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Old 28.09.2013, 05:13
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Re: Bitcoin paper presented to Swiss parliament

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the guy just asked the government to produce a report about it.
The result will probably be that it's a non-problem and no action is necessary.
I mean, if it was serious, the parliament would have done more about it.
I don't know if the whole chamber has to accept it to transmit it to the gov or not though.
No, the government has already been given the job of investigating bitcoins and their impact on the "real" economy, and if bitcoins are being used to fund criminal activity. The question now is: How long will the Federal Council take to investigate?
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Old 28.09.2013, 14:42
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Re: Bitcoin paper presented to Swiss parliament

30 year rice prices:

http://www.indexmundi.com/commoditie...ice&months=360
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Old 28.09.2013, 14:59
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Re: Bitcoin paper presented to Swiss parliament

3 year bitcoin prices:

http://bitcoincharts.com/charts/mtgo...gCzm1g10zm2g25
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  #44  
Old 28.09.2013, 15:00
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Re: Bitcoin paper presented to Swiss parliament

come back in 27 years
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Old 28.09.2013, 15:08
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Re: Bitcoin paper presented to Swiss parliament

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come back in 27 years
I probably won't bother. But the message from that chart is clear - anyone who piddled about with gold or rice speculation during that time and didn't realize bitcoin was going on missed out on some serious profits and should ask themselves: what else are they missing out on?
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Old 28.09.2013, 15:08
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Re: Bitcoin paper presented to Swiss parliament

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No, the government has already been given the job of investigating bitcoins and their impact on the "real" economy, and if bitcoins are being used to fund criminal activity. The question now is: How long will the Federal Council take to investigate?
Crikey. Didn't realise I was tossing such a grenade in starting this thread

The answer to this question is, undoubtably. You only have to pay a visit to Silk Road to know that.

But then, you could equally ask if Swiss Francs are being used to fund criminal activity. And no-one, to my knowledge, is wondering whether we should ban those.

Karl Denninger, of the Market Ticker blog, points out a few reasons why using BTC for criminal activities such as buying drugs or laundering loot might not be such a great idea.

Not least this one:

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Now consider the typical clandestine transaction -- Joe wishes to buy a bag of pot, which happens to be illegal to transact. He has Bitcoins to buy the pot with. He finds a dealer willing to sell the pot despite it being illegal to do so, and transfers the coins to the dealer. The dealer must verify the block chain of the coins to insure that he is not being given coins that were already spent on gasoline or that Joe didn't counterfeit them, and then he transfers the pot to Joe. There is now an indelible and permanent record of the transfer of funds and that record will never go away.
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Old 28.09.2013, 15:16
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Re: Bitcoin paper presented to Swiss parliament

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Karl Denninger, of the Market Ticker blog, points out a few reasons why using BTC for criminal activities such as buying drugs or laundering loot might not be such a great idea.
In general, that's true but the transactions are essentially anonymous - they're tied to a cryptographic key with no identifiable user information. The only way to track somebody through the block chain would be to identify them at the point at which they exchanged fiat for bitcoins. Certainly in the early days there was somewhat of a wild-west feel and it was trivial to exchange into bitcoins anonymously.

And here really lies the second wave of bitcoin trading. Exchanges now all have to confirm with AML and KYC regulations and so bitcoin now takes on the sheen of something that hedge funds get interested in. The drug thing will really get less and less relevant.
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Old 28.09.2013, 15:26
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Re: Bitcoin paper presented to Swiss parliament

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I probably won't bother. But the message from that chart is clear - anyone who piddled about with gold or rice speculation during that time and didn't realize bitcoin was going on missed out on some serious profits and should ask themselves: what else are they missing out on?
being one of the first people that knew of bitcoin, i kinda regret not putting time into it. i've probably even lost $10'000 of bitcoins in a wallet somewhere.

i honestly thought that the chance of it being successful would be too small be be worthwhile investing in. i didn't think about the short term speculation potential. in the end, i still suspect bitcoin is likely to fail, but not without making certain people very rich.

even as recently as 2010, someone paid 10'000 BTC for a pizza - around $1.4m at current rates.
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Old 28.09.2013, 15:38
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Re: Bitcoin paper presented to Swiss parliament

It moves a lot - fecker has doubled since July alone - so I suspect there is still a lot of cash to be made, if your timing is good. The lack of liquidity should be a big worry for anyone considering BTC as a trading vehicle, however.
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Old 28.09.2013, 15:47
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Re: Bitcoin paper presented to Swiss parliament

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being one of the first people that knew of bitcoin, i kinda regret not putting time into it. i've probably even lost $10'000 of bitcoins in a wallet somewhere.

i honestly thought that the chance of it being successful would be too small be be worthwhile investing in. i didn't think about the short term speculation potential. in the end, i still suspect bitcoin is likely to fail, but not without making certain people very rich.

even as recently as 2010, someone paid 10'000 BTC for a pizza - around $1.4m at current rates.
I feel for you. In those early 2010/2011 days (I started mining in early 2011), bitcoins just seemed like a cool but throwaway toy and certainly millions have been lost. The golden days of mining are also absolutely over now, with only manufacturers of ASIC miners making any money in that field.

