It would be monumentally stupid to end up in legal trouble and broke when one could just suck it up and pay the taxes.

Anyway, the Bush tax cuts have offered the opportunity for (American) people who are careful to not actually make money the old fashioned way to pay very minimal taxes.  This is supposed to be for trust-fund brats who don't lower themselves to have a job, but it looks like a clever bitcoiner might be able to slip through the same crack in the door.  As always, consult a qualified tax professional, etc, etc.

I don't blame Mt. Gox for not sending my $5k wire...I just don't have the insight to know exactly where the problem lies and if there is a solution that they could employ.

I do blame Mt. Gox for giving me false and misleading information about expectations.  They should have said in big bold letters "We cannot allow withdrawls of USD at this time and we do not know when we will be able to do so."  That would have been an honest and appreciated bit of information that I could have used in my planning.

It's quite possible that I'll be doing millions of dollars worth of activity in the coming years and very unlikely that Mt. Gox will see a dime of it since they are have been demonstrably untrustworthy.

Yes, you are probably wrong on this.

As the OP has famously said, Bitcoin could run just fine if only 4 or 5 copies of the blockchain existed.  Presumably it would be large entities who hold these copies and run the 'supernodes' required to process the incoming data and datasets.  He is probably right about this due to the way Bitcoin is designed, and it would certainly make it a lot easier to deploy 'red-listing' or whatever the preferred marketing term is these days.

This is not the evolutionary path I would like to see Bitcoin go down, but I'm just an ordinary user and enthusiast.

Just FWIW, that's pretty much how most of us felt in 2011 also.

Not saying that it's a good idea to plow one's life saving in at this time, but it is probably more likely that Bitcoin will do another 10x or 50x now than it was back then.  Still it's certainly not something that I would consider to be a strong likelihood.  Just a possibility.  In the interest of full disclosure, I'm selling.  But if I had no BTC and some money I could afford to lose, I probably would be taking a modest speculative position at this time.

That's not saying much.  Mt. Gox has been sitting on my $5k international wire for more than a quarter now.

So far all of my experiences with Coinbase (all me selling) have been good.  I'll be sure and provide an update if that changes.

Just like ~davout/Instwallet (which has cost someone I know of upwards of $1M.)

My rule of thumb is the more hard-core a libertarian someone is, the less I trust them to not try to steal my money if/when times get tough.  Except for a handful of non core dev admins on this forum (e.g., John K. and BadBear) I consider involvement here on bitcointalk.org to be a slight negative in terms of instilling confidence.

I'll guess that he's one of the immigrants who feels that he has to be a hard-core right-winger to prove his allegiance to the U.S.  I think he said he's Russian or something.  Seems like a Fox News sort of guy.

I've not been to Russia, but I have been to China.  I most certainly did NOT feel more free there.  I felt safe enough because there seemed to be pretty a pretty significant understanding that Westerners were to be treated well by the authorities.  My friends did not seem comfortable with the police at all (and they were perfectly normal software engineers and so on.)  I don't think one can put lipstick on the pig and paint China as some bastion of liberty and personal freedom.  My main hope is that we can keep the U.S. from sinking down to that level.  Of course I hope that China continues to improve, but I live in the U.S. and I care a lot more about what happens here.  And of course I care deeply about our deplorable behavior globally.

I remember ~sipa helping recover a badly corrupt database (wallet) one time.  That may or may not be the incident you are describing.  ~sipa is, or at one time was, probably the primary coder of Bitcoin.  I've not tracked commits for a long time, but that was what it appeared to me to be the case when I did.

The biggest value of a stronger alt-coin space is, to me, that it would expose the futility of trying to crack down on Bitcoin if the powers that be took a mind to try.  Thus, it is less likely that they would.

Further, alt-coins provide a good test-bed for inventing and developing new ideas since it is increasingly difficult to do in Bitcoin as the system matures and becomes more critical.

Both alt-coins and off-chain structures could help reduce the burden on bitcoin's global blockchain for less consequential transactions, and I see that as a big win.  And something that has gotten us this far without ballooning the blockchain in fact.

My hope is that Bitcoin can remain the 'gold standard' in distributed crypto-currencies.  It either will or it won't I guess.  In my mind it depends mostly on whether it can remain free of subversion in the form of monopolization which would be an end effect of attacks on it's

 - quasi-anonymity (e.g., Guo address mapping PII attack)
 - fungiblility (e.g., Waters/Hearn x-list attack)
 - infrastructure distribution (e.g.,: Hearn unlimited growth attack.)

A combination of these attacks will open the door for governments to control Bitcoin utilization in much the same way they have largely been able to control privacy on the global Internet in spite of the development and availability of high quality cryptography.  Or at least would allow the dominant government to do so, and to the detriment of the global citizenry.

It isn't mentioned much, but my understanding is that it's a fairly useless full node if one isn't running UPnP or has set up a port forward.  Just sucks out without giving back.  For better or worse, many people probably don't even know what this means, or even that they are doing UPnP since lots of routers have it on as a default setting.  I don't trust UPnP since I didn't compile it (or more accurately, I didn't compile the OS on my phone, printer, etc), and I turn it off.

Just as a point of reference:

I broke open one of my savings wallets last night for the first time in a year it being a monster hassle to retrieve them.

I'm working on a source built bitcoind from around April 2013 codebase, and my client is only caught up to block 25k-ish.  I'm on a satellite connection with limited monthly quota, so I only run the client when I need to.

I transferred all the coins out of the wallet (100BTC) directly to my Coinbase account and two blockchain.info accounts.  I have bitcoind set to pay .001 transaction fee.

 - The first transaction (to Coinbase) was visible within a minute on blockchain.info.

