Naaah .. drastic widespread change in sentiment from (possibly overpriced) valuations to lower valuations causes a price crash.

Flat out false.  QR Codes have redundancy in them.  Level H codes can recover from errors up to 30%.



You need to be considering the case of people who have substantial amounts of wealth in Bitcoins.  Say I have $100,000 worth of Bitcoins.  What you are suggesting is that I make a $100,000 wager that I can keep my computer free of zero-day viruses, FOR LIFE.  I am not willing to make that bet.  It is, after all, a Windows machine.

Making backup wallets and storing them for years makes a lot of sense.  Paper is far more durable than any electronic medium.  What medium would you suggest that is going to last 100 years?  Floppy?

I see your point, and don't know the right answer.  Two counter arguments for you::
1)  "Under new Code Sec. 1012(c) that goes into effect for sales on or after January 1, 2011, accounts are treated separately for purposes of determining the basis of stock. For sales prior to that date, accounts are aggregated. "  By analogy, Bitcoins mined last year would all be treated as a pool, even though you can account for them separately.

2)  The Bitcoin Client (supposedly) sells off smallest first, treating all of your money as fungible.  Sure, I suppose you could write your own client, or use two wallets, or whatever.  But it seems like for the standard 1-wallet user, trying to analyze which actual coins were sold would be a nightmare.  (Not to mention that 2 different coins with two different basis dates could be lumped together in a transaction, and change is returned to you... how are you going to account for the basis of the change?  Pro-rate it?  Seems overly complex!)

Good discussion though!

"When selling mined bitcoins, however, you would also be taxed on the increase between the value you recorded them at when you first received them, and the value you sold them for. "

It should be noted, likewise, that this can be a capital loss as well.
Example:  If you mined some at $32 a couple of days ago, the taxable event is that you earned $32 worth of bitcoins, and that is taxed at ordinary income.  This also establishes the "basis" of those coins at $32.
If you sold them today for $26, that is a capital loss of $6, which earns you a tax break.


If you are buying and selling stock, you are supposed to track whether you are selling LIFO or FIFO.  I believe your broker is supposed to ask you this question when you buy the stock.  Not sure if buying currencies is the same, but I would suggest that people keep track of a) the date and price that you paid (or the fair market value of any mined coins at the date they were earned), b) any expenses that you incurred in the mining or purchasing process (purchasing fees are probably deductable), c) the date and price received for any coins sold.   In other words, treat Bitcoins as you would any other asset.  (This also implies tracking whether your gains are "short term" (under a year), or "long term" (over a year).   Long term capital gains typically receive favorable tax treatment.


I think it's best to choose a method (LIFO specific identification or FIFO), and stick with it until I am out of Bitcoins (at which time I can choose to switch methods).  Generally on an asset that rises in value, specific identification using LIFO is the better choice in my opinion, because then the taxpayer is selling the ones that he/she bought for the most money (generally), as this will generate the smallest taxable event.  On the other hand, LIFO may cause more short-term gains, which get less favorable tax treatment.

On the other hand, if the taxpayer's income is small today (and so a low tax bracket) and he/she expects it to be higher in the future, he/she might want to choose FIFO just to incur the tax burden while the other income is small.  Since Bitcoins are fungible, I suspect the IRS would frown on the "I sold the ones with the highest basis" method, although someone might be able to pull it off.

EDIT:  According to another user (bitcoinaccountant) "Also the cost basis of financial instruments is either determined through FIFO or specific identification. LIFO is not an option."   Read his advice below!


I believe that if the US Government wants to stomp out Bitcoins, they will go after a few tax cheats, and make a big deal out of the cases (in the same way that the Recording industry goes after a few file sharers, to try to scare everyone else).  So don't think your transactions won't be monitored by the IRS!   I plan to list them as "BTC" on the tax return just as if they were any other capital good.


Disclaimer:  Everybody's tax situation is different, and I am not a licensed professional - I'm just a guy on the internet... so don't believe me without checking with a professional, and really, don't take this post as any sort of financial, legal, or tax advice.  I am stating it purely as an opinion for others to give feedback to.

 

I second that.  Sure it'd be nice to buy now, instead of $32, but you can't lose sleep second guessing the exact timing.

I go back to "fundamental" analysis.  Figure how many dollars need to be stored in Bitcoins to support an electronic market, and guess at the probability that Bitcoins will get there, and you can arrive at a current valuation.  I did that here about nine days ago with some very conservative numbers.

A lot has changed since then, including (especially) more than 100,000 people having downloaded the client, increasing the installed base by about 40%.

It's already been proven that Bitcoin is 500 million trillion times the value of gold.  Why are you underestimating?

Thanks.  I'll take a look.
If you don't mind, please remove the debug info from the previous post... I'll turn that off and give a standard "500" error in the future.

Edit:  I think I fixed it.  It appears that you requested a short name that is already taken.  Try again.




And you are correct, I wanted to create a service where people could reserve short names, and change the wallet address at any time.

or something like this:
myB.TC/jerfelix

Sounds are working fine now.  May have been user error.

Hey dorphern, I think you might have broken your sound file and flag image, when you moved it to http://bitval.info

img src="flags-iso/24/us.png" fails to load.  and I'm not getting any sound.  Is it just me?

Is there a way to see the history of orders that have been filled, and a list of orders that are open?

The geometric mean is a reasonable simple solution to the problem.

If you want to be really analytical, you would look at the order book and determine how much it will cost you to convert bitcoins to USD (or whatever currency you are considering).

Two things worth noting - this method could actually be higher than the geometric mean (if the current price is close to the high of the day).  And the conversion rate really depends on how many Bitcoins you are converting.  Just consider this:  If it's 1 BTC,  you are going to get a higher in USD than if you are trying to convert 10,000 BTC.

