Bitcoin | General financial discussion | Discussion forum

I have a good chunk of experience with it.. I've yet to watch Spurlock's show but seems to be re-igniting some interest slowly.. In terms of the technology/code behind Bitcoin I don't think alot of the problems are here.. It should be sound.. However.. The problems erghh the problems.. For the average individual bitcoin is not for you.. It requires a level of technical prowess in order to utilize/store/invest in safely.. It requires due-dilligence far beyond what would be typical of a stock or investment product.. In fact take the higest risk stock or product you own times it by a thousand and this is still below bitcoin risk threshold.

It is an interesting idea but frought with risks. In terms of Loonie's quetions.. Is it viable in my opinion yes.. Is it away to avoid pain and suffering with the US/CDN devaluation i would say yes.. Regulatory varies by country but is apart of vast due dilligence.. Competitors yes and no.. the RCM has a "digital" currency.. There are others out there not using BTC code or platform..

If your willing to travel into the investment wild-west then take a look at bitcoin however you can and very well might lose anything in it.. Don't be swayed by big media (or names) stories on Bitcoin.. Winklevoss bros etc..

Alot of early investors have made their $$.. It concerns me where the concentrations of BTC are occuring now.. If BTC stays flat I could see US and Canada taking a swing to stamp it out.. Mintchip has been in use for awhile now as a limited pilot.. With OLG now coming online as well as more govt services it wouldn't surprise me to see mintchip and others getting some new funding or attention..

I think many people today have been taught that banking and financial system, democratically elected governments, capitalist system, etc are greedy and evil, so as an act of self-righteousness, "I'm not participating in this because I am virtuous", freely exchange their dollars (i.e. the one, sovereign legal tender backed by the democratic governments of Canada and United States) for something someone invented called Bitcoin (redeemable and backed by what or who or where exactly.......??) O-K. How about everybody send me their dollars in exchange for BillCoins, issued and backed by me?

Self-righteousness is a possibility. Another is just plain greed.

The accounts from some people who lost money in the collapse of the Mt. Gox Bitcoin exchange sound like they were speculating in bitcoins much the same way people were speculating in tulip bulbs during the Dutch tulip bulb bubble in the 1630's. These are some of the stories from BitcoinTalk.org: Mt.Gox Multi-plaintiff Suit:

My name is xxxxxx and I am from California (if that matters). I have about 650 BTC in Gox. I haven't slept in days and haven't been able to tell my wife how much I've lost. I was an early adopter, just mining in my basement, and I can't imagine all of my time and work vanishing like this. Please contact me with what I need to do

I would like to join your action lawsui as co-paintiff. I try to keep this short since you are probably getting tons of PMs.

I'm resident of Germany and I'm waiting for ~5700 Euros (~7800 US$) to be withdrawn by MTGOX. I also have about 9 BTCs on my account there. I successfully received a MTGOX-withdrawal of 990 EUR on 2013/12/30, which was ordered on 2013/12/03.

I'm a student and this is almost all of my money I have left (I actually have a lot of debt, which I intended to pay back with that money). I'm really panicking right now and not sure what to do!!!

I found your post just today after the Gox closed the site. I had 10,200 USD with them, which I traded just last week for gox coin. I initially deposited USD from bank account on November 2013, and traded on Gox just about 2 weeks ago, not knowing there was a trouble to withdraw any BTC from them. I do have screen shots from last week from trading and all my history since November 2013. My initial deposits in November have been 8000 USD and 2200 USD, so whatever trading I did in last weeks was for vain since gox did not let any BTC out of the site. Current standing on my account is about 27 BTC and around 2200 USD but since gox coin was never a real BTC, as I just learnt recently, I consider Gox owing me 10200 USD which I initially deposited.

Otherwise, I find it hard to believe someone would spend (and risk) £200,000 on Bitcoins as described by Daily Mail Online: 'Where's our money?'.

Perhaps bitcoins are just another payment method (like MasterCard and Visa) and not really a currency.

This excerpt from the MONEY Magazine article No, Big Companies Aren’t Really Accepting Bitcoin cuts through some of the bitcoin promo nonsense and sheds light on what companies that accept bitcoins really do with them:

...
BitPay, which has partnered with Microsoft, Newegg, and other merchants, confirmed to MONEY that the majority of its major clients ask that their bitcoins be instantly converted to cash. “I would say as a general trend most of our larger business do choose a settlement in 100% U.S. dollars because that’s how they do their accounting and finance,” said Tony Gallippi, co-founder and executive chairman of BitPay.

That’s a rather charitable explanation of why companies take fiat over bitcoin when given the choice. In reality, it’s probably because they simply don’t trust bitcoin as a stable store of value. Since Dell began accepting bitcoin through Coinbase in July 2014, bitcoin’s value has dropped by over 54 percent. If Dell had actually kept the cryptocurrency it received, its revenue from bitcoin sales would have essentially been cut in half.
...

Loonie said

Interesting piece by John Lanchester on the nature of money and bitcoin in particular. It's long, but some will find it worth their while.
I am a fan of Lanchester's books and find him more useful than much of what usually passes for "financial literacy" reading.

When Bitcoin Grows Up by John Lanchester

Interesting article. Lots of details and history about money and bitcoin. Unfortunately, it is flawed as the result of these two erroneous statements:

1. Its [money's] value rests on our belief in its value, underwritten by the authority of the state.
2. It doesn’t alter the fact that bitcoin has done very well for a form of money only seven years old, with no entity backing it other than lines of code running on a network of computers.

Regarding #1, most people don't really give a thought about whether or not money is sanctioned or underwritten by the state. In practice, it doesn't really matter.

What does matter is whether or not the money can be exchanged for things people need or satisfy obligations, particularly taxes. If the grocery store, telephone company, landlord, and CRA were to accept Canadian Tire money as payment, then people would be perfectly happy to be paid in Canadian Tire money than Canadian dollars. Otherwise, people will not accept Canadian Tire money, regardless of its security features.

#2 is simply false. Bitcoins have value because of the exchanges where one can convert the bitcoins into so-called fiat currency. Without the exchanges, bitcoins are just digital Monopoly money.

On the west coast, there is a non-digital alternate currency called Salt Spring Dollars that circulates mainly on Salt Spring Island and is not as hyped as bitcoins. See http://www.saltspringcoin.com/.

Merchants there accept them because they are backed by Salt Spring Island Monetary Foundation which will exchange each Salt Spring Dollar for a Canadian dollar.

Loonie said
Toronto also had or perhaps still has an alternate currency called Toronto Dollars. Its use was restricted to a small area, and it was effectively a medium for barter as I understood it. It never really caught on in a significant way. But Salt Spring is full of alternative-minded folks!

Toronto Dollars are gone.

According to the Wikipedia article, the "Toronto Dollar organization has had to suspend sales of Toronto Dollars due to lack of volunteers and the lack of infrastructure to support the work."

However, I suspect that the real reason was that people had to pay $1 for each Toronto Dollar. But, the merchants who had accepted them could only redeem each Toronto Dollar for 90¢.

For the merchants, it would have been like offering a storewide 10% discount. As well, if merchants are complaining about the 2% to 3% commission rate on credit cards, then they will not be welcoming to a payment method with a 10% commission rate.