First transaction, I purchased 5 25 BTC coins from coblee. Coblee, would you mind confirming?

[Bitcoin Trust]

Bitcoin merchant adoption is currently a chicken-and-egg problem.  The long term viability and usability of Bitcoin remains in question to the common public, chiefly because you can't spend it in enough places.  Merchants are reluctant to accept Bitcoin, for fear of selling goods in exchange for a currency that could go to zero.

This proposal sets out to break that logjam. I should also stress that if successful, this system will gradually move itself into obsolescence, as merchants realize they can make more profits by owning Bitcoins themselves. 

I don't have enough time or financial resources to pull together all the skilled players that would be required to turn this concept into a fully-fledged business.  Yet I believe an advance like this is what Bitcoin needs to get it over the hump.  So, I'm offering this idea in full to the Bitcoin community, no strings attached.  If someone wants to run with this, I'd be interested in helping out in an advisory/consultative capacity, but there are no obligations.  Final disclaimer: I'm just a regular dude that thinks Bitcoin will revolutionize the concept of money. I want to see it succeed, and am offering ideas to help us move to that ideal.  I have no delusions that this plan is 100% complete, nor viable.  My hope is that other smart mind will read this, and further adapt the concept so that we can get something in place, then improve from there.  Without further ado...

The Problem at Hand
-Bitcoin holders fervently wish to be able to spend their Bitcoins wherever they spend their money.
-Merchants don't see the value in investing in a technology that might not be there tomorrow.

How could we solve the problem? By providing merchants a way to accept Bitcoin as payment, without incurring an upfront buy-in cost, and while earning at least as much money per transaction as they currently do.

Let's take a look at how a consumer thinks of a transaction (numbers made up, but important for comparison):

How Consumers View a Transaction (in USD)

Consumer sees item they want  --> chooses payment method --> Merchant receives USD --> Merchant sends item

How Merchants View a Transaction (in USD)

Consumer sees item they want --> sends USD to payment processor (credit card, paypal, whatever) --> processor takes 3% USD, merchant receives 97% USD--> merchant sends item

In short, consumers don't have to care about "the cut" that happens from payment. Merchants are very aware of this cut.  The whole concept is black-boxed from the consumer - they send the money, and get their good.  Merchants know that a middleman payment processor offsets the management of fund collection, at a cost. They can count on receiving a fixed percentage of their sale price in exchange for this benefit.

Let's take that exact same model, and insert Bitcoin in the middle. Let's use the hypothetical company Chainsaw's Widgets.  We can then black-box that entire concept, leaving the merchant in the same position they are in now.  I'll talk more about the "Bitcoin Trust" as soon as I've laid this parallel, Bitcoin-based scenario out.

How Consumers View a Transaction (in Bitcoin)

Consumer sees item they want  --> chooses Bitcoin payment method --> Merchant receives Bitcoin --> Merchant sends item

How Merchants View a Transaction (in Bitcoin)

Consumer sees item they want --> sends Bitcoin to Chainsaw's Widgets Bitcoin Trust --> Bitcoin Trust sells bitcoins for USD, distributes 3% proportionally to Bitcoin holders, merchant receives 97% USD--> merchant sends item


What is the Bitcoin Trust? (First of all, probably a horrible name for this concept. Tons of better wordsmiths out there than me. If this thing gets legs, please, lets improve on this.)
The Bitcoin Trust is the missing piece, the one that let helps everyone (except existing payment companies).  Implementing this idea will require development of a few technical, infrastructural components. For the purposes of explanation, imagine they already exist. The work of any company that tries to run with this idea will lie in developing these components, with the chief emphasis being on maximally reducing friction both to the merchants and to the consumers.  Here's a theoretical walkthrough of it in action.

Chainsaw's Widgets see the rabid demand of Bitcoin holders, and wants in on the action.  They go to www.bitcointrust.com, and register a Merchant Account. They create a Merchant Wallet, and allow investors to place invest Bitcoins for their company. They initially desire $10,000 of liquidity, and are offering to pay 2.9% of gross proceeds to bitcoin investors.  I, as a long-term bullish Bitcoin investor, decide to put 10 Bitcoins into Chainsaw's Widgets.  At today's market values, that gives me 10% of the liquidity they seek out.  Let's say 9 other investors just like me come along, and each does the same.  Okay, the fund is set up, here it is in action.

