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I've a theory that's probably worth as much as you are paying for me to share it with you.

But here goes.

About six months ago miners were getting squeezed on their mining -- the exchange rate was dropping and their electric bills were coming due.  Without an inflow of profit from mining, they turn to selling their entire BTC revenue and then also sell what they've accumulated.

This time the exchange rate is flat but the difficulty is rising fast again, causing the mining profitability to drop to levels not seen since early December.
 - http://bit.ly/HEzoMm

Now some of these miners are seeing the writing on the GPU wall.  And are looking to buy FPGAs.   So what they might do is use their BTC stash to cash out and buy an FPGA, or they might sell their rigs to another miner who maybe pays less for electricity and buys an FPGA or two with the proceeds.  The end result of that though is the GPUs return to mining with the new owner and new FPGAs get fired up as well -- causing profitability to drop to even worse levels.

There are occasionally individual offers to do trades, like this:
 - http://bitcointalk.org/index.php?topic=74474.0
  As with any person-to-person, over-the-counter trade, know:
 - http://wiki.bitcoin-otc.com/wiki/Using_bitcoin-otc#Risk_of_fraud

It is possible Mexico is one of the 42 countries where bitcoins can be purchased via SMS  [Update: Mexico is indeed one of the countries]:
 - http://blockchain.info/wallet/sms-phone-deposits

If you are a merchant, you can set up with Bit-Pay to have your customer pay you online using Bitcoins and then those are converted to MXN and sent to your bank account.
 - http://bitcointalk.org/index.php?topic=69425.0

VirWoX accepts PaySafeCard, though I don't know if the PSC purchased in Mexico is denominated in USD or if VirWoX can accept a PSC with MXN on it.
 - https://www.virwox.com
 - http://en.bitcoin.it/wiki/VirWoX

There is also a cross-border mobile payment system called Boom from M-Via.   Perhaps there is a family member or friend in which Boom can be used to send funds from Mexico to that person who has more access to easier methods for purchase of Bitcoin.

There were individuals willing to do trades as well:
 - http://en.bitcoin.it/wiki/Category:Local

If you learn anything useful or a new method, please report back!

Is that something you no longer do because there isn't much price delta between those exchanges and thus not as profitable to arbitrage anymore?

Well at least the press is qualifying it properly nowadays.


And properly describes how it is not Bitcoins themselves but in how they are used (laundered to hide origin) that is where the problem comes about.

In pictoral form (the top chart):

Some people look at that and see blue causing red to move (though with a significant lag).  Others look at it and come to a different conclusion.

Is a two-factor authentication method on the roadmap?

One area where Operation Fabulous has room for improvement is in the process a new publisher goes through.

Right now the process requires the publisher to get approval by adding the OF adbox (script) to the site where the ads will be published and to wait for OF staff to review it and mark the site as active.  Then once that happens there are no paying ads being published until an advertiser bids a sufficient amount to get ads shown.

Until that happen the "inventory" is wasted.  By the time that paid ads might start showing, the publisher might already have moved on to some other online advertising platform.

This is particularly a problem where the publisher is selective and chooses the "explicit approval" option in which only ads that get the publisher's approval are allowed to be shown.  In review of the advertisers many are for sites that would be considered spammy, scammy or just not a good fit for the publisher's visitors.  So the publisher generally should choose this explicit inclusion mode.  But even then spending a few minutes looking at the list of ads from advertisers to include, the publisher sees these:
 
  BiddingPond (has been "coming soon" for months)
  Cash Cow Casino (closed, was a scam anyway apparently)
  FXNet - Bitcoin Ponzi (really, it was a ponzi site -- taken down after MyBitcoin)
  BitLotto - Win Big With 1 BTC  (has been 0.25 BTC since August)
  Ubitex  (long gone)
  BitMunchies (closed)
  SquareWear (for the most part closed)
  MetaCo.in (closed)
  TradeHill (closed)
  BTCOnTilt (closed)
 and on and on.

So one improvement would be do so housecleaning and weed out the inactive advertisers.

The next might be to make it so that publisher can choose from the list of active advertisers in advance rather than not starting that process until after having already begin publishing the Operation Fabulous adbox.

Oh, now I get what you are describing.   This would allow a person to redeem a paper bitcoin at a merchant, for example, without having the exact amount.  Here's how I now understand it to work: The paper bitcoin is presented to the merchant.  The merchant scans both the private key and the "to here" address.  The merchant then creates a transaction which has the first output going to the merchant's Bitcoin address for the amount of the purchase, and then the second output goes to the "to here" address.

