Bitcoin Forum

Hi Guys

Ive always been a fan of bit coin but looking at today's stocks bitcoin and litecoin are on a stead path south.... do anyone think this will turn around or is this the end?>

Thanks

Welcome to Bitcoin!

I suggest you read the white paper.

https://bitcoin.org/bitcoin.pdf

Hello!

I'm fairly confident it will turn around! At some point above zero!

But, it will only do so after you have sold all your bitcoins or forgotten about them and lost the hard drive you kept them on.

Excellent suggestion.

Understanding the protocol is paramount.

OP, do you want to be a pioneer or not? If yes, then enjoy the pain of a long wait until gains because the initial get rich quick phase is over, now its a long waiting game and big massive donkey balls to hold are needed.

I understand the initial get rich quick phase is now over... I am a true believer that good things comes to those that wait. I don't mind waiting a year or two and let me mining machines keep plodding away and then cash out when things get a little better... but as i keep seeing more and more big firms taking on the payment of bitcoin it feels me with more and more hope that this will in the first or second quarter of 2015...

Does anyone else agree with me on this one? 
 

I have a feeling there are still A LOT of speculators messing around keeping the price suppressed or over valued.  TBH I am not sure which one.

I use bitcoin soo.. the price can do w/e.

That's true, price can be at any level, and won't affect actual Bitcoin functionality. But investors in Bitcoin itself WILL be screwed as long as Bitcoin uses PoW, because PoW will destroy 10% of Bitcoin total marketcap every year, therefore any investors holding Bitcoin will lose 10% every year, guaranteed.

The only savior will be new money coming into the Bitcoin eco-system, if there's no new money, then investors in Bitcoin will experience a perpetual downward spiral.

Bitcoin is more than a pump  & dump and it is also more than a simple crypto-currency ...

Leaders don't ask what is going to happen, we f-ing make things happen.  ;)

Here's my personal take on what the prices are dropping:

1.) Big corporations are adopting Bitcoin. Tigerdirect, Overstock, Paypal, and Microsoft now accepts Bitcoin. These companies are likely set up to automatically cash out in USD with prices set in USD to minimize risk. This means that when you purchase something with Bitcoin this creates sell pressure which helps drive the price of Bitcoin down.

3.) Speculation. People see the price going down, get scared and sell more. This is pretty much how bubbles pop, but it doesn't have to be because of a popping bubble.

3.) Government undervalue. Correct me if I am wrong, but it's my understanding that the Bitcoin sold in government auctions were recently sold below market prices. When a large number of anything - Bitcoin, Stock, whatever - is sold below it's previous value that becomes the new value.

Here's why I believe the prices will go back up:

1.) Microsoft example: When more people realize that it is more convenient to purchase Bitcoin than it is to purchase Microsoft points that is going to increase buy pressure. Think about how much people spend around the world on Microsoft points alone knowing that there is no way they can move that money elsewhere or even spend with Microsoft it if their accounts are suspended. This will inevitably create more buy pressure. At first this will result in more stable prices than dramatic increases (as has already started to happen), but as more people decide to hold Bitcoin like they hold available Microsoft points the buy pressure will begin to outpace the sell pressure which will drive prices steadily up, although I am confidant that the sell pressure balance will make this more gradual.

2.) Speculation. Even if all other factors leads to a gradual increase in prices there will be increased investments in Bitcoin as people begin to see the prices go up. This will create a new bubble which will drive prices higher. This is inevitable, but there is a serious danger in this. As mentioned in the previous example, average people will hold it more when prices are stable, but as prices go up they will notice that their buying power goes up with the Bitcoins they are holding to be spent. This is fine at first, but it will help to feed the bubble which will eventually pop and the moment prices go down again the average people will get scared and hold less of it which will cause the sell pressure from big companies like Microsoft to have an even larger impact helping the price to crash faster. The only thing that would buffer this is the fact that impulse buyers, seeing that their Bitcoin are worth a bit more, will think instead that the price of their games are now cheaper and will buy more which will slow the growth of the bubble which would in turn slow the shrinkage of the bubble.

Of course, this is primarily based on how economics work. Not specifically the economics of Bitcoin. It's relatively predictable, but outside factors could still harm it. For example, if people in Florida really do get convicted for selling Bitcoin without a license that will seriously hurt it's adoption. I don't believe it will stop though.

Another important factor to consider is the value of USD. People don't usually think about that, but if the price of Bitcoin goes up and the price of USD goes up faster it will look like the price of USD is going down. The fact that America classifies Bitcoin as a commodity means that the price of USD won't be directly impacted by exchanges to and from Bitcoin, but other markets can still impact it. Inflation, Deflation, and various global market conditions can easily cause Bitcoin to go down in one currency while going up in another. I strongly believe that the global market conditions impacting fiat currency is at least partly to blame for the current price drop, but that's a bit more complex. What I can say is that people have been making money investing in currencies since long before Bitcoin existed. Myself included.

.......

Personally, I am liking the lower prices. It's giving me better returns on mining investments since people with higher electricity costs are taking their units offline ;) Although, when prices are lower I find myself less likely to sell because I am confident that it will go back up so I guess I am at least partly relying on speculation.

Usage on those services is tiny. Overstock did $3M in Bitcoin business in 2014. Paypal and Microsoft accept Bitcoin only for some very limited purposes. TigerDirect accepts Bitcoin mostly as an old promotion; their Bitcoin page is trying to sell obsolete Radeon GPUs for Bitcoin mining. (They're out of stock on their sale of old Butterfly Labs units.)

