The cost of the alternatives is far higher. I have seen people on welfare pay $50 for a prepaid debit card in order to pay for a $20 item online. The balance then gets eaten by fees and charges. With Bitcoin the balance will likely appreciate over time. The group that will benefit the most from Bitcoin are the poor.
It might appreciate over time but it might lose half it's value in one day. Suppose one of these poor people bought when Bitcoin was at $30, and then had their coins drop to $16 each the next day? I don't think they would be rushing to buy Bitcoin anytime soon after that. If our poor person timed the market perfectly for the worst possible outcome and bought right at the top at $31.89 and then absorbed the 50% market risk, they are still ahead of my example of using a pre-paid debit card as they would have $5 worth of BTC left. So even in the worst possible scenario with perfect negative market timing they are still ahead using Bitcoin. |
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It's really hard to predict what will happen in the next 4 months, but in my opinion Bitcoin is still in a bootstrapping phase and will be there for a long time.
Bitcoin has 4 main uses right now (besides speculation) in this bootstrapping phase:
...
Unfortunately, I don't think online retail sales are there yet. The reason is not because of merchant problems. I think bit-pay and mtgox can probably provide merchants with enough tools to integrate bitcoin checkouts and allow them to mitigate risk by selling the coins immediately. The problem is on the consumer end. There isn't a huge incentive for consumers to acquire Bitcoins right now. The cost (or at least perceived cost) of acquiring them is going to be greater than the cost of just whipping out a credit card. Furthermore, holding bitcoins for any significant amount of time carries risk. A consumer would have to buy the bitcoins and get some kind of discount with the retailers to make it worth their while, and then spend them all rather quickly before they had a chance to drop in value.
Bitcoin is going to have to bootstrap from the rather menial niches it can worm its way into for a long time because the cost of acquiring Bitcoin and the volatility is not going away anytime soon.
This ignores that fact that many consumers cannot get a credit card or a debit card that works as a credit card. It is the same reason that cash is still around despite that efforts of the financial industry for the last two decades to eliminate it. For an online merchant accepting Bitcoin is not about changing the habits of existing customers. It is about getting an entirely new customer that before Bitcoin had no cost effective way to pay for goods or services online. That could be true to some extent, but how do those people mitigate the risk of holding Bitcoin? These people are going to be the ones least able to afford to lose money on something as risky as Bitcoin. A loss of a couple hundred dollars even could mean they wouldn't be able to pay their rent. The cost of the alternatives is far higher. I have seen people on welfare pay $50 for a prepaid debit card in order to pay for a $20 item online. The balance then gets eaten by fees and charges. With Bitcoin the balance will likely appreciate over time. The group that will benefit the most from Bitcoin are the poor. |
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It's really hard to predict what will happen in the next 4 months, but in my opinion Bitcoin is still in a bootstrapping phase and will be there for a long time.
Bitcoin has 4 main uses right now (besides speculation) in this bootstrapping phase:
...
Unfortunately, I don't think online retail sales are there yet. The reason is not because of merchant problems. I think bit-pay and mtgox can probably provide merchants with enough tools to integrate bitcoin checkouts and allow them to mitigate risk by selling the coins immediately. The problem is on the consumer end. There isn't a huge incentive for consumers to acquire Bitcoins right now. The cost (or at least perceived cost) of acquiring them is going to be greater than the cost of just whipping out a credit card. Furthermore, holding bitcoins for any significant amount of time carries risk. A consumer would have to buy the bitcoins and get some kind of discount with the retailers to make it worth their while, and then spend them all rather quickly before they had a chance to drop in value.
Bitcoin is going to have to bootstrap from the rather menial niches it can worm its way into for a long time because the cost of acquiring Bitcoin and the volatility is not going away anytime soon.
This ignores that fact that many consumers cannot get a credit card or a debit card that works as a credit card. It is the same reason that cash is still around despite that efforts of the financial industry for the last two decades to eliminate it. For an online merchant accepting Bitcoin is not about changing the habits of existing customers. It is about getting an entirely new customer that before Bitcoin had no cost effective way to pay for goods or services online. |
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at that time the 7% per week interest rate made a lot of sense and was perfectly sustainable.
