

Bitcoins featured in Forbes - DiabloD3
http://www.forbes.com/forbes/2011/0509/technology-psilocybin-bitcoins-gavin-andresen-crypto-currency.html

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trotsky
Bitcoin is a fascinating model of how to run a distributed, internet based
boiler room. Unregulated + ultra thin market + appeals to inexperienced
investors == pump and dump dream.

<http://www.bitcoincharts.com/charts/bcLRUSD#permalinkbox>

April 7th: 0.60 BTC/LRUSD

April 22nd: 1.37 BTC/LRUSD

Goooood luck getting out on the right side of this trade...

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ghshephard
Can we also consider the possibility that Bitcoins are precisely what they
claim to be - A decentralized crypto currency?

I think the real story become more clear as the Vendor Infrastructure
continues to grow.

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trotsky
If the touts actually wanted the currency to be used for commerce your focus
would be on stability - clearly you won't have any kind of substantial trade
in BTC (for actual objects or other items that aren't just currency pair
trades) until the value can be predicted over short/medium time frames. The
amount of hype, hype, hype that goes on by submitting these endless articles
to places like HN, slashdot and I'm sure plenty of other places and soliciting
articles like this one in forbes makes it very clear what the community
intentions are: speculation.

You may personally not be involved in that, or not understand that's what
you're doing. But it's very clear that the market is being run by those that
are.

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mike_esspe
I think you are wrong, thinking that exchanges are unimportant part of
attracting traders. To attract sellers, bitcoin market needs high volume
trades on exchanges (because currently most costs for sellers are in USD and
they need to hedge that costs on exchange).

Spreading awareness is the most right thing to achieve this.

~~~
trotsky
In one post you're predicting/hyping $5-$10 BTC/USD and in another you're
discussing what should happen to encourage commerce? Is it a case of you not
realizing how diametrically opposed those two goals are, or simply one where
you assume readers won't note the contradiction?

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mike_esspe
I don't see the contradiction.

Let's say you are selling some good, 95% of which you are buying with USD, 5%
is your profit. When someone purchase this good from you in bitcoins, you need
to instantly convert 95% of the cost to USD. For this to happen you need to
have a liquid exchange.

And because the number of bitcoins is limited, and the number of traders are
going up, we see a steep increase of exchange rate.

~~~
trotsky
Well, what you're describing is merely a difficult to use stand-in for the USD
with fees on both ends.

Reasons you need stable value in a currency for it to be good for commerce:

Pricing hell: If you're a merchant you probably need to be changing your
prices in BTC several times a day at this point. In such a thin market, what
trades do you believe for quoted value?

No buyers: People holding a currency that is deflating are unlikely to buy -
why spend your money now when it could be worth twice as much in two weeks?
Those alpaca socks won't be worth twice as much.

Inability to hedge: With no instruments available to hedge BTC trades a
merchant's exposure to wild currency swings is almost infinite.

Thin markets + no safety in holding BTC means that merchants who feel the need
to setlle out of BTC several times a day or after every transaction will 100%
be at the mercy of the markets. Last trade was 1.37 LRUSD/BTC - what you based
your sale price on? Sorry, our buyers have thinned, if you want to settle
150BTC you're going to have to take an average of 1.10 LRUSD/BTC.

I could go on of course. But you'd do yourself better by picking up an econ
101 textbook.

~~~
mike_esspe
I don't see another way to bootstrap a new currency. BTW currently the whole
bitcoin economy is 1/30 the size of e-gold reserves in 2007. So to be at least
like e-gold it has to rise 30 times current price.

If people hold the currency to get twice next week, than this logic apply to
dollars too. Why spend dollars today, if you can convert them to bitcoins and
spend twice the amount next week? Either this logic works both for bitcoins
and dollars, or don't work at all.

You can hedge BTC value on exchange instantly via exchanges API, i think i
explained that in the previous post. That is the reason we need a high volume
exchanges (currently mtgox have around $10000-$50000 volume per day).
Merchants do it automatically, not by hand. I think we'll see a bitcoin
billing soon, that will help to do this without programming knowledge.

Of course there are a lot of difficulties now, but how will you explain, that
amount of traders is rising despite all this difficulties? Compare this page
<https://en.bitcoin.it/wiki/Trade> from the February and now.

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JonnieCache
The whole drugs thing is just hype. Bitcoins are surely much harder to launder
than shiny metal, because they're so unusual. You can't just wash $10,000,000
of bitcoins through a casino or whatever without someone asking questions.

If they become widely accepted this will obviously change.

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mukyu
How can you define it as "hype" when there already exist people selling
controlled substances for bitcoins through a Tor secret service? (n.b. it
could have been fake and I certainly did not order any to try and find out
given I have no interest in either drugs or bitcoins)

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Joakal
USA government will crack down on anonymous money schemes [0], especially
'conspiracy to operate an unlicensed money-transmitting business'[1].

<http://www.wired.com/threatlevel/2009/06/e-gold/> [0]

<https://secure.wikimedia.org/wikipedia/en/wiki/Egold> [1]

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tomjen3
Against whom?

It is anonymous, is it not?

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npad
Presumably against anyone who runs a service that exchanges bitcoins for
regular currency.

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tomjen3
That isn't going to matter, those laws are only good inside the US.

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trevelyan
Anyone recommend an exchange for buying and selling bitcoins with Paypal?
Thinness of the market doesn't particularly matter - I'm not interested in
speculation or arbitrage but rather adding bitcoin support to my site.

~~~
mike_esspe
There is a <http://coinpal.ndrix.com/> for buying but they have a very low
limits due to paypal fraud, and <http://coincard.ndrix.com/> for converting to
paypal.

~~~
trevelyan
thanks.

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eliben
<fun> Is it just me or the guy in the photo looks like Mr. Spock :-)? </fun>

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eliben
OK, guys & gals, I got it - no jokes on HN (even specifically marked with a
<fun> tag...) - you can stop downvoting now - I wish I could delete my own
comments, but HN doesn't let me do that.