Of course this puts a delay between when you can use the first paper wallet and the second one.  One confirmation (about ten minutes) is all that is needed though before spending the second one.

There is the risk that the merchant doesn't actually send the change transaction and the customer with the paper wallet wouldn't know that happened until attempting to spend the second paper wallet.  But if the merchant provides a printed receipt with the details of the transaction at the time of the sale then the customer would have all the information needed to resolve any dispute if the funds don't arrive.

There is also the risk that the merchant scans the private key but cannot (or does not) process the transaction.  Should that happen, there is the risk that before the customer is able to use that private key elsewhere (e.g., upon return home) the merchant then fraudulently spends the coins.  There's almost no way for the customer to prove the merchant had spent them.  But maybe the merchant really didn't spend them -- maybe the customer spent them upon return home with the intention of accusing the merchant of having spent them (in an attempt to get the merchant to pay a refund).  This just opens an opportunity for one party to scam the other in which there is a fairly decent chance of being successful with a fairly low chance of getting caught as there's almost no way to prove who really spent the funds.

Now instead if this is a way for two parties which trust each other to transact where one party wishes to use a paper wallet system, these would work wonderfully.

p.s. one caveat on the design -- the actual keys should be printed out in case of the need for manual entry (e.g., no QR scanner available or the scanner used couldn't detect the code.)

There are reasons for paper transfer of bitcoin value but whenever real-world scenarios are described, the fraud potential between when the paper is issued (e.g. spit out of a receipt printer) and when it gets redeemed (scanned for redemption a few hours later) is too great.  It is only a matter of time before the flaws are exploited and users lose coins.

If you are wanting a paper wallet to hold bitcoins securely yourself until redemption days, months or years later, then perhaps some specialized device that you could own would someday be created that would provide that.  Something perhaps like the Raspberry Pi Offline Paper Wallet Creator discussed here:
- http://bitcointalk.org/index.php?topic=74615.0

Here's another thread describing the problems in accepting a paper wallet from a third party:
 - http://bitcointalk.org/index.php?topic=68065.msg810361#msg810361

It really boils down to that the wallet needs to be redeemed soon enough after issue such that neither side has an opportunity to defraud the other without detection.  The only exception is for the physical bitcoin products which are secured with a hologram or other such protection.  So far though, those physical coin and paper wallet methods cost about $2 per blank.

There was discussion of a "half wallet" approach here:
 - http://bitcointalk.org/index.php?topic=56414.0

As far as a client specifically for loading, sweeping and verifiying paper bitcoins (QR code or manual entry (copy/paste) of the keys) that is already solved for the most part, using services that exist already (e.g., Mt. Gox does load and sweep, My Wallet from http://BlockChain.info/wallet does most of that as well, and I believe one or more of the other clients (Armory?) are on the job for this too).

A dead-simple standalone app and/or site just for this purpose could be built without much difficulty if there was demand.

[Update: Not sure how this fits in but wanted to share it:]
 Flexible, plastic electronic displays -- digital paper:
 - http://www.gadgetguy.com.au/lg-makes-digital-paper-a-reality-could-change-newspapers-and-clothing

In the U.S. we have Dwolla as an option.  We can easily and cheaply convert BTCs to Dwolla.

If I am making a purchase from a merchant where I can pay with Dwolla instead of credit card I will do so.  But I haven't had the opportunity to do so yet.  Dwolla isn't getting huge numbers of merchants signing up apparently either.  To be fair, Dwolla doesn't have a forum of fanatics who would go out of their way to solicit merchants to consider accepting that payment method and then promising to give patronage in the future.

But a lot of money was raised by companies such as Square, Venmo, etc and that along with the efforts of PayPal, Google and Isis are all going to be competing to persuade merchants to begin accepting their method of mobile payments.  That 3% swipe fee and lower fraud levels seen with mobile are enough to draw a huge amount of attention to this space  

But unless the hardware that merchants start using for mobile payments is locked down, adding another app -- a bitcoin payment app -- isn't such a radical step further.   When you start actually seeing Square register used on iPads at your coffee shop you'll know the time is getting near to start the push for getting Bitcoin in there as well.

That won't be happening at chains which want to have control of their own systems.  Look at Starbucks for instance which rolled out its own mobile payment app (which holds a cash / prepaid account balance for its user, interestingly).  And for smaller merchants because an investment in hardware is required the change to mobile payments will only slowly arrive (unless that corporate and venture capital money starts going to subsidize iPad purchases).