Sally Sue comes to Chainsaw's Widgets. She sees they offer Bitcoin payment! (A widget that bitcointrust builds, lets you pay the wallet set up with Chainsaw's Widgets.) She chooses that option. Payment gets sent to the proper wallet, spending $250 for some fancy Glow in the Dark Chainsaw Paint.  Automatically, the funds are sold to USD on the market. The bitcoin price charged is based on the value of bitcoin at that moment. The $250 sale happens. 2.9% of that sale ($7.25) gets distributed to the funders of the account.  For Chainsaw the investor, holding 10% of the assets in that account, I earn $7.25/10 = $0.725.  The remaining $242.75 is passed along to Chainsaw's Widgets. 

The consumer got to spend their bitcoins.
The merchant got to make more money on the transaction than by using other payment systems.
The merchant never had to assume the financial risk of investing in bitcoins.
The investors (regular Bitcoin holders like you and I) have a place to put our bitcoins, and profit, without having to play the market.

What Could go Wrong?

Plenty could go wrong. I'm sure this isn't a complete list. Nor do I think the answers are perfect. But again, I am hoping to illustrate that with some thought, these problems are solvable.

I spent a week playing with this idea in my mind, aspiring to be able to explain it adequately. I hope it's clear enough that it'll make sense, because I'd really like to talk through some of the potential problems, proposed solutions...and the potential next-steps that could get stacked on top of this idea.  None of it will make any sense if this foundation isn't solid.

Assuming you're still with me (and please, shoot me refinement suggestions if there are areas I can make this more clear)...I can think of three key problems.
1) Monies held in a centralized (per-company) wallet is still a greater risk and target than a 100%, purely distributed currency.
2) Bitcoin transactions are not instantaneous, which could get thorny for merchants.
3) Development tools need to be developed to allow these new transactions to occur seamlessly. With a wealth of existing, third-party payment systems, this may require a non-scalable number of interfaces to allow a Bitcoin payment system to interact nicely with them.

1) Like any sounds Bitcoin business, employing a highly skilled Security professional is essential.

2) We solve this either through backup payment system, social trust, or time (waiting). 
a) A backup payment system: A user can specify Bitcoin, but secondarily gives a credit card.  Payment is accepted immediately. If the bitcoin transaction doesn't verify, the backup payment system is verified. Either way, the merchant receives payment when the Bitcoin transaction is verified/rejected. Either way, the consumer completes the transaction without delay.
b) Social trust - Let's say Chainsaw's Widgets allows new users to pre-spend 0 Bitcoins. However, once you've spent $1000 with the company (and no reversed transactions), you can pre-spend 1 Bitcoin.  The specifics of the social trust system can vary (feedback, funds, anything).
c) Time - a step backwards, but the user can complete the entire transaction as if it were real-time accepted. An email sent 30 minutes afterwards indicates the successful transaction (or its negation if the funds ended up being illegitimate).

3) Consumers need to be able to pick a 'Pay with Bitcoin' option. That's all they need to care about. From their perspective, they are buying a good, and choosing Bitcoins. They do not care that Chainsaw's Widgets has contracted with BitcoinTrust to be a middleman to convert payments.  Merchants need to be able to count on getting paid for their goods. This means that when the consumer is checking out, a protocol needs to be established. Very crudely, bitcoins sent in, USD sent back to merchant, and finally, merchant's good sent.

Who Would Go For This?

We're still early in the Adoption Cycle.  9 out of 10 people I talk to today are still scared away from Bitcoin from the barriers to entry for funding, and the lack of tools.  The same must hold true for merchants.  But offering a package like this gives a new option. You can dip your toe in the Bitcoin waters, rather than needing to take a giant running start and dive in headfirst.  No up-front cash risked. Market-defined profits which should exceed existing payment methods. Capitalization on a currently untapped niche - Bitcoin holders.

