Anyone collecting BitCoins ?

[mumu]

To those who don't understand bitcoin, and I am no proponent of the currency, here is how to think of it in a more clear fashion.

 

If you are familiar with online RPG games like World of Warcraft and Everquest, then you can understand how bitcoin works. Characters in these games would be built up over time, with virtual items such as special swords and homes and golden camel statues et cetera, and the character would then be worth money and sellable on ebay and forums. Well think of bitcoin as the value without the game attached. Or a very simple version of the game where all you do is "mine" the bitcoin in the same way you can mine in the RPG games for the money that buys you the golden camel that you then sell on ebay. That is where the virtual intrinsic value comes from. In the end its just computing power used.

[RWB]

...about as meaningful as collecting dust bunnies.

[Crohnos01]

I collect navel lint...whether I want to or not..... does that count?

[RWB]

...Navel Lint --- does not count if you're in the Army....or is that the new Navy ship they've sepend so much money on?

[delta]

Substantial bitcoin losses suffered at one site:

 

bbc news

[mtnstyne]

More bad news for bitcoin.

 

Yahoo News

[wdrob]

 

It has been quite a while since anyone made any further comments or personal analysis on Bitcoin (or any other cryptocurrency for that matter). I read through the previous posts and it is interesting to see how far Bitcoin has evolved since this thread was started.

 

When I first exchanged fiat currency for Bitcoins I really had very little knowledge of the process involved in creating the Bitcoins, the origins of cryptocurrency theories, and the underlying foundation that Bitcoin was based. The small amount that I lost from the Mt. Gox collapse, and the eventual filing of bankruptcy was not much for the tuition.

 

As I am writing this the price of a Bitcoin is about $220.00 +/- depending on the exchange that is used to index it. Far lower than back when this thread was created and people were experiencing huge gains. The Mt. Gox collapse affected the confidence in cryptocurrency and that was reflected in the declining price.

 

On the other hand, there has been a continued increase in acceptance of the Bitcoin and an ever increasing base of businesses that accept the currency. There are a number of legitimate sites, here in the US that will accept Bitcoin for the purchase of precious metals. I have taken advantage of that on a number of occasions when I obtained BTC and the price per coin increased as the price of gold or silver decreased.

 

The first U.S. Bitcoin exchange has opened in the US and is licensed (although this could be considered somewhat of a grey area) in over 30 states. The New York State Department of Financial Services (NYDFS) has now released the revised revision of it's BitLicense provisions as well as a number of other states are working on the same.

 

Coinbase (the US Bitcoin exchange that opened recently) was able to raise over $75 million on the initial round raising capital, and they received this funding from Fortune 500 companies like USAA and others - not from the likes of John Gotti.

 

The intrinsic value of Bitcoin has been challenged throughout previous posts when compared to other stores of wealth such as gold or silver. I would imagine that those very same people have learned a little more, since previous posts, and possibly can see that it does indeed have intrinsic value, not far removed from that of gold or silver, other than the applications aspect in industry of the previous mentioned metals.

 

I have always understood that gold received it's intrinsic value based on two major factors; 1.) It has a finite supply and 2.) the effort involved in mining for the precious metal.

 

Well Bitcoin has both of these qualities as well (probably the reason some of the same terms are used in describing the creation of Bitcoin, and not by coincidence). 1.) There is a finite supply. There will only ever be 21 million bitcoin that can ever be mined. As more Bitcoins are mined, the algorithm is designed to continually and exponentially increase the difficulty level of successfully mining subsequent Bitcoins. The last 7% of all Bitcoin mined will take place over a time span of 100 years. 2.) In order for any Bitcoins to be rewarded (created), computers (nowadays it is ASIC's - application-specific integrated circuits - since the days of mining Bitcoin with a CPU or even an array of GPU's are long gone) have to work extremely hard to solve mathematical equations in order to complete a 'block' which rewards the miner with 25 Bitcoins ( roughly worth $5,800.00 at the price right this second). That is where the intrinsic value is derived for a Bitcoin.

