Bit coin is getting KILLED !

[Mega]

http://www.bbc.com/news/technology-19486695
Never trusted it for 1 minate!
I had a row with Max Keiser on this subject & i was removed from his site.........(No one can "dis" with the Big "K")..........Well smarty pants SUCK it UP !
Mega

[*T*]

Re: Bit coin is getting KILLED !

Another exchanged hacked, and a large ponzi scheme run by someone called "pirate" recently collapsed, but bitcoin itself has been pretty stable at around $10. The protocol itself remains sound.

I have about 0.5% of my savings in the form of bitcoin.

[c1ue]

Re: Bit coin is getting KILLED !

Another exchanged hacked, and a large ponzi scheme run by someone called "pirate" recently collapsed, but bitcoin itself has been pretty stable at around $10. The protocol itself remains sound.

So the security of bitcoin itself is so far fine, but the ability to store and/or redeem it is not?

What is the difference exactly?

[*T*]

Re: Bit coin is getting KILLED !

So the security of bitcoin itself is so far fine, but the ability to store and/or redeem it is not?

What is the difference exactly?

You can store and exchange it yourself. I'm not sure what you mean by redeem. My bitcoins are stored encrypted on my laptop & servers elsewhere.

The exchanges are private enterprises and independent of bitcoin itself. You are not obliged to use any one.

When I bought about 2/3 of my bitcoins, my money was on an exchange for about 20 minutes in total.
The other 1/3 I bought in a private sale. That money never saw an exchange.

[c1ue]

Re: Bit coin is getting KILLED !

You can store and exchange it yourself. I'm not sure what you mean by redeem. My bitcoins are stored encrypted on my laptop & servers elsewhere.

The exchanges are private enterprises and independent of bitcoin itself. You are not obliged to use any one.

So in other words, you're saying that bitcoin is like gold: you can store it yourself and buy/sell in a number of venues.

However, you can't hack gold.

From my view, bitcoin is a nerd equivalent of collectible art. No harm in it as such, but the idea of having an actual real world monetary system based on it - no thanks.

[SamAdams]

Re: Bit coin is getting KILLED !

Since your Bitcoin account is a summation of credits in a ledger, you can actually memorize or print on a piece of paper, the as-of-yet unhacked (there's been a $5mill bounty for the decryption unclaimed for years, for this encryption standard) public/private key pairs to your account(s). In this way its an elegant store of wealth as you have complete control over it, unlike gold which you may have to physically hide. You can still send credits to the public key so long as the private key is safely secured. The private key is only needed to send Bitcoins. So you can bury the details in your yard (or in your brain) but still add money to it. Also handy for moving money globally without restriction. I would consider it for a small portion of one's wealth, just in case. The encryption standards could be upgraded within the Bitcoin community should it be needed. Of course it's all a concept, that could be improved upon.

I should add that if Bitcoin's encryption was broken, most of our financial institutions would likewise be in trouble, since they rely on it for secure data storage. The issue with Bitcoin is liquidity (cartels making it hard to convert fiat into Bitcoin) & how to resolve disputes in legal grey areas (like this hacking). I would expect all of this to improve as the benefits of this kind of currency outweigh the risks, especially in areas with less stable currencies, with underdeveloped banking/credit systems. It's a potential leapfrog technology.

[c1ue]

Re: Bit coin is getting KILLED !

The issue with Bitcoin is liquidity (cartels making it hard to convert fiat into Bitcoin)

Hence my comment about nerd collectible art.

& how to resolve disputes in legal grey areas (like this hacking). I would expect all of this to improve as the benefits of this kind of currency outweigh the risks, especially in areas with less stable currencies, with underdeveloped banking/credit systems. It's a potential leapfrog technology.

There are no legal grey areas; bitcoin isn't legal tender. Thus to expect clarity in the legal system is wishful thinking until the legal tender status is changed.

I'd also note that the fundamental valuation structure of bitcoins is flawed.

Bitcoins as they are constituted today are effectively a crystallization of CPU time. The problem is that CPU time keeps getting cheaper, while bitcoins are supposed to increase in value. This is because the basis of bitcoins valuation is rarity, not what goes into a bitcoin. The paradox then is the cost to mine a bitcoin falls over time even as the value theoretically increases.

This fundamental conflict hasn't been talked about much, but should be.

[*T*]

Re: Bit coin is getting KILLED !

C1ue, I normally have genuine respect for your comments, but when it comes to bitcoin you seem ready to comment from a very uninformed position.

The difficulty of the problem set for miners is automatically adjusted to match the computing power of the miners so the rate of bitcoin production follows a predetermined rate. This creates a computing arms race between the miners. This improves the security of the network and since mining also processes transactions, improves speed.