$3M is not that small especially since people panic and it can lead to a domino effect. And overstock is one of the smaller companies that accept bitcoin compared to tigerdirect and now microsoft. If it catches on the sell pressure might be greater.

Anyway I am sad and kinda also wondering why the price is dropping. I do not think its the overstock news and It should have had a sustained increase due to microsoft's bitcoin policy (although it is limited).

It on a downhill slope right now, but it is going the climb back up again. I am not worried about price fluctuations, it is expected for an investment or currency.

Sounds great. Probably sounded great in 2011 and 2012 and 2013 and.. you get the idea.

You may have a point a few years down the line but certainly not now.

If you really think it is going down and want to get rid of your hodlings, please feel free to send them my way.

That is, if you have any hodlings.

Double bottom at 270. Then buy time.

The price of Bitcoin went down from 700$ to 340$, nothing to worry too much about, there is a lot of volatility. If you are interested in Bitcoin, you can start buying some and hold for a few years.

Litecoin has been losing value compared to Bitcoin so it has been destroyed in USD.

Not over. Get in.

Keep waiting  :D Won't go below $300

I bought a few more coins at current rate, quite happy with it.

I do find most of the comments quite funny and seriously lacking any depth of thought.

Bitcoin is currently a very speculative investment and not a currency! (one day it will mature into a currency if it continues to evolve)

I invest in BTC because of the underlying technology and because it is a serious disrupter to traditional banking and transfer of wealth.

Assuming I am correct then BTC will increase in value over time and it has done rather well so far.

The $1000 bubble is normal and so is the market correction back to 300/400. If you look at the growth, from inception to today's spot value its impressive.

The value will go up when people see it as an "INVESTMENT" and they buy BTC with Fiat. Day to day some people are buying BTC to spend but this is currently a drop in the Ocean.

Let me share with you a little bit of reality to compare where BTC is today.

Apple started out in the 70's and is about 40 years old.

In that time they have grown from a silly little nerdy company (compared with Microsoft during the 80's) to a Company worth $630 BILLION

BTC is currently worth $5billion which is less than the amount of $100 dollar shares traded in Apple each day.

Bitcoin is in its infancy and subject to reacting violently to any market action but I will tell you VERY SIMPLY why BTC price will not keep dropping.

1 More and more people recognise the technology is sound and thus an excellent alternative to traditional currency

2 As the price drops it will become more and more attractive to investors and their very action to purchase will push the price back up.

Personally I would love to see it drop to around $250/$275 because the amount of money which could flood in could be enough for a lot of Russians and Chinese to transfer wealth from dollar too.. and that means BIG FAST RISE to $500.

Then next year the same bollox will be spouted in these forums again.. Then it will move up to $1000 and the next generation of people arriving at the forum will start spouting the same rubbish from the $1000 perspective when it drops to $800.

So remember guys.. BTC is in its infancy if it suddenly opens its mouth, saying  "Daddy" or just randomly farts the whole family will bang on about it for days!

As time moves forward Bitcoin will be exposed to growing pains until it matures OR fails.. I believe it is way past failure unless something happens in the underlying technology for everyone to lose faith.

It doesnt take much to lose faith.. In less than 2 years Russians have lost faith in their currency!

That brings up a very simple point: Bitcoin is worth whatever someone is willing to pay for it and will never be worth more or less. If you hold Bitcoin and can sell it at $270 you won't sell it for any less unless you are trying to unload it fast. Conversely, if you believe that the price is going to swing back up high there is a point where you will invest heavily and that's the point that it will swing back up. Everyone has a different personal bottom line that they start investing heavier in.


The rules that govern currency investments still apply though. Prices go up and down on an hourly basis just like any currency based on exchange rates just like currency.

The rules that govern currency investments still apply though. Prices go up and down on an hourly basis just like any currency based on exchange rates just like currency.
[/quote]

This isn't actually true. The rules regarding commodities most certainly apply. When it comes to FIAT then it is a lot more stable, a lot less volatile and reflects the country of origin. Also the country of origin has a variety of mechanisms to influence its value compared to other FIAT i.e. Lending rate, Printing money etc

I would suggest it probably reflects a consumable commodity, as opposed to a commodity which is a store of value such as Gold.

The bottom line is simple.. It is freely traded and market conditions apply so if you believe in the concept and it is here to stay then it is exceptionally likely that BTC will increase in value.. The roller coaster ride is down to speculative investors and BTC is probably the best place to speculate due to the large moves, both up and down, whcih can occur in a short timeframe.

Me, i am in for the long haul however I wil do some tradsing if the opportunity arises. i currently have over 120 BTC committed to a sell order around $430 and hope to buy back in around 400-410 however only time will tell if I cancel that or not.

You have a good point there. I know that in the case of USD the Federal Reserve actually creates trillions of virtual dollars without any backing temporarily to control the value of USD. Federal law requires printed money to have backing, but it when it creates it as a virtual deposit this is considered something of a reserve power. That's certainly a mechanism of control that Bitcoin would never have.

That being said, the exchanges are worth hundreds of millions of dollars (at least) and they stand to lose money with price drops. How difficult would it be for a holder of Bitcoin to influence price fluctuations to prevent a loss of profit? Not that I am accusing anyone of doing this, but in theory these could be central points of wealth that would stand to gain from acting as partial mechanisms of control.

Aside from a mechanism of control argument I would argue that it is still more of a currency than a commodity. Stock prices are a good analogy, but you can't use stock to buy goods and services and I already use bitcoin for that. A currency is simply a unit of exchange and just because it's easier to influence paper marked with the insignia of a given nation doesn't make shiny stones or seashells any less valuable as a currency. I found it completely impossible to send USD to some countries, but Bitcoin has proven to be the easiest way to purchase goods overseas.

