It's only an issue if you need exchanges to change back into fiat.

The worst thing that happened to bitcoin was speculators piling in treating it like a commodity to increase their dollars. It's meant to be a peer-to-peer currency - so as such doesn't need banks nor exchanges as long as you stay in Bitcoin-World once you have your coins. This obsession with "trading" back and forth into fiat and watching the dollar price is a weakness. Govts can only control fiat and the use of fiat, so all these exchanges are points of weakness because they need conversion into fiat. Eliminate the obsessive need to switch back into fiat and you eliminate the threat of govts.

Perhaps the community needs to switch focus on teaching people how to earn bitcoins and strengthening bitcoin commerce, so that people don't ever have to deal with exchanges and banks, bitcoins will just circulate within bitcoin-world. Once that happens, bitcoin is beyond the reach of any government.

Can someone explain to me why everyone is so obsessed with trading against fiat?

Well, strictly speaking we're not reliant on banks. You only make yourself reliant on banks if you insist on trading back and forth into fiat.

If people just stayed in bitcoin world once they accrued their coins, there wouldn't be any problem. Now that you can buy stuff using bitpay and gyff, is there any real need to switch into dollars or any other currency at all? This only affects the speculators and currency traders  - they just can't resist going back into their old world...

Get yourself a verified paypal account, and then when withdrawing fiat, you can use bitinstant to withdraw from mtgox to paypal. You can then withdraw from paypal to your bank account.

Sending fiat money to mtgox is more problematic. Look into an e exchanger that will put money into a liberty reserve account, which then goes into mtgox.

Actually it's perfectly possible to manage hundreds of very different strong passwords without a password manager in your computer, if you go old school.

Buy yourself a hard-backed book which remains in your desk at home. Write down the passwords for every different site in that book. That way, however long and complicated the password, all you need to do is look it up in your book. They'd have to locate your house and steal your book to get at them, and yes this means you can't open your wallet in the office. And, yeah, it's really old school - paper isn't popular in the mainstream world, but isn't it interesting how it is making a comeback in the bitcoin universe?

I don't see how they could. Bitcoin is a global currency. So if the US Federal government says it's illegal for any US business to accept bitcoin they may as well say that it's illegal for any US business to accept euros, yen, pounds and so on - and bang goes the export industry. Because when someone abroad buys your stuff they are paying you in their currency, and then you exchange it at your bank or keep it in that currency for hedging purposes. So Google accepts money in euros when someone in euroland buys an ad for example, and they keep much of that money in euros rather than repatriating it to the US. Someone paying in Bitcoin is doing the exact same thing. And then there's all the other token items such as frequent flyer miles, reward points and so on which are all tokens businesses accept instead of money. They'd have to ban all of those too.

They can't do anything, not just because it's decentralized but because it's global. The more countries that participate in Bitcoin the better.

P.S. I should have added - the government will never have to bail out bitcoin because there is no lending based on it. So from the taxpayer point of view it is risk free as long as they can still collect taxes on people's capital gains from trading or people's profits from selling pizzas in bitcoins etc. If Bitcoin had existed in fully fledged form in 2008, would the govt have needed to bail out the banks? They did it because the banking system was the only financial system in place, but if there was a working alternative in place, would they have just let the banks fail?

Bitcoin is bad for banks because it cuts out banking's middleman function, but it could be good for govts if it reduces their need to conduct bailouts (which they didn't enjoy doing because they caught so much flack from voters for it). The biggest threat to bitcoin is actually banks unilaterally closing accounts of exchanges and merchants they think are using bitcoin. In which case we'll need the govt on our side to force the banks not to close accounts on the grounds that it is anti-competitive behavior. Banking and governments are separate institutions and they have different agendas. At the moment the govts agenda is the same as the banks - but it's up to us to persuade govt that it's in their interest for them to line up with us against the banks.

How does this affect getting change? Say I want to send an amount, but I don't have the exact amount in my wallet, I have a bit more -so it does two outputs, one to the address of the recipient, and another output to one of my addresses with the change. If the change is below this new threshold I no longer get it back?

