
1 bitcoin worth more than dollar  - hippich
http://bitcoincharts.com/charts/mtgoxUSD#vztgSzm1g10zm2g25
======
sgornick
For those who are new to Bitcoin and would like to learn more:

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

Bitcoin Wiki - <https://en.bitcoin.it/wiki/Main_Page>

How Bitcoin Works - <https://en.bitcoin.it/wiki/How_bitcoin_works>

Installing Bitcoin - <https://en.bitcoin.it/wiki/Getting_started>

HowTo Mining Bitcoin: Fedora 14: <http://bit.ly/fb54ye> and Ubuntu:
<http://bit.ly/ewVzhu>

The Bitcoin Faucet (free bitcoins) - <https://freebitcoins.appspot.com>

Buying bitcoins - <https://en.bitcoin.it/wiki/Buying_bitcoins>

Bitcoin 6-Month Price Chart - <http://bit.ly/hzVKpq>

Bitcoin Community Portal -
<https://en.bitcoin.it/wiki/Bitcoin:Community_portal>

Recent Posts here on the forum -
<http://www.bitcoin.org/smf/index.php?action=recent>

~~~
sabj
I'm more confused than when I started. I understand the concept, but not the
ecosystem or money supply... or exchange rate.

~~~
sgornick
Ecosystem? How about the Payment portion of the ecosystem ... let's take a
"competitor", PayPal, for example. When you send $100 to a business using your
Paypal, the recipient gets $97, or less. With bitcoin, when you send $100, the
recipient gets $100 (at least until fees are necessary ... but even when that
starts being necessary the fees should be just a FRACTION of what Visa / MC /
PayPal / etc. take.)

~~~
johnny22
so, you're saying if paypal/mastercard/visa charged no money for transfer, you
would continue using them?

that example isn't reason enough for me to use bitcoin.

~~~
sgornick
A less expensive payment network is _one_ reason bitcoins might be used. Ask
ten people why they use bitcoins and you'll get ten different answers. For
some, it will be the ability to send money without needing a bank. For another
person the reason might be related to the anonymity that bitcoin offers.
Bitcoin's benefits range from supporting micropayments to supporting large
transfers with no chargeback risk.

But for the long term, When the list of payment methods reads:

    
    
      Visa / MC / AmEx / Bitcoin (receive 2% discount)
    

which button do you think most consumers will choose?

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svrocks
I really like the idea, but I have a question about how transaction growth can
be sustained once all 21MM bitcoins have been generated. In order to support
borrowing/lending IMO you need an increasing supply of currency. Otherwise
where will the interest on debt come from?

The only other type of non-inflating "currency system" I can think of is the
market for collectibles (baseball cards, limited edition artwork, etc.). But
collectibles have intrinsic value while bitcoins only have value inasmuch as
they are useful for transactions.

So, TLDR I am concerned about the long-term viability of bitcoins

~~~
rdixit
This is largely true. Bitcoin is a brilliant idea combining a several
innovations that in and of themselves would be laudable. Still, it is most
likely true that expecting Mr. Satoshi Nakamato to have a perfectly formed
working model of a new financial system _at one go_ is unrealistic, even with
his obvious brilliance and dedication.

As a corollary to your point, other world currencies are going to be
considerably more inflationary than Bitcoins the longer this experiment last.
Then converting bitcoins to a national currency with a more profitable
interest rate is an inevitability. bitcoins will be sucked into financial
services rather than building out a viable economic platform for the currency.

That strikes at the heart of it, IMHO. The current currency distribution model
is good at least in the sense that the newly "printed" currency is allocated
for the most part by banks with (ostensibly) some degree of investment saavy.
Here, we are asking "network operators" doing the proof-of-work algorithms to
essentially act like banks and distribute bitcoins into larger circulation.
That seems likely to cause problems.

~~~
0x6763
First, those that get the coins first aren't "distributing" them into larger
circulation. If they generate a block and get the reward, they either save the
bitcoins or buy goods/services with them. This is not "distributing", but just
normal trade.

Second, how else do you bring coins into the market? Be forced to buy them
from the system's founder? I doubt that would catch on. Reserve a set number
for each person onthe planet and give it to them when they ask for them? I
don't think I could count all of the problems with that idea. Hand them out
some arbitrary number of some supply in a first come first serve manner? I
don't see how that would be an improvement.

The system needs people to generate blocks in order to provide the security of
the system, but generating blocks has costs associated with it (hardware,
electricity). Why not reward those block generators that are providing the
system's security with new coins for each block they generate, at least until
the number of transactions per block grow to a point that block generators can
charge transaction fees?

