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Author