As far as stability goes, fiat currency isn't always stable. Before bitcoin even existed I made thousands of dollars by investing in Canadian money and then waiting for the price to change as dramatically as I expected. There are also economic recessions.

I strongly believe that Bitcoin already has the characteristics of a currency and that it has the potential to become the world reserve currency, but I would argue that there are some barriers in making it fully useful so I can at least agree that it's an immature currency at this point. For example, if you buy a cup of coffee, would you want to wait 10 minutes for the transaction to be approved? I think that there should be a kind of "express lane" for highly urgent transactions which would be set at a higher cost. If most transactions cost .0001 BTC maybe a base price of .0004 BTC would be enough to start in the express lane, with people who are willing to pay more put higher in the queue. A mechanism like that would make it as fast as credit cards which would help it to compete, but this raises the problem of what would happen if the price of Bitcoin went up to, say, $40k. Would the transaction fees be the same? Who would willingly pay that? I think the solution there would be another denomination. For example, 100 pennies equal a dollar. If there was a kind of altcoin that wasn't created by mining, but was instead created with the destruction of a Bitcoin (and, inversely, a set number of this altcoin destroyed creates a Bitcoin) we could have a coin designed primarily for much smaller transactions. It would in practice be no different than using words like "bits" or "mBTC" or "Satoshis", but if it works with smaller data sizes because the transactions are limited to that denomination it would likely help handle such transactions fasters and at a lower price. In that case trading bitcoins could still cost .0001 BTC, but trading in bits might cost .01 bits (unless the protocol is updated to allow a unit smaller than a satoshi). As strongly as I believe in Bitcoin, I believe that these issues with transaction speed and denomination sizes are barriers to widespread adoption.


I'm also in it for the long haul, but I invest not in futures but rather in mining. Regardless of if the prices go up or down I will reinvest most of my earnings each money in more mining no matter how low or high the price got. That just feels like the most stable way to invest in bitcoin.

2009-2013 has all been good years, precisely because all the new money coming in, plus Bitcoin marketcap was tiny back then, so the 10% of something tiny, is still tiny, new money easily overwhelmed the 10% PoW mining tax.

At the end of 2013, Bitcoin marketcap went up big time. Now 10% is not so tiny, it's a pretty large amount of money. Therefore 2014 new money was not able to balance out the 10% PoW mining tax, and we are seeing Bitcoin going down in value.

The price went back to 340$ which is not frightening at all.

You state correctly that the market cap of Bitcoin has a lot of upside potential.

Why would you call emission rate a tax?

When the block reward was 50 coins the inflation was higher than 10% per year, it gets lower and lower with every new halving. Bitcoin was designed to distribute coins over the course of several decades on a permission-less basis. All coins (before they are mined) are guarded by an algorithm, as opposed to any form of private money (including fiat) guarded by a group of people.

It might be cheaper to maintain an electronic money system, where people are at the center of its security model, but you will get all the downsides of that as well.

Here's another perspective on why prices are going down: The price of oil. 45% of the Russian economy is based on oil exports and much of the oil extracted in the US depend on higher prices. While consumers in some countries significantly benefit from the lower prices at the pump, if entire nations are going through economic collapse that's going to have an impact.

If we think of Bitcoin as a global currency that means it's going to be impacted by the economic collapse of nations. If we think of Bitcoin as a commodity - a luxury expense - that still means it's going to be impacted.

Still, economic recessions are often temporary. Price wars on crude oil end eventually. If this is a major factor influencing the price going down (and it seems likely, since the graphs for the past year line up) that means that the price of bitcoin will without a doubt climb back up.


http://www.vox.com/2014/12/16/7401705/oil-prices-falling (http://www.vox.com/2014/12/16/7401705/oil-prices-falling)

Crude Oil Price over the last 3 months:
http://i58.tinypic.com/2afifyt.jpg

Compare that to the price of Bitcoin over the last few months and the value of Bitcoin is actually doing BETTER than crude oil, but it's still falling at the same relative curve.

Now, just to double check, I compared this to the price of Gold which has been on the SAME downward trend throughout 2014 with more similar price spikes, although a bit more exaggerated. Now no one can say that the price of Bitcoin dropping proves it to be unreliable without making the same statement about Gold and Crude Oil.

http://i57.tinypic.com/255oxfc.png

This isn't a coincidence. Bitcoin is obviously influenced by outside economic factors. Does anyone else have any other takes on this perspective though?

To expand on this, let's take a look at the prices for each over the past year.

Bitcoin:

http://i62.tinypic.com/2nspgjq.jpg

Crude Oil:

http://i57.tinypic.com/29opbir.jpg

Gold:

http://i62.tinypic.com/humwro.png

Looking at it together over the past year we see that the graphs are different, but follow similar trends. There is an upward spike early in the year - with Gold happening a bit after Bitcoin in similar scales and Crude Oil only having a gradual dip up. Followed by a general downward trend with Gold falling similar to Bitcoin and ALSO having a second spike in the middle of the year with crude oil being on a more general downward slope that's a bit sharper.

Isn't it interesting how Gold spikes twice to similar highs proportional to previous value and then falls at a very similar average slope? And isn't it interesting how crude oil is falling much sharper? Although it's spike appears delayed, I would argue that it's the other way around. The second smaller spike hit Bitcoin and Gold shortly after the small spike hit crude oil so there is a time lag of sorts likely related to the overall health of the global economy.

This time lag tells me that the price of Bitcoin is going to go up a bit very soon since the price of Gold has already started it's upswing, but I wouldn't expect it to climb much higher without the bubble effect since global economies are still reeling from the impact of low gas prices. At the very least one could easily expect to make quite a bit of money over the next month assuming that the historical trends follow through.

