Bitcoin - a decentralised digital currency

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After a couple of weeks of extreme volatility, the BTC/USD exchange rate has been stable around $47 the last four days.

 

More money will start flowing into the exchanges again on Monday as the bank transfers go through. What happens next is anybody's guess.

 

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yea, this topic about Cyprus really vindicates those predicting that governments will go to all extremes in a futile attempt at self-preservation. This makes civil war a realistic possibility virtually anywhere.

 

That said, the Bitcoin gamble is in no way an option out. this is not a currency, and there is no reason it would become a medium of exchange nor a store of value. Since you speculate in terms of other currencies, this in itself is a self defeating purpose.

Brace of impact on that topic: like any speculation, the insiders/market-makers win, the others are generally footing the bill.

 

if you are looking to step out of the monetary system altogether, there is a far better vehicle. But bear in mind, even as the current system is heading for total destruction, fiat currency is still an economic necessity, therefore the next system will be only slightly different. If you hate this one, you will surely despise the next one.

 

A bon entendeur Salut!

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It's amazing really, that a country's government can decide to effectively "steal" money out of the private bank accounts of its citizens.

 

This is what happens when you cannot increase inflation and you are faced with default. If people will use bitcoins massively, the government will confiscate them instead.

 

A little bit of history: Executive Order 6102

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If you store your bitcoins in a brain wallet the only way a government could confiscate them is through torture or hypnosis.

 

 

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A brainwallet refers to the concept of storing Bitcoins in one's own mind by memorization of a passphrase. As long as the passphrase is not recorded anywhere, the Bitcoins can be thought of as existing nowhere except in the mind of the holder. If a brainwallet is forgotten or the person dies or is permanently incapacitated, the Bitcoins are lost forever.
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Over the weekend, in response to the Cyprus fiasco: Bitcoin apps soar in Spanish iPhone app store

 

 

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Several Bitcoin-related apps started spiking on the Spanish iPhone market over the weekend. Bitcoin Gold shot up in the Spanish iPhone Finance category from 498 to 72, and another app called Bitcoin Ticker zoomed from 526 to 52 in just one day. A leading service called Bitcoin App jumped from 194 to 151 between Friday and Sunday as Spaniards brooded over the Cyprus crisis.

 

Some vague rumors about possible savings confiscations have been swirling around Europe over the past couple of months, but they had been shrugged off as American-style crazy conspiracy theories. Now, Europe is facing the reality of governments suddenly swooping in to take a bite out of even small savings accounts.

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Looking at the chart, the Bitcoin seems to have been testing higher levels these last few weeks and reached a plateau for the moment that it can't break out of yet.

 

But if there's high volume trading over the coming weeks, like with the last two peaks, then Bitcoin could likely go higher. Eg through the Cyprus crisis.

 

So Bitcoin may go up.

 

On the other hand it may go down. Or it may remain at the current plateau. :D

 

In other words, I don't know for sure what's going to happen.

 

I think the deciding factor will be media coverage of Bitcoin, plus if any high profile companies announce that they are accepting payments or holding reserves in Bitcoin, then that will fuel interest in Bitcoin and further increases in value.

 

Especially if eg Ebay started accepting Bitcoin. That would really give it a boost. But I cant actually see that happening for a while at least, they are happy with Paypal.

 

So tell all your friends about Bitcoin. Spread the word.

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There she goes. Topping $50 plus change overnight.

 

I originally started this thread in "Singularity" because it represents exponential growth.

 

And some say we're just getting started. There's talk of $100 by end of March, $1,000 by end of the year, $100,000 by 2015.

 

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Sorry, Bob, but once all the Chinese WoW gold-miners start mining bitcoins instead, it's going to slump harder than Lindsay Lohan behind the wheel of a luxury car.

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That's not true because mining difficulty automatically increases the more people who do it.

 

Mining - The Difficulty Metric

 

 

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As more miners join, the rate of block creation will go up. As the rate of block generation goes up, the difficulty rises to compensate which will push the rate of block creation back down. Any blocks released by malicious miners that do not meet the required difficulty target will simply be rejected by everyone on the network and thus will be worthless.

 

In fact, if more people are mining (Chinese or otherwise) that means there's more interest generally, which means even higher prices.

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There's talk of $100 by end of March, $1,000 by end of the year, $100,000 by 2015.

 

Always beware of "talk" when it comes to investment. Remember, it's only talk. It means nothing by itself. Talk is a high risk reason to purchase anything.

 

But I'll go for the $100,000 in 2015 anytime.

 

Usually what happens with these rises is that they fall back somewhat after a while as people take their profits, then the price consolidates before deciding what it's going to do next.

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That's not true because mining difficulty automatically increases with the more people who do it.

 

Wonder what the risk is of the Bitcoin mining algorithm one day being hacked or cracked and the market suddenly being flooded by "fake" Bitcoins.

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The biggest risk, to my mind, is definitely technical.

 

I don't think speculative bubbles can harm bitcoin. Nor can legal challenges.

 

But if there's some as yet undiscovered fatal flaw in the system, or new mathematics are discovered that can break the SHA-256 encryption, then yes, it could all fall apart.

 

I've read others say that the only danger to bitcoin is time travel. They say that even quantum computers won't be able to crack SHA-256. And even if it does then the encryption algorithms can be simply swapped out for the next generation cryptographic technology. I think this is uncharted territory though, so nobody can really say for sure.

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All talk, all talk! :D

 

Wish I bought more bitcoins the other week now.

 

It is indeed amazing to watch.

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When all is said and done, if it were really the case that bitcoin harmed the power of governments to tax and devaluate, then we would simply have to return to seizure of real assets.

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I have quite a few anarchist friends in the US and they use this. I am quite surprised/impressed to see Editor Bob also talking about it. So this tells me there is more to this than I know. Curious now...

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I think the whole Bitcoin concept is silly. It's a fiat currency without a country, police force or army to enforce its value. So as soon as people just say, "Bit-what?", it loses all value.

 

By contrast, if you look at USDs: As long as someone in the world owes the US government taxes, he will have to pay those taxes in USD or face unpleasant consequences for tax evasion. Therefore, USDs are definitely worth something to him; which means that he will be willing to give something else of value for a USD. (The amount of value is not fixed; but at least it is greater than zero.) That means that a USD is worth something to anybody that knows him, because they can always trade it to him for something of value. This makes a USD valid currency.

 

However, there is no government or force in the world that is required to accept Bitcoins for anything. Even if it has been shown to be technically unbreakable, that still makes it no more than a glorified wooden nickel: even a provably unique wooden nickel is still a wooden nickel. That means there is no taxpayer who can get himself out of a jam only by providing Bitcoins; so no friends of this non-existent taxpayer; so no starting point for building a non-zero value for it.

 

It will rise and fall as long as people want to play with it. But as soon as people say, "No thanks, pay me in real money," it will go poof!, because there is no force behind it. You could argue that the same is true of the USD, and in a sense you would be right: If the US government folds up and fades away, the USD will be worth just the paper it is printed on. But the difference is that there is no Bitcoin government to start with, it is ALREADY folded-up and faded-away.

 

If Gore really said Bitcoin is the new currency (or the currency of the future), I'm afraid that I regard that as the dumbest thing he's said. In my opinion, Bitcoin is like money you own in your dreams: It works wonderfully while you're dreaming, but when you wake up, you're left with nothing.

 

For What It's Worth:

A journalist trying to locate the inventor of Bitcoin has identified me as one of his suspects. He is wrong, but the article is worth a laugh:

http://www.fastcompany.com/1785445/bitcoin-crypto-currency-mystery-reopened

 

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