These days the miners tend to use gpus, fpgas or asics. Cpus are too slow for the type of problem being solved.

You seem to have made your mind up prematurely. I encourage you to revisit bitcoin as it should be something you have an affinity for.

[SamAdams]

Re: Bit coin is getting KILLED !

Gold isn't legal tender either, that won't stop me from investing in it. That won't accept people from accepting in exchange for products & services. People can proclaim the value of their fiat currencies until they drown themselves in paper. But you are right on one thing, the hacking is a clear legal violation of someone's property, regardless of whether it was Bitcoins stolen or bank account numbers. However I don't expect their to be much action on the part of authorities since most of them are hopelessly inept when it comes to matter of technology and usually don't react to things getting stolen from the average Joe. So perhaps stated more clearly, there is a hole in the legal system for pursuing people involved in these kinds of violations. When someone robs a bank and disappears with cash, they just adjust their accounting accordingly. No biggie for most deposits. The issue is when real stuff is stolen. Same could really be said of people having their gold stolen, it is not often in the press, but when it happens there is little recourse for most people. Police reports usually don't result in actual arrests.

As *T* said, the value of Bitcoins in relation to CPU power is adjusted per algorithm. As computing power increases, the amount of Bitcoin is adjusted. The market value of a Bitcoin is simply due to its scarcity and its usefulness.

[c1ue]

Re: Bit coin is getting KILLED !

The difficulty of the problem set for miners is automatically adjusted to match the computing power of the miners so the rate of bitcoin production follows a predetermined rate.

Fair enough - thank you for the explanation.

The fact that the production rate is limited artificially, however, still doesn't change my view of bitcoins as collectibles.

Gold isn't legal tender either, that won't stop me from investing in it.

True, however gold very much has a legal currency standing - as central bank holdings attest to. Not in any way true for bitcoins so far.

[SamAdams]

Re: Bit coin is getting KILLED !

And just to be clear, the current Bitcoin source code allows for 8 decimal places, but there is no reason this cannot be expanded infinitely. So the money limit will be reached asymptotically, but the units are infinitely divisible. I'm sure there will be alternate crypto-currencies (I think there are already), including so-called Bitcoin forks, which specifically address this issue.

A recap of large corporate and government attention in the past year:
http://bitcoinmagazine.net/a-recap-o...his-past-year/

Attention on Bitcoin has increased considerably in 2012 based on a number of sources. Although theGoogle Trends volume, a rough indicator of the number of eyeballs looking for something on the internet, is not nearly as high as it was at its all-time high in June 2011, indicators of the slower-paced and more durable sort of attention that ultimately leads to success for any new product of technology have arguably only become stronger. In 2011, indicators that there was any high-level institutional acceptance of the technology were scant, and any kind of connection between an established government or business and Bitcoin, even an independent time project of a Google employee, became the focus of attention for weeks.There are good reasons to be concerned about this kind of institutional attention; even if it has little effect on Bitcoin directly, there is reason to believe that many businesses are holding out on accepting Bitcoin because they are waiting for official acceptance. BitPay’s Tony Gallippi writes about the experiences of Bitcoin users in Finland: “As a result of the secretary of the Central Bank of Finland publicizing that bitcoin is legal to use in Finland, many businesses have seized the opportunity to accept bitcoin. Some of the rather unique merchants in Finland include a dentist office, a veggie burger restaurant chain, and a funeral service.” There are likely many potential Bitcoin-using businesses in the US and elsewhere that are holding out for just such a ruling; in the case of Google, Sergey Brin all but admitted that that was the case. Since 2011, however, there have been many telltale signs that there are a number of individuals and teams in the upper echelons of government and business around the world that have begun to pay attention to what the mainstream media still, arguably correctly, describe as a fledgling currency, and this article will list some of the more important indicators.