It has nothing to do with inflation rate, the 10% expense is on the USD value of the market cap. If the PoW mining expense had anything to do with coin distribution, then what happens when coins are all distributed? Bitcoin network suddenly has no hash rates?

^
I think he means "distributed to miners."  More than 10% a year, but still...
When all the coins are distributed, inflation won't pay for mining any longer--tx fees will.  How well that works out without being outrageously pricey per tx remains to be seen.

When distribution ends the network is still guarded by an algorithm, this is the only way to keep money away from politics.


Correct.

No, the network is guarded by how expensive it is to attack it.

Algorithm alone does nothing, there's a ton of altcoin got attacked to death, and they uses the exact same algorithm as Bitcoin.

The past 5 years has shown, the natural equilibrium is reached with an annual PoW mining expense of 10% fiat value of Bitcoin market cap.

Therefore, investors/stakeholders of Bitcoin will pay a 10% tax in fiat value on their Bitcoin holdings, perpetually.

Now of course there are other factors affecting the price, such as new money coming in, or existing money leaving the eco-system. It's up to the investor/stakeholder to decide whether inflow of new money will offset the 10% mining tax.

I will put it another way.
The network is guarded by the amount of competition, which in turn is judged by the algorithm.
Yes, coins that have little relevance or importance are easy to attack, but that's not the point.
Everything can be attacked. What I'm sayng is that humans are more prone to that than an open algo.


There is no tax, just a distribution of coins. If 10% of new coins being emitted per year, then rougly the same amount of money will be spent mining them. The same goes for 5%, 2% of the market cap and so on. Money in, money out - no tax!

This happened last year guys! Stock up now, while you can, we are in extremely oversold territory!!!

Call it "service fee" or "inflation," call it whatever you want, but ~10% of Bitcoin's market cap will be spent every year to maintain current level of security.  For now inflation is footing the bill, but once block reward halves, either security will suffer, or tx fees go way up.  

If Bitcoin stays relevant in the future there will always be a competition for "conquering" its algorithm. I can't say whether it will cost 10% of its market cap or not. But I can say for sure that those engaging in this voluntary competition will be getting something out of it - be it profit in the form of transaction fees or some other agendas. The algorithm really doesn't care about people's nationality, political or religious views, their skin or eye color. It simply says "here I am out in the open, make me run faster and you win!".

We have already gone through one halving and the network survived without suffering any security loss. For users the inflation is predictable and declining over time, miners get what they are after as their engagement is voluntary.  So there is really no cost or "tax" associated with running the network because you get what you pay for.

If there is a better way to organize a neutral global money system, we should have it penned here and get a nobel prize in economics.

FYI there is a better way, it's called Proof of Stake mining, it's working for a variety of altcoins, they have all avoided the inevitable downfall of PoW systems (expensive + low security).

Correct me if I am wrong, but Proof of Stake (https://en.bitcoin.it/wiki/Proof_of_Stake) mining puts all of the emphasis on the Bitcoins you hold rather than the hashing power, right? So even if I have 100 TH/s it won't mean anything at all if I don't ALSO own a significant amount of Bitcoin. Is that right?


If so it's a HORRIBLE idea because it creates unnecessary cost barriers to getting into Bitcoin mining. Right now you can buy mining hardware and start earning Bitcoin even in areas where it's nearly impossible to purchase Bitcoin thus allowing it to become established in new areas, but if you have to actually own Bitcoin first that scenario becomes impossible. It also significantly slows reinvestment possibilities. Right now, for example, I can immediately reinvest my earnings into new mining hardware which helps to expand the network. If I also had to maintain significant stores of Bitcoin it would slow the expansion of the network. People already established would have no trouble, but people just getting into it would find it impossible to compete.

Although I can see a benefit in preventing a single monopoly, technically, if only the wealthiest of people have the rights to minted coins it will in a round about way encourage the formation of monopolist groups. It would very likely mean that cloud mining solutions would be the ONLY way to mine since these companies would likely hold coin of their own which would very likely lead to large numbers of people giving way too much power over the network away to a central authority. (although, to be fair, with electricity costs it's likely to move in that direction anyway)

This also raises the question of what such a change would mean for current miners. I don't think many people would be happy if their ROI expectations were completely destroyed by a protocol change. If the people whose hardware supports the network back out due to a lack of ability to recoup investments due to a lack of assets that would lead to major disruptions in the integrity of the network. Even if the proposed changes leads to a fair balance between small and large miners with proportional holdings of small and large Bitcoin this would still present a problem for those who don't have any holdings when such a change goes into effect. Overnight their investments would become completely meaningless and, like I said, those without the ability to obtain more would be barred from participating. Even in scenarios where you can mine without assets if preference is given to those with assets it would still significantly alter the way rewards are calculated and from there it becomes less about being rewarded for maintaining the hardware that processes transactions and more to do with being rewarded for being wealthy.

I can really only think of one long term benefit to such a scenario: Increasing the number of people with holdings decreases the sell pressure while increasing scarcity which would drive the price up. In theory that increase in price could help to offset some of the problems I mentioned, but I am still against any protocol change that introduces barriers to the average person getting involved. I myself obtained my first Bitcoin from mining hardware I purchased with fiat because at the time I couldn't purchase Bitcoin anywhere locally and neither Western Union or MoneyGram would allow me to send money to other countries (MoneyGram banned me for life for trying, believe it or not) and I would never have been able to have anything to do with Bitcoin if those barriers existed and I wouldn't be a strong supporter of Bitcoin today.