There's nothing stopping people just voting with their feet and using other exchanges like bitstamp. MtGox only has go much power because people have been herding towards them like sheep.

alyssa85

DannyHamilton - you're a star! Thank you very much!

OK - another question about inputs and outputs.

Say I have a wallet with 2 BTC in it, which is made up of 50inputs of  0.04BTC each. I want to send 1BTC to another wallet - am I right that this will be made up of 25 inputs, and the transaction size will be 25 x 200bytes = 5000 ?

I'm aware of namecheap - the issue for me (ironic seeing as we're discussing prices!!!) is that their prices are too expensive. For unlimited domain hosting they charge $14.95 a month, whereas hostgator charges $9.99. Namecheap's bitcoin price is the market exchange for dollars. So in order to use my bitcoins to buy hosting I'd have to accept INFLATION of 50%. Like I said - I don't want deflation, but I don't want inflation either. I want prices to be rock steady. Is that too much to ask?

How many businesses are trading with each other? I can't buy my groceries with bitcoins or even hosting for my domains. The most developed part of the bitcoin economy is trading exchanges - one springs up every day. In other words, there is a tendency to hoard, and then change back money into fiat. That's not a good sign - if bitcoin was the future why on earth would people want to check the price against the dollar or even change it into dollars, complete with regretting that they spent their coins because they'd have made so much money if they'd hoarded it and yup, changed into dollars. The dollar should be irrelevant - but it's not...

Depends on "what the consequences are to them personally".

Deflation simply means that prices fall. Therefore it's not worth spending money today because things will be cheaper tomorrow. In other words, it encourages hoarding of money.

Now consider that one person's spending is another person's income. Say you are a business. You've made some goods and incurred some costs doing that (cost of materials, cost of labor). But no-one is buying, they are waiting for the price to drop. So you shave your margins. Soon you are selling at cost just to release the money locked in the inventory. But what if people refuse to buy goods at cost? Then you go bust. Your staff are fired. Forget decreasing wages, they have no wages, because there is no business, because no one will buy. As the numbers of people getting laid off increases, sales fall further because these people have nothing to spend. Prices get cut even further to try to attract the remaining business - but no-one is buying because a) they are waiting for the price to drop even further and b) they are scared they'll lose their precious job - so you get even more hoarding and even more businesses going bust and even more people laid off. In a downward spiral.

Eventually, after about twenty years, there are some goods that people absolutely have to have (medicine for example), and people will pay for that, but elsewhere the economy is a wasteland. People emigrate, but they find problems wherever they go because other people resent them moving onto their territory (they've become immigrants). You get starvation, you get riots, you get anti-semitism and racism, and you get people trying to exploit popular anger.

The long depression of the late 19th century, which lasted twenty years spawned two responses - some countries introduced welfare states to prevent the masses from rioting and dying, and other countries had revolutions (Russia) or fell to evil dictators (Germany and Spain in the 1930's).

If there hadn't been deflation during the late 19th century, none of that would have happened - no welfare state, no revolutions and no mad dictators leading to a world war that saw about 30 million dead.

That's why the ideal is keeping prices rock steady - not inflating but not deflating either.

I think people on here are romanticising the desperation, starvation and sheer madness of the late 19th century and early 20th century simply because it has passed out of living memory and there is no family member left to speak of it's horrors. But read up accounts of people who were actually there. It was not a fun time to be alive.

Going back to your comment that "In an unregulated and deflationary economy employers couldn't drop the wages so low that people would be forced to work for longer without consequences to them personally" - it's happened before where people worked for a loaf of three days old stale bread, because the alternative was death. Don't be naive, of course employers can drop wages that low!!! They've done it countless times in history. The only time they haven't was during the Roman empire when the Emperor forced his law on wayward employers and in the last fifty years, which have been a bit of a golden age in the history of man.

Is bitcoin a deflationary currency? I hope it's just a steady one that allows commerce so we don't have to deal with banks. However, I can already see the hoarding tendency become dominant - the most developed parts of the bitcoin economy are those that encourage people to trade bitcoins for dollars - i.e. just like a stock rather than like a means of commerce.