Luckily, my OCD attention to backups and hoarder mentality meant that that I haven't lost any bitcoins yet...

Will bitcoin fail? Could be, but something similar may well replace it. Trouble is, of course, the proof-of-work functionality that secures bitcoin inevitably leads to an arms race of more and more computing power (and thus energy usage) being thrown at bitcoin. There are some very good arguments that if bitcoin, or something like it, became the global dominant currency, then at least half of the energy consumption of the planet would be used to secure it.
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Old 28.09.2013, 16:08
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Re: Bitcoin paper presented to Swiss parliament

Anyone whose interest has been piqued by bitcoin and wants to know more could do a lot worse than read the original white paper by the mysterious (nobody knows who he is...) Satoshi Nakamoto:

http://bitcoin.org/bitcoin.pdf

It's only nine pages long, and if you have knowledge of CS or finance (preferably both) then it's fairly easy to understand.
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Old 28.09.2013, 16:34
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Re: Bitcoin paper presented to Swiss parliament

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I probably won't bother. But the message from that chart is clear - anyone who piddled about with gold or rice speculation during that time and didn't realize bitcoin was going on missed out on some serious profits and should ask themselves: what else are they missing out on?
No, the message is that if I knew back than what I know now then I would have made a reasonable mount of money. But that is true for every investment opportunity. You could have become very rich on gas masks and U.S. flags, airline shares, Gold, Google, Apple, Lehmann Brothers shares, Greece bonds and a lot of other things in the last 15 years. Even "second life".

The point is that you never know how things will develop. It's a question of risk assessment. There will always be some village idiots who fall in a pot of gold together with some far sighted investors who had the right nose, but I wouldn't say that not having made 'serious profits' with bitcoins is 'missing out'. You can't possibly invest in every high risk opportunity without being a gambler.
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Old 28.09.2013, 16:53
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Re: Bitcoin paper presented to Swiss parliament

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No, the message is that if I knew back than what I know now then I would have made a reasonable mount of money. But that is true for every investment opportunity. You could have become very rich on gas masks and U.S. flags, airline shares, Gold, Google, Apple, Lehmann Brothers shares, Greece bonds and a lot of other things in the last 15 years. Even "second life".

The point is that you never know how things will develop. It's a question of risk assessment. There will always be some village idiots who fall in a pot of gold together with some far sighted investors who had the right nose, but I wouldn't say that not having made 'serious profits' with bitcoins is 'missing out'. You can't possibly invest in every high risk opportunity without being a gambler.
Of course that's all true. I was really trying to move the thread away from the gold/rice thing. (Rice I can understand, and now that bitcoin has pwned gold, it can shift back to being a fairly useful industrial material and the stuff of children's trinkets...)
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Old 28.09.2013, 19:27
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Re: Bitcoin paper presented to Swiss parliament

i'm pretty sure people who bought tulip bulbs were lording it over others... at least for a short period of time...
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Old 28.09.2013, 20:26
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Re: Bitcoin paper presented to Swiss parliament

I've had a brief look through that paper and maybe I'm missing the point, or not being too forward looking, but it seems that the bitcoin was originally intended to be a payment method which avoided third party arbitration, and therefore the associated fees, but in the minds of bitcoin adopters it appears to have turned into a currency.

I don't know much about economics so please bear with me on my amateurish take on what I'm about to say next.

A currency needs a backing. Normally the backing of a currency comes from a country's worth. The only backing of the bitcoin that I can see is from those who have already paid real money for bitcoin. Therefore each bitcoin is worth the total amount of real money invested divided by the amount of bit coins there are.

So what about bitcoin mining. Well from what I can see it's effectively printing money. A form of digital quantitive easing if you like, except it's being done without any controls. Somebody who mines a bitcoin effectively introduces another bitcoin, but the value of normal currency backing the bitcoin system remains the same, hence each bitcoin becomes less valuable than it was. This is bad for bitcoin holders.