• Being A Bitcoin Exchange Is Not Illegal in France – Although it makes no claims about the legitimacy of Bitcoin itself, this little-known ruling is arguably the first true “Bitcoin ruling” ever to take place. In the summer of 2011, Crédit Industriel et Commercial, the bank which MtGox was using for their activities in France, closed MtGox’s account, arguing “Bitcoin is an electronic money, Macaraja [the entity representing MtGox in France] is not a bank, therefore it’s illegal for Macaraja to be handling this”. MtGox challenged the decision, and took CIC to court claiming its right to a bank account under French law. In response to the CIC’s position, MtGox argued that “bitcoins are not an electronic currency but rather an immaterial good, like software”, and the court decided (French) that it was not competent to determine the issue of Bitcoin’s validity. Nevertheless, this did establish one important legal precedent: without any judgment on what Bitcoin was, MtGox was safe to continue operating by default.
• France’s 2011 Tracfin Report – France’s TRACFIN, or “Traitement du renseignement et action contre les curcuits financier clandestins” (“Treatment of Information and Action Against Clandestine Financial Circuits”, essentially an anti-money laundering association) published a report describing various schemes of money laundering using virtual currencies and corporations located in various financial havens around the world. Among other cases, the report described “the illegal exercise of the profession of banker with a virtual currency with no legal value”. Although the focus of the report was money laundering, the use case which the page described for Bitcoin was in fact a perfectly legitimate one: using bitcoins “to avoid fees associated with currency exchange and monetary transfer” between the Euro zone and entities outside the Euro zone using US dollars.
• FBI Internal Report on Bitcoin – in early May, a report from the FBI titled “Bitcoin Virtual Currency: Unique Features Present Distinct Challenges for Deterring Illegal Activity” was leaked. The fortunate news for Bitcoin shown in the report was that the FBI was less fearful of Bitcoin than some had suspected. The report read “The FBI assesses with medium confidence that, in the near term, cyber criminals will treat Bitcoin as another payment option alongside more traditional and established virtual currencies which they have little reason to abandon. The FBI assesses with low confidence, based on current user and vendor acceptance, that malicious actors will exploit Bitcoin to launder money.”
• Bitcoins are a Unit of Value in Germany – Germany’s financial supervisory authority, Bafin, has published a report (translation of relevant text here) delineating their status under German law. The document has the following to state on the subject: “tokens of value meant to be used as a method of payment which are issued by barter-clubs, private exchange-rings or other payment systems in exchange for real economic goods or services or like for example Bitcoins, which are issued in computer networks without any service in return, are therefore exempt from the definition of e-money, even though they fulfill the same economic function as e-money and have the actual potential of privately issued currencies.” The legal concept of e-money in Germany applies only to instruments that ultimately derive from legal tender currencies, and so Bitcoin is effectively classified as a commodity. Incidentally, this is similar to the way more recent government decisions have treated Bitcoin donations – as an “in kind” donation of material but not monetary form, similar to donating food or supplies. Note that classification as a commodity does not exempt Bitcoin transactions from taxation; in most jurisdictions, barter income is taxable too.
• HSBC says Virtual Currencies Will Go Mainstream In 3-5 Years – HSBC’s global head of e-channels strategy and innovation, Andrew Davis, stated that he believes that virtual currencies are going to enter the mainstream soon. “We have a planning assumption that virtual currencies will become mainstream in three to five years,” Davis said. “One of the reasons why we need to reach a view two to four years out is to influence our decisions around enterprise architecture, because it doesn’t change very often. How people place value on things won’t just be with hard currency in the future and we’re already seeing micro-currencies emerge around the world.” Although Bitcoin itself was only mentioned by secondary sources, no virtual currency other than Bitcoin is anywhere close to “becoming a normal way of buying goods and services,” around the world, making it highly likely that the HSBC has Bitcoin in mind.
• The Financial Supervisory Authority of Norway Mentions Bitcoin – This report paints Bitcoin in a less charitable light than some of the others. A translation of the pertinent text reads: “Bitcoins can for instance be compared to ‘Monopoly money’ where each single actor buys virtual money called Bitcoin to do commercial transactions in a gated environment of trade. Liquidity in fiat money must always be available if the trade actors wish to exchange from bitcoins to, for instance, US dollars or Euros. At the moment, this system is outside governmental control, and the risk is unknown. The system is virtual and the American government has signalized that they want to remove this system before naive and gullible users become too involved. For such a system to work, it needs a ‘rich’ sponsor.”
• Brazil Whacks Bitcoin Investment Group – In August, the president of the Comissāo de Valores Mobiliários, Brazil’s equivalent of the Securities and Exchange Commission, ordered the administrator of the “Grupo de Investimento Bitcoin” to suspend what the CVM considered to be an illegal investment fund. What the GIB was offering was similar to many other investment opportunities popular at the time: shares which anyone can buy which pay an interest of 12% every 30 days. After the shutdown, operator Leandro Cézar restarted the operation by reclassifying the investments as loans – a subtle distinction, but one which does give depositors more power to go after him if he fails to pay interest – and by not guaranteeing a fixed interest rate. Although the CVM’s ruling makes no difference to Bitcoin itself, it may set a precedent for the legal status of the wide array of Bitcoin-based financial instruments available for purchase on the Bitcointalk forums and the Global Bitcoin Stock Exchange.