Block generators aren't just generating blocks for the fun of it...they want
bitcoins so they can spend them, which means those bitcoins will go to others,
who can then further spend them, etc. Anyone can do it. GPU mining is
profitable for most who wish to make the investment. There's no central
authority choosing who gets to generate new blocks. Each person chooses
whether they want to generate blocks or not.

If you don't want to generate blocks, but still want bitcoins, then you offer
goods/services for bitcoins.

So far no one has thought of any less arbitrary way to introduce bitcoins into
the network while continuing to support the security of the network at the
same time.

And the term "proof-of-work" is misleading. They're generating blocks in such
a way to deliberately make it difficult for someone else to attack the network
by generating replacement blocks in an attempt to double-spend their bitcoins.
They're not doing these calculations as an attempt to prove they're not some
malicious node. Block generators do the work of creating a block, and if
someone wants to double-spend their money, they have to generate that block
and every single block that's been generated afterwards with _at least_ the
same total difficulty of the other blocks. This can only theoretically be
accomplished if they have more processing power than the entire bitcoin
network, and even then it would take a long time to do unless they had _a lot
more_. Otherwise they just fall further and further behind as the bitcoin
network block generators increase in power and the difficulty increases.
Contrary to the _opinions_ of some, these calculations are not wasteful, but
are a necessary part of the system's security.

------
solipsist
Anyone want to offer some insight into what a _bitcoin_ is?

(Sorry for my ignorance. I tried looking it up, can't seem to understand what
it really is.)

~~~
trotsky
A gentleman's agreement between a certain faction of econ-crypto-tinfoil-hat-
botnet nerds to assign trade value to the wastage of increasingly large
amounts of electricity.

~~~
phirephly
Best description I've seen yet. Granted, I'm impressed with how much momentum
they seem to have already collected, so I feel like their implementation is
sound, but still tin-foily.

They are working on a real problem though. Paypal kind of works, but isn't
ideal.

~~~
cmontgomeryb
Why 'tin foily'?

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iheartmemcache
I read the wiki on BitCoin and I still don't understand how the BitCoin forex
market is made. Usually currencies are based on national GDP and that sort of
thing, but I haven't the faintest as to what controls the strength of this
currency. Can someone enlighten me?

~~~
antimatter15
I think I read somewhere that the value is derived from the amount of
electricity and hardware required to mine for a bitcoin.

~~~
sgornick
Not really, but to make MORE bitcoins yourself you would need to expend a fair
amount computing power that chews up a fair amount of electricity. Here's a
chart showing that possibly as the price rises, the amount of computing power
(and thus electricity) rises to match.
[http://www.bitcoin.org/smf/index.php?topic=2399.msg42269#msg...](http://www.bitcoin.org/smf/index.php?topic=2399.msg42269#msg42269)

~~~
hunterp
mobiles take pennies a day of electricity to power. mobiles are computing and
cheap to power.

~~~
sgornick
That's been tried! You can run a slightly modified version of bitcoin on a
Nokia N900, and it will mine as well. The N900 performs at about a 150
Khash/second level.
[http://www.bitcoin.org/smf/index.php?topic=2125.msg27918#msg...](http://www.bitcoin.org/smf/index.php?topic=2125.msg27918#msg27918)
For comparison, one single ATI Radeon HD 5970 pumps out about 600,000
Khash/second, or the equivalent of 4,000 N900s.

------
arohner
Most of the comments here are "why bitcoin?" I'll ask again, but in a form
that I hope is slightly more detailed:

Gold was valuable before it started being used as money. It started being used
as money because it has several valuable properties: it's rare, it's portable,
it's fungible.

Why would someone start using bitcoin? Who will accept a bitcoin in trade, and
why is that bitcoin more valuable to them than $1?

~~~
hippich
'cos "it's rare, it's portable, it's fungible."

~~~
hristov
And it can be quickly sent and received over the internet anonymously, which
is something gold cannot do.

~~~
mkramlich
And today, not only do we not send gold over the Internet to buy things, we
don't even send paper US dollars. Instead, banking systems send electronic
messages to one another, indicating a transaction has occurred and that two or
more accounts should be modified in a certain way.

Take this second thing, get rid of actual physical gold or actual paper
dollars, and you basically have what Bitcoin is. Pure electronic, pure
virtual, and not backed by any single bank or national government. Paper was
to gold somewhat like Bitcoin is to paper. A step further in the same
direction, just more extreme, with a couple of cool additional features and
potentially scary quirks. (Counter: arguably the US Federal government and
world banking system has some "scary quirks" but we're effectively forced to
accept them.)

~~~
arohner
Yes, but my biggest question is, why will anyone _start_ using it?

Gold was valuable _before_ it was money. Bitcoin is not.

These first movers that are paying real money for bitcoin, seem to only be
doing so because they think other people will use it in the future. There's a
name for that, it's called a bubble.

To have a sustainable currency, the medium of exchange should be valuable,
even if no one else is using it as money.