In a finite universe exponential growth is never perfectly sustainable. In a system with a hard limit of 21 million bitcoins exponential growth is especially unsustainable. It is perfectly sustainable only as long as the BTC / USD rate keeps dropping at the faster rate than the BTC interest rate not for ever. |
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no
,3400% interest on bitcoins can not be explained by fiat currency growing lower in value
not even at anywhere near those rates
just no
Absolutely. In fact appreciation of BTC with respect to USD as has been the case this year makes the situation a lot worse. On the other hand if BTC were depreciating with respect to USD at a rate over 7% per week as was the case between July 2011 and December 2011 then at that time the 7% per week interest rate made a lot of sense and was perfectly sustainable. |
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The chances of the BTC / USD rate been between 13 and 14 at the end of August are slim. It will likely be higher or lower.
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ArcticMine: Yeah, no. Honestly, if he's happy with pissing people off anyway, and contemplates a lawsuit, it's better to just squirrel the money away and blame default on "hackers" or thieving "business partners" that cannot be disproved.
The difference is between a very clear cut and dry liability and one that may take years and an army of lawyers to figure out if a liability even exists. |
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You think that dollars being legal tender gives everyone the right to liquidate any contract they please by paying what they claim to be fair market value? That's an interesting belief. Others believe in bigfoot.
More importantly, has he ever even promised to give everything back? The lead post seems to have a disclaimer about risk and past performance not being a guarantee. If Pirate's really looking for a tricky legal argument, that'd be the one I would use.
As if anyone could sue him for being "hacked" or having a major deal go wrong in these "bitcoins" (assuming you can even prove who the responsible party is...)
The tricky legal problem here is determining what fair market value is. That is where the lawyers will start to bill. |
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i think if pirate returned everyones coins
Where would these coins come from? After interest payouts that already happened? If he is short he would have to buy from the rest of us. Who knows I might even sell him just a few  . The latter of course depends on the price. Of course there may be also those that are buying in order to profit from a Pirate short squeeze, so in that sense the rally could also be due to Pirate. Why would he buy fresh coins to pay depositors back? If he was going to default he'd just up and leave. I am assuming this is not going to be a simple grab the cash and run or classic Ponzi type default. Pirate is a lot more sophisticated than many in the "anti-pirate" camp give him credit for. Something along the lines of what I mentioned in your other thread https://bitcointalk.org/index.php?topic=98225.msg1084866#msg1084866 on the other hand may well be what happens. |
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The pertinent portion of law that applies to your question is the Coinage Act of 1965, specifically Section 31 U.S.C. 5103, entitled "Legal tender," which states: "United States coins and currency (including Federal reserve notes and circulating notes of Federal reserve banks and national banks) are legal tender for all debts, public charges, taxes, and dues http://www.treasury.gov/resource-center/faqs/currency/pages/legal-tender.aspxDoes that mean that if I lend you my car for the weekend, you're within your rights to sell it and give me back the amount you got in dollars? If I lend you my car, I expect to get my car back. In the same way, if I lend you some Bitcoins, I expect to be paid back in Bitcoins. Is the law really saying that all loans can be paid back in dollars at the borrowers discretion? I think the main problem is more along the lines of: US law =/= Global law People would do well to remember that... My understanding is that pirateat40 is a "us person" or has a strong enough nexus in the United States so that US law would apply, likely in the state of Texas. But even if US law did not apply in all of his cases. Suppose he has to settle in EUR or CAD etc., because of local laws with some creditors he can still avoid moving the BTC market. |
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if Pirateat40 is rebuying coins on Gox to repay his lenders, does the volume traded on Gox actually support this?