• Ron Paul’s Domestic Monetary Policy Subcommittee Hearing – US Congressman and, for a few months, potential Republican presidential candidate, Ron Paul had a subcommittee meet on August 2 to explore the concept of parallel currencies. About 48 minutes into the conference, congressman David Schweikert began talking about the concept of alternate currencies in a variety of contexts. “What happens tomorrow if a handful of our trading partners move to a basket of currencies? Does that actually create a new method of exchange?” Schweikert asked, and other topics such as contracts which require payment physically using US dollars but peg the value to gold were brought to the table. At one point (49:10), another congressman off-screen mentioned Bitcoin by name. Although Bitcoin itself was mentioned only briefly, the hearing provides clear evidence that the idea that the monetary landscape is changing is one that is understood by many beyond the internet fringe, and is something which at least some government officials have already accepted as a reality.
• New Hampshire Deputy Secretary of State Okays Bitcoin – Many people within the Bitcoin community have heard that Mark Warden, an incumbent and candidate for State Representative in New Hampshire, is accepting Bitcoin for donations. At first, there was considerably legal uncertainty about the offer, and most people now agree that the first iteration of Warden’s attempt at accepting bitcoins, putting up a donation address for anyone to send bitcoins to just like Wikileaks does, was in fact illegal, due to the anonymity of the procedure. Mark Warden himself soon agreed, returning all of the funds that had been sent to the addresses from which they came. Then, however, Warden created a new donation page, presenting a more conventional BitPay merchant form, which asks for personal information like name and physical address before providing a donation address. What many people do not know is that when Warden asked the New Hampshire Deputy State Secretary if what he was doing was acceptable, the Secretary said yes. As long as donations are accompanied by the donor’s name and address and contributions are only acceptable from US citizens and permanent residents, there are no problems accepting Bitcoin for political donations at least in New Hampshire. Although no government confirmation of this has been published, Warden confirms that this happened, and links to this announcement on a Bitcoin forum through a post on his Twitter account. Since then Jeremy Hansen, an independent candidate in Vermont, has started accepting Bitcoin donations as well, and Josh Jones, the creator of Hansen’s donation system, has made it open for any politicians, or other charities, to use it as well.
• Finnish Central Bank Agrees Bitcoin is Legal – Bitcoin has made considerable progress in Finland in the past few months, with a veggie burger restaurant chain, a dentist office, a funeral service, soon a movie theater, and many others accepting Bitcoin in Finland. When a reporter for YLE 2, a Finnish TV channel, asked a representative of Finland’s central bank what the legal status of Bitcoin was. The representative replied (3:40), “There are no guarantees that bitcoins can be exchanged back into official money. Such guarantees don’t exist in unregulated virtual currencies such as Bitcoin.” When the reporter asked “But isn’t it illegal?”, the representative replied “Not at all, people can invest in and use any money they prefer. Finland is a free country, after all.”
• Lockheed Martin Wants Someone Experienced in Unconventional Money Transfer, like Bitcoin – A job posting by Lockheed Martin, an American global aerospace and security company with strong ties to the US military, asking for a “Counter Threat-Finance Analyst” was discovered on LinkedIn very recently. The job description read “Analysts should also have financial investigatory/forensic accounting experience in non-traditional arenas including drug money laundering, Sharia-compliant banking, terrorist finance, informal and formal money transfer mechanisms (hawala), trade based value transfers, and parallel reconstruction. Knowledge of emerging alternative and mobile payment methods is also desired (Bitcoin, Secondlife, etc).” The general theme is similar to that of the monetary policy subcommittee hearing; the interest is not so much in Bitcoin specifically, but in emerging methods of money transfer as a whole.

Although the reports are, for now, still few and far between, the New Hampshire decision and the statement by the Finnish Central Bank undoubtedly represent significant milestones for Bitcoin acceptance. Currently, there are two ongoing court cases relating to the Bitcoinica situation which may lead to further legal decisions when they are resolved, although it remains to be seen just how much the cases will actually involve the issue of the validity of Bitcoin itself. Nevertheless, over the past two months, the amount of government attention on Bitcoin around the world has grown considerably. The ship of the government and corporate establishment may be slow to steer, but a growing number of signs suggest that at least parts of it are finally coming around.

[c1ue]

Re: Bit coin is getting KILLED !

The representative replied (3:40), “There are no guarantees that bitcoins can be exchanged back into official money. Such guarantees don’t exist in unregulated virtual currencies such as Bitcoin.” When the reporter asked “But isn’t it illegal?”, the representative replied “Not at all, people can invest in and use any money they prefer. Finland is a free country, after all.”

This is hardly a ringing endorsement.

[*T*]

Re: Bit coin is getting KILLED !

update: that 0.5% is now about 5%