I'm likely wrong in my assessment, but it does look to me as if this whole bitcoin thing has become an unintended form of Ponzi scheme. Quick money to be had for the early adopters, but nothing but losses for those who jump on the bandwagon at a later stage.

I'm sure that some of you financial experts will put me right on this.
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Old 28.09.2013, 20:51
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Re: Bitcoin paper presented to Swiss parliament

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I've had a brief look through that paper and maybe I'm missing the point, or not being too forward looking, but it seems that the bitcoin was originally intended to be a payment method which avoided third party arbitration, and therefore the associated fees, but in the minds of bitcoin adopters it appears to have turned into a currency.

I don't know much about economics so please bear with me on my amateurish take on what I'm about to say next.

A currency needs a backing. Normally the backing of a currency comes from a country's worth. The only backing of the bitcoin that I can see is from those who have already paid real money for bitcoin. Therefore each bitcoin is worth the total amount of real money invested divided by the amount of bit coins there are.

So what about bitcoin mining. Well from what I can see it's effectively printing money. A form of digital quantitive easing if you like, except it's being done without any controls. Somebody who mines a bitcoin effectively introduces another bitcoin, but the value of normal currency backing the bitcoin system remains the same, hence each bitcoin becomes less valuable than it was. This is bad for bitcoin holders.

I'm likely wrong in my assessment, but it does look to me as if this whole bitcoin thing has become an unintended form of Ponzi scheme. Quick money to be had for the early adopters, but nothing but losses for those who jump on the bandwagon at a later stage.

I'm sure that some of you financial experts will put me right on this.
bitcoin was designed as a distributed digital cash. the central innovation was the blockchain as a method to create a transaction log that did not require a central authority.

bitcoin does have some characteristics of a ponzi scheme. the early adopters benefit.

in my opinion there are a few factors that will mean bitcoin will fail in the future:

- uneven distribution of bitcoins. the early adopters are now millionaires/billionaires at current rates. it makes sense for them to hoard until bitcoin is entrenched in usage and then they can unload their holdings at great gains. until this re-balancing occurs, there will be a latent amount of sellers which will depress the BTC price
- limited BTC numbers. although this has encouraged adopters who see BTC as a digital analogue of gold, my view is that once all the BTCs are mined (and probably before that) the miners will stop mining and BTC will collapse. the only way against this is if BTC takes off such that the transaction reward is enough to keep miners interested.
- ASIC mining concentrates power in the hands of few people. BTC is vulnerable to attack from any moderately well funded person or organisation. imo, this is essentially a fundamental weakness of the proof-of-work blockchain transaction log that underpins the whole of BTC. it requires that the honest represent >50% of the computing power
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Old 28.09.2013, 21:10
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Re: Bitcoin paper presented to Swiss parliament

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I've had a brief look through that paper and maybe I'm missing the point, or not being too forward looking, but it seems that the bitcoin was originally intended to be a payment method which avoided third party arbitration, and therefore the associated fees, but in the minds of bitcoin adopters it appears to have turned into a currency.

I don't know much about economics so please bear with me on my amateurish take on what I'm about to say next.

A currency needs a backing. Normally the backing of a currency comes from a country's worth. The only backing of the bitcoin that I can see is from those who have already paid real money for bitcoin. Therefore each bitcoin is worth the total amount of real money invested divided by the amount of bit coins there are.

So what about bitcoin mining. Well from what I can see it's effectively printing money. A form of digital quantitive easing if you like, except it's being done without any controls. Somebody who mines a bitcoin effectively introduces another bitcoin, but the value of normal currency backing the bitcoin system remains the same, hence each bitcoin becomes less valuable than it was. This is bad for bitcoin holders.

I'm likely wrong in my assessment, but it does look to me as if this whole bitcoin thing has become an unintended form of Ponzi scheme. Quick money to be had for the early adopters, but nothing but losses for those who jump on the bandwagon at a later stage.

I'm sure that some of you financial experts will put me right on this.
the number of bitcoins is capped, so it's kinda like knowing how much total gold is trapped under the whole of the earth and the bitcoin mining process is just getting it out. while mining increases the amount of BTC available for circulation, the total amount of BTC is limited.
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Old 29.09.2013, 00:08
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Re: Bitcoin paper presented to Swiss parliament

The Canadian Mint is ready to test its own digital money project called Mintchip presenting it as a digital version that would be legal tender, just like physical dollars and cents. You would hold it on a smartphone or other electronic device, just like a wallet. This has the potential to make virtual currencies like bitcoin obsolete.
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Old 29.09.2013, 14:01
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Re: Bitcoin paper presented to Swiss parliament

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A currency needs a backing. Normally the backing of a currency comes from a country's worth. The only backing of the bitcoin that I can see is from those who have already paid real money for bitcoin. Therefore each bitcoin is worth the total amount of real money invested divided by the amount of bit coins there are.
A currency (money) doesn't really need a backing as such (and national currencies haven't been backed in that sense since the end of the gold standard); in order for people to use it, they need to have good reason to believe that it fulfills certain properties.