From what I can see, Proof of Stake system doesn't really solve the problem that Bitcoin is solving. It puts a group of people at the center of its security model. In that sense the network is "owned" by the wealthiest of its stakeholders, which turns it into a form of private money, and we already have plenty of that.

Bitcoin, on the other hand, has a neutral algorithm as an ultimate judge for people's performance. That's how it ensures that any attack on it is not permanent and can be overturned with the same 51% mechanism. All Proof of Stake systems in that sense are already 51% attacked by default, and their position is static over time.


Correct. Mining-less systems regardless of their initial distribution of money have an asymptote that leads towards centralization essentially turning any such system into a private enterprise.

I'm not suggesting that the Bitcoin's algorithm is racist, merely that it is horribly wasteful (roughly 14% of all BTC in existence was mined over the past year, i.e. 14% of Bitcoin's market cap was spent on network maintenance/security).  And these costs do not translate into jobs, but mind boggling amounts of burnt energy.
Bitcoin utopia:

https://pbs.twimg.com/media/BrxyUeUCUAASNcy.jpg:large


Yes, there is, already exists--the current fiat system.
Imposing limitations like "It has to be trustless, decentralized, and it's name must start with the letter 'B'" is a bit Goldbergian.  

In fact, it is a fundamental problem with money creation: the distribution of seigniorage, and of course, the flip side: the cost of inflation.

It is unavoidable when an asset becomes money.  An asset becomes money when the bulk, or all, of its price (that is, of its demand) comes from a desire to hold value, and doesn't come mainly from another desire to hold the asset (such as using or consuming it). 
The production, and the increase in value, of a monetary asset profit to certains (= seigniorage) and are hence paid for by others (inflation).  It is unavoidable.

If a normal commodity with normal usage (say, milk) becomes money, then the price of milk will increase significantly, as people will start holding milk for its value, and not to drink it or make food with it.  This will profit enormously to people with cows.  It will cause an over-investment in cows, and it will cause an under-consumption of milk. 

If an almost useless commodity, such as gold, becomes money, then there will be an over-investment in gold-mining, and people who had gold for say, ornament purposes, will become very rich as compared to people who didn't have any.  The more people dig up gold, the more they become rich, and this goes at the expense of those who have worked hard to *earn* gold, and see its value decrease because of the inflation of the gold stock.

Issuing fiat money profits of course to those issuing it (the state, the central bank, those giving assets to the central bank against fiat money...).  By increasing the fiat money stock, this seigniorage is paid for by all those who held fiat money they obtained by working for it, because of the inflation they suffer.

With crypto currencies, you have the same issues.  The idea was that during the inflationary phase, there is more or less a running-parallel with the adoption.  As such, the miners, who get the seigniorage, but, contrary to the fiat issuers who get the seigniorage for nothing, are put in competition, and as such, just "grow the network", are paid for by the inflation, but on the other hand, more adoption would also mean an offset of the inflation.

If the rate of adoption increase were equal to the inflation, then we would have a perfect system.  Clearly this isn't exactly the case currently.  Satoshi had to pick an inflation curve, and tried probably to fit it to his imagined adoption curve.  The more this is wrong, the more one will suffer from too much inflation, or the more one will get a too early price increase.

All in all, the way to handle the inflation and seigniorage issue with bitcoin is in principle not so bad.  The only difficulty is of course that the real adoption will not follow precisely the pre-programmed inflation curve (over 140 years or so), which implies strong price fluctuations.

This is the basic misunderstanding of most on this forum--believing that the state is a separate entity, rather than themselves.
The state is not a separate entity, it is the sum total of people of the state.  No more a separate entity than the pool that you aim your hashpower at.

Sorry to disagree, but the confusion between the nation and the state is the great lie of the modern states.

The state is an organisation which has the monopoly of violence over a nation (= people, territory, infrastructure, capital).  The workings of this organisation are similar to that of the maffia: they extort the nation, and they provide some services such as "protection".

The distinction between state and nation was much clearer in times when there was still a monarchy.  Louis XIV said it clearly "The state, that's me !".

However, after cutting off heads of state by the disgruntled nation, the state went on in a different way, by trying to make the nation think it is responsible for all the extortion of the state: they invented elections.  There's a price to pay: elections are on one hand what limits the maffia's time at the hands of the state.  Elections can alternate between different maffia families at the head of the state, which was not the worry of an hereditary monarchy.  In order to gain elections, now lies and mass manipulation is necessary which was much less the case before.  But the great thing about elections is that the nation is now "guilty" and "responsible" for all of the extortion by the state, which will avoid heads cut off of the maffia leading the state.

But that doesn't mean that the state is the nation.  The state is the organisation that extorts the nation, it being the violence monopolist. 
That has historically always been so, and it is not because there are elections in modern states, instead of hereditary monarchy, that that basic principle has been overthrown.

Now I understand.  It is impossible to debate a mind like yours--you'll simply restate your delusions. Here's a quote describing your mentality far better than I ever could:

Enjoy your worldview :)

http://s12.postimg.org/cmus81ih9/subg.jpg

Edit:  Another interesting take:

I don't see what's so deluded, extreme, or otherwise psychiatrically disformed by stating the obvious.

Since the dawn of states, an aristocracy has extorted value-producing people.  Since wealth was produced (that is, since man left the status of hunter-gatherer and started agriculture), "leaders" took part of that wealth for themselves, using their status of violent monopolist (when they were not the monopolist, there was war). That's how kings became rich.  That's how the classical upper classes (aristocracy) became rich: by extortion of those that produced, whether they were farmers or other value-producers.  With that, they did according to their whims: going to war, building palaces or pyramids, living in great wealth.  They had to manage this extortion of course, and that was traditionally done with violence, and with religion.  And of course, in order to get the gullible mass to cheer for them and support them, they had to do now and then something that, in the eyes and simple minds of the people, seemed to be good and necessary.
The formula has evolved over time, but is still the same.

