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Author Topic: Early speculator's reward antidote  (Read 20324 times)
rebuilder
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May 31, 2011, 06:14:20 PM
 #121

 As we saw in the recent slip from $9 to $6, when newcomers stop throwing money on the table, the value of BTC starts to lose steam relatively fast.

Is this such a bad thing?

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May 31, 2011, 06:20:42 PM
 #122

I hear you... it's just that this logic also sells pyramid schemes.

No, the people at the bottom of pyramid schemes are always losers. When nobody else wants to buy bitcoin in exchange for fiat currency, everyone who has bitcoin is still trading them. That is their value.

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What's the difference between me selling BTC versus a 32-dollar bottle of wongo juice whose intrinsic value is maybe 50 cents?  (I live in Utah which has got to be the "wongo juice scam" capital of the world).

How do you know the intrinsic value of bitcoin? It is used as a money, like gold.


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What do you say to the guy who just filled his basement full of wongo juice the week before the world population decides it's acquired all the wongo juice it needs?

That's the risk of speculation. What casascius isn't getting is that his $20k could have just as easily been the next wongo juice.


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As we saw in the recent slip from $9 to $6, when newcomers stop throwing money on the table, the value of BTC starts to lose steam relatively fast.

What are you talking about? A drop in the exchange rate only means that people are willing to sell now rather than wait for the exchange rate to rise.
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May 31, 2011, 06:28:50 PM
 #123

By the way, casascius, when I asked what new Bitcoin would be worth to you, I meant now. After all, you said you're already starting to value new coins more than old ones. I have a few new-ish coins mined in the last couple of months. Care to buy them, I'm sure we can come up with an exchange rate to suit us both.

Or would you then be taking unfair advantage of your realization that BCP is the future? Or just taking a risk (big IMO) that you deserve to be rewarded for if there turns out to be a profit to be made?

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May 31, 2011, 06:42:08 PM
 #124

By the way, casascius, when I asked what new Bitcoin would be worth to you, I meant now. After all, you said you're already starting to value new coins more than old ones. I have a few new-ish coins mined in the last couple of months. Care to buy them, I'm sure we can come up with an exchange rate to suit us both.

Or would you then be taking unfair advantage of your realization that BCP is the future? Or just taking a risk (big IMO) that you deserve to be rewarded for if there turns out to be a profit to be made?

Tell you what, just for fun, maybe I will.  Would you accept a 2% premium?  (I give you 51 BTC for your 50 BTC if you can spend it to me as a single transaction that gives me the entire output of a virgin block).

If you haven't spent them out of their generation blocks, they are inherently more valuable when people realize that Bitcoins are only anonymous under certain perfect conditions.  Some people already realize this now, but it will take a big privacy scandal to make everyone realize it, just how some lazy local governments won't fix the traffic lights at a problem intersection everyone knows is a problem until enough people die.

Mined bitcoins that have never been spent out of their generation blocks will eventually command a premium to someone wanting to buy them for anonymous transactions.  And an enhanced BTC+BCP client with a wallet interface like I showed in the screenshots - that allows the user to checkbox the specific coins they want to spend - will help future Bitcoin users who grow to value premium anonymity.

Companies claiming they got hacked and lost your coins sounds like fraud so perfect it could be called fashionable.  I never believe them.  If I ever experience the misfortune of a real intrusion, I declare I have been honest about the way I have managed the keys in Casascius Coins.  I maintain no ability to recover or reproduce the keys, not even under limitless duress or total intrusion.  Remember that trusting strangers with your coins without any recourse is, as a matter of principle, not a best practice.  Don't keep coins online. Use paper wallets instead.
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May 31, 2011, 06:43:49 PM
 #125

I hear you... it's just that this logic also sells pyramid schemes.  What's the difference between me selling BTC versus a 32-dollar bottle of wongo juice whose intrinsic value is maybe 50 cents?  (I live in Utah which has got to be the "wongo juice scam" capital of the world).
What is this intrinsic value you speak of?