Thinking Big

The theoretical company www.bitcointrust.com - it's a middleman.  Their aim is to appeal to all Bitcoin holders, and all merchants.  Just like Chainsaw's Widgets signed up, the next day, maybe Bob's Buckets signs up. They ask for $100,000 in liquidity at 2% return rates, because they're finding they can't keep up with Bitcoin payments unless they increase their size.

Now Joe Investor comes over to bitcointrust. He's thinking "Man, Bitcoin is going up. I don't wanna sell. I wonder where I can invest my funds."  Ultimately, he decides to put 75% of his money into Bob's Buckets. Even though their rate of return is lower, they sell so much more, that proportionally, he calculates he'll get a greater return on his investment. So as not to tie his profits too much to a single company, he puts the remaining 25% into Chainsaw's Widgets.

Is this limited only to small businesses? Of course not.  Amazon could do this. (I commend them for trying to go to war with Bitcoin by defining their own virtual currency. But c'mon. What is going to win - a currency you can use anywhere, or a currency you can only use for a single company?  ("First they ignore you, then they laugh at you, then they fight you, then you win.")

So that's the big payoff.  PayPal could do this.  Imagine.  They get to use their complete, existing market base. Keep their brandname.  From their perspective, they're just adding a sub-option. I'm paying with Paypal, using Bitcoin.  From the consumer side, the costs are the same.  From their end, they set up a trust, allocate a percentage to the userbase, keep the remaining profits.

What's the Endgame?

Imagine this idea works, and now you've got the dream scenario we all think about. Widespread bitcoin usage and adoption.  At some point, Chainsaw's Widgets is going to say "You know what? This is great, I'm making more money than ever...but I could make more. I'm going to put some of my own profits into my trust. In short, I will start funding 50% of my own Bitcoin transactions. Now, of those 3% profits, half are coming back to me.  From there, 75%. Eventually - "That's it. I'm going to cut out BitcoinTrust entirely, and start accepting Bitcoins directly to my own wallet."

The laws of business dictate that, once successful, this (removable) middleman can, and will, be removed.  Then we've got the scenario we all hope for.  The interim phase might be many years.

I welcome all feedback. My only requests:
-Please take the time to thoughtfully construct any feedback, with the aim of keeping discussion focused on refining the idea, pointing out errors, suggesting improvements.
-If anyone is interested in trying to get an actual business group put together around this idea, please set up a separate thread and link to it.

Thanks for taking the time to read.

I swear by the value of having a Trading Buddy.  Whenever I'm considering making a shift to my valuation of Bitcoin (https://bitcointalk.org/index.php?topic=181037.0), it's nice to have external validation. Did I fail to factor something in with my analysis?  Am I overemphasizing the importance of a certain factor?  Sometimes, it's just getting the confidence boost from finding they agree with your conclusions.

I thought I could start a thread whose goal is to pair people up.  I created a shared spreadsheet:

Trading Buddy Spreadsheet - https://docs.google.com/spreadsheet/ccc?key=0AqpoRK3q-_aKdGpTU0xIQ2Iyek01Ri02UXNmMnVhdXc#gid=0

The quick and easy way is to simply follow the link and claim someone.  If you're a bit more anal thorough, you could try some of the following suggestions to try for a more perfect fit.

If you'd just like to put yourself out there and wait for someone to pair with you, fill out a "Trading Buddy Profile" below.  List whatever details you think will be important to someone pairing up.  For example, if I wasn't already paired up, I might write something like:

I weight fundamentals more heavily for a long term view, but absolutely love shorter term technical plays.  I tend to have a long-term bullish outlook. Given the right circumstances, I could see Bitcoin being sub-$1 next year, well over $1000, or anywhere in between.  I expect it'll be a bumpy ride for awhile as we transition from bleeding edge to leading edge adoption.  My interests in a partner:
-Minimum five years trading experience
-Considers both technical and fundamental indicators
-Generally bullish, long-term
-Willing to unemotionally debate points, cede errors, and be willing to say when you disagree with a position I take.

Or, you can take a look at the Spreadsheet, see who is currently unclaimed, then find their entries in this topic to find your best match.

