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Author Topic: Why Are You Sold On Bitcoins?  (Read 5508 times)
RHorning
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November 22, 2010, 05:00:50 AM
 #41

@RHorning: The discussion you point to is very interesting. I am not at all certain I understand all of it. My related reservation is around latency. If a meatspace vendor is going to sell me something for BTC, right now they face a confirmation latency on the order of 10-20 minutes if they require at least one confirmation in the subsequent block. If they require zero confirmations it's 0-10 minutes. When I walk into a store and buy a pack of cigarettes, the equivalent "confirmation" comes by the clerk (cursorily) examining my banknotes and coins, and reaching an instant genuine/counterfeit decision. I wouldn't tolerate a 0-10 minute wait to get my fix, let alone a 10-20 minute wait. At the same time, maybe I'd *like* to adapt to a better system, so who knows. (Yes, I'm probably late to the game and this has already been addressed someplace)

The one concern that a "meatspace vendor" would have to deal with if you conducted a transaction is to make sure you aren't double-spending the same bitcoins.  The confirmation latency is an issue that I haven't spent too much time to think about, and it seems like an issue that needs some work, but for a straight person to person transaction it would be more like writing a check.

You will have some level of trust with a merchant (most likely) and there are already existing laws in place if you try to screw over the merchant.  That would be a form of fraud at the very least and certainly would be non-payment of services if, and this is the catch, you double-spend the same bitcoins with multiple merchants.

Normally banks have as much as a full week of latency in order for a check to clear.  I'm not entirely sure what country you live in, but I would think that getting a "check" to clear in 10-20 minutes would seem like a godsend to a typical merchant in this respect.  You wouldn't get far before some police radio channel is buzzing that some idiot is kiting "checks" or Bitcoins in this case and is presumed to be in the process of doing it again.  The penalties for doing stuff like this is far worse than shop lifting.  Also, a merchant can confirm that you have the coins "available" and possibly will charge you a small "transaction fee" as well to make sure your purchase in this case has priority.  They would know that at least within the past 10-15 minutes you had the money to make a purchase, which might be good enough to them, particularly if you are a regular customer.  The fact that you authorized the transaction giving enough information to make it included into the next block would be sufficient for many merchants... presuming that they or somebody they trust has thought this through.

As a further incentive to "stay honest", merchants would presumably be connected through the network and could also receive messages from each other (using existing Bitcoin network protocols.....nothing new even needs to be added here) where they could in theory scan to see if those same bitcoins have been spent somewhere else but not yet included in a block.  Those messages are floating around the network too and can be used to stop dishonest behavior.  In short, the concern about the network latency is misplaced.  It may take some extra programming and a special "merchant" client that has tools to try and prevent this kind of fraud, but it is possible and doesn't need changes to the network as a whole, just to the particular front-end software that the merchant is using.  Presumably that would be something custom anyway due to the needs of a typical merchant.

No money supply can ever be permanently stable.  All systems can be gamed.  But, if you save in gold then the failue of money can never hurt you.  If bitcoins fail someday then the bitcoin savers will be burned just as bad as the dollar savers will be.  The gold savers will just shrug and convert some of their saving gold into whatever comes along next as money.

The value of gold can also crash real hard too.  I love to use the analogy of finding some ultra-pure veins of gold on some asteroid.  If you could get a million ounces of gold @ $10 USD per ounce (in theory something which could happen), it would certainly send the gold markets crashing if those guys decided to dump it on the world markets all at once.  The days of a major gold rush to somewhere still aren't over, but they are going to be found in more exotic places than we've seen in the past.  If that happens, Bitcoin users are going to smile and those who are hoarding gold are going to look foolish.  The only similar kind of event with Bitcoins is if somebody who is hoarding a large number of bitcoins decides to dump them onto the major currency exchanges for Bitcoins to push the value down.  I think that would only be a temporary situation anyway.  Somebody doing that is also shooting themselves in the foot, and self-interest is one that would encourage you to put a large hunk of Bitcoins into such a market much more slowly.


Gold is no longer money and it should remain that way.

Gold has been money for nearly all of recorded human history, and remains so; despite the desires of governments.  If that were not so, it wouldn't be worth much more than lead, and certainly less than many other heavy elements.  Uranium, for example is much more dangerous and capital intensive to mine and refine than gold, yet has recently been described as being in a bubble rally for breaking $60 per pound.  Gold's current spot price reflects it's position as an ideal, physical money.  That has never not been so.  The primary advantage that Bitcoin holds over gold as a trade currency is that 1) you can't transfer it over the Internet and 2) if you could it would still impose a transit overhead well beyond a transaction fee.

