A gentle reminder of why we are all here:

[vokain]

A friend sent me this article today, I figured I would share my response. Anything fundamental I got wrong or need to correct? I am aware of the occasional typo, it was 5AM here  in america when I wrote this

http://blog.p2pfoundation.net/how-the-bitcoin-1-manipulate-the-currency-deceive-its-user-community-and-make-its-future-uncertain/2013/06/30

Keep reading.... it is easy to get swept up in the price volatility and forget about the original purpose of bitcoin. I'd probably believe the same thing if I didn't know my history and focused only on the bubbles.

What's more likely, that this is a ponzi and everyone's in on it, or that this voluntary model to reward miners (of which anyone cold voluntary choose to do so) who take the risk to dedicate time and capital to secure the network against the possibility of someone manipulating the transaction history?  Since they are the reason why Bitcoin works, should they not be rewarded? And should the amount of their reward not be determined by the market who get to know exactly what the money supply is, what the rate of inflation is, that each transaction is irreversible yet has a small cost also determined by the market, and the fact that these things cannot be changed? This is like arguing that the founders of Apple shouldn't have majority stake in the company because some wall street analysts are promoting how well (or poorly) they think the company will do. You have to understand that everyone who is a part of Bitcoin has a direct incentive to see through it its success. This is how you go from $0.00/BTC to 10000BTC/pizza to $77.9/BTC today, all along organically stimulating capital to build infrastructure to allow low-cost frictionless transactions of a market-determined commodity. Compare to gold. What's the cost of transmitting gold from the US to Asia? There's a paper market, but it is common knowledge that the paper receipts outnumber the total gold in existence, hence, the reason why you see gold prices dropping/

The original intention of Bitcoin is to solve the infamous double-spend problem (http://en.wikipedia.org/wiki/Double-spending) without having a central authority that you have to trust. People have attempted to solve it before, see this 2008 paper before the Bitcoin protocol was ever released ( http://arxiv.org/pdf/0802.0832v1.pdf ), but never figured out until Satoshi came up with the blockchain concept. If you have a looksee at the original whitepaper ( http://bitcoin.org/bitcoin.pdf — it also outlines the underlying structure of Bitcoin which explains why things are way they are), before Bitcoin, "completely non-reversible transactions [were] not really possible, since financial institutions cannot avoid mediating disputes. The cost of mediation increases transaction costs, limiting the minimum practical transaction size and cutting off the possibility for small casual transactions, and there is a broader cost in the loss of ability to make non-reversible payments for nonreversible services. With the possibility of reversal, the need for trust spreads. Merchants must be wary of their customers, hassling them for more information than they would otherwise need. A certain percentage of fraud is accepted as unavoidable. These costs and payment uncertainties can be avoided in person by using physical currency (like my example with gold earlier), but no mechanism exists to make payments over a communications channel without a trusted party."

So, what we have is the first time in history where we have an ideal money. John Nash in response to the Triffin dilemma described an ideal money where "international exchange rates can be fixed by pegging the value of each currency to a standardized basket of commodities, called the industrial consumption price index. Such a policy would curtail the ability of central banks to make monetary policy." There was no way possible to make sure our governments or central banks be trusted to debase their currency though. So Bitcoin came along, making the problem obsolete. Do you really think all the millions in VC money in the Valley are going to go into Bitcoin if Bitcoin was so easily fallible like your article suggests? Bitcoin should've died after the $32 bubble when all the hoarders dumped down to $2. If Bitcoin were some ponzi planned from the top, we wouldn't have kept going. Why? Honestly, probably because of the Silk Road. It was there where Bitcoin was utilized as it was imagined, maintaining demand for coins. The Silk Road was a spit to the face of authority and the poster child of free-market economics. The only way the free-market principles behind the Road could work is through something like Bitcoin, something that could not be manipulated and blocked by some fallible power. It was the first real trial of this experiment. We found that people could voluntarily decide to exchange, without even knowing the other party and conducting a normally risky transaction face-to face online, a product for money, based on the Web of Trust model ( http://en.wikipedia.org/wiki/Web_of_trust ). Concept: "As time goes on, you will accumulate keys from other people that you may want to designate as trusted introducers. Everyone else will each choose their own trusted introducers. And everyone will gradually accumulate and distribute with their key a collection of certifying signatures from other people, with the expectation that anyone receiving it will trust at least one or two of the signatures. This will cause the emergence of a decentralized fault-tolerant web of confidence for all public keys." Satoshi did to money what Phil Zimmerman did with communication: by removing the possibility that a prior transaction was faked, he created a foundation for trust to be built upon.