I'm not against the state, as it would be as silly as being against gravity.  The appearance of organized extortion is unavoidable when there is wealth creation.  A state is unavoidable: if you destroy one, another will come in its place.  So better learn to live with it, and use it to your advantage.  Like with gravity.  A state is a dynamical essence in a society.  Maffia is unavoidable.  But that doesn't mean one has to cheer for it.

Lol, in that case, your employer is extorting you, taking the value you create, and living in great wealth.


You are not?  Not against organized extortion?


That's mighty defeatist of you.  Work for a brighter tomorrow--Communism!

http://s27.postimg.org/4k971oqxv/btc.jpg

Welcome to the forums, nice to see somebody smart for a change, this section has been overrun by trolls lately so you are most probably wasting your energy in vain :) Good posts though.

No, of course not.  My employer and I AGREED mutually on a deal.  He didn't put a gun against my head forcing me to produce value for him.  I had a choice.  When you have a choice (not "an offer you cannot refuse"), there's by definition no extortion.  At most, a scam.


As it is unavoidable, better be on the extortion side, no ? 


Communism is the top of extortion. 

Don't take Trollchop seriously. She's just a pathetic little troll with an axe to grind.

She's also not very bright so there's no sense trying to reason with her.

You're best to just put her on ignore, as most here have.

^
>My employer and I AGREED mutually on a deal.  He didn't put a gun against my head forcing me to produce value for him.

Who put a gun to your head last?   What God-forsaken foregny you hail from, brah?

Whenever you do not comply in giving about half or 2/3 of what you produce to the state, that's what happens in the end: they put a gun against your head, or force you violently to comply in any case.  They call it tax evasion.  You get "protection" and "public services" you didn't necessarily ask for in return.  What other kind of organization comes and takes a good chunk of the value you produce in an offer you can't refuse, and offers you "protection" and goods and services you didn't ask for in return ?

Great analogy!
Something tells me that we talked about it some years ago... Maybe just a coincidence :)


The Infinity will make sure that we will all play on each side eventually.

But there is a way out.

With the fuel as pure and clean as Bitcoin the Star of Humanity has a good chance to go Supernova.
That's when people move to live among the stars with all the good stuff that we will have produced up to that point and there is no amount of government that can hold us back. That's where we are headed, resistance is futile.

So no one has put a gun to your head, you're simply afraid that someone will.  Now we're finally getting somewhere, let's take this a step at a time.
Do you personally know someone who was shot for failing to pay taxes?
My previous question still stands: What God-forsaken foregny you hail from?

I don't really understand how a mining-less system can function either. I mean, sure, right now most of the income from Bitcoin mining is from newly minted coins, but as the number of coins minted decreases the usability as a currency should be increasing which will lead to a gradual shift towards income from transaction fees. In fact, Satoshi probably predicted the move towards mining hardware at ever increasing speeds so that by the time people stop making money from the minting their machines are able to process enough transactions to actually allow the transaction fees to go even lower and work even faster at equivalent ROI to the minting of today.

In a mining-less system the income is exclusively from minted coins without any strategy for the shift towards transaction fee income. There is even this interesting concept called "Proof of Burn" (https://en.bitcoin.it/wiki/Proof_of_burn) which although presents an interesting low energy cost approach to distributing new coins has not even considered the role hardware has to take in maintaining the network. In either Stake or Burn the focus gets shifted away from the hardware that holds everything together. Even in the better stake proposals that allows people to be rewarded from mining alone, the fact that people are rewarded just by holding coins would seriously disrupt the expansion of the network which would be required for it to become the world reserve currency for all transactions everywhere.

In the worst case scenario, based on fluctuating price, energy, and hardware the rewards for holds could become higher than mines which could in turn result in a rapid shut down of mining hardware to the point that the network ceases to function fully or at all. Sure, the existing mines won't shut down right away, but as people stop investing in new mines and stop buying more energy efficient hardware as energy prices go up the old hardware could be gradually decommissioned without replacement. That would be a consequence of the BETTER proposal where you are allowed to earn from mining independently of holding. In the other scenario where you have to hold and mine it would guarantee that only the wealthiest control Bitcoin, but more importantly would cut the network expansion rate in half which would seriously compromise required network growth.

The emphasis needs to remain with proof of work because that is the only model that will allow the network to expand as it must while providing the required buffer to keep everything working in the event of price declines as will occasionally happen.

Yes, apart from a method of initial distribution which acts like a faucet, mining is a way to keep the system as neutral as an algorithm can be.

You mean that if you're convicted for tax evasion, you can still stay at home and enjoy life, and nobody's going to use violence on you, like trying to put handcuffs, or put you in jail or something ?  And if you try to defend yourself against people with uniforms coming to use violence on you with a weapon, you're not going to get any guns against you ?  Nothing physical will happen to you if you refuse to pay your taxes ?  You will simply be denied access to state services you're not paying and that's it ?  Nothing physical will happen to you and you will happily go your way ?

^
No.  You have failed to answer my previous question, and I unjustly attributed it to evasiveness.  In my haste, I overlooked the possibility of you being differently enabled & suffering from poor reading comprehension.  Along with your delusions of persecution.
Apologies.
I've highlighted the important bits this time, in hopes that it may somehow help:

You're trying to answer two questions, so that we could continue our conversation.
Good luck!

