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UruramTururam
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Re: Bitcoin digital currency
« Reply #90 on: Jun 6th, 2011, 12:38am »
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on Jun 5th, 2011, 7:37pm, 99of9 wrote:
 A bitcoin is essentially the solution to a mathematical problem.  But it's a cryptographic problem nobody wants to solve, so it's not really that valuable.  

 In fact the problem is: "Are the bitcoins transactions performed so far valid?" I think the problem is chosen to be like this - having no other use - for the purpose of no interference between transaction validation and doing anything else. In fact who wants banknotes for the paper they contain?
 
By the way the bitcoin hashing is - as far as I understand it - a NP-complete problem. Just like the salesman problem is. And all NP-complete problems are equivalent, so if anyone finds a faster solving way for any of them it could be fairly easy adapted for all the others.
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Re: Bitcoin digital currency
« Reply #91 on: Jun 6th, 2011, 3:38am »
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The point is not what it takes to produce a Bitcoin. The only reason for having the mining system is to have a stable way of releasing the currency. As I understand it, Bitcoin's worth is based purely on the fact that it's being used as money, that everybody else thinks it's worth something. Like a very powerful yet very dangerous way of harnessing the bandwagon effect.  
 
You could also say that much of the debate in this thread has been over to what extent fiat currencies also amount to this.
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99of9
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Re: Bitcoin digital currency
« Reply #92 on: Jun 6th, 2011, 6:59am »
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But if you're going to put in a mining step, why not mine something useful.  Then it can be at least slightly valuable.  Why solve a random useless NP-complete problem when you could solve a useful one?  I think the best thing about bitcoin is it's ability to be divided and transferred easily.  But without any trace of backing value it's totally vulnerable to imitators.  Why would *this* version retain value if there were 100 other equivalent schemes promising bytenotes.
« Last Edit: Jun 6th, 2011, 7:02am by 99of9 » IP Logged
rbarreira
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Re: Bitcoin digital currency
« Reply #93 on: Jun 6th, 2011, 7:15am »
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on Jun 6th, 2011, 6:59am, 99of9 wrote:
But if you're going to put in a mining step, why not mine something useful.  Then it can be at least slightly valuable.  Why solve a random useless NP-complete problem when you could solve a useful one?  I think the best thing about bitcoin is it's ability to be divided and transferred easily.  But without any trace of backing value it's totally vulnerable to imitators.  Why would *this* version retain value if there were 100 other equivalent schemes promising bytenotes.

 
I think it's about the momentum of the currency. As long as people are willing to trade services and goods for Bitcoins, does it matter that nothing of value is behind it?
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Re: Bitcoin digital currency
« Reply #94 on: Jun 6th, 2011, 12:25pm »
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on Jun 6th, 2011, 6:59am, 99of9 wrote:
Why would *this* version retain value if there were 100 other equivalent schemes promising bytenotes.

I think that is a very incisive question.  Particularly to those who believe that technology keeps making everything better, it is easy to imagine that bytenotes will have additional features that bitcoins do not, and which can't be backported to bitcoins.  If everyone therefore stopped using bitcoins and started using bytenotes, then value of bitcoins would drop to zero.  This thought experiment alone should scare everyone away from bitcoins.
 
The only counter-argument I can think of is if the transition was somehow orderly, i.e. if everyone received the same number of new bytenotes for their old bitcoins.  But given how that is not happening for the transition into bitcoins (supposing that is what is happening now), why would it happen on the transition out?
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Re: Bitcoin digital currency
« Reply #95 on: Jun 6th, 2011, 12:38pm »
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on Jun 6th, 2011, 7:15am, rbarreira wrote:
I think it's about the momentum of the currency. As long as people are willing to trade services and goods for Bitcoins, does it matter that nothing of value is behind it?

I think it is about momentum, to be sure.  But are BitCoins really gaining momentum as a currency?  I'm trying to imagine how that would even work with such a wildly fluctuating exchange rate.
 