Perhaps that you can drink it... once all the marketing hype has been peeled off and the juice poured out of the fancy bottle, it's still perfectly drinkable fruit juice with similar nutritional and refreshment qualities as most any other juice, and valuable anywhere from 50 cents to $3 based on its temperature, freshness, and location relative to thirsty people.

Companies claiming they got hacked and lost your coins sounds like fraud so perfect it could be called fashionable.  I never believe them.  If I ever experience the misfortune of a real intrusion, I declare I have been honest about the way I have managed the keys in Casascius Coins.  I maintain no ability to recover or reproduce the keys, not even under limitless duress or total intrusion.  Remember that trusting strangers with your coins without any recourse is, as a matter of principle, not a best practice.  Don't keep coins online. Use paper wallets instead.
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May 31, 2011, 06:47:06 PM
 #126

I hear you... it's just that this logic also sells pyramid schemes.  What's the difference between me selling BTC versus a 32-dollar bottle of wongo juice whose intrinsic value is maybe 50 cents?  (I live in Utah which has got to be the "wongo juice scam" capital of the world).
What is this intrinsic value you speak of?

Perhaps that you can drink it... once all the marketing hype has been peeled off and the juice poured out of the fancy bottle, it's still perfectly drinkable fruit juice with similar nutritional and refreshment qualities as most any other juice, and valuable anywhere from 50 cents to $3 based on its temperature, freshness, and location relative to thirsty people.

So, it gets intrinsic value because people want it?  I don't think you are using the word intrinsic correctly.

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May 31, 2011, 06:49:45 PM
 #127

So, it gets intrinsic value because people want it?  I don't think you are using the word intrinsic correctly.

I mean that the value of the juice is in the juice, in other words, it is valuable because it is still juice and can be consumed as such (as opposed to it being something whose sole value is what you can trade it for).  I'm no economist... what does intrinsic mean to you?

Companies claiming they got hacked and lost your coins sounds like fraud so perfect it could be called fashionable.  I never believe them.  If I ever experience the misfortune of a real intrusion, I declare I have been honest about the way I have managed the keys in Casascius Coins.  I maintain no ability to recover or reproduce the keys, not even under limitless duress or total intrusion.  Remember that trusting strangers with your coins without any recourse is, as a matter of principle, not a best practice.  Don't keep coins online. Use paper wallets instead.
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May 31, 2011, 06:50:35 PM
 #128


Tell you what, just for fun, maybe I will.  Would you accept a 2% premium?  (I give you 51 BTC for your 50 BTC if you can spend it to me as a single transaction that gives me the entire output of a virgin block).

The BTC are from pooled mining, so I can't give you an entire block. If you're still interested, I'll get back to you after I check how much I actually have in that wallet. I hope you have some way of verifying the age of the whole amount.

edit: Just so you know, it's not much. Max 6 BTC or so, but I don't recall if I transferred some of those to my main wallet already. I'll have to check.

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Jaime Frontero
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May 31, 2011, 06:56:51 PM
 #129

Yeah, because that's what entrepreneurs need, the knowledge that early adopters will get screwed for taking a chance.

+1
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May 31, 2011, 06:57:22 PM
 #130

Wow, 7 pages of replies on a thread that started just today...(tl,dr...so apologies if I'm stating something already stated)...I love the irony in this proposal...the irony is that in order for it to take off, it would very likely have to offer even greater reward for the early speculators than bitcoin (because of the current awareness of bitcoin and the very marginal improvement on bitcoin that it offers).  You would actually need to rapidly issue new currency at the very beginning and ramp down the payout and inflation more quickly than bitcoin.  The early speculator would have an even more "unfair" advantage, but that is what it would take for this to even have a chance at succeeding.  LOL

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May 31, 2011, 07:04:08 PM
 #131

Yeah, because that's what entrepreneurs need, the knowledge that early adopters will get screwed for taking a chance.

