

Bitcoin, a service and the micro-micro-economy - spenvo
http://www.bitcoinbulletin.com/2011/03/29/bowling-for-bitcoins-meet-the-trader-04/

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dublinclontarf
Allow me to extol the virtues of bitcoin over the current credit-card/banking
based payment system.

1)Hard money, once you receive payment in bitcoin it stays with you, meaning
no chargebacks(Paypal, credit cards, looking at you).

2)Fast payment, you can recieve payment within minutes of it being
made(sometimes faster, but more on this in a moment).

3) Low barriers of entry, to start accepting bitcoin you don't need a bank
account, or even your own computer. You can use one of a number of free(or
cheap) online services such as mybitcoin.com or just go ahead and install it
on your machine.

4) No red tape, this is slightly related to the above but important enough to
warrant it's own point. With bitcoin there are no forms, no regulations, no
paperwork. You can send bitcoin to anyone, anywhere, anytime, any amount and
no one will care or track you, or freeze your account or any of the other
issues when dealing with the current banking system.

5)It's the most innovative financial ecosystem on the planet and evolving damn
fast. Because there is no regulation, it's easy to start writing applications
that use bitcoin. Services and goods are springing up at an astounding rate.

Now you may say that payments take minutes, but creditcards are instantanious
this is true (to a certain extent, at least with payment confirmation).
However because of the flexibility of bitcoin, it's ease of development a
technical solution to this issue will arrise in the near future(next two to
three months).

Right now bitcoin is small, but it's growing fast, real fast, and faster than
the growth of bitcoins themselves or even it's users are the services and
goods that are springing up around it.

In a years time bitcoin is going to be so easy to use people like your
grandmother are going to wonder why they ever bothered with credit-cards(or
online banking) at all.

Sexy no?

~~~
rmc
_1)Hard money, once you receive payment in bitcoin it stays with you, meaning
no chargebacks(Paypal, credit cards, looking at you)._

I read this as: "If you give bitcoins to someone in exchange for
goods/services and they don't deliver, you're screwed, your money is gone,
there is no-one you can talk to". That sounds like it's good for sellers and
bad for buyers.

~~~
lutorm
Yeah, this is what makes no sense to me. In a f2f transaction, I exchange
money for goods. In a virtual transaction, it creates a fundamental asymmetry
if the money transfer can't be reversed, since you have no way of verifying
the _other_ part of the transaction, i.e., that the goods were actually
shipped.

The bitcoin proponents make a big deal that transactions can't be reversed.
But if you continue reading the FAQ, they also make a big deal about the fact
that you shouldn't deal with people you don't trust and that it's your
responsibility. I'm sorry, but that doesn't make sense to me. If transactions
were only done between trusted parties, there wouldn't be a need for
chargebacks _either_. You want to put the responsibility entirely on the
customer, who has no practical ability to judge trustworthiness of an online
retailer.

An escrow service doesn't make sense either. Then I have to trust _that_
service. Maybe if some well-known non-bitcoin entity offered such a service, I
would be inclined to trust it. But for now, it doesn't seem to me that any of
the bitcoin entities have enough to lose to convince me that they're not front
ends for scamming operations. I mean, Bernard Madoff and Enron were scams, how
in the world could I judge that these operations aren't?

It's true I don't have much trust in the government to go find my money when
my wallet's picked out of my pocket. But I _do_ have some trust in that if a
store front just took customers' money without giving anything back, they
would be shut down pretty soon.

No, what's needed is a scheme which not only ensures the currency transaction,
but the _entire_ transaction. It seems that, at least for digital goods, one
should be able to design a system where the good is encrypted, and the use of
your key to decrypt it simultaneously effects the currency transaction. Still
doesn't ensure the content is what they said it would be, though...

~~~
kiba
_chargeback_ is a cost. That cost is then passed on to consumers.

It's a tradeoff.

~~~
rmc
I agree. But the people promoting Bitcoin act as if there is no tradoff, as if
there is never any benefit to anyone (except the greedy paypal companies) to
chargebacks.

------
trotsky
People who grow interested in participating in the bitcoin market because of
this or other articles about the currency should be aware that at its heart it
is a very speculative market. The price of a bitcoin in USD has risen
dramatically through most of its life while lacking economic fundamentals for
why it should.