So, what are the implications of this? With a foundation that the money base and previous transactions that is unanimously agreed by the miners to never be manipulated, people are free to build from there. Satoshi wanted Bitcoin to succeed, which is why he gave power to the miners to receive block rewards for securing the blockchain. Miners wanted Bitcoin to succeed, which is why Laszlo decided to exchange 10000BTC for two pizzas and jercos voluntarily decided to accept ( https://bitcointalk.org/index.php?topic=137.msg1195#msg1195 ). This first exchange insinuated the idea that "Without trade, there is no market. Without a market, there is no value". Ludvig von Mises' regression theorem took over from here on.

The lesson here is that Bitcoin will not succeed without incentive. The idea that your article suggests is totally wrong. Instead of sitting on our asses, we must do something to create wealth and promote commerce. That's what the miners are securing. That's what laszlo and jercos did. That's what the Silk Road did. That's what hundreds in the tech industry left their high paying jobs to build That's what the VCs in the Valley are doing pouring millions, dedicating their time and talents, towards creating a world where Bitcoin will want to be used.  People that hoard are helping bitcoin by increasing the worth of each individual bitcoin. In doing so, it creates demand, stimulating others to do something to acquire those bitcoins. Our very own Jonny here is exercising his talents for something bigger down the road in creating working online businesses ( www.bit-coin.org ) in order to get Bitcoins. He could've worked on other web projects, but likely not as soon as he is as the profit incentive wouldn't have been there to do so. We're both working to get our friends' businesses to accept Bitcoin. I spend coins whenever I see something worth it to me. Day after day I'm adding to my knowledge base so that when I'm ready, I too can create something that will further demand for these coins. The end goal of all of us is creating an economy where we are free to trade whatever we'd like for bitcoins, because we know that we can spend those bitcoins on something else down the road without the money supply being debased and having to lose our savings via inconsistent inflation or having our assets seized by a debt-laden government's tax collector. This is agorism by definition: "a libertarian social philosophy that advocates the goal of the bringing about of a society in which all relations between people are voluntary exchanges by means of counter-economics, thus engaging in a manner with aspects of peaceful revolution."

Avy, thank you for posting contrary opinions, they're very welcomed. This was something that was overdue on my part and it was simply too easy  to forget that I had to reiterate this core understanding to you guys amidst all the new developments. It was lightly touched upon when I first started this thread in January, but not enough.  

[naphto]

sry but tl;dr

[vokain]

Very nice read Don't see anything that needs to be corrected.

My story: Invested a triple digit amount of euros in bitcoin last october and invested nearly all of it into ASICMINER shares, which I'm still holding for the biggest part. The profit is absolutely unbelievable, especially when considering that I am just a poor student otherwise. So being all in on bitcoin and never having had any substantial amount of fiat my perspective is like this:

It's a pretty easy decision for me, can't seem to find any points where our current monetary-system is superior to Bitcoin, Bitcoin is just younger. But I'm glad to hear other people's opinions.

I'm a poor student myself, butttt now I have a way of paying for my debt and education and I feel secure in my future because of Bitcoin. Would I have ever invested the same amount of time and capital into any other investment like I did? Helllll no! This is the people's money. Besides, through Bitcoin, I learned so much more than I ever have in school. How economics work, how to value things, how to read in between the lines of what people write and what their agendas are, how to setup payment services, how our financial markets really worked. Those things are priceless and I argue is the biggest return I've had through Bitcoin.

