Which is great until it becomes corrupted, which will eventually happen to any USB key.

Well, there's a big difference: Fiat currency has governments with big militaries to back it up. They decide who owns what physical property, and they decide what currency you owe your property taxes in. Therefore, there will be a huge demand (by the government) for fiat currency, and that demand is driven by an entity that has a crapload of guns to force you to pay it in its fiat currency. BTC has no such benefactor.

Very helpful, thanks much!

What are fundamentals with BTC?

I'd argue that the only fundamentals that matter are merchant acceptance levels, and those are tiny.

So, hard to disagree. Very much a house of cards presently.

The bright side to me is the smart VCs entering the game (Andreesen Horowitz, Tim Draper, Lightspeed, etc). These guys have the money, the connections and the cultural clout within the tech startup community (where payments startups like Paypal and Square began) to substantially move the needle. Bitcoin needs a professional sales force going out and signing up merchants on the back of a very slick payments infrastructure, among many other things, and one thing VC money can fund effectively is that.

Thanks!

So you're suggesting that we split our coins? Have one private key that is only offline (presumably backed up physically in at least two secure locations) that we store the bulk of our bitcoins there? And then have another private key that does reside on our computer (along with a print-out backup) where we store any balance that we want to trade with or actually buy things with?

I'm past 4 hours, and well past 5 posts. Just wondering what the procedure is. Thanks!

The real answer depends on how much you're trying to protect. If you're an adult with any substantial portion of your wealth in bitcoin, keep your keys in cold storage in different physical places. A fireproof safe is not good enough. Put it there, and then also store it in a safe deposit box in a bank in a different town from you.

You can't buy adspace for gambling services on reddit. http://www.reddit.com/wiki/selfserve#wiki_why_did_my_ad_get_rejected.3F

I hear you. I've got one company that I own that's been accepting credit cards since 1997, and for virtual stuff rather than physical stuff, so there is no protection against chargebacks like you have with point-of-sale purchases or sign-on-delivery. I almost got blacklisted in 2001 after our gateway screwed up and submitted 16 transactions for every one it was supposed to. Nothing makes me angrier than getting a chargeback 6 months later (6 months is generally the limit) when I am positive the person doing the chargeback authorized the transactions and just wants a refund. It sucks, and we're just out the money when that happens. That's just part of the cost of doing business, along with fraud prevention generally.

But here's the thing: Of course it's the merchant that takes the risk. The merchant needs the money of those customers a lot more than the customers needs that merchant. I run an online games business, for instance, and if I don't make it easy and safe for a customer to spend money, many of them won't. There are plenty of other online games for them to go play. They don't need me as much as I need them. There's almost no business in the world that isn't in that position barring true monopolies or in certain edge cases like so-called 'food deserts' where there's only a single small food store serving a poor area.

No, not vice-versa. Bitcoin is a currency to a merchant that's going to use them. It makes no difference how strong Bitcoin is, because the only way widespread merchant adoption is going to happen is if merchants have the ability to near-instantly cash out of bitcoins into a currency they can use for things like taxes, legal salaries, and so on.

I can confidently say that I'd accept sheep as payment if I could convert them quickly and painlessly into USD. Same with bitcoins. How strong the sheep market or bitcoin market is just doesn't matter to a merchant though, as the merchant isn't going to hold onto those sheep or bitcoin.

Apologies if I misunderstand, but why would you own and short an equal amount of something? Wouldn't you typically aim for delta neutral through a combination of securities and options on them? Long securities, with put options, for instance, and possibly the addition of call options if you can't perfectly get to delta neutral with the available puts?

Transaction/cashing-out difficulties aside, selling your current 10 bitcoins and shorting 10 bitcoins is the same thing isn't it? In the former case, you have to buy 10 bitcoins back, but you can do it whenever you want. In the latter case, you have to buy 10 bitcoins back too.

You aren't. You have protection against a shady merchant as a consumer when paying with a credit card as you can initiate a chargeback if you're not happy with what you received. Without a signature attached to a sale (either at the point of sale, such as in a retail store, or upon delivery of a physical item), it is very easy to just chargeback an item in the first 6 months after you've purchased it. With bitcoin, the merchant has all the power once you've given the merchant your bitcoins.

Porn sites (and any site selling things without a required signature or proof of delivery) would love to not have to worry about chargebacks from upset customers, or from customers whose kids 'borrowed' their credit cards. The trouble is, it's a pain in the butt to use bitcoins as a consumer currently, and it's a pain in the butt to accept them currently and then convert them into a usable currency.

Further, in a business like porn, your costs are in customer acquisition. If you can solve the customer acquisition problem, the 3% that credit cards take don't really matter compared to how important it is to make the payment process easy for the customer.

Why? To make it harder for people to buy porn? A credit card is about 100x easier and you have protection against shady merchants by initiating chargebacks.

It's a combination of the rapidly fluctuating price of bitcoins and the fact that it takes too long to cash out to a currency that can be used to pay salaries, pay rent, etc. If the exchanges were reliably performing in the sub 1 sec range (which is still unacceptably slow for a modern exchange, but it's still the Wild West in bitcoin), then wild fluctuations would matter less. If the price of bitcoin was stable, then having a slow exchange would matter less.

Having highly unstable prices and sometimes outrageously slow exchanges means that by accepting a bitcoin, a merchant (of any sort, porn or otherwise) is taking on a currency risk that she may not want to. She can't just immediately cash out of bitcoin and into a useful currency at an exchange rate that is nearly guaranteed to be at or very close to the exchange rate that she used to calculate the bitcoin price. It's additional, substantial risk for a merchant.

Totally agreed.

If you've never tried it, you should. Also, look up a Double Charlie Backwards Mexican. It will blow your -mind-.

Don't think you guys are the first unless you've been doing it quite awhile.
http://www.dragons.tl/
and
http://ataleinthedesert.com

have been offering bitcoins as prizes since 2011.

I've lost zero, I've gained zero. The sidelines is a comfortable place to be at the moment, though I wish I'd been in a year ago.

A posting we will go.

Any time you "jump on a bandwagon" when investing, you're probably not being wise. One doesn't make money by "jumping on a bandwagon". You do it by predicting what the next big thing is and buying it before the masses discover it. Witness how many people were still buying houses in 2005-2006, and then lost their shirts when the housing market crashed. Look at how as the Dow hit record highs recently, ordinary investors have been pouring money into mutual funds. Guess who is going to lose the most when the stock market next corrects?

So yes, it was probably foolish to jump in during a phase of rapid price appreciation (you want to buy when the price of something goes down, not when it goes up), but it's also totally understandable. Bitcoin is exciting.

If I were you, I'd just hold onto them now.