Money needs to be:

- Portable
- Divisible
- Durable
- Rare (and non-forgeable)
- Fungible
- Non-consumable and non-perishable (rice just about works but apples wouldn't)

Bitcoin meets all these requirements perhaps better than anything before, so it's at least a 'mechanically' good currency. National currencies also do pretty well, but they sometimes fail on attributes such as 'rare' (e.g. Weimar Republic in the 1920s and Zimbabwe now).

In the end, we accept a certain kind of money as payment for a debt because we believe other people will also accept it. (I'm happy to be paid in Swiss francs because I know Coop and my landlord will be also happy to be paid in Swiss francs).

Bitcoin is, obviously, a long way from such universal acceptance (Silk Road notwithstanding) but it certainly has some, and increasing, uses as a currency. E.g. you may commission me to produce a product, you pay in bitcoins. I employ a programmer in Belarus and pay him in bitcoins; I organize server hosting and pay in bitcoins; use a graphics designer in India and pay her in bitcoins; etc.

This 'use' of money (rather than sitting on it as a speculation vehicle) is known as 'velocity of money' and is what the value of bitcoin should really reflect. At the moment it's grossly overvalued in that respect (i.e. most of its value is speculation).

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So what about bitcoin mining. Well from what I can see it's effectively printing money. A form of digital quantitive easing if you like, except it's being done without any controls. Somebody who mines a bitcoin effectively introduces another bitcoin, but the value of normal currency backing the bitcoin system remains the same, hence each bitcoin becomes less valuable than it was. This is bad for bitcoin holders.
As Phil_MCR pointed out, there are a finite amount of bitcoins and everybody knows they're coming, so there is no inflationary pressure. Mining is also heavily rate restricted (25 bitcoins every 10 minutes on average).

Bitcoin's real problem is one of deflation; if its value is increasing then the tendency is to sit on bitcoins rather than spend them. This alone makes it fairly useless as a single national currency. The gold standard was abandoned for the reason that it strangles economic growth through an over-restricted money supply and nobody wants to go back there.

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I'm likely wrong in my assessment, but it does look to me as if this whole bitcoin thing has become an unintended form of Ponzi scheme. Quick money to be had for the early adopters, but nothing but losses for those who jump on the bandwagon at a later stage.
It's not a Ponzi scheme - that's an organized fraud where early investors are paid a return from the proceeds of later investors and are not informed of the real source of the returns. Bitcoin is totally transparent and everybody can see where the increase in value is coming from (it has a compelling industrial use and is an effective store of value). Bitcoin investors in 2010 are no different from Apple investors in 2000 - they were just in the right place at the right time.
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Old 29.09.2013, 15:34
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Re: Bitcoin paper presented to Swiss parliament

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The Canadian Mint is ready to test its own digital money project called Mintchip presenting it as a digital version that would be legal tender, just like physical dollars and cents. You would hold it on a smartphone or other electronic device, just like a wallet. This has the potential to make virtual currencies like bitcoin obsolete.
That's been discussed since last year in the bitcoin community. Basically, it's a chip (a hardware wallet) that can be loaded with small amounts of money (< $500).

All electronic currencies have to solve the 'double spending problem'. This is when you spend the actual same cash in your electronic wallet to two or more counterparties. This is effectively the same as forging money.

Bitcoin solves it through 'proof-of-work': this is where large amounts of computing power (the miners) compete to approve the transaction. Miners win this competition at random, so a single bad miner (the forger) can't predict that they'll be allowed to approve a dishonest transaction. This randomization among large numbers of miners is what keep bitcoin secure. The cost to overcome this is in the realm of very large companies or governments and would destroy bitcoin as a side-effect. (Actually, the community would try an algorithm change first - but it would still cause a lot of hassle).

MintChip approves the transaction from the sending chip; so the secret that is uses (the private key) has to be kept secret on the chip even from the user. The system has a $100 transaction limit and a $500 account limit which has presumably been calculated based on the cost for a criminal to discover the secret key (acid bath on the chip; electron microscope; etc).

Summary: it will be useful for small-scale consumers in Canada who can't get a credit card. It doesn't really have any good international or business-to-business uses.
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