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"TRADING SARDINES"
It comes from a story about a man who joined a friend down at the docks. They were working in a fish market. Their job was to "trade" fish.
All day long the price would change dramatically, the action was fast and furious. Buying and selling, selling, buying, etc. Making and losing large sums of money.
Finally the day ended. The man was hungry so he opened one of the fish containers he had been trading and took a bite. "Hey", he exclaimed, "these fish are rotten!".
"Those aren't eating sardines", his friend explained, "they are TRADING sardines".
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I am currently cracking the leaked password file just for fun and because I am curious. Guess what? 1) Hundreds of accounts with their usernames as passwords. 2) Hundreds of accounts with the password " 123456" 3) Hundreds of accounts with the password " testtest" 4) Hundreds of accounts with the password " bitcoin" Are you guys STUPID? TO THE THOUSANDS OF USERS WHO ARE THIS DUMB: YOU DESERVE TO LOSE YOUR BITCOINS, IDIOTS. As pointed out by others up-thread real financial institutions like banks have multi-layered security procedures. I haven't used Mt Gox yet so I'm not going to trash-talk their log-in security; but if it is anything like any of the banks I've used a weak password would not be an open-sesame to a hacker. First the hacker bot would have to guess a user-name. "A" Not recognized. "B" not recognized. "C" not recognized. At what point should the log-in system cut off the bot and direct it to call customer service? Suppose it gets lucky at "AA" So now it has to provide a password. Perhaps it has a list of common passwords to try first. "Password" not it. "password" nope. "PASSWORD" -- Message from system: "Too many log-in attempts. Please call customer service." If Mt Gox allowed password cracking bots to run wild on their system (and I doubt that they did) they need to be shut down now. Modern banking systems work fine with ordinary everyday people, if Bitcoins require computer security geeks to use them safely, while "idiots" lose their life savings, Bitcoins are going back to zero.
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To summarize, bitcoin derives its value from commodity-like properties, and is a fairly poor medium of exchange in physical or e-commerce. It makes much more sense to me to call it a commodity. It's the first crypto-gold in existence. I've been thinking about this and I agree. Gold used to be money, which was used in everyday transactions. But it has long been disassociated with fiat currency which is the workaday currency. Today gold has proven to be a good long-term investment and speculative vehicle, but is useless as ordinary money. One basic problem is volatility, gold is worth half-again what it was worth a year-ago in terms of the dollar, and also real goods. With the Bitcoin, the volatility problem is far, far worse. The vast price swings day-to-day make it impractical to price goods or services in Bitcoins. It has been an astonishingly good investment for early adopters, a pretty-good speculative vehicle, but as a medium of exchange it has very very limited applications.
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If and when bitcoins start becoming more popular, which is what we all want, there is nothing stopping Amazingon from crushing it with their own brand of p2p currency. Thoughts? As soon as I understood the concept that was my very first thought. There's a lot of incentive for entities like American Express, a bank in Asia, eastern Europe, the treasury of a small country, a venture capitalist, to roll their own version of Bitcoin rather than support the existing Bitcoin system, because of the enormous potential profits from keeping a percentage of the founding Bitcoins plus transaction fees for making a market. Such entities could make their P2P currencies much more accessible and have more real-economy links so the currency is much more usable. But Bitcoin users may stick with Bitcoins if it is perceived as more trustworthy by not being attached to a large corporation or government, and if Bitcoins are perceived as providing more privacy and anonymity. Right now with the Mt. Gox fiascoes and its offer to open its books to the DEA and its inviting the FBI into investigate its users for the security breach that brought down its market, it is not obvious that Bitcoins would have an advantage relative to the P2P currency sponsored by Amazon.com or other large entity.
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I discovered Bitcoins just before the price doubled, from the Gawker and a couple of other articles. Since then I've been following this forum, including the "mining" threads.
I've researched the costs of building a mining system, not so much because I'd expect to make a lot of bitcoins with the ever increasing difficulty, but because I'd like to have my own desktop supercomputer: I've been researching trading systems for stocks & commodities and while alpha can be quantitatively achieved, it requires enormous number crunching capability. The solutions I was considering before didn't include GPUs, now they do. Building a bitcoin mining system might be an easy introduction to GPU computing. Right now I am trying to understand the programming resources available for Clear CL vs CUDA, ATI vs. NVIDIA.
As an anarcho-capitalist I love the idea of bitcoins, and a bitcoin economy; but I can see many barriers to widespread adoption. For now, and for a long time I see it as a plaything for hobbyists, a vehicle for speculators, and as a medium of black-marketeers. Perhaps when the US government finishes Zimbabweizing the economy and the currency people will turn to bitcoins, and it will then be a life-saver for many.
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