Let's say Omar checks the exchange rate and sees 1 BTC = $8.  He offers to sell an Arimaa set for 5 BTC, the suggested retail price of $40.  Three days later, the price of BitCoins has gone through the roof so that now 1 BTC = $20.  Suddenly nobody is going to pay 5 BTC ($100) for an Arimaa set.  So Omar can't make a sale.  He has to go in and reprice his sets at 2 BTC = $40.  But wait, this is really risky.  What if the next day BitCoins drop in price so that 1 BTC = $15.  Then someone snaps up Omar's Arimaa set for 2 BTC = $30, i.e. 25% less than what Omar was intending to sell it for.  Tough luck, Omar.
 
Let me make a total guess with no data to back it up: the overwhelming majority of transfers of BitCoins at the moment are not in exchange for goods and services, but rather in exchange for other currencies.  If my guess it correct, it would be further evidence that BitCoins are not taking hold as a new currency, but rather are taking hold as the latest speculative fever.
 
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Re: Bitcoin digital currency
« Reply #96 on: Jun 6th, 2011, 3:15pm »
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on Jun 6th, 2011, 12:38pm, Fritzlein wrote:

Let's say Omar checks the exchange rate and sees 1 BTC = $8.  He offers to sell an Arimaa set for 5 BTC, the suggested retail price of $40.  Three days later, the price of BitCoins has gone through the roof so that now 1 BTC = $20.  Suddenly nobody is going to pay 5 BTC ($100) for an Arimaa set.  So Omar can't make a sale.  He has to go in and reprice his sets at 2 BTC = $40.  But wait, this is really risky.  What if the next day BitCoins drop in price so that 1 BTC = $15.  Then someone snaps up Omar's Arimaa set for 2 BTC = $30, i.e. 25% less than what Omar was intending to sell it for.  Tough luck, Omar.

Er no, he quotes his prices in dollars and updates the Bitcoin price continually based on the market feed. If gold bar vending machines can do it, why not a website?
 
Plus he can give me a discount because I'm not using Paypal.
 
Based on personal experience, I think you have to be living outside the US/western Europe to understand exactly how great it sounds not to have to deal with the international banking system.
 
This is what I meant when I said I think this could replace hawala. An international Bitcoin-powered network of independent money transferers would make a killing from remittances.
 
on Jun 6th, 2011, 12:38pm, Fritzlein wrote:

Let me make a total guess with no data to back it up: the overwhelming majority of transfers of BitCoins at the moment are not in exchange for goods and services, but rather in exchange for other currencies.  If my guess it correct, it would be further evidence that BitCoins are not taking hold as a new currency, but rather are taking hold as the latest speculative fever.

Now what you say there about the current situation is absolutely true. However, if any new currency is going to get off the ground with no official backing whatsoever, you have a chicken-and-egg situation in that no internet retailer's going to go to the trouble of enabling Bitcoin on their site when nobody's using the things.  
 
Ever the optimist, I wonder if we might now start to see more internet sellers implement Bitcoin. But if this does happen it's going to be grass roots. The risks are too great and the benefits too small for the big players. The little guys might just sneak under the radar.
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Re: Bitcoin digital currency
« Reply #97 on: Jun 8th, 2011, 12:45am »
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on Jun 2nd, 2011, 9:12am, UruramTururam wrote:
I plan to quit at 50.  Wink

Wow, that may only be a few days from now.  It's already trading over $27!  I have never seen anything like this in my life.  The price of BitCoins is rising so fast, I have to check it both before I go to bed and as soon as I get up in the morning.
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Re: Bitcoin digital currency
« Reply #98 on: Jun 8th, 2011, 1:02am »
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on Jun 6th, 2011, 3:15pm, megajester wrote:
Er no, he quotes his prices in dollars and updates the Bitcoin price continually based on the market feed. If gold bar vending machines can do it, why not a website?

OK, that could be done, although it still leaves the vendor with potential losses if the price of BitCoins plummets after a sale has been made.
 
As for gold bar vending machines, it is pretty easy to predict those will disappear as soon as the bubble in gold prices is popped.  The man on the street will suddenly realize that not only does gold not retain its value through thick and thin, it is also somewhat inconvenient to spend.  I saw it happen only too recently with real estate.  Friends of mine bought a second house, not to live in, but on the conviction that house prices never go down.  Now they "can't sell" their extra house, which is a euphemism for being unwilling to sell at the current market price, which is too much lower than what they paid for it.
 