In the meantime it doesn't hurt to try to soften up the retailers by repeated inquiry ... just don't be disappointed when the desired outcome remains evasive.  But when there are merchants that do take the leap, we as a community do ourselves a service by making it worth the merchant's while by giving our support.  Even if it means going out of our way a little (though making a trip from a western state to Manhattan might be taking it to the extreme ).

p.s., There's always Papa Johns (CoinCard) or gift cards from a couple dozen other national chain restauraunts as well (GiftCoin.net):
 - http://CoinCard.ndrix.com
 - http://www.GiftCoin.net

We gotta start somewhere ...

Just an update:

The hash rate increased 8.56% this last block adjustment period, which took 12.9 days instead of the targeted 14 days.
 - http://bit.ly/vFZwdF

That pulls the date earlier.

The last block on March 31st was 173,804.  So to get to 210,000 means there are 36,196 blocks remaining.  At 144 blocks/day (based on impossible situation of hash rate not rising or dropping) there are 251.36 days remaning until the block reward adjustment occurs.

That puts the date sometime on December 7th, 2012.
At this point, those betting on it being December 9th or earlier are on the winning side.  The wagers are 4X more for that than for the "later than December 9th" side:
 - http://betsofbitco.in/item?id=312

From the November BTC/USD low of $2.20 the current exchange rate at $4.85 is up 108%.  From the November difficulty low of 1,090,715 the current difficulty at 1,626,553 is up 49%.  So I suppose the difficulty still has room to rise or the price has room to drop because early estimates already just a few days into this next adjustment period show even further capacity has come online.
 - http://bitcoin.sipa.be/speed-lin-10k.png

It's still early enough that we could still see a November date, but I think the chances of a January 2013 date have now been completely eliminated barring a catastrophe.

For reference, a prior post of yours:
 - http://bitcointalk.org/index.php?topic=53990.0

And other posts related to the topic:
 - http://bitcointalk.org/index.php?topic=2713.0
 - http://bitcointalk.org/index.php?topic=17591.0
 - http://bitcointalk.org/index.php?topic=52635.0
 - http://bitcointalk.org/index.php?topic=3138.0
 - http://bitcointalk.org/index.php?topic=54637.0
 - http://bitcointalk.org/index.php?topic=11839.0

And kind of in the same ballpark:
 - http://bitcointalk.org/index.php?topic=53401.0

It is possible though our need to change for immediate survival will trump our desire for a change with the most promising long term opportunity:
 - http://www.resilientcommunities.com

Update: read also:
 - http://www.resilientcommunities.com/how-to-build-a-thriving-community

Do you know how unfair that is?  Seriously!  

Yes, hashing each transaction hash with a value that isn't known until after the deadline eliminates the (even microscopic) concern that I had.

So that there is a backup of the change, I'm reposting the content from details here:


[Update: That page doesn't have the change yet. 
Maybe putting the pages for the site in github or some other version control and then signing each rev of this page would be a better archive?]
 

That will depends on knowing not only the exchange rate but also the difficulty -- at future points in time.  Oh, and knowing the price you pay for electricity is needed to compute that as well.


So, maybe you'll get about $2.20 a day worth of bitcoins at the current difficulty and market price.  Electricity on the 5970 alone might cost you about $1.20 per day if your electric rate is around $0.15 per kWh.

Here's a calculator where you can plug in some numbers:
 - http://tpbitcalc.appspot.com

So that's maybe a little over one year of profit at those levels before it adds up enough that you break even on the investment for buying a 5970.   That's assuming the price/difficulty doesn't continue dropping.  Here's the trend.  Don't forget, that come about December the amount of bitcoins issued will drop by half each day, so if you haven't broken even by then you probably won't be mining even at a profit after that unless the exchange rate doubles from its current level.
 - http://blockchain.info/charts/miners-operating-profit-margin

It could be curtains for new GPU purchases for mining (at a profit, versus as a hobby) unless either GPUs get really cheap or you are paying significantly less than $0.15 per kWh.

I just learned of a startup that has a unique approach which might be of value to those wishing to trade locally.