The value gold has is such that it would still be worth more than the other heavy elements, because there are a number of electrical, biological, and metallurgical properties gold has which make it incredibly useful for many industrial applications.  It is biologically inert as the human body or for that matter most other forms of life really don't react to it... unlike lead which is incredibly hazardous.  It is very dense, has a unique color  (useful for art), incredibly ductle (can make some very thin wires), and with ordinary tools can be pounded down thin enough to be just a couple of atoms thick.... useful for many scientific experiments and again art.  Its use in the electronics industry is primarily due to the fact that it doesn't oxidize very easily, again unlike lead and for that matter most other elemental metals.  These and many other properties add value to gold well above and beyond the ability to easily make coins out of the stuff.

Uranium is hitting a bubble right now because there are a whole bunch of nuclear reactors going on line, along with a few countries like North Korea, Iran, and China who are eating up Uranium for making nuclear bombs.  The previous bubble like this hit during the 1950's and made some instant millionaires, but when America and Russia stopped making new warheads in large numbers and curtailed the construction of nuclear power plants as a result of Chernobyl and Three Mile Island, the bottom fell out of the Uranium market.  There just aren't that many other uses for the metal and the one remaining application, as a super-heavy metal for gunnery (depleted uranium bullets) isn't enough to sustain the market.

Gold is a much more valuable metal in and of itself, even if all of the metals of the world could be found in equal quantities, of which gold is rare because of raw physics and the make up of the Earth, it would still be one of the most valuable of all metals.

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November 22, 2010, 05:02:15 AM
 #42

I wonder if a system like this would work.

What if you could send a bitcoin before you intended to purchase ? A merchant may broadcast an address or something and you could deposit there while walking past then come back later and just take the coffee thats waiting for you without needing to hand over cash at all.

This may not work for instant gratification and impulse buying (this might actually be a good thing lol) but if you could just have a bitcoin credit wallet sitting at your favourite coffee shop buying stuff would be instantaneous wouldnt it?

Maybe I just like to plan purchases ahead too much. Embarrassed
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November 22, 2010, 05:09:30 AM
 #43

I wonder if a system like this would work.

What if you could send a bitcoin before you intended to purchase ? A merchant may broadcast an address or something and you could deposit there while walking past then come back later and just take the coffee thats waiting for you without needing to hand over cash at all.

This may not work for instant gratification and impulse buying (this might actually be a good thing lol) but if you could just have a bitcoin credit wallet sitting at your favourite coffee shop buying stuff would be instantaneous wouldnt it?

Maybe I just like to plan purchases ahead too much. Embarrassed

Well, it might be annoying to have to walk past, but if you go to Starbucks or Podunckville Coffee Express regularly there's no reason you can't pay before you go out, or even on your way from your phone. Request addy to pay, pay it, get a "code, broadcast code from your phone automatically when you walk in, pick up mocha.

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November 22, 2010, 05:12:10 AM
 #44

For merchant point-of-sale (POS) systems, the merchant should display a QR-code on a screen.  The customer uses their mobile phone to snap a picture of the QR-code

Automated processing software reads the QR-code in the picture, determines that it is a payment request from merchant CoffeeYourDrugOfChoice, Inc. for 35 BTC, and prompts the customer to approve the payment.

Presuming sufficient payment processor speed (see the snack machine thread), you could probably get away with zero-confirmation, instant bitcoin-denominated purchases.

Jeff Garzik, bitcoin core dev team and BitPay engineer; opinions are my own, not my employer.
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November 22, 2010, 05:32:11 AM
 #45

In short, the concern about the network latency is misplaced.


Quite so.  The actual transaction can be verified as valid by the merchant's own client instantly, and other forms of fraud can be reasonably protected against by the use of a specialized network peer that watches the network for transactions that would have tried to spend the same coins, etc, and warn the vendor in real time; much like how the credit card companies' approval process works.  Confirmations from the blockchain are not necessary for normal transactions, and likely only to be waited for on big ticket items, such as buying a new car.

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The value gold has is such that it would still be worth more than the other heavy elements,
Gold is a much more valuable metal in and of itself, even if all of the metals of the world could be found in equal quantities, of which gold is rare because of raw physics and the make up of the Earth, it would still be one of the most valuable of all metals.

As useful an industrial material as gold would be, without it's monetary value I would seriously doubt that it would be valued higher than scandium, beryllium, or even silver (itself primarily an industrial metal so highly prised for it's usefulness that there is much more gold in an 'above ground' refined state than silver).  All of which are significantly more abundant in nature than gold.