I'm doing some basic back-of-the-envelop calculations here, but here's what I get: 30 day MtGox volume BTC (mtgox30btc): ~2,000,000 BTC approximate 7 day MtGox volume (mtgox7btc = mtgox30btc*7/30): 470,000 BTC conservative BTCS&T figure (piratebtc): 250,000 BTC If pirate has to go back and forth to cash in order to make his profits, that requires selling once and buying once with 10% BTC profit, meaning that his weekly transaction volume would be piratebtc*2.1, or 525,000 BTC of weekly volume, more than the entire MtGox weekly volume. If instead we view him as only selling once, then just buying back enough to pay interest, (which would be very risky in the case of rising BTC prices because he would be essentially short piratebtc number of bitcoins, and would have lost about 1.25 million in the recent rise from 5 to 10 USD), then his weekly volume would be piratebtc * 0.07 or 17,500 BTC. That would be about a third of a days volume at MtGox. So, the short answer is it depends on what model of pirate's business you have in your mind, but I personally do believe it to be a Ponzi due to the ludicrous notion of sharing that level of profit when significantly cheaper ways to acquire legitimate capital are available. -bgc This analysis is really interesting. What if we look at the mega short option with the BTC liabilities backed up in part with USD and in part with BTC. Now what pirateat40 could do here is: 1) Sell his remaining stock of BTC on MtGox at market to depress the price. 2) Settle his BTC liabilities in USD right away at the now depressed MtGox price by taking advantage of legal tender laws in the United States. This avoids moving the market sharply up by having to purchase millions of USD worth of BTC in the open market. The pertinent portion of law that applies to your question is the Coinage Act of 1965, specifically Section 31 U.S.C. 5103, entitled "Legal tender," which states: "United States coins and currency (including Federal reserve notes and circulating notes of Federal reserve banks and national banks) are legal tender for all debts, public charges, taxes, and dues http://www.treasury.gov/resource-center/faqs/currency/pages/legal-tender.aspxThe interesting question here is whether this would attract litigation over market manipulation? |
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i think if pirate returned everyones coins
Where would these coins come from? After interest payouts that already happened? If he is short he would have to buy from the rest of us. Who knows I might even sell him just a few . The latter of course depends on the price. Of course there may be also those that are buying in order to profit from a Pirate short squeeze, so in that sense the rally could also be due to Pirate. |
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Yeah, and anytime a girl is raped they weighted their risk / reward by dressing too sexy.
Stop blaming the victim, especially when they are obvious and identified responsibles. No offense intended toward you, Hollyday.
Rape victims are not to blame. In civil societies, they are not responsible for what has been done to them. The ecosystem we have here lacks many features of civil society. Anyone participating needs to understand that. This is a very rough environment at the moment, anyone unable to live with losing their investment should not invest in Bitcoin. Transisto is clearly a victim here. Assigning blame isn't much use, though, as blame here doesn't readily translate to repercussions in the way many would hope. Either accept this and plan accordingly, or do something about adding repercussions. But risk/reward is the only thing that counts right now, and to think otherwise is to set oneself up to get fucked. edit: to clarify, my sympathies are with Bitcoinica's debtors. I am one myself. Sympathies don't, however, turn into money. Do you mean Bitcoinica's creditors; namely those who are owed BTC and / or USD by Bitcoinica as opposed to Bitcoinica's debtors those who owe BTC and / or USD to Bitcoinica? |
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A classic typosquat targeted to the Bitcoin community. For that reason alone I would very much suspect scam.
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I see the risk of being a bear with Bitcoin in this market as massive. It is not just about loosing it all. It is about how deep in the hole one can go by shorting Bitcoin.
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I voted 99+.
The one thing I will stay well away from is anyone who is short Bitcoin or has any exposure on the short side to Bitcoin. The risk on short side with Bitcoin is massive. This applies equally to a newbie looking for a payday loan in BTC (I have seen this in the lending section) or a multi million USD hedging operation with unknown exposure on the short side to Bitcoin.
There is a significant risk that being short Bitcoin could turn out to be one of the worst investments of this century, sort of like going long on the DOW with 100:1 or more leverage on September 3, 1929 was in the last century.
