The Instawallet thingy strikes me as a ridiculous idea. The web is not designed around URL security. URLs are stored in browser history and company logs (yes, some companies preload self-signed roots that allow them to MIM all HTTPs traffic). They are phoned home by various toolbars and phishing filters. They are easy to leak out of negligence: support screenshots, forgotten data in the clipboard when connecting to VNC/Remote Desktop, etc. They are hard to remember when the computer inevitably dies, I know people who need to reinstall the OS once every few months and use their email accounts "draft" folder as storage space for things that are "really" important.

A quick test shows Instawallet does not even lock the wallet to the original country IP range. I can reload the page with IPs from different continents every few seconds. Not having an optional fallback email where I can recover the lost URL is a bonus feature.

Ok, it works as advertised, providing an "instant" ewallet. But why ?

How can he be convicted of slander if he never signed a contract with the accusers or the mediators ? Ah I see, you are talking about the good old monopolistic mediator and the mandatory social contract established by violence.

The irony.

The guy in the video is all buzzwords and feelgood and no actual economic clue. Hey, it's not like that ever stopped anyone from writing public policy.

One of the schemes he's suggesting, where a website tracks everybody's skills and express them in time-dollars is basically a disguised form of communism, the notion that everyone has equal rights to the economic outputs of the society regardless of his contribution. By fixing an hour of baby-sitting to equal an hour of computer programming you can pretty much guarantee no programming services will be available on the market, just a glut of baby-sitting, garden-mowing and grocery-buying offers. Scarcity is the natural effect of intervention in the process of price discovery - the undervalued good or service is sold on the parallel or black market.

For the sake of argument, let's assume the townspeople reach an agreement on an "unit of account" to be used, and devise a pricing scheme that everybody accepts as fair (yeah, right), for example 100 points = 1 hour of accounting by a CPA = 5 hours of baby sitting = 2 hours electrical work. Well then, when all townspeople enter their service offers in the web interface, the server will only be able to do crude barter matches - since nobody has done any work everybody has a big fat zero points in his account, there's no purchasing power.

To move beyond barter to an actual economy you need to inject liquidity in the market via two main mechanisms:
 - some trusted entity is able to spend points into existence for example the City Hall or a community charity
 - accounts are allowed to have negative balances, effectively a credit facility

Does all this sound familiar ? Well it should, since it's exactly what the government (via bond issuance) and the Fed (via QE) are doing. So we have free prices and a fiat currency - the exact same way the real economic system works. A fat lot of good did that do !

It's just a scheme to boost local spending by pricing at a discount in redeemable scrip which is backed 1:1 by govt currency. So it's not a new currency. The beggar thy neighbor strategy is questionable - the increased spending in the local economy will reduce spending in other neighborhoods. Those in turn will retort by printing their own currency negating any relative advantage. The net effect is similar to trade barriers and tariffs, a destruction of synergy and comparative advantage -  balkanization into small poor economic islands.

If the robots.txt issue is solved and the recent hack/unresponsive server issue fades away, it will be back on 1st place in no time. Google has massive amounts of information regarding the sites people actually visit (google toolbar and all), the importance of keywords in your domain name is much lower than it used to be. If from all sites that have "Bitcoin forum" in their HTML title a single one gets 90% of the traffic, then that site is gonna show up as nr.1 for "bitcoin forum" even if it's called HannahMontanaGoxed.com

The notion of "risk" does not apply. You take no risk when giving your money to a hobo, you give them up voluntarily. If 10 years later the same hobo turned successful business man gives you a million dollars out of gratitude, that's not an investment paying off, it's just serendipity. In the same way, giving money to random people on GLBSE cannot be considered an investment that caries a risk.

It strikes me that these folks set to live out their libertarian fantasies online behave much like a cargo cult: they duplicate the institutions from the statist world without bothering to understand why those regulations come to be, and how to supplement them in a deregulated fashion. They seem to believe that if you buy a domain called bitcoinbank.com or bitcoinstockexchange.org and cobble a web interface that claims it's a bank or a stock exchange, it will magically start to behave like the real thing, only much better because of the moral superiority of deregulation, freedom et al.

Don't get me wrong, maybe a stock exchange can function in a deregulated fashion, but they have to supplement the lack of government enforced contracts with real private contracts, and put meat on the bones of the "freedom of contract" mantra. Strong requirements of identity and financial disclosure, audits by respected 3rd parties, real contracts backed by escrow and/or private mediation etc.

Without these there's no "freedom of contract" at play because there's no contract - an enforceable bilateral agreement; it's all just a gentleman's agreement, in effect creating a lemon market where everybody is out to scam his counterpart since there's no way to know if you are talking with a real gentleman.

In fact I still maintain that the current blockchain is flawed and will eventually fade away into obscurity - as all human endeavours do. Surely you don't believe that Bitcoin is immortal ? Given the overall rate of innovation in the technical field, I would expect a worthy Bitcoin successor sooner rather than later.