As others already said, NotLambChop is one of major forum's trolls. Most people have him on ignore. By the same reason they are not happy when somebody is quoting him.

"Over-investment" and "under-consumption" wording assume that there is some "proper" level of consumption and investment. But there isn't. If milk becomes money, their utility will grow. If, say british scientists would discover that milk, added to petrol, would double mileage per gallon, milk consumption will grow, along with investment into milk production. But we won't call it over-production and over-consumption. If milk, apart from drinking, can be used for something else, it's utility will grow and it is normal, rather than "over".

You are right in the sense that you will be subject to violence if you don't obey but you can organize your life to be less subject to this violence.

Lambchop is only here for one reason....

When on the internet it is best to keep your emotions out.  Just leave topics you get emotional about, some people come to the web only to draw out rage from others.

also... What's a "Bit coin". Is that like a bitcoin? Or is it something that is a bit like a coin?

Bitcoin's overhead costs to operate the network is nothing compared to the cost to run the current bullshit fiat system.

Current fiat system costs:

1. Thousands of locations
2. Millions of computers
3. Billions spent on electricity
4. Security (technological/human)
5. General operational employees

just to name a few....

Those costs are easily in the 100's of billions of dollars.

No comparison to bitcoin.

^You really think 10-15% of the world's wealth is destroyed every year on banking?
Care to back up your assertions with some facts?

Sorry to interject, but here in America there are very serious problems with being caught evading taxes. The first thing they do is freeze your assets which directly prevents you from accessing any sort of money anywhere (except Bitcoin of course since no central authority can be directed) and they can take it all if you are convicted (obviously they can take Bitcoin given the recent auctions though not sure how they get the keys), but it gets more serious. Recent police shootings involved people who were selling goods without paying taxes on them and I recall at least one case where a man refused to pay taxes, was held up in his survivalist compound, and the FBI used obnoxious music to try and force him out.

That is an extreme example though. More commonly the penalty for tax evasion is 5 years in prison per count (http://www.fbi.gov/jacksonville/press-releases/2011/tallahassee-man-convicted-of-tax-evasion), though sometimes as low as 6 months (http://www.dispatch.com/content/stories/local/2014/09/26/sentence-tax-evasion.html). It's very easy to get life in prison for failing to pay taxes and this guy (http://hollywoodlife.com/2014/09/24/mike-the-situation-sorrentino-tax-fraud-indicted-tax-evasion-jail-jersey-shore/) got 9 years in prison for not paying up. European courts (http://www.theguardian.com/lifeandstyle/2013/jun/19/dolce-gabbana-jail-tax-evasion) seem to be more lenient.

The exception is that some people don't make enough money to owe on income taxes. In that case you don't have to report anything, but should still keep records in case you are audited. Another exception is that you have to live within 20 miles of a federal office building to owe taxes and people have successfully had their tax bills challenged in these cases. Of course, even a post office is considered a federal office building. When I lived in Canada I actually had to pay taxes to BOTH the United States and Canada because I lived within 20 miles to the US Embassy in Halifax.

I really don't mind the taxes personally, but I would prefer the Fair Tax system because in that system we only would pay taxes when we spend money which would tax everyone equally. Then again, that would mean that we would have to integrate a sales tax system into Bitcoin transactions to remain legitimate and I'm not really sure how we would do that.

You're confusing "maximum sentence" with "most common."  Maximum sentences are used in extreme cases. Al Capone got nailed for tax evasion, for instance.
Re. your tabloid link where "this guy" got 9 years for tax evasion:  Bro, he wasn't even tried yet.

TL;DR: Typical tinfoil Bitcoiner tripe.

Talking about tinfoil... I made some inquiries with my sources and it turned out that NotLambchop is a general Baxter from Pentagon. You can find him in the following short videos:

https://www.youtube.com/watch?v=3adw9oLBkBI
https://www.youtube.com/watch?v=L6O6sM2Shok
https://www.youtube.com/watch?v=NXbCwq4ewBU

Enjoy! :)

You're right of course, but I meant with "over-investment" and "under-consumption" as compared to the hypothetical market situation that would exist if the commodity were just produced and consumed for its consumption and eventual capital utility, but not for its speculative aspects.

The difference between milk-that-is-discovered-to-enhance-petrol and milk-that-became-money is that the first is a new consumption aspect of milk, while the second is a speculative aspect of milk.

The demand for an asset (which can be a commodity) has normally three origins:

1) consumption
2) capital (that is, it is a means of production)
3) speculation on later demand

I was setting 3) apart and my "over" was with respect to the absence of 3)

I never claimed people to be shot systematically nor that I know people stupid enough to have themselves shot because they refuse to comply.  Just that there is threat of physical violence, and use of violence if you don't pay your taxes.  If you try to defend yourself against that form of violence, you will, depending on the situation, face a gun sooner or later.   So your point is not an argument against mine, that you will end up suffering physical violence when you refuse to pay your taxes and defend yourself against those trying to force you to comply.

I'm pretty sure you don't personally know anybody that got shot by Stalin either.  That doesn't mean that Stalin didn't use violence to make others comply.

Good.  Thus far we've established the following:

1.  No one held a gun to your head.
2.  You do not personally know anyone who had a gun pointed at his head for nonpayment of taxes.

Now if you can just answer the second question, we can continue.  Concentrate.  Good luck.

You forgot endless market manipulation to suppress alternative currencies, endless wars to keep the petrodollar going, endless media manipulation to keep the sheep thinking good banker friendly thoughts, endless police state to keep the rest of the people in line, and endkess political bribing to keep the law stacked against us. All in all this system costs trillions not to mention hundreds of thousands of lives and the sacrificing of freedoms

Did I leave anything out??

