

Largest bitcoin bounty paid for animation about the system (8500BTC, ~$6000) - mike_esspe
http://www.bitcoin.org/smf/index.php?topic=5399

======
trotsky
There sure seems to be a ton of bitcoin articles that show up on HN, with many
of the same usual subjects showing up to comment as soon as they're posted. I
know you guys want to drum up as much interest as possible in bitcoin for the
obvious reasons, but it comes across a bit spammy/scammy at least to me.

Besides, if you really want people to set up shop trading things of actual
value for BTC you're going to need to get the bullish forces under control so
that you don't have this runaway strength in the currency. Promoting it so
heavily looking for those slashdot type bumps in the value makes the community
come across as just a bunch of greater fool theory speculators.

~~~
kiba
_There sure seems to be a ton of bitcoin articles that show up on HN, with
many of the same usual subjects showing up to comment as soon as they're
posted. I know you guys want to drum up as much interest as possible in
bitcoin for the obvious reasons, but it comes across a bit spammy/scammy at
least to me._

Who's going to answer HNers' questions and criticism?

 _Besides, if you really want people to set up shop trading things of actual
value for BTC you're going to need to get the bullish forces under control so
that you don't have this runaway strength in the currency. Promoting it so
heavily looking for those slashdot type bumps in the value makes the community
come across as just a bunch of greater fool theory speculators._

Maybe Bitcoin is just a very viral idea. Bitcoin prices functuate and they
don't alway goes straight up, so it's not always bullish. Corrections are part
of the natural part of the market.

~~~
wmf
Your enthusiasm for Bitcoin may be innocent, but shills and astroturfers
abound on the Internet. If Bitcoin is so interesting, other people will take
up the conversation; you don't need to dominate it.

------
mike_esspe
Animation that got the bounty: <http://www.youtube.com/watch?v=Um63OQz3bjo>

------
kiba
For those who don't know what Bitcoin is:

It's an open source P2P cyrptocurrency.

Here are some helpful links to get you started:

1\. <http://bitcoin.org> \- The main site

2\. <https://en.bitcoin.it/wiki/How_bitcoin_works> \- How Bitcoin works

3\. <https://en.bitcoin.it/wiki/Getting_started> \- Getting Started Guide.

4\. <https://en.bitcoin.it/wiki/FAQ> \- The Bitcoin FAQ

~~~
rodh257
When I first heard of this, I thought it would be something like seti@home
where it uses your PC power to do jobs, and people would pay for those jobs to
put onto the nextwork, if you were running it on your PC, you'd get some of
that money.

But from what I read, all it does is do complex calculations that don't
actually get used for anything? Just uses electricity in return for
'bitcoins'?

Does anyone know if there is such a thing as my original idea? Companies could
buy distributed computing time that is sourced from home users idle clock
cycles.

~~~
wmf
<http://en.wikipedia.org/wiki/United_Devices> It failed because the idle time
on your PC is worth less than the overhead of organizing it.

I wouldn't say that the CPU time used by mining bitcoins is wasted per se; in
some sense that computation prevents attackers from falsifying transactions.

~~~
gojomo
And 'Centrata' (in its original incarnation). And a bunch of others in the
same era: Popular Power, Applied Metacomputing, Parabon Computation,
Distributed Science/ProcessTree, and DataSynapse ("get paid in Flooz!").

And kids today think they know what a bubble is!

------
asdf333
How do you avoid a deflationary spiral (same issue as gold standard)?

You can kind of get around it by continuing below 8 decimal places but it
seems like a potentially fatal issue as the bitcoin economy expands.

~~~
po
Another example of the issues faced by a private currency were related by
Krugman in 1998. It describes the economic issues of a Capitol Hill baby-
siting club that issued a limited amount of scrip to keep track of hours of
time for people offering and using baby sitting services:

<http://www.slate.com/id/1937/>

It's a good description of an unexpected problem.

 _Edit: also don't miss the sidebar about solving the problem of cycles with
inflation:_

<http://www.slate.com/id/1937/sidebar/42410/>

~~~
nas
Fascinating. Still, I'm not sure the problem with the babysitting scrip
applies to bitcoin. You must be very careful to differentiate between monetary
deflation and price deflation.

In the case of the babysitting scrib, it sounds like it was clearly a problem
of monetary deflation. The payment of dues took coupons out of circulation,
deflating the monetary supply. Aside from lost wallets, bitcoin does not have
monetary deflation.

A doomsday scenario involving price deflation is just a theory since as far as
I know there has never been an example in real-life. Logically, it does not
make sense to me but I-Am-Not-An-Economist.

Bitcoin has been undergoing price deflation for much of its life. So far, it
has not caused a problem except that vendors are inconvenienced by relatively
quickly changing prices.