That being said, I can approach the price issue on the economic fundamentals, just as you can take an economic approach to the supply of prostitution in 3rd world countries. I don't own significant amounts of bitcoins nor do I rent child prostitutes, but I will not deny their reality.

And the fundamentals say that a price in the 10 - 20$ within a functional economy is a pure fantasy - it requires an equivalent GDP in the billions of dollars.

The main problem I see is that the market does not trade in "securities". It trades in shares issued by people who are only bound by their own will to behave honestly. There's absolutely nothing stopping a "business owner" to liquidate all assets of the "company" and drop out of sight. There's nothing stopping him from issuing one quintillion extra shares. There's nothing forcing him to pay dividends. There is no obligation to financial disclosure, and any published data is not audited by a trustworthy party. There's no way for shareholders to express their voting rights.

So yes, I think "monopoly money" is closer to what GLBSE actually deals in, as opposed to "securities". Companies both love and hate the stock exchange. They like they can raise capital, but they hate when their are forced to disclose truthful financial details and the price drops as a consequence. CEOs hate when their are ousted by angry stockholders. If you take the hate out of the relationship and leave it entirely voluntary for the company to behave what you get is a way for unscrupulous "investors" to obtain free money from less savvy ones.

For web startups I would fix the system so that the stock market (Web-SE) is the owner of any domain name the business uses, and hosts the database and has access to the source code of the site. Also any financial dealings are conducted via wallets administered by Web-SE. This way the business owner is forced to behave and support the majority decisions, including replacing him as CEO and relegating him to a simple owner of stock issued on Web-SE. The stock holders could also democratically decide to take the company "private" and regain control of it's prime assets, the domain, database, source and wallets from Web-SE, and incorporate in some jurisdiction.

There can be no talk about stabilization until the recent speculative bubble defuses. Stabilisation could happen in the less than 1$ range. A functional bitcoin ecosystem will bring about much higher velocity of money that, counterintuitively, will further depress prices. If 5 million bitcoins worth 1$ each change hands once every week, the annual GDP of the bitcoin economy will be 250 million $. We're far, far from that.

This sounds like inflammatory and misguided advice. It's ridiculous to believe that declaring your bitcoin income for tax purposes will bring the anti-terrorist police to your door. That's the whole reason terrorists will use bitcoins, to maintain anonymity.

Secondly, the phrase "As long as you did not sell the coins into actual cash there will be no tax implications needed." is plain wrong. As long as you keep your mined coins in your wallet yes, there are no tax implications. As soon as you exchange them for anything you are engaging in a commercial activity and that's a taxable event. If you barter your coins for food you need to add the fair value of that food to your income for tax purposes; additionally the business selling you that food must retain and pay VAT - it applies to barter transactions too.

Only one: BitcoinPorn
I can stomach the occasional noob, troll or teenager, but at 1600+ posts this one is simply depressing to read. I weep for humanity.

The causality line is: prices vary -> profitability varies -> miners join and leave the market -> difficulty varies. Difficulty does not determine price and miners can't "strike" to maintain a given price.

No matter how difficulty varies the daily number of 7200 generated coins does not change, it's just otherwise distributed. So there's no stabilizing force, in order to maintain a price of K USD you need to have a daily cash influx of K*USD dollars. The volume of MtGox is misleading since those are dollars moving around back and forth on already mined coins. But in order to maintain a high price you need high net cash injections like we saw early this year. I just don't see those coming.

It's rather irrelevant to say that some miners sell while others don't. The miners that hoard are paying for bitcoins with resources, and by the nature of the problem they can't accumulate too much inventory. Sure, there would will be some miners clinging to the get-rich-quick dream and refusing to sell at "this ridiculously low price", and who will continue to mine at a loss. That's a bit like people bankrupted by Amway/Quixtar types of MLMs continue to cling to the dream despite all rational evidence. But sooner or later they will be unable to subsidize the price out of their own pocket and the daily 7200 BTC will return to the market, with a vengeance.

Yup, the bubble is deflating. The only thing that could stop this elevator is a net cash influx large enough to withstand the daily 7200 BTC onslaught. At 5$/BTC, that's a net cash influx of 36K/day, over one million dollars a month.

Since the real net buy-in is much less than one million dollars/month, the equilibrium price is in the pennies range, as the market will eventually discover, trampled dreams and egos notwithstanding.

First some facts: current US Dollar monetary base increased from 2 trillion in 2010 to 2.6 trillion in August and the total government revenue is around 4.6 trillion , 30% of GDP. The M3 is a very broad form of money that include time deposits and long term bonds and which the central bank has very little control over and which being very illiquid has little bearing on inflation. I would take everything Ron Paul says with a grain of salt.

Now on to the main issue:


Not all money is created equal. I believe it's a classic case of pushing on a string: the QE rounds replaced MBS and treasuries the banks held with freshly conjured dollars, but those are not hitting the market since banks are weary about lending in a recession. The newly printed money sits idle as excess reserves.