One final note: I realize a shared spreadsheet is not the ideal tool for this. If there is a clearly superior method that doesn't require significant effort, please let me know, and I'd happily update the link from the spreadsheet to a new medium.

[Fear]

The whole point of the Speculation forum - trying to make some sense of the market.

Why does Bitcoin have the value it currently does?
What will Bitcoin's value be tomorrow?

Something I think we all fall victim to, at least occasionally, is to miss the forest for the trees.  We assess its value based on just one or two pieces of information.  Bitcoin's value is determined by a free market. There are many moving parts, some pushing the value up, while others push the value down. Any complete valuation of Bitcoin needs to take all these factors into account.

It's all about fear and greed.  Please note - this remains a gross oversimplification.  The main focus here is to define a simple paradigm, a structured way to look at Bitcoin when trying to assess its value.  I would encourage everyone to tailor this model to themselves, most importantly because your belief in the power of certain market forces will invariably be different than my own.

Fear  - Belief that Bitcoin's future price will be lower than the current price.
Greed - Belief that Bitcoin's future price will be greater than the current price.

Let's say you have been watching market prices, and each day for the past 20 days, the price has gone up $1.  There's a good chance you are going to expect it to go up $1 tomorrow.  You're basing that belief on activities that have taken place within the market. That makes it a technical indicator.

Now let's say you just read an article in your Bitcoin news feed - "Amazon to Start Accepting Bitcoin".  If you're at all like me, you're buying up bitcoins with every spare penny you've got, the first instant you can.  You'd be basing your belief on a news event that you think will lead to greater acceptance (and therefore demand) of Bitcoin.  This would be a fundamental indicator.

Please bear with me as I make up a few terms, so that we can talk about the fear- and greed-based fundamental- and technically-based indicators.  Then we'll be able to put it all together.

Fundamental Indicators

Legitimacy (Greed) - Confidence in Bitcoin's long term future, acceptance, and adoption.
Nullification (Fear) - Fear of illegitimacy (i.e. one or more countries defining Bitcoin to be illegal)

Technical Indicators

Oversold (Greed) - Belief that the market's valuation of Bitcoin is too low, and will correct upwards.
Overbought (Fear) - Fear that the market's valuation of Bitcoin is too high, and will correct downwards.

Let's walk through an example to put this all together.

It's March 18, 2013. The article I've been waiting nearly two years for shows up - the Treasury has just announced that it will regulate Bitcoins.  The significance to me is in what they did not say. They did not say they were coming after it. Implicitly, they said they accept it. The Legitimacy indicator has just skyrocketed.  Viewing Bitcoin purely as a commodity, the likelihood of its future value going to zero has just been signicantly reduced. The valuation of Bitcoin has increased.

Time to do due diligence, and scan over each of the four kinds of indicators. Are there any other new forces that might counterbalance the news? Other news that might magnify the value gain? Going through one by one...

Legitimacy - If I remember correctly, a small handful of other positive news stories had broken around this same time.
Nullification - No new threats.
Oversold - The rally was underway, but was controlled, and already looking stronger by the day.
Overbought - No new threats. (The previous all-time high had been cleared, and the order book was solid.)

New Price = Current Price + Fear Adjustment + Greed Adjustment

Factoring in all the variables, there are new, strong upward forces, with no new downward forces.  Everything pointed to an upturn.  I went all-in, and committed to buckling in for the ride.  And whaddaya know, the surge to $266 commenced.

I love the quote, "Plans are worthless, but planning is everything."
Was my assessment correct? I'll never know. Maybe I got lucky, and the price bump was entirely due to the new mining rig surge, or Cyprus, or some other factor I'll never understand.
What matters is that you do it. Then afterwards, reflect on your decision, and learn from it.

This is a great first step towards moving out of emotional investing, and towards structured, findings-based decisions. As you do this more, you'll hone your trading instinct. Learn what you overreact to, relative to the market. Figure out where you tend to see the value ahead of the market. These findings will grow your skill (and gains) as a trader.  It's hard work...but it can sure be worth it. 