HipSwap:
 - http://HipSwap.com
 - http://www.prnewswire.com/news-releases/hipswap-officially-launches-in-seven-cities-142365575.html

The service started out in L.A. but now lists the following cities:
 - Los Angeles
 - New York
 - Chicago
 - San Francisco
 - Austin
 - Washington D.C.
 - Atlanta

How it works is individuals (or businesses) post items for sale.  When a buyer places the order, the payment form is through PayPal and the individual seller's own PayPal account is listed as the seller who will receive the proceeds of the sale.  So it is a direct payment between the buyer and seller.  HipSwap does charge a fee for using the site -- 3.75% which is a separate transaction that eventually gets billed to the seller's credit card (and does not go through PayPal).

Now here's the great part though.  For an extra $5 (added to the invoice that the buyer pays) HipSwap will deliver.  The seller chooses the time and HipSwap sends a van to pick up the item.  They then deliver that item to the buyer at the time of the buyer's choosing.

HipSwap's terms of service state that they are a neutral party in the transaction.

I was trying to figure out a way that this would work for someone wanting to do an in-person exchange without the in-person part.  Simple ... the bitcoin seller uses HipSwap to get cash delivered from the buyer!

So here's how this would work.  Let's say Bob has bitcoins for sale.

Bob posts a listing on Craiglist (or anywhere else) describing bitcoins for sale, $5 each, cash, with fulfillment through HipSwap.

Alice sees the ad and inquires, she would like to buy 20 BTC.  Bob provides instructions for Alice to place a listing on HipSwap where she lists a special paperclip or some other item for a $1 price and to specify delivery as the only option for the buyer.

Bob then purchases the paperclip listing on HipSwap, using the checkout form which pays $6 to Alice's PayPal account.

Alice prepares an envelope containing the paperclip plus $100 in cash plus another $6 to reimburse for the purchase and delivery charge. She also includes her bitcoin address, seals the envelope and schedules the time for pickup.

Bob, when placing the order, specified time slots for delivery -- with next-day delivery being the earliest delivery, I believe.  When the envelope does get delivered then Bob sends bitcoins to Alice's address.

Alice's credit card will get charged $5.04 from HipSwap ($5 for the delivery plus 3.75% of the sale amount), but she got $6 from Bob via PayPal (well, $6 less PayPal fees, so about $5.66) so that charge isn't out of her pocket a send time.

So for a total of $106 she gets 20 BTC, and this all happens in the same day or next.  This is better than sending cash in the mail as this delivery method is probably more secure.

This isn't totally anonymous -- Bob knows the e-mail address Alice's uses for her PayPal account.  If Bob paid the $6 using his own PayPal account, Alice knows the e-mail address for his PayPal account.   If Bob paid the charge using a credit card without a PayPal account, Alice won't know Bob's identity I don't believe.

The risk I suppose is if Bob buys the paperclip and truly only gets the delivery of a paperclip.  It could happen -- so on average the bitcoin seller is going to want to charge enough to make up for times where something like that happens.  There also is a short period of time after the price is negotiated and when the cash is actually delivered.  I suppose listing the price as market price + $X or something to that effect will protect the seller if the price moves after the sale begins.

I'm sure eventually HipSwap will add to their terms of service that the delivery cannot include cash.  At present they do not.

If someone wishes to simply use HipSwap to sell bitcoins and accept PayPal, here's an example of how that could be done (at least, until PayPal figures it out, freezes the seller's account and claws back the funds):
 - http://www.hipswap.com/bitcoin/bitcoin-wallet-19b2e7xgjbqr1wgz7xtnpig6asscbpxpxu-5-btc

HipSwap lets the seller indicate delivery options of "meet the seller" so this could be used as a method for soliciting in-person trades as well.  The seller can even opt to offer using the "will ship" option as well, if that's wanted.

And, of course, my disclaimer.  I've no idea on the legality of this.  Maybe the laws in your jurisdiction are such that the use of a third party for this type of transaction defines you as a money service business.  Also, if there is a dispute -- say the person doesn't send any cash in the envelope and then blames HipSwap for it not arriving, etc. I couldn't guess where that all would end up.

I do think this is an interesting development though.

Any thoughts?

Past tense?

Do current anti-virus security providers (e.g., AVG, Avast, McAfee, etc.) detect the download as being malware now?   Or is this likely occurring from those who either don't have anti-virus or don't keep it current  (and do dumb stuff like downloading and installing .exes from untrusted sources).

Not sure why you would think that more hashing occurring might lead to the exchange rate rising.  That isn't an uncommon belief among miners, I just don't know the reason why.  The data points to mining activity only lagging the exchange rate moves.