[derpinheimer]

sry but tl;dr

l;dr

[BTCThousandaire]

Very nice read Don't see anything that needs to be corrected.

My story: Invested a triple digit amount of euros in bitcoin last october and invested nearly all of it into ASICMINER shares, which I'm still holding for the biggest part. The profit is absolutely unbelievable, especially when considering that I am just a poor student otherwise. So being all in on bitcoin and never having had any substantial amount of fiat my perspective is like this:

• I am still (even with the recent decline in bitcoin value) making profit. Where else can I move shares of companies and money so efficiently between countries and exchanges at such low fees? And where else can I even BUY shares of companies/products of geniuses like friedcat or bitfury (and I know there are many other extremely skilled people in bitcoinland)?
• What advantage do I have buying euros (aside from being able to purchase things that bitcoin can't buy yet. Of course I need to do that from time to time to pay bills, but I know the situation gets better and better with bitcoin growing out of it's infancy)? With a lot of euro-nations being that highly indebted is my money really safer in euro than in bitcoin? (Had some money seized once by US Government when they decided to shut down "Full Tilt Poker", I know how it feels). Isn't there a good chance Cyprus was just the beginning? Nice analysis: http://www.youtube.com/watch?v=K7LQu-eIOO0
• I'm in my early twenties, no wife, no kids, no problems getting a job. Two options:
  • Invest in a monetary-system that's "controlled" by seemingly incompetent people, where said people have the power to know about how much I own, what I buy, etc. and even have the power to TAKE/DEVALUE what I own. The risk may admittedly be lower here (is that really so sure?), but do I have any chance of making profit?
  • Invest in a system that tries to challenge the status quo by dethroning the controllers of the current monetary-system. Where I am the only one knowing about my money. Where I am the only one capable of using my money. Where I am able to operate much more efficiently in terms of investing (Does a small investor still need to use the phone when buying shares at traditional stock markets and pay ridiculous fees ?) Risk might be higher here, but the chances of profit have proven to be insane.

It's a pretty easy decision for me, can't seem to find any points where our current monetary-system is superior to Bitcoin, Bitcoin is just younger. But I'm glad to hear other people's opinions.

I completely agree with you. I'm curious what is the percentage return you have got from investing in AM that early? I only invested in may so I got about 90% return on top of 20x from investing in bitcoin 2 years ago.

[vokain]

I completely agree with you. I'm curious what is the percentage return you have got from investing in AM that early? I only invested in may so I got about 90% return on top of 20x from investing in bitcoin 2 years ago.

Is that paper profits from share appreciation or from dividends?

[BTCThousandaire]

I completely agree with you. I'm curious what is the percentage return you have got from investing in AM that early? I only invested in may so I got about 90% return on top of 20x from investing in bitcoin 2 years ago.

Is that paper profits from share appreciation or from dividends?

Mostly from share appreciation, I invested the dividends in other companies.

[vokain]

I completely agree with you. I'm curious what is the percentage return you have got from investing in AM that early? I only invested in may so I got about 90% return on top of 20x from investing in bitcoin 2 years ago.

Is that paper profits from share appreciation or from dividends?

Mostly from share appreciation, I invested the dividends in other companies.

Curious, if you don't mind sharing. I wasn't aware of other lucrative Bitcoin-denominated equities. I don't need to tell you this but be careful with AM!

[BTCThousandaire]

I completely agree with you. I'm curious what is the percentage return you have got from investing in AM that early? I only invested in may so I got about 90% return on top of 20x from investing in bitcoin 2 years ago.

Is that paper profits from share appreciation or from dividends?

Mostly from share appreciation, I invested the dividends in other companies.

Curious, if you don't mind sharing. I wasn't aware of other lucrative Bitcoin-denominated equities. I don't need to tell you this but be careful with AM!

At first I put some in a bond that isn't doing well, but then I put it in AMC which is merging with VMC and is high risk, but I think at least short term looks good. Another chunk I put in LTC locking in a good price before it hits Gox.