 - The second transaction (to blockchain.info) took many minutes to show up.  It seemed to show right after a block was mined.

 - The third transaction (also to blockchain.info) happened fairly quickly as I recall.  A few minutes perhaps.

---

I've never believed that Bitcoin is a appropriate tool for dealing with small purchases for coffee or whatever.  I want something reliable and independent (from corporate and government interference) for large value transactions.  .001 BTC on a 50BTC transaction is a price I'm perfectly happy to pay for good service.  It is

 - vastly less than I pay for international wires,
 - and is much faster,
 - more hassle free,
 - more private,
 - and more reliable (e.g., Mt. Gox cannot get my $5k international wire to me after more than a quarter.)

So far Bitcoin is has served me well for my needs here.

What is annoying to me is that I'm sqeeky clean so If my problems with Mt. Gox are associated with fraud detection, it isn't working.  But it's actually probably not associated with this.  It's almost certainly a result of maladies in our legal and corporate financial system impacting Mt. Gox and the fall-out being felt by me.  That likely in part being an artifact of Peter Vessenes attempts to reach his hand into Karpeles pocket.

I don't remember him saying specifically a 'basket', but he may have and I forgot.

I'd love to see this happen, but also see the algorithms be evolving and unpredictable, and also have reward adjusted to promote other kinds of diversity.  But it would be complex to implement and I suspect that miners would make a credible threat to destroy the system before they allowed that to happen.

Probably the only way for Bitcoin to evolve past today's rather simplistic proof-of-work scheme would be for it to form a symbiotic relationship with alternate crypto-currencies (or spawn a set of them) such that miners could continue to capitalize using sha256 gear.  Either that, or leverage the existing sha256 hashing power to re-base (for optimization) the value source-of-truth periodically (with a much longer period than every 10 minutes.)

I'm not holding my breath for that to happen.  Or holding all of my BTC for that matter...

I took Kaminsky's comments to indicate that the risk was from centralization of mining effort and that the centralization was only avoided at the time (the SJ 2013 conference) because it was recognized as a risk by the miners themselves and they actively seeked to avoid it.

As for full nodes, I've found the drop-off over the course of the time I've been paying attention (a couple years) to be bothersome.  This in spite of the fact that the transaction rate has not been increased.  A fraction of new-users are going to be interested (or ignorant) enough to run full nodes, but that tends to die off and it's not worth the time, money, and inconvenience for a lot of people.  I'm in this category myself.

I'll be very interested to see if the developments of 0.9 will create nodes that actually strengthen the infrastructure (unlike multibit.)  If so, I could see the infrastructure growing at a healthy rate correlated with growth in end-user userbase.

I'm trying to tell you that unlike an exchange, you don't have a fiat balance at the vendor.  The balance is in YOUR mainstream bank account.  So the basis of your question about whether it is safe to have Coinbase sit on your fiat until you decide to buy is not valid.  I just logged into my Coinbase account again to look around, and I see nothing which would indicate that I'm mistaken about this.

Of course Coinbase has some transient cashflow issues to deal with when you make a sale or purchase of BTC.  How they deal with that and mitigate the risks is their own secret sauce.

As you've probably notice, many people here claim that Coinbase games the risk mitigation to skim profits when there is volatility, but it would be hard to prove, and most of the people making the assertions have little solid evidence to back it up.  I would not rule it out, but I've never felt that I've been abused.  But then I've only used them with me being in seller mode (around $25k in the last few weeks.)

Nobody has claimed that Coinbase flat out stole money.  Only that they canceled transactions in instance when it worked against the user's favor.  If there are cancellations when it worked in the user's favor we would probably hear less about them on this board.  But if the price is generally going up, and most of the cancellations happen when the user is trying to buy, it is logical that most of those who have been effected have felt that they got screwed.

I was under the impression that Coinbase does not hold fiat at all, and that when it is needed it comes straight out of a mainstream demand account (checking or credit card.)

If my understanding is correct, then it is still a valid question as to whether it is safe to hold significant fiat in an account that Coinbase has the ability to withdraw from.  My own personal opinion is 'yes' because they (and by extension, their VC funders) would be subject to considerable grief if they stole from me, but it is easy and wise to set up an independent checking account for such work anyway.  So I did this.

So far, the one questionable thing I have found about Coinbase is that they seem to offer the option for a user to give them the password to the user's on-line checking account.  This seems like an absolutely terrible idea, and I'm surprised that it is even legal!  The only way it would make any kind of sense is if the entire account structure (often multiple accounts) was dedicated to interacting with Coinbase, but in that case, the supposed benefit of 'instant gratification' would not apply since it would be considerable leg-work for a user to set up such an account in the first place.

The Bitcoin ecosystem is filled with business people who started out intending to 'stick it to the man' and ended up as cowed cheerleaders instead.  Those who were not able to make the jump have largely exited the industry.

 Edit - 'exited the industry' with a lot of former customer's money often enough, I might add.

Depends on the situation.  Mt. Gox has been sitting on my wire for more than a quarter.  That's not my idea of 'smooth'.  I'm not even all that unhappy about this, but I am rather pissed that Mt. Gox told me things which were certainly untrue about expected timings of the problem resolution.

Coinbase, OTOH, has been working very well and very smoothly for me as I mentioned.

I avoided verification for years because I don't like to give out high quality scans of everything someone needs to steal my identity.

Even if Mt. Gox are not crooks, and I believe they are not, they have a poor record with data security.  And they probably employ people from all over the world and may not have even met some of them.  If any of these people decided to steal some data on the way out the door then I'm looking at a lifetime of fighting identity theft issues.

Get some relationships and infrastructure in place, then wait for the big 'cyber 9/11' so that the laws which become possible afterwards will have some teeth.