~~~
po
I not sure if the lessons there are applicable either. There are a ton of
differences. For one thing the coupons 'value' was fixed to an amount of work
and they were not divisible.

Also don't miss the sidebar at the end of that article. I was firmly in the
"inflation is always bad" camp until I started thinking about it a bit.
Inflation is definitely an incentive not to hoard the currency. It causes
money to flow back into the economy. Now I'm not sure where I stand on the
issue other than I know that I don't understand it enough.

Suppose a Buffet-like successful person was able to hoard up 10% of bitcoin.
This money is effectively out of circulation because he's a scrooge that will
never spend it. Because bitcoin is divisible, it doesn't really matter much
and the price reflects the amount in circulation. Then let's say he died and
passed it onto his kids who were irresponsible and spent it all in 3 years.
The amount in circulation would be increased by a huge amount (assuming that
most people have some savings) relative to the amount in circulation before.
The liquidity of the bitcoin would change significantly but the underlying
value of it doesn't. I believe that's what you were talking about with
monetary deflation and price deflation, no?

Based on that, it means I would expect the price of bitcoin to fluctuate quite
wildly. Then again, I guess gold has the same problem.

------
aristidb
In that link, there are a couple of links to a Ponzi scheme which is openly
advertised as such.

Weird. (Or is this just a big fat joke?)

~~~
trotsky
People who are willing to invest in what they think is an economic bubble are
probably pretty willing to invest in what they know is a ponzi scheme as well.
After all, both can be pretty profitable as long as you get out right before
the bottom drops out.

~~~
wmf
And Bitcoin has no clawbacks. (A concept I'd never heard of until Madoff.)

------
qixxiq
I've been seriously considering purchasing 18000BTC as an investment. If
bitcoins catch on in the next ten years, 18000 will be equal to 0.1% of the
total available currency.

Just wish I still had the money to do that (startup is busy digesting whatever
I had)

~~~
kiba
It's a big gamble, though. The bitcoin community don't know if the currency
will succeed but we're trying our damn hardest to make sure it succeed.

Other than that, bitcoin is an extremely fascinating subject. You can spend
hours upon weeks upon years talking about it.

~~~
hugh3
_You can spend hours upon weeks upon years talking about it._

Yes, kiba, you can. We've noticed.

------
jedsmith
Wasn't there a transaction of > 300,000 BTC? Or does the headline specifically
mean a _bounty_?

~~~
kiba
Anybody can send 300,000 BTC back and forth between their computers. It
doesn't mean something.

However, it is significant when somebody won one of the largest bounty by
performing immensely useful work such as the production of a well polished
animation video that is designed to introduce users to bitcoin.

~~~
jedsmith
> Anybody can send 300,000 BTC back and forth between their computers.

You assume that's what it was. Calling the bounty in the headline ~$6,000 is
disingenuous, too, because dumping the BTC into the market would drop the
price significantly. You'd never be able to move it for $6,000, currently.
You're talking about more than the daily Mt. Gox volume.

(Yes, you might be in your domain, but there are other people familiar with
BitCoin present. It bugs me when those with domain-specific knowledge assume
people in alternative forums don't have a clue.)

~~~
kiba
_You assume that's what it was. Calling the bounty in the headline ~$6,000 is
disingenuous, too, because dumping the BTC into the market would drop the
price significantly. You'd never be able to move it for $6,000, currently.
You're talking about more than the daily Mt. Gox volume._

It's actually hard to say. Mt. Gox order volume is partly hidden because of
dark pool order. What people see might not be an indicated amount of bitcoin
on the market.

~~~
jedsmith
Dark liquidity still affects a market, it just affects it less.

BitCoin is fascinating to me because there are people who are absolutely
absorbed in it, but it's unlikely to get traction outside of its current
domain. The fact that it's moving for real money is interesting, though, and
mining or small trades is currently worth it.

I wouldn't dump my life into it, though. Outside regulation picking up on it
is likely to be interesting, as well. The system itself is a prime target for
laundering money, if the market gets to a point where it can support enormous
trades.