There may be a coming debacle for the euro, and for the yen, and also for the US dollar.  Gold may look good for a while yet.  But when the dust settles, gold will not be the new means of settling international payments.
« Last Edit: Jun 8th, 2011, 1:04am by Fritzlein » IP Logged

UruramTururam
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Re: Bitcoin digital currency
« Reply #99 on: Jun 8th, 2011, 6:20am »
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on Jun 8th, 2011, 12:45am, Fritzlein wrote:

Wow, that may only be a few days from now.  It's already trading over $27!

 
I'm not that greedy. Sold for $32. It grows too fast. Input $49, output $224, balance 175, I offer 150 to the prize pool of AC'12.  
 Smiley
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Re: Bitcoin digital currency
« Reply #100 on: Jun 8th, 2011, 1:16pm »
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on Jun 8th, 2011, 6:20am, UruramTururam wrote:
I'm not that greedy. Sold for $32. It grows too fast. Input $49, output $224, balance 175, I offer 150 to the prize pool of AC'12.  
 Smiley

I'm glad you won your gamble, and glad of the generous use to which you will put your winnings.  Smiley
 
In other news, the government crackdown is looming.  But government moves so slowly, and this bubble is inflating so fast, that it seems something has to give economically before law enforcement can effectively interfere.
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Re: Bitcoin digital currency
« Reply #101 on: Jun 10th, 2011, 2:44pm »
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I surely don't know the future of BTC price, but as for today it seems I had got a good price.  Grin
 

 
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Re: Bitcoin digital currency
« Reply #102 on: Jun 10th, 2011, 2:53pm »
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Wow, if the trend keeps up, it will mean that you sold at the exact peak of $32.  That is unbelievable.  While you're at it, will you pick my lottery numbers for me?  Grin
 
We should take a "double-or-half" poll.  From the current price of $22 is it more likely to hit $44 next or $11 next?  Since earlier in the thread I spoke of BitCoins reaching $100 or even $200, I will stick with the implicit prediction.  The pyramid will not yet collapse.  $44 will come before $11.  But eventually the price will indeed fall below $11, probably below $1.
 
I say this because it is hard for me to psychologically accept a bubble unraveling so soon.  I'm steeled to waiting years for stock market or commodities bubbles to burst.  Besides, the news about BitCoins is still just getting out.  There are plenty of fools left that haven't rushed in yet.  But why should a quick end be so strange?  The bubble inflated more quickly than I imagined possible in the first place, so I should adapt my expectations to a new pace of change.
« Last Edit: Jun 10th, 2011, 3:03pm by Fritzlein » IP Logged

UruramTururam
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Re: Bitcoin digital currency
« Reply #103 on: Jun 10th, 2011, 3:08pm »
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I basically agree here.  
 
I'm not sure if $44 would be reached but I expect a rise next week. Yet I also bet $44 rather than $11.  
 
Now a lot of new people started mining BTC and the network is vastly overpowered generating 450 BTC/hour instead of desired 300. This would cause a big jump of difficulty around next Wednesday. And there are supply shortages of Radeons! So I expect a  rise afterwards.  
 
I have a few spare BTC (not bought but generated using my comp while I'm working - as fortunately I have a Radeon 5870 known as the best GPU for Bitcoin generating) so I'll play with them.
 
The point that we disagree with each other is the final price of BTC. I don't believe in $1-$10 range. The project will either succeed or collapse totally and the price will be either >$100 or <$0.10.
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Re: Bitcoin digital currency
« Reply #104 on: Jun 10th, 2011, 3:14pm »
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on Jun 10th, 2011, 3:08pm, UruramTururam wrote:
The point that we disagree with each other is the final price of BTC. I don't believe in $1-$10 range. The project will either succeed or collapse totally and the price will be either >$100 or <$0.10.

You are probably right that it will either succeed or collapse totally.  The problem with the "succeed" scenario is that there is no stable price other than $0.  Why $200 and not $2000?  Since there is no stable price greater than zero, the price must eventually converge to zero.  Mathematical proof.  Smiley
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