I know that if I don't pay my taxes, at a certain point, violent action will be taken against me,  such as trying to get me handcuffed or so.  If at that point, I resist (for instance, using self defense with a gun myself), I will end up getting a gun pointed at me.

Of course, as I don't see the point in doing that because I will lose in the end, I pay my taxes.   Exactly in the same way as the restaurant holder pays his "protection" to the local maffia, and they don't explicitly need to point a gun at him.  He knows that he's in danger if he doesn't, so if you have some wisdom, you don't let it escalate to that point.

Do you know personally people who got a gun pointed at them by Stalin ?  Does this in any way prove that Stalin didn't use violence to obtain from others what he wanted ?

To answer your second question: I live in the European Union of Socialist Soviet Republics.

If a cop tells you to stop jaywalking, and you pull a gun on him "in self-defence," he'll cap your ass too.  Doesn't mean you got shot for jaywalking--you got shot for pulling a gun.


Why not move to a place that suits you better?  Lazy?  Scared?  No one wants to take you?
Sulking on the interwebs isn't helping you much, is it?

It suits me perfectly.  I'm part of the state.  I'm just honest about it.

Yes I agreee with the article. If you think about it, how much polution did bitcoin mining cost the world? Excessive?

All I had to go on was publicized cases which is why I listed a range of penalties, but if you guys are serious about not paying taxes there is a LEGAL way to do it. As I mentioned before, you are only subject to Federal Taxes if you live within 20 miles of a federal office building. For this reason wealthy people typically create "tax havens" which basically means that if you buy an address in a country where there is no income tax and list that as your primary address you don't owe any federal taxes. The trick is that if you never spend any time there and have only one US address which is active that can easily dispute that which is why people typically have multiple addresses that they occupy when they do this. The only consequence of using this strategy is that you cannot legally vote in any city or state election if you don't have a primary address there and you can only use an absentee ballot for federal elections since you have no local voting place. You can, however, still fund political campaigns so if you list your primary in the middle of the ocean but really live in an American city you can still be involved, but never completely.

Here is a video talking about it: http://www.icij.org/offshore/video-tax-havens-101-high-cost-offshore

I am personally against tax havens, but I would rather see people go through legal channels to avoid taxes. At least that way it won't bring more bad press for Bitcoin.

If you are moving a rather large amount of money another strategy is to set up a corporation can help. Because shares are stock are not taxed if you get your company to legally pay no or little taxes and then you get paid by your company in the form of shares you can keep your address anywhere you like and won't have to worry about it.

http://www.forbes.com/sites/leesheppard/2013/05/28/how-does-apple-avoid-taxes/

Or you can try what this lady did: https://sniggle.net/TPL/index5.php?entry=10Sep05

Instead of paying taxes to the IRS, she sends the money to the programs that the IRS claims to fund and then sends a letter to the IRS about it. Of course they were quick to go after her, but since she is actually paying money to support the people in her community it was kept as quiet as possible and proved to be a bit more difficult for the IRS to handle. I am not entirely sure what the overall outcome was, but to the best of my knowledge she never went to prison over it so obviously it works if you have the time to play with the IRS in court.

The point I'm trying to make is that there are consequences in breaking the law, but there are legal ways to avoid taxes. Anyone who thinks they can get away with just not paying taxes and not having a plan is fooling themselves.



No need to be rude.

If bitcoin would become a world-wide success before block rewards are reduced significantly, it would become terrible, yes.
Grossly, the inflation rate is about the mining cost and hence close to the energy and hardware consumption for mining.

With a tiny market cap of a few billion $, even at an inflation rate of about 10%, this only represents a few hundred million $ that are wasted on mining hardware and mining energy consumption.

If bitcoin would, at this point, have taken over all of fiat, its market cap would be of the order of $50 trillion, and the expenses on mining hardware and energy would be of the order of $ 5 trillion, which is more than the current world energy and hardware production.  This would imply that about all of the world's energy and all of the world's hardware production capacity would go into producing and having run mining equipment, which would be a terrible ecological disaster.

In order to avoid that, it is to be hoped that bitcoin doesn't get a significant market cap before several block reward halvings - that is - a decade or two from now or more.

If Bitcoin was that big, there would be savings from not having the other activities and businesses that are polluting right now.

You have to compare the cost with the benefit. If the benefit is huge, the cost can be very big.

Bit and coin are different words?

Well, time for OP to create another thread -  Bitcoin is on a uphill climb.

Very small uphill right now but it is downhill from the beginning of the year. Nothing to worry about since it's a temporary consolidation and set back.

In the hypothetical situation where bitcoin replaced most of fiat, I don't see what business would be not there anymore, except a certain part of current banking (probably replaced by similar bitcoin financial services).  Bitcoin would then simply the means of payment, like fiat is today.  However, the mining logic of bitcoin is such that there's an incentive to invest more hardware and energy in bitcoin, until there is an almost break-even between the mining seigniorage and its cost.  The mining seigniorage is the bitcoin inflation which is now about 10%.  It would hence mean that of the order of 10% of the $ 50 trillion market cap would go into mining hardware and energy consumption per year until mid 2016.  After that, it will be 5%.  That's still $ 2.5 trillion worth of hardware and energy cost.
No other pulluting business would be replaced and out of business with that (except of course that it wouldn't get any hardware and any energy anymore as all of it will be used up by bitcoin miners).

There is no particular benefit (on the pollution/business side) of using bitcoin over fiat, that would reduce in the same way the mining pollution and consumption.   Even the total banking world today is not consuming all available energy and all available hardware.