I've been a Bitcoin evangelist and student since the $5 mark. I know the feeling of watching an account you are comfortable managing grow into something that can start causing you to lose sleep.

Suddenly, you realize the buy, sell, or hold decisions you are making will substantially affect your livelihood for years down the road.  But there's not much in the way of alternatives - the market is gonna keep moving. And indecision is still a decision - the worst one!

Some wealth management principles can help here. They'll help you make your short term decisions within the framework of your long term goals.  If you're new to it, figuring out this framework can take years. Years that we, the 'groundfloor Bitcoiners', don't have.

I have the best interest of two awesome groups in mind here:
1) Those early investors, whose shoulders we get to stand on today.
2) The successful future of the Bitcoin currency as a whole.

I'm not sure if there will be any interest in this or not. If you are interested, please use the messaging feature to let me know. Let me know whichever of the following details you care to fill in:

Name
# of bitcoins
% gain to date, from initial buy-in
Current View (buy/sell/hold/undecided)
Long term goal - # of bitcoins
Long term goal - total $
Any other notes
Skype contact (or less preferably, email)

I'll be doing this in my somewhat limited free time. In the event interest outweighs my available time, I'll use the bitcoin balance, plus whatever other notes, as a means to prioritize/rank.  For example, if one of you 10,000+ bitcoin holders are looking for a sounding board, or some guidance...those decisions could dramatically affect not just you, but the Bitcoin community as a whole.

When we connect, I'll let you share whatever relevant financial planning/goal information you care to. Then, we'll talk about some options, and come up with a long term plan together.  With that in place, we'll look at your current bitcoin position, and come up with a plan for any buys or sells you may want to put in place.

Yes, this is really free. Yes, I will accept donations (bitcoin only!). I'm very grateful that Bitcoin has started "giving back".  It's time to pay it forward.  Do remember to request this via the messaging system, and not in replies.

Full disclosure - I am a bitcoin holder (duh), with an evolving but very bullish sentiment at the moment.

For Use in the Event of Bitcoin Rally

http://orymh.bandcamp.com/track/the-bitcoin-rally-song

A friend and I got in around $5. You know those times the price just keeps going up? It's exciting, you want to talk about it, but there's not really anything to say?  Enter - the Bitcoin Rally Song.

It's hosted on bandcamp, so you can pay whatever you like. Really, he's more interested in contributing something back to an awesome community.  

If you dig it, you can pay whatever you like for the song, using bandcamp's system. Or, by a donation to the artist's wallet:
1AYstep1b3GRRCTjSUViwCneH9AZ2u6TCM

But far more important than that...if you enjoy the song, share it - we need a rally song!

I've talked the creator into joining bitcointalk. Once he's cleared newbie status, I expect he'll have a few more things to say about it. Until then...enjoy!

EDIT:
First poll results.
April 09 2013 - May 1 2015

Whenever I play the Bitcoin Rally Song, the price
goes up.   - 60 (36.6%)
goes down.   - 24 (14.6%)
stays put.   - 18 (11%)
starts a new rally.   - 18 (11%)
kills an already-in-progress rally.   - 44 (26.8%)

If memory serves, up to this point the Rally correctly predicted 3 of 5 rallies, with its two failures being the 3rd and 5th calls.

Sorry - I'd post in Marketplace, but that darn newbie status.

I note that MtGox (as well as clarkmoody and bitcoincharts) are having some prolonged downtime.
I recall reading last week that a DDOS was responsible for the last of these. My concern lies in the fact that last time, upon getting back online, we suffered a pretty major correction.

Thoughts? Another attack, or just overthinking?

For Use in the Event of Bitcoin Rally

http://orymh.bandcamp.com/track/the-bitcoin-rally-song

A friend and I got in around $5. You know those times the price just keeps going up? It's exciting, you want to talk about it, but there's not really anything to say?  Enter - the Bitcoin Rally Song  .

It's hosted on bandcamp (best music site ever!), so you can pay whatever you like. Really, he's more interested in contributing something back to an awesome community.  If you enjoy the song, all I would ask is that you share the link with your friends.