+1

They're not getting screwed... I'm an early adopter, a relatively late one at that, who was "only" able to grasp 0.5% of the economy at the time... how is getting 6 figures of free money being screwed?  What Bitcoin needs is people to have well-placed faith in it, that won't be exposed to a systemic risk of being screwed just by buying BTC.  Those poor other early adopters for whom a six-figure gain isn't enough, they need a 9-figure gain to not be "screwed" for the CPU time they spent running a free mining program in their spare time.

Companies claiming they got hacked and lost your coins sounds like fraud so perfect it could be called fashionable.  I never believe them.  If I ever experience the misfortune of a real intrusion, I declare I have been honest about the way I have managed the keys in Casascius Coins.  I maintain no ability to recover or reproduce the keys, not even under limitless duress or total intrusion.  Remember that trusting strangers with your coins without any recourse is, as a matter of principle, not a best practice.  Don't keep coins online. Use paper wallets instead.
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May 31, 2011, 07:11:43 PM
 #132

Having foresight is a perfectly reasonable attribute that is marketable.  You should feel good for yourself about being able to recognize a good opportunity. If you cashed out right now I would not begrudge you your 6-figure payout (over time due to market size)  

If my foresight is of value, then listen to this: Newcomers don't like it when others profit at their expense without giving value.  They are going to leap from putting new funds into the BTC block chain at the first solid safe opportunity.

Your foresight only has value if you are right. So why don't you provide proof that you destroyed all the rest of your BTC and deposited them into BCP?

I never will... I would be a fool to, because the difficulty (i.e. how easily I acquired my coins) would make them a poor conversion.  Nobody will want to convert BTC unless they were recently mined and would yield a comparable sum of BCP.  I however would throw all my mining at BCP as well as all recently mined coins.  BCP of course doesn't "exist" yet until a client is released for it.

do you have any idea how ridiculous you make your position out to be?

on one hand, you bemoan your fate of terrible wealth in almost shakespearean high-dudgeon - the unfairness of your foresight, how valueless risk-taking is to the strength of the network and the success of Bitcoin...

...whilst on the other you do everything possible to secure your wealth and to increase it.

is this some kind of monumental internet performance art lead-up to a particularly grisly suicide, broadcast on youtube?

bah.  done with this thread.
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May 31, 2011, 07:13:38 PM
 #133

how is getting 6 figures of free money being screwed?

Fucking hell you are dense. How many times do I have to say this?

If you are still holding your bitcoin, you have not yet profited.

When you do sell and do profit, you are providing a valuable service (selling bitcoins) at a price other people are willing to pay. How is this "free money" or "not providing anything valuable"?

The longer you hold your bitcoins, the more risk there is that the value drops to zero and you lose your entire investment. (Not that I think that is likely).
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May 31, 2011, 07:13:46 PM
 #134

how is getting 6 figures of free money being screwed?
Because it's not free money.

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May 31, 2011, 07:14:56 PM
 #135

They're not getting screwed... I'm an early adopter, a relatively late one at that, who was "only" able to grasp 0.5% of the economy at the time... how is getting 6 figures of free money being screwed?  What Bitcoin needs is people to have well-placed faith in it, that won't be exposed to a systemic risk of being screwed just by buying BTC.  Those poor other early adopters for whom a six-figure gain isn't enough, they need a 9-figure gain to not be "screwed" for the CPU time they spent running a free mining program in their spare time.

Your proposal is what screws early adopters here. You didn't get free money. You spent $20k on things that later turned out to be much more valuable. No one knew, when you put 20k in, that this was going to be big enough for that 20k to have a 1000% return. Especially when you put it in, you were more likely to end up with 20 cents than 200k.

You risked a large quantity of capital in this currency and there is a commensurate reward for that. The less "proof" that you needed, i.e. the lower the price of BTC was when you bought in, the more reward you received; by the same token, the less "proof" that you had, the higher the risk was that your investment would be worthless. Further, your investment constituted a "vote" of sorts - a 20K USD buy on a public market would be a contributing factor to another potential investor looking for "proof" that this is a good investment. If that investor then buys BTC and pushes the price up more, did you get money for nothing? No, you provided an investor with some information, and he paid you for that information.