So look at the order book chart linked above, and look up the number of coins you are trying to convert on the side (Y) axis.  Then slide your finger over to the orange line, and that will give you a minimum price.  And where the orange ends (to the right a little bit), that will give you a maximum price.  Look at the area that is contained in the graph of orange, between the minimum and maximum, and take the arithmetic mean of the minimum and the maximum.  And that's your answer. (of course, you can figure this out mathematically, and not just by eye-balling it.)

That is the price that you KNOW you can offload the coins for, at that moment in time.

When you go to a party (a non-geek party) and hear someone else talk about Bitcoin, then you are too late.

This hasn't even been a feature article in Business Week (yet).  When it is, that's your first clue that the bubble is getting ready to pop.  Not immediately, but it's the warning shot.

To put this into perspective, go look at the Bitcoin Client Download stats.  The software has only been downloaded 350,000 times, and that number is going up by 10,000 per DAY.  Consider how many Internet users there are. 

Then ask the question again.  did you miss the big bubble?

I think this is an excellent service idea, and it looks like a pretty good implementation.  But it looks like it's going to be hard to get the ball rolling.  Part of the problem is that you are trying to sell two sides of a transaction to an audience that sits on only one side.  There aren't a lot of bears here, that are willing to bet against Bitcoin.

Here are my suggestions.  Please accept them in the spirit intended... trying to get your service launched.

1) Simplify your offering.  When options are first offered for stocks, typically there are only a few offerings until those get popular.  With options, you have 4 different ways to play them:  [Buy or Write] x [calls or puts].  In addition, you have the strike price and the date, which multiplies your 4 choices times a lot more choices.

To start with, why not have just a few choices:

Strike price=20 calls that expire end of June.   Buy or Write
Strike price=20 calls that expire end of July.    Buy or Write
Strike price=30 calls that expire end of July.    Buy or Write.

You'd be offering 6 things that people could bid on.  No puts (yet).  No variable terms (dates and strike prices) that people can enter.

2) Explain, for the first 6 offerings, what needs to happen for someone to make money, with examples.  Maybe a Javascript calculator that helps new users to plug in some numbers and see what happens in each case.

3) By default, use the Clearcoin escrow service for the first month or so.  Have this as a part of the offering (included in the price of the service).  After a month or two, then make it a chargeable extra.  At that point, people can trust you as the escrow, or trust Clearcoin for an extra fee.  (I'm just trying to think of ways that you can overcome the challenge "why should I trust you?"

4) Market this outside of the Bitcoin forums. "Think Bitcoin is a Pyramid Scheme, destined to fail?  Write some calls, and benefit from your wisdom."

5) optionally.... if you think Bitcoin advocates will be the "easier sell" than Bitcoin nay-sayers, then disregard what I said in item 1, and ONLY offer 6 put choices, and no call choices.  People who write puts would put up the BTC collateral, and people who buy the puts would only have to put up the premium.  Offer the puts in USD, not BTC, as the people who are hard to get in on the transaction won't want to deal in BTC.  Example:  For $4, you can buy the right to make someone pay you $15 for 1 BTC.  If they crash to zero, you'll make $15 (less the $4 you paid).

That's all I have.  Hopefully this will take off!

I think it's pretty funny that the user blurred out a bunch of information on his screen shot (here http://mlkshk.com/r/35UI ), but left some critical information to his identification.

Specifically, by showing the total number of blocks, and the total number of confirmations of the two transactions, he probably gave enough information to narrow down his wallet ID to just a few possibilities.  And we know he's 54mf on Reddit, so we could get a lot more info.

My point is not to expose this guy, as I think he has some great advice about the software.  I'm just trying to remind people to think about their privacy.

Sorry, it was a poorly worded joke.

Sure, get a wallet.  You can go to bitcoin.org and download the client.  Or you can use an online wallet (like instawallet or bitcoinme).

Once you have a wallet, you'll be able to generate those numbers yourself (your Wallet ID).  Then just let your friend know what your wallet ID is, and he can send you Bitcoin whenever he wants to.

Then when you want to send it to Mt Gox, follow the instructions I mentioned earlier. 

You can also transfer from Mt Gox to your wallet.

Nice interview on CBS, Jeff!

http://www.cbsnews.com/2718-504943_162-1111.html

Edit:  I guess this was a live webcast, that I happened to tune into, at the right time.  Not sure where the archive is.

Sure.  Go to Mt Gox. Log In.  Click Add Funds.  Look down the page to "Add BitCoins"   Key in the number of Bitcoins that your friend is going to send you.   You'll be given a number, like this one: 1BZbpx7wHAUcBgzAtH4KeogTmtgUrq5Nkk

Give that number to your friend, and tell him to use it within 24 hours.

Note, your number will be different.

Your math looks correct, but your logic can be questioned.
Past performance is not necessarily an indicator of future success, but the 8 month average gain has been about 2.45% gain per day.  (This is still very respectable, but nowhere near the 10% per day that you predicted.)  At that rate, it will take 190.3 days for you to get 100x gains.

math:
past 8 months it went from .06 to 20 (approx).  So 20/.06 = 333.33
so that's a compounded average daily gain of 2.45%  (333.33 ^ ( 1 / 240 ), which is 1.0245, or a 2.45% gain.
it will take you 190.3 days at that rate:  log( 100 ) / log ( 1.0245 ), which is 190.3


On the other hand, if we hit a knee in the curve, then 49 days might be correct.  Who knows!
You nearly doubled your money; you should be happy, and get out.