valuable it becomes, therefore, the day, which will ultimately come, when people start to cash out or trade their currency for real one, the bubble will explode? for the act of less people backing it or having trust in it since it doesnt have gold or whatever to back it up

Yes exactly, but it has a knock on effect because it's trading value wont go 1:1 proportion dip, the loss of confidence sends it soaring down.

i think the term is "investment/capital flee"... well im not sure its called that but like... the snowball effect of decline in a company's stock value... company sinking? everyone bails out and sells their stock, thus the cost dipping out.

[Faust]

This weeks reason not to use bitcoin

https://bitcointalk.org/index.php?topic=186902.msg1936161#msg1936161

Another Bitcoin exchange hacked.

[Junkenstein]

Related update:
http://www.wired.co.uk/news/archive/2013-06/24/bitcoin-cease-desist-california

California's Department of Financial Institutions has issued a cease and desist letter to the Bitcoin Foundation for "allegedly engaging in the business of money transmission without a license or proper authorisation,"  according to Forbes. The news comes after Bitcoin held its "Future of Payments" conference in San Jose, California, in May.  (The license information is available on CA.gov and Forbes placed the cease and desist letter on  Scribd.)

If found in violation, penalties range from $1,000 (£650) to $2,500 (£1,625) per violation per day plus criminal prosecution (which could lead to more fines and possibly imprisonment). Under federal law, it's also a felony "to engage in the business of money transmission without the appropriate state license or failure to register with the US Treasury Department," according to Forbes. Penalties under that law could be up to five years in prison and a $250,000 (£160,000) fine.

It'll be interesting to see if they make it to the end of the year. I'm currently thinking at least one or two people are going to be in jail soon for something.

[Junkenstein]

http://www.bbc.co.uk/news/business-23140904

yler and Cameron Winklevoss, famed for their legal dispute with Facebook's Mark Zuckerberg, have unveiled plans to float a Bitcoin trust.

The Winklevoss Bitcoin Trust will initially sell $20m (£13m) worth of shares to investors, according to a filing with the US regulators.

The twins are among the key backers of Bitcoin, a virtual currency traded independent of monetary authorities.

Anyone want to guess how this will end?

[LMNO]

Lawsuits?

[Junkenstein]

Probably.

And still there's MORE:
http://www.forbes.com/sites/andygreenberg/2013/09/05/follow-the-bitcoins-how-we-got-busted-buying-drugs-on-silk-roads-black-market/

With the data from just 344 of their own transactions, they were able to label the owners of more than a million Bitcoin addresses. And by making just four deposits and seven withdrawals into accounts held on Silk Road, Meiklejohn says the researchers identified 295,435 addresses as belonging to that drug market.

HO HO HO. This is what an interested party can do. Anyone else think the NSA may just have a big list of everyone involved in the silk road somewhere? Times, dates, purchases..... If the prisons got quiet I bet I know who's getting a call.

[Junkenstein]

Adopting this thread as the BITCOIN UNLIMITED BULLSHIT THREAD

Why?

http://www.theverge.com/2013/11/8/5080774/fec-to-allow-bitcoin-contributions-in-political-campaigns

The Federal Election Commission (FEC) is moving to allow Bitcoin donations as a campaign contribution in national races. Under the rules, Bitcoin donations would be considered "in-kind contributions" rather than direct money contributions, because the digital currency isn't the official currency of any nation and doesn't entitle holders to the ability to exchange it for cash like a check or money order might. The rules were proposed in a draft yesterday, and according to The Hill, they'll likely be approved later this month.

A mechanism to assist varied awkward to trace donations? Who could possibly have such an incentive?

The future: Brought to you by the Koch brothers and anyone else with cash and political goals.

[Cain]

Or, this is the continuation of an FBI program.

The FBI seized what is believed to be the vast majority of existing BitCoins in their raid on the Silk Road.  The FBI would therefore control what many consider the currency of choice for illicit activities.

[Junkenstein]

I hadn't considered that angle.

Would bitcoins fall under the federal asset seizure regulations? If so, that could get quite amusing as those funds seem to get spent with practically no oversight anyway.

It would be in their own self interest to fund candidates and campaigns sympathetic to them. Which surely creates a fuckton of conflicts of interest.

[Faust]

Or, this is the continuation of an FBI program.

The FBI seized what is believed to be the vast majority of existing BitCoins in their raid on the Silk Road.  The FBI would therefore control what many consider the currency of choice for illicit activities.

The funny thing is the transactions are publicly available and searchable forever. I don't know how easy it is to look at party donations in the states, but here in Ireland if you start asking about that you disappear.

They still haven't been able to do anything with the Silk road bitcoin, they have the wallet but without the password it's useless to them. And because of the peer to peer nature of currency, the community has to approve the transactions.

I think the bitcoin is utterly useless, barring this slim satisfaction that the assets that were seized can't be redistributed.

[Telarus]

Hrm, interesting.. I hadn't thought of that angle. Didn't the Silk Road guy cop to a plea deal? I wonder if that involved divulging his wallet password...