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I'm actually getting pretty close to launching my newegg.com competitor. It will be Bitcoin only, and competitive with newegg on just about everything. It will have over 500,000 items available with real time inventory checks. Here is a sneak preview:  This looked really exciting to me until I visited the shipping methods page of Memory Dealers http://memorydealers.com/shipping-rates/ when it becomes a clear no deal for me. The reason is you do not offer and advertise the US Postal Service as a shipping option to your customers. Let me explain: When it comes to international and residential package delivery the private shipping companies simply do not get it here in Canada. I have seen UPS charge a $50 brokerage fee to broker a $3.50 GST charge at the border on an Item that cost $50. This got so bad the there was a class action lawsuit in Canada against UPS over this. http://www.classaction.ca/actions/Consumer-Protection/Current-Actions/United-Parcel-Service-Canada-Ltd-%28-UPS-%29.aspx. They have now changed their fees somewhat after the litigation but they are sill far to high. Canada Post charges a flat fee of $8.50 for brokerage. http://www.canadapost.ca/tools/pg/manual/PGcustoms-e.asp#1382719. That is it Then there is the issue of delivery to a residential address especially in the smaller centers. With Canada Post if I am not home I get a notice in my mailbox and I can go to a retail outlet in my neighborhood to pick up my package. This is simple and very convenient as these outlets are typically open evenings and weekends. With private couriers I may get a phone call or in some cases I have to contact them using the tracking information provided by the shipper. Then to arrange for delivery I have to either spend all day waiting of the courier to arrive or drive to some office in the outskirts of town, or in some cases in another community a few hundred miles away, open only from 8:30 to 4:30 on weekdays to pick up my package. Private couriers are very good at delivering documents to a business that has a reception. They fail very badly with delivering packages to residential addresses, and are even worse with international shipments. This may sound like a real hearsay to many in this community, but it must be said: When it comes to shipping items purchased with Bitcoin to residential customers the "State Postal Monopoly" here in Canada http://www.canadapost.ca does an excellent job, while the private sector fails miserably. For me as a customer purchasing online it is very simple: Deliver using the Post Office or no sale. Here are some examples regarding residential deliveries by private sector companies: http://www.youtube.com/watch?v=D7Sb_r7BKTchttp://www.youtube.com/watch?v=ikanns26nDAhttp://www.youtube.com/watch?v=APqvq0Kn55ohttp://www.youtube.com/watch?v=W1qUd9na_PQ |
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So pirate has borrowed enough coins to give him the weight to manipulate the market and thus profit enough from his up an down game to pay off his lenders and make profit?
Everyone could just call their coins back. Why would they when they are essentially in cahoots with the pirate and making good money? Because when pirate makes a really bad bet (JPMorgan Chase style and he will one day) he will probably default. Then everyone will lose a portion if not all of their money, and Pirate will be labeled a ponzi scammer even if he is not. When it gets to serious cash like this then it is hard to come back from big falls. If he lost a little before he could pay back out of his own funds to make up for a profit later on, but a loss that he can't handle will doom the whole operation. All of pirate's creditors could do the same thing he is doing except without the manipulation and potentially make more than 7% a week. I don't borrow or loan money anyway and I will only invest with people or institutions that are transparent, but I would hate for this to hurt the bitcoin economy and tie a lot of people's coins in limbo like with Bitcoinica. +1 |
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Up.
Mmmkay, you're going to have to explain that. Is this based on your theory that Pirate is a huge ol' bear that might hang over the market to drive down the price, but if it's revealed that he's "only" a scammer, no one will stand in the way of bitcoin growth? Even if we assume Pirate is only a scammer, there is still going to be a lot of people out there that thought they had BTC who find out that they no longer have those BTC. They cannot sell BTC they no longer have; however they may buy in order to replace at least some of the lost BTC. This is especially the case in an otherwise rising market. We may have seen some of the same effect already in the case of Bitcoinica. It is like a bank collapse in the days of the gold standard. The remaining cash outside the collapsed bank actually becomes more valuable. By the way my theory is that Pirate can only drive temporarily drive down the price in an otherwise rising market. Eventually something will give and when this happens there will be a significant rise in prices other things been equal. |
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