"The powers of financial capitalism had another far-reaching aim, nothing less than to create a world system of financial control in private hands able to dominate the political system of each country and the economy of the world as a whole. This system was to be controlled in a feudalist fashion by the central banks of the world acting in concert, by secret agreements arrived at in frequent meetings and conferences. The apex of the systems was to be the Bank for International Settlements in Basel, Switzerland, a private bank owned and controlled by the world's central banks which were themselves private corporations. Each central bank...sought to dominate its government by its ability to control Treasury loans, to manipulate foreign exchanges, to influence the level of economic activity in the country, and to influence cooperative politicians by subsequent economic rewards in the business world."

- Carroll Quigley, CFR member, mentor to Bill Clinton, from 'Tragedy And Hope'
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November 22, 2010, 05:39:18 AM
 #46

For merchant point-of-sale (POS) systems, the merchant should display a QR-code on a screen.  The customer uses their mobile phone to snap a picture of the QR-code

A QR code is really a work-around solution.  Phones with near-field communications chips will be able to communicate with POS systems much faster and more conveniently.  Cashless & cardless commerce is the primary intent for the development of NFC, and the reason that NFC will be included into google android 2.3.

I'm not sure that there is any point to trying to make QR codes work, since if the credit card companies decided that they were too inconvenient to bother with over plastic cards with magnetic strips; there is not much point in us trying either.

"The powers of financial capitalism had another far-reaching aim, nothing less than to create a world system of financial control in private hands able to dominate the political system of each country and the economy of the world as a whole. This system was to be controlled in a feudalist fashion by the central banks of the world acting in concert, by secret agreements arrived at in frequent meetings and conferences. The apex of the systems was to be the Bank for International Settlements in Basel, Switzerland, a private bank owned and controlled by the world's central banks which were themselves private corporations. Each central bank...sought to dominate its government by its ability to control Treasury loans, to manipulate foreign exchanges, to influence the level of economic activity in the country, and to influence cooperative politicians by subsequent economic rewards in the business world."

- Carroll Quigley, CFR member, mentor to Bill Clinton, from 'Tragedy And Hope'
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November 22, 2010, 05:44:27 AM
 #47

I like Bitcoin because it actually provides the properties of money. Dollars do not -- how can you have any economic security if your savings depreciate at the whims of politicians? Or if they create a monetary system that is designed to expand credit into a bubble that collapses every so often?

Secondly, I like how it is nearly impossible to steal them. Your dollar savings, on the other hand, are easy as pie to steal -- just ask anyone who has been involved in an unjust lawsuit.

I originally discovered Bitcoins through an Austrian Economics Distribution list at the company that I work. That was right about the time it was Slashdotted. Wish I had gotten in even sooner, of course.
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November 22, 2010, 02:53:40 PM
 #48


Gold is no longer money and it should remain that way.

Gold has been money for nearly all of recorded human history, and remains so; despite the desires of governments.  If that were not so, it wouldn't be worth much more than lead, and certainly less than many other heavy elements.  Uranium, for example is much more dangerous and capital intensive to mine and refine than gold, yet has recently been described as being in a bubble rally for breaking $60 per pound.  Gold's current spot price reflects it's position as an ideal, physical money.  That has never not been so.  The primary advantage that Bitcoin holds over gold as a trade currency is that 1) you can't transfer it over the Internet and 2) if you could it would still impose a transit overhead well beyond a transaction fee.

If you are attending the University of Kentucky as an Economics student and you have been taught that gold isn't money, you should consider transferring before you learn some more falsehoods that are difficult to overcome.


I use the word "money" for lack of a better term.  Read my definition of it above.  It is an internal calculation of value.  It is not part of the material world.

Gold has been used as money in the past.  However, this stopped for the common man after FDR and it stopped for international trade after Nixon.  It hasn't been money since.  We have been using fiat dollars to make our mental calculations.
Gold is an excellent wealth reserve(the best wealth reserve) but it is not money.
Also, I am not university trained.  They teach crap economics in all universities.

If you think gold is money then find me somewhere that you can buy something directly with gold.  Find somewhere that a person uses gold to calculate value.  Find somewhere that gold settles international trade imballance.  It doesn't currently exist.
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November 22, 2010, 02:58:35 PM
 #49


The value of gold can also crash real hard too.  I love to use the analogy of finding some ultra-pure veins of gold on some asteroid.  If you could get a million ounces of gold @ $10 USD per ounce (in theory something which could happen), it would certainly send the gold markets crashing if those guys decided to dump it on the world markets all at once.  The days of a major gold rush to somewhere still aren't over, but they are going to be found in more exotic places than we've seen in the past.  If that happens, Bitcoin users are going to smile and those who are hoarding gold are going to look foolish.  The only similar kind of event with Bitcoins is if somebody who is hoarding a large number of bitcoins decides to dump them onto the major currency exchanges for Bitcoins to push the value down.  I think that would only be a temporary situation anyway.  Somebody doing that is also shooting themselves in the foot, and self-interest is one that would encourage you to put a large hunk of Bitcoins into such a market much more slowly.