Indeed, the money supply in the bitcoin market increases steadily over time,
this should be inflationary, causing the value of BTC to fall. The fact that
it doesn't speaks to how thinly traded the BTC markets are, and that there are
simply more buyers than sellers interested in BTC - primarily due to articles
about bitcoin that drum up interest, and due to speculators participating in
the market.

Bitcoin values are very loosely coupled to fundamentals - you can't buy food,
energy or commodities with it. In general you need to transfer it back to a
fiat currency to do anything classically useful with it. Currencies that
either rapidly appreciate or rapidly depreciate are both ill suited for any
kind of real commerce - people need relatively stable pricing to conduct any
kind of direct business in fiat money. While there are certainly examples
where fiat currency runs away in either inflationary or deflationary ways,
central banks, charged with protecting their currencies often take dramatic
steps at times to prevent moves either way.

In these ways bitcoin currently resembles either a pump and dump scheme the
tulip bubble. Which it is depends on whether you believe the people driving
the rises in pricing are intentionally exploiting the press and thin nature of
the market, or if most of the participants are simply along for the
speculative ride.

Of course, it is in the rational best interests of anyone who holds bitcoin to
disagree with this assessment. That said, I do genuinely welcome any kind of
informed debate on the issue.

~~~
yummyfajitas
_Of course, it is in the rational best interests of anyone who holds bitcoin
to disagree with this assessment._

No, it is in the rational best interests of anyone holding bitcoins to have
the most accurate assessment possible of their future value.

If that assessment suggests the future value will go down, it is in their
rational best interests to sell bitcoins.

~~~
trotsky
Good point. I didn't mean to say it is in the rational best interests of
anyone holding bitcoins to not understand the market forces involved. You make
a good argument that it is in their interests to understand what they hold.
However, if you buy my argument that the BTC market is nearly wholly
speculative at this point, it is probably not in the interests of speculators
holding BTC to have it publicly understood as this would seem to lead to an
evaporation of upward pressure on the market.

------
eli
Is this a legitimate attempt at a currency or a political statement?

Also, what's the exchange rate between bitcoins and Flooz?

~~~
noagendamarket
Start a bitcoin to flooz exchange and find out ?

The difference is bitcoin is decentralized while every other internet currency
has been reliant on a single entity to issue it.

------
noagendamarket
Looks like the article made the author some bitcoin on witcoin too
[http://bitcoin.witcoin.com/p/862/The-story-behind-witcoin-
an...](http://bitcoin.witcoin.com/p/862/The-story-behind-witcoin-and-other-
projects-of-mizerydearia)

------
mischa_u
Your two cents worth literally; although at the current Bitcoin exchange rate
[1] a typical post/comment/vote on witcoin.com costs USD 0.079.

[1] <http://www.bitcoincharts.com/markets/>

~~~
mizerydearia
or USD 0.0079

Also, each category has its own prices. Some categories post/comment/vote
costs at current Bitcoin exchange rate are USD 0.0000000079.

~~~
burke
This brings up a little facet of bitcoin that I'm /really/ not crazy about:
The smallest possible unit is 0.00000001 BTC. With a fixed cap of 21M BTC,
requiring that each transaction be for at least 4.8*10^-16 of the total
possible amount in circulation seems like a questionable choice at best.

~~~
jakehow
If it becomes a runaway train towards this endpoint, this would give bitcoin
>10x current M1, while retaining the ability to pay in $.01 increments.

This should be sufficient for the near term ;)

------
motters
Unfortunately this model doesn't seem to work. If you look at what's getting
votes it's things like pictures of girls and kittens.

~~~
spenvo
It may not work. It's still too early to tell. If you look at other content
sites that have tried to pay out to contributors (think Mahalo), their models
didn't work either. Huffington post finds more success by paying nothing.

~~~
motters
I think the problem here is that the introduction of payment changes the
psychology from one of sharing information to one of maximizing income (gift
Vs capital). In the latter mode of operation the quality of the information is
a secondary concern.

~~~
spenvo
I had similar misgivings/feelings while using the product. However: Two
observations: 1.) they did include user-selected charities lately in their
distribution of "upvote" profits; 2.) The point is less about making money,
more about adverse selection (keeping out trolls). Nobody could subsist off of
this in any real kind of way. If they did--the value they would have to
provide would be immense.