When those dollars hit the market the Fed can sell the assets it acquired and sterilize (destroy) any excess liquidity thus preventing inflation. This is major point of contrast with direct spending by the government which will never tax and destroy currency.

There is also another point Austrians make very nicely: inflation travels unevenly through the economy and some groups (bankers) who get easy money have a net advantage over those at the bottom of the social scale, which have a fixed income and are force to see their wealth vanish. What I'm trying to say is that the bulk of the inflation caused by QEs might be still to reach the man on the street.

As an anecdotal evidence about the evils of direct money creation by the governments, you can look at Zimbabwe's case that derived only 50% of it's revenue by creating a 10^25 inflation during a five year period. Even Mugabe could not dispense with the revenue from taxes and the exploitation of the country's mineral resources.

IMHO, it doesn't matter how fiat money is created: as loanable funds or as tokens spent directly into the economy. The most important thing is that governments:
 - don't confuse money creation with a revenue source (Mugabe)
 - don't distort the credit market for the purpose of makeshift development and control over the economy for their bank cronies (Bush, Obama et all)

Tor works because data can be encrypted, and once that's done you can't connect source with destination, you only see an opaque bitstream at each point. Even if you own all three hops you have only managed to match source with destination; you still can't decrypt the traffic.

In contrast physical packages are easily tagged, x-rayed and tampered with, and there's little recourse against it. Multiple hops will not give increased security vs. a single one, quite the contrary it will pass the package through hands of  3rd parties that are free to join the system. If I was law enforcement I would certainly participate in the "Physical Tor" and have interesting packages arrive in my mailbox each day, as opposed to scanning the whole parcel traffic in a given country or region.

Government taxes economic activity, GDP if you will. Every time you make an economic exchange you usually pay some form of tax, and the same limited monetary base (~$2 Trillion) circles around the economy and creates a large annualized revenue (~$5 trillion) that the government promptly spends upon collection thus enabling the cycle to continue.

If the government would try to target the same level of revenue to GDP ratio (30%-ish) by monetary seigniorage alone the effect would be runaway hyperinflation, no doubt about that. A single trillion added to the monetary base would instantly inflate all prices by 50%, and once inflationary expectations set in the government would find it very difficult to capture more than a few percent of GDP via direct monetary expansion.

A trillion of extra M2 is not the same as direct printing by the government, it's a trillion deposited in the banking system and not circulating in the economy, it's a claim on future revenue against the debt holder and his collateral. Most importantly it's a choice of the "economy" where some agents decide to save and others to take credits and invest. The notion of credit is a natural one and appears in various forms in all monetary systems.

The root of all evil is government interference in the credit market via:
 - interest manipulation in the name of "economic development" - the decision to take on debt is skewed over saving, the economy is transformed in a consumerist series of bubbles; government gets easy access to loans at low interest and can increase debt spending, a perverse form of taxation
 - deposit insurance policies that masks the risk of investing via a bank: the owners of capital have a risk free investment insured by the central bank, and the private bankers have the liberty to take infinite risks, moral hazard ensues

Someone definitely put a huge effort into this. If all hackers were so funny.

Because there's no need for it. The market is efficient and will reach an equilibrium value of BTC that acknowledges the large liquidity infused each day by mining.

But wait, a large herd of people approach and they are yelling "buy Bitcoins, we'll all be rich !". The price spikes to a level that can't possibly be maintained against the daily liquidity injection of 7200BTC. I guess markets aren't that efficient after all, and occasionally fall pray to a speculative bubble. There's a quick fix: the price has to fall back to it's natural level, dictated by net cash inflows into the system. Luckily, The Designer made it all automatic, you don't have do anything, except loose money if you are one of the balloonists.

In short is not the rate of printing that's too high, it's the price.

The whole "price can't fall bellow X because miners will do Y" line of thought is flawed. If the price falls, the most inefficient miners will start to go offline, as they sink more and more underwater. The decrease in difficulty will make the remaining miners more profitable, so an equilibrium will be reached. The same happens if the price increases, new miners come online and eat up the large profit margin, leaving only those with the thinnest margins or the best technology.

The price can fall very nicely bellow 4$, 1$, 0.1$ and any such arbitrary limit because it's only supported by the interest of people buying into the currency, at a rate at least equal with the mining rate. If miners hoard instead of selling  it makes no difference: they are effectively Bitcoin buyers, they buy with the resources used for mining which as explained above have a financial value very close to the market price.

So you tell me, what is the net buy-in Bitcoin will see each month ? If you got that you can easily compute the market price:
- 1 million $/ month -> 5$/BTC
- 200K $/ month -> 1$/BTC
etc.

In order to sustain that price you need to have consistent buy-in month after month. There's simply not enough going on in the bitcoin economy to warrant such large positive cash inflows. It's a currency used, literally, only by the members of this forum. Maybe a few thousands - tens of thousand dollars a month, leading to a BTC price in the pennies range. We have a long way down people.

Aaaand it's gone.

I wonder what's the next "resistance price".