This actually happened to the spanish during the colonization of south america.  They brought so much gold back to spain from the new world at such a low cost that it caused monetary inflation(they used gold as money then)  It also disrupted their internal wealth calulations.

However, despite the disruption, it remained valuable.

If we find a gold asteroid today, it won't even disrupt society(gold is not money, we don't use it for value calculations).  It will just drop the value calculation via the dollar.  It will still be an excellent wealth reserve because people will still want it.
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November 22, 2010, 07:10:08 PM
 #50


Gold is no longer money and it should remain that way.

Gold has been money for nearly all of recorded human history, and remains so; despite the desires of governments.  If that were not so, it wouldn't be worth much more than lead, and certainly less than many other heavy elements.  Uranium, for example is much more dangerous and capital intensive to mine and refine than gold, yet has recently been described as being in a bubble rally for breaking $60 per pound.  Gold's current spot price reflects it's position as an ideal, physical money.  That has never not been so.  The primary advantage that Bitcoin holds over gold as a trade currency is that 1) you can't transfer it over the Internet and 2) if you could it would still impose a transit overhead well beyond a transaction fee.

If you are attending the University of Kentucky as an Economics student and you have been taught that gold isn't money, you should consider transferring before you learn some more falsehoods that are difficult to overcome.


I use the word "money" for lack of a better term.  Read my definition of it above.  It is an internal calculation of value.  It is not part of the material world.

Gold has been used as money in the past.  However, this stopped for the common man after FDR and it stopped for international trade after Nixon.  It hasn't been money since.  We have been using fiat dollars to make our mental calculations.
Gold is an excellent wealth reserve(the best wealth reserve) but it is not money.
Also, I am not university trained.  They teach crap economics in all universities.

If you think gold is money then find me somewhere that you can buy something directly with gold.  Find somewhere that a person uses gold to calculate value.  Find somewhere that gold settles international trade imballance.  It doesn't currently exist.


You are confusing a currency with a money.  They are related, but distinct concepts.  Gold is an ideal money, but only a fair currency.  Coins used in the past were all (ideally, not actually) minted to the same standard weight of gold, silver, or copper.  This creates a defacto unit of currency, but physical coins are a poor currency because they both have mass and volume.  Fiat currencies have done well in the industrial age because they are representations of a numerical unit.  This is why Bitcoin is a currency, and not a money nor a commodity; as it is a pure unit without any physical representation required.

And I take offense at the statement that all Economics courses are crap in American higher education.

"The powers of financial capitalism had another far-reaching aim, nothing less than to create a world system of financial control in private hands able to dominate the political system of each country and the economy of the world as a whole. This system was to be controlled in a feudalist fashion by the central banks of the world acting in concert, by secret agreements arrived at in frequent meetings and conferences. The apex of the systems was to be the Bank for International Settlements in Basel, Switzerland, a private bank owned and controlled by the world's central banks which were themselves private corporations. Each central bank...sought to dominate its government by its ability to control Treasury loans, to manipulate foreign exchanges, to influence the level of economic activity in the country, and to influence cooperative politicians by subsequent economic rewards in the business world."

- Carroll Quigley, CFR member, mentor to Bill Clinton, from 'Tragedy And Hope'
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November 22, 2010, 07:47:47 PM
 #51

The great thing about economics courses is that they can use the same exam questions every year. It's just the answers that change.
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November 22, 2010, 08:24:07 PM
 #52

The great thing about economics courses is that they can use the same exam questions every year. It's just the answers that change.

Now that's funny!

"The powers of financial capitalism had another far-reaching aim, nothing less than to create a world system of financial control in private hands able to dominate the political system of each country and the economy of the world as a whole. This system was to be controlled in a feudalist fashion by the central banks of the world acting in concert, by secret agreements arrived at in frequent meetings and conferences. The apex of the systems was to be the Bank for International Settlements in Basel, Switzerland, a private bank owned and controlled by the world's central banks which were themselves private corporations. Each central bank...sought to dominate its government by its ability to control Treasury loans, to manipulate foreign exchanges, to influence the level of economic activity in the country, and to influence cooperative politicians by subsequent economic rewards in the business world."

- Carroll Quigley, CFR member, mentor to Bill Clinton, from 'Tragedy And Hope'
Lexington
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November 23, 2010, 12:43:06 AM
 #53

The great thing about economics courses is that they can use the same exam questions every year. It's just the answers that change.
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