~~~
mkramlich
Fair point. I understand. However, some people today are actually accepting
Bitcoin as a method of payment. Not everywhere. Amazon doesn't accept it. Your
local water utility doesn't take it. But somebody takes it. And then there are
ways of converting Bitcoins back into say US dollars. And then you can pay
Amazon and your water utility in dollars. And so on. It is happening already.

In prisons, cigarettes are often used as a form of accepted currency. Weird
but, as you said, cigarettes have functional value before and beyond their
arbitrary assigned role as currency. Now take these little pieces of green-ish
papers in my wallet, with the funny markings on it. I heard a rumor that
others will take it as a unit of payment, even though in reality, it's just a
little piece of paper with some markings on it. It's actual functional value
could maybe be that of a piece of tissue paper to wipe my ass. Except it's not
very good at it. So I wouldn't even use it for that. The US government says,
"Forsooth and yeah verily, these pieces of paper shall be the currency we
use!" and couple that with a promise to accept it themselves as a unit of
payment, and therefore, poof, it now has value.

Last point, if you parachute onto a tiny uncharted Pacific island and contact
a lost tribe there, and offer them $20 USD for their food, they will most
likely say, "Sorry, we only take melons and womenfolk as currency. We don't
take US dollars, and we don't take American Express." Lesson: what is accepted
as currency varies by individual and culture and time period. It's totally
arbitrary.

------
hristov
Wow, I just learned about bitcoins and I have to say they are very clever.
Their brilliance is in that they play to the urge to collect in humans.

You run the software and makes bitcoins for you. Almost like earning money in
your sleep. And of course once you have "earned" these bitcoins by installing
the software you have a psychological inclination to assign actual value to
them.

Of course like most things academic it falls flat on its face on execution. My
software did not work. I had to spend half an hour diving through forums and
wikis to find some obscure command line argument that may make it work,
although I am still not sure it is working properly. Of course 99% of ordinary
people would have just given up.

So the folks at bitcoin have ensured that only persistent nerds like me use
their service.

~~~
0x6763
All I did was download the client and run it. It "just worked" for me without
doing any special on either Linux or Windows (XP). This was with the current
version 0.3.19.

------
vinyl
"No central authority" ? Well, I think the guys who decide there will only be
21 million bitcoins can be considered a central authority. Currency, in any
form, is deemed to have a central authority -- national currencies, for
example, have real-life value because states limit the available quantity. In
this case, the Bitcoins people are acting as the central bank. Especially when
I see that the total produced bitcoins will be halved each year by decision.

~~~
0x6763
Someone proposed 21 million coins, and others, by _voluntarily choosing_ to
run the software, agreed to the 21 million coin limit. That's not a central
authority...just an agreement between individuals.

In all of your statements you're conflating a protocol, and voluntary social
agreement, with a central authority.

Anyone is free to fork the software and change the rules to create their own
protocol for people to use! If they like the rules, they join...if they don't
like the rules, they don't join. Freedom.

------
jackowayed
Wow. The value has roughly 4x-ed since I was looking at bitcoin for the first
time a couple months ago.

Maybe it is worth it to implement my idea of writing something that tries to
get free cycles out of EC2 Spot instances by predicting when the price will
rise and spinning up instances before it does. (They don't charge you for
fractional hours if they kill you due to a price increase.)

EDIT: I think it's actually gotten a little less favorable to generate
bitcoins. My cheap VPS peaks at 1M hashes/sec, which according to
<http://www.alloscomp.com/bitcoin/calculator.php> used to mean it would take
around 250 days to generate a block, as I recall. Now, the value of a block
has 4xed, but the average time to generate a block at 1M hps is now 1300 days,
which is more than 5x as long.

~~~
bdonlan
These days there are 'pooled' mining systems in which you can receive payment
for working on fractions of a block.

~~~
jackowayed
But that doesn't change the fact that, since I was able to get $12.50 every
250 days and now I can get $50 every 1250 days, I'm getting less money per day
than before.

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rgrieselhuber
Does this mean that people are actually paying for bitcoins or that, based in
bitcoin's own systems they are worth more than $1?

~~~
kevinburke
I think it's the exchange rate - you can buy 1 bitcoin for $1.

~~~
janzer
I see a lot of people basically saying this same thing. It seems to me though
the real question is how easily can I sell my bitcoin for a dollar?

To me at least that seems more defining as a currency rather than simply say a
digital good.

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daeken
Topic correction: s/then/than/

~~~
hippich
thank you. i still learn english =)