You also haven't really explained what is going to make BCP somehow a solution to this problem. In the beginning, BCP will not have a high difficulty. There will be a few miners who switch over, just like Namecoin, but for the most part, the BCP blockchain difficulty will be a pale shadow of the BTC difficulty. In this period, people will mine blocks and receive BCP at some arbitrary rate. Perhaps they will sell those BCP to other people for another currency; later on, if BCP catches on, those BCP will be worth more. The only difference will be, instead of the question being "Can a blockchain-based decentralized P2P currency catch on?" it'll be "Will this blockchain-based decentralized P2P currency that competes with Bitcoin catch on?"

And people who predict the answer to that question correctly stand to profit. Just like Bitcoin.

In any case all of this arguing is pointless. I am with the others who say, if you want to create a better bitcoin,

Fucking do it already and stop talking about how the current bitcoin is worse than the unicorn in your head.

It's like listening to people talk about how unannounced or unreleased tablets are going to be better than the currently shipping iPad. Maybe they will. But no one knows until it comes out. Similarly, if you think that this is going to be the Wave of the Future, then just fucking do it and stop talking on forums about it.

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May 31, 2011, 07:33:01 PM
 #136

do you have any idea how ridiculous you make your position out to be?

Yep... I probably sound about as ridiculous to you as I would trying to preach evolution to creationists at a church.  Doesn't make me wrong.

on one hand, you bemoan your fate of terrible wealth in almost shakespearean high-dudgeon - the unfairness of your foresight, how valueless risk-taking is to the strength of the network and the success of Bitcoin......whilst on the other you do everything possible to secure your wealth and to increase it.

You mean like criticize Bitcoin in forums, which can't possibly increase the value of my BTC?  Are you suggesting that I need to void my BTC to have merit?  Kind of like how people who criticize the Federal Reserve should be burning their dollars if they want to be taken seriously?  (To the recent poster who thinks I am suggesting early adopters destroy their BTC, my suggestion is actually quite the opposite - early adopters should keep their BTC as BTC so if it turns out to be a train wreck, it goes down with it).

is this some kind of monumental internet performance art lead-up to a particularly grisly suicide, broadcast on youtube?

No, but maybe it's eery that I just saw Les Miserables this weekend, just made me think of that dude Javert...nevermind.  WTF would I want to kill myself?  Is it untenable that someone could possibly put the idea of a successful Bitcoin ahead of an advantage to profit at someone else's expense?  Jeez, I'd return your wallet if I found it at the airport too... that doesn't make me crazy.

Companies claiming they got hacked and lost your coins sounds like fraud so perfect it could be called fashionable.  I never believe them.  If I ever experience the misfortune of a real intrusion, I declare I have been honest about the way I have managed the keys in Casascius Coins.  I maintain no ability to recover or reproduce the keys, not even under limitless duress or total intrusion.  Remember that trusting strangers with your coins without any recourse is, as a matter of principle, not a best practice.  Don't keep coins online. Use paper wallets instead.
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May 31, 2011, 07:38:35 PM
 #137

Fucking hell you are dense. How many times do I have to say this?

If you are still holding your bitcoin, you have not yet profited.


Am I supposed to respond to this?  It isn't even a question.  How do you know if I am or am not holding my bitcoin?  And what difference does it make?  If Bitcoin flops before I sell out then yeah, I guess I get it...no ferrari.  It should be pretty clear by now that I understand this, but hey... apparently people think my eyesight is bad too cause this thread gone past bold and on to big fonts now.

Companies claiming they got hacked and lost your coins sounds like fraud so perfect it could be called fashionable.  I never believe them.  If I ever experience the misfortune of a real intrusion, I declare I have been honest about the way I have managed the keys in Casascius Coins.  I maintain no ability to recover or reproduce the keys, not even under limitless duress or total intrusion.  Remember that trusting strangers with your coins without any recourse is, as a matter of principle, not a best practice.  Don't keep coins online. Use paper wallets instead.
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May 31, 2011, 07:50:21 PM
 #138

Fucking hell you are dense. How many times do I have to say this?