There's now nine unconfirmed transactions with the oldest outstanding for 21 hours. I assume that after a certain period, the money gets returned to the originator?

I wonder if I've got a problem with my wallet seeing as no-one else is having unconfirmed transaction problems.

Remember that in deflationary systems, wages fall as well as prices. So you'll still have to work as long! We're in a semi-deflationary period now, with minimum wages frozen and zero hours contracts and juicy salaries only available to the elites.

There have been only two real periods of sustained deflation that we know of. One was during the Long Depression of the 19th century. That depression lasted from 1873 to 1896 - over twenty years. It caused massive movement across teh globe of desperate people - that was when the huge movement of people from Europe to the United States happened - people already in America didn't like it and at the end of it, passports were introduced, to prevent mass migration. So one result of the deflationary period was social - free movement of people across the globe (which had been enjoyed since human beings first evolved 170,000 years ago) stopped and came under the control of governments. A big loss of freedom if you subscribe to libertarian views. The second result was an upsurge of anti-semitism in Germany, Austria and Eastern European countries - that deflationary period in the late 19th C was when it started.

The second deflationary period was the Great Depression of the 1930's. That caused movement of people too, eg from Oklahoma to California, but not as much as during the long depression, as passports had been introduced, which reduced international movement. For example desperate Jews were turned away from America and shipped back to their deaths. And we know how this played out in Europe - we got another world war.

So deflation can result in some sinister stuff. Inflation results in sinister stuff too. Some people think that if you are against inflation you must be for deflation. Actually we should all be aiming for the sweet spot where prices hold rock steady, with neither inflation nor deflation.

I disagree with this. All the government cares about is the ability to extract tax. As long as they can tax businesses operating with bitcoins, they'll be happy. It's a bit like the 90's when the internet first took off. At first govt was nervous because it was all decentralised. But once they figured out how to tax online businesses like bricks and mortar businesses, they were happy.

Bitcoin isn't really a threat to govt - it's a threat to banks. If bitcoin takes off, it makes the banks obsolete, and the banks are going to fight hard against this. Including shutting down the accounts of exchanges and trying to prevent bitcoin businesses from using their facilities.

Will govt care if the banks become obsolete? - again I don't really think so. They would never have to bail out bitcoin operations, so that's a big plus on the side of bitcoins. I don't think anyone in govt enjoyed the bailouts, they got a lot of fury from the voters for it. They bailed out because the banking system was the only one in existence and they feared meltdown. If there was an alternative in existence at the time of the crunch, there'd have been a different response.

If they could have a system that doesn't need bailout, which means elected representatives can collect their salary without feeling any heat from voters, govt would be very happy indeed! Especially if they've found a way to tax bitcoin business. Once govt sees this, they'll actually start defending bitcoin operations against the actions of the banks - such as preventing them from closing down the accounts of bitcoin exchanges on the grounds that that constitutes anti-competitive behavior.

I know people assume banks and govt are the same thing, but they are completely different with different agendas.

I've now got a string on unconfirmed transactions from these faucet sites! Anyone else seeing this, and anyone know what is causing it?

You can use Liberty Reserve and then an e-exchanger that send money to Western Union (or Paypal).

For example, here's a New Zealand based e-exchanger: https://www.alertexchanger.com/index.html

I'm sure as the e-exchangers realise there is money to be made, they'll start adding bitcoins. Or perhaps a bitcoin entrepreneur can create one. Basically as long as you can somehow get money to western union, you don't need banks at all. Western Union may be seeing it's first proper revival since it's glory days in the 19th century!

One reason is safety. Say some government decided Bitcoins threatened them - they pass legislation (which takes months to go through the legislature) saying that it is illegal to accept Bitcoins. While this is going on, the community simply changes it's bitcoins into litecoins and continues as before. After all the legislation so painstakingly crafted doesn't mention litecoins at all. And so on.

They can't ban them all.

Hi - I just checked on my blockchain wallet - the oldest transaction has over 900 confirmations. How high do the confirmations go? Does anyone have any idea?