 

I am only writing this with a focus on Bitcoin cryptocurrency and am not including any of the other available ones available, which use different algorithms and set standards, as well as many that are based off the concept of the Bitcoin algorithms but also with variances in volatility, difficulty, and rewards just to name a few.

 

My main point is to highlight the increasing acceptance of cryptocurrency throughout the world and the fact that governments, although the approaches vary widely, are keeping a close watch on the virtual currency and are working hard to adopt policies that are not intended to 'kill' the technology but develop an equilibrium while maintaining the decentralized foundation on which Bitcoin (cryptocurrency in general) was founded on.

 

For a alternate method of conducting transactions, I think it is far to soon to write the technology off. Hell - Bitcoin has only been around since 2009 when the first purchase made with this currency was for a Pizza at a healthy cost of 10,000 Bitcoins ...

 

 

 

 

[coinman_23885]

Honestly, I am shocked that the feds are not all over BitCoin and that the service still exists. My understanding is that the currency is decentralized and can be difficult to track, which would pose a problem in identifying money from drug trafficking, extortion, massive fraud, and even terrorism. Moreover, why were the NORFED Dollars, which were touted as their own currency, distinguishable from virtual currencies? It sounds like selective enforcement to me. I guess it depends on whose Cherrios you sneeze in.

[wdrob]

 

Honestly, I am shocked that the feds are not all over BitCoin and that the service still exists. My understanding is that the currency is decentralized and can be difficult to track, which would pose a problem in identifying money from drug trafficking, extortion, massive fraud, and even terrorism.

 

Decentralized yes, which is a positive attribute since one particular body, group, or entity does not have complete control over the supply (how much is 'minted' - i.e. Federal Reserve), how much it is worth, and limited inflation since it is distributed evenly throughout the mining community (through computer processing power) and as a result the community is also the 'guardians' who, through the inherent actions of the mining process and ledger system keep the system more secure. Add to that - you are your own bank. No more banking holidays. No more 9 - 5 business hours. 24/7 - 365 is/will be the new standard.

 

The fact is, no one really knows the identity of Satoshi Nakamoto (the pseudonym of the alleged creator of the Bitcoin concept). Although people have been working on possible theoretical implementations of a cryptocurrency for as long as the Internet has been around, the proof of concept developed (white paper) for the Bitcoin was the first successfully adopted implementation since this concept was far more advanced from that which had been suggested before.

 

Satoshi Yakamoto could in fact be the NSA or the CIA, which allows me to address another misconception; using Bitcoin does not provide anyone with true anonymity, regardless of what you may have heard. When you send or receive a Bitcoin payment it is entered into a publicly accessible 'Blockchain'. You can take measures to limit your personal exposure, but you can not eliminate it. Just take a look at how many have been arrested, prosecuted, and are going to be doing time for using Bitcoin in underground black market websites and networks ( Silk Road ).

 

Why would it be beneficial then? When you go on a web site and make a purchase as it is now, you are giving the business or individual your credit card information, contact details, and in many instances the ability to make unauthorized charges (we see that quite often). Also, as a business or an Individual that is accepting Bitcoin, you no longer have to be concerned with 'chargebacks'. Once I send money to you - I can not get it back unless you give it to me under your own terms and conditions, and that would be through you sending it to my wallet just as I originally sent it to your wallet. There are also no identifying information or credit card numbers sitting on some companies insecure network, only to be compromised by some 15 year old pimpled kid in China.

 

I have learned quite a bit about it since the last time I voiced my disappointment at losing a few dollars (most of which was actually unrealized gains on my meager investment). Even Mt. Gox was not hacked per say. Or at least the code for the Bitcoin network and underlying infrastructure was not compromised. It comes down to lax security protocols in password and passphrase management, more often than not.

 

 

Moreover, why were the NORFED Dollars, which were touted as their own currency, distinguishable from virtual currencies? It sounds like selective enforcement to me.

 

I was not completely familiar with NORFED so in about 3 minutes worth of reading I have come away curious as to how one could be compared to the other. I read this and after 2 paragraphs and the accompanying bulleted list, I can see a major difference.

 

Only time will tell if cryptocurrency will eventually be mainstream. Years ago, I remember my Dad getting his first credit card. I think it was a Sears or JC Penny card. He use to carry cash in his wallet or a checkbook if it was going to be a bigger spending day. I use to carry cash in a wallet at one time as well. I would have never thought back then that we would adopt and embrace a world of virtual currency as we have today. Very rarely do I ever have cash on my person, and usually if I do it is a prearranged withdrawal to purchase something of relatively high value when the person prefers cash and no checks. Now we are moving away from even carrying the Credit and Debit cards and more and more people are relying on their smart phones and other digital devices to make purchases.

 

I really can't come up with a reason why cryptocurrency will not become mainstream, either in the short or long term. I think it is inevitable.

 

 

 

 

[coinman_23885]

NORFED sought to create an alternative currency to the U.S. Dollar, and the Feds became upset. The NORFED creator was prosecuted. I am curious as to why the Feds are okay with pursuing one alternative currency and not another. Even though it was labeled as a "counterfeiting" prosecution, it was clear that the NORFED people were not seeking to emulate US coins or counterfeit them, but to create their own alternative currency.

 

To be clear, BitCoin is nothing like a credit card or PayPal. Credit/Debit cards are electronically trading actual U.S. Dollars, not an alternative currency unit. BitCoin is its own currency.

[wdrob]

To be clear, BitCoin is nothing like a credit card or PayPal. Credit/Debit cards are electronically trading actual U.S. Dollars, not an alternative currency unit. BitCoin is its own currency.

 

I actually believe it to be more like PayPal and Credit Cards than you are aware. PayPal (to a greater extent), Visa, Master Card, Discover, etc .... are all what one might be best classifying as an 'exchange' as does the US Government according to KYC (Know Your Customer) regulations, Anti Money Laundering laws, and of course The Patriot Act.

 

When you send someone money with a PayPal account using your Debit or Credit Card - PayPal acts as the exchange and converts your credit into cash for the other person. When you go to the convenient store and you swipe your card, the card issuer (Visa, Master Card, etc... ) acts as the exchange and charges the retailer fees for the exchange.

 

That is exactly where Bitcoin is identical to all of the above mentioned services. For an example, I mentioned earlier that Coinbase just opened the first Bitcoin exchange in the US. Although they are not able to operate in all 50 states as of right now, they will be soon, as states get their policies in order for licensing crypto currency exchanges.

 

Coinbase also offers Merchant Services, just as PayPal does (even has a button for you to put on your web site ) and for a small fee, if a retailer takes Bitcoin, they can have it immediately exchanged for US dollars at that current rate. They offer multiple wallet support as well as a cost free 'Vault' that you can deposit your Bitcoin into and in order for you to withdraw it, you request the transfer and it takes 48 hrs to complete. That gives the wallet owner the time to cancel if they did not initiate the transfer.

 

The Coinbase Exchange is just like the NYSE (without the enormous volume) in that I can deposit cash from my checking account into the exchange and I can place an order at 'market', 'limit', etc... They even have a nifty interface that is similar to L2 (level 2 market streaming) where you can see the open orders, the bid, the ask, and the spread as well as the depth of orders. I used to have to pay $85.00 / month to get that L2 service when I was actively trading stocks. It is free on Coinbase.

 

I will include some screen shots.

 

***Edited to add ****

 

Oh! And btw; you will see all zero's on that wallet because I withdrew all my Bitcoin to my Electrum Wallet (keeping them under my local control) since only after about a week or so of trading in BTC and making withdrawals to pay for legitimate services, I was contacted by the Coinbase 'Compliance Team' and interrogated about my money activities and they even sent a spread sheet with a predefined template and wanted me to give them all sorts of details that didn't even apply to me. They are definitely overcompensating right now trying to get the ability to operate in all 50 states.