If you are still holding your bitcoin, you have not yet profited.


Am I supposed to respond to this?  It isn't even a question.  How do you know if I am or am not holding my bitcoin?  And what difference does it make?  If Bitcoin flops before I sell out then yeah, I guess I get it...no ferrari.  It should be pretty clear by now that I understand this, but hey... apparently people think my eyesight is bad too cause this thread gone past bold and on to big fonts now.

How about the next part, which refutes your constant claim that you are getting "free money" without "providing anything of value"?

When you do sell and do profit, you are providing a valuable service (selling bitcoins) at a price other people are willing to pay. How is this "free money" or "not providing anything valuable"?

Is this hard to understand, or do you have some argument that counters this point?
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May 31, 2011, 07:52:40 PM
 #139

I think a little perspective is in order...first, if someone does have 20% of all bitcoins, the notional value of those coins is around $10 million.  However, were they to sell all those coins on any short time scale, they wouldn't get anywhere near that amount and they would crash the market.  But, let's assume they could bleed out $5 million over the span of 3 months (but I think that's still far above what the market could support today).  That's peanuts compared with the wealthiest people on this planet and I'd bet that the contribution these bitcoin pioneers have made is far greater than the vast majority of those extremely wealthy individuals (and yes, even for those that did little more than buy or mine bitcoin...because, after all, without them, there would be no "us").  If the price of bitcoin continues to appreciate, these early adopters will have increasing pressure and incentive to either lock in those gains or to invest it in some capacity (quite likely in businesses involving bitcoins).  Continuing to hold such a large hoard will make less and less sense as time passes.  

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May 31, 2011, 08:10:19 PM
 #140

How about the next part, which refutes your constant claim that you are getting "free money" without "providing anything of value"?

When you do sell and do profit, you are providing a valuable service (selling bitcoins) at a price other people are willing to pay. How is this "free money" or "not providing anything valuable"?

Because when I think of providing something of value, I am thinking of the creation of goods and services, which are the true backbone of any economy, not money.  When I buy BTC at 0.80 and sell them for 8.00, I feel more like a troll on a bridge.  The troll isn't doing anything useful, unlike say a toll that goes to the people who built the bridge, which motivated them to build a quality bridge and which probably helps maintain the bridge.

Yes, I agree I am providing a valuable service (in the sense that my service is probably valued by someone), but I am not actually adding any goods and services to the economy.

Compare that to what I do for work - I make software - people pay me for that - the software satisfies a need of theirs - it's a two way win.  Put a bunch of software engineers on an island, and from that island will come products innovation and automation.

Put a bunch of farmers on an island, and from that island will come fruits and vegetables.  Put a bunch of singers and dancers on an island, and from that island will come rehearsed entertainment.

But put a bunch of bankers or trolls or traders on an island without anyone that produces goods or services, and from that island will come nothing, because their activities produce nothing and benefit nobody.  They will nickel and dime each other all day for each other's nickels and dimes, but without others who produce, none of them can so much as whip up a bowl of macaroni and cheese.  And when I resell BTC at a profit, that's how I feel, that I have only converted someone else's resources to my personal benefit while giving nothing useful in return (other than, of course, the resource I'm holding, which I didn't create).

Bitcoin came from the software engineer island, not the banker and trader island.


Companies claiming they got hacked and lost your coins sounds like fraud so perfect it could be called fashionable.  I never believe them.  If I ever experience the misfortune of a real intrusion, I declare I have been honest about the way I have managed the keys in Casascius Coins.  I maintain no ability to recover or reproduce the keys, not even under limitless duress or total intrusion.  Remember that trusting strangers with your coins without any recourse is, as a matter of principle, not a best practice.  Don't keep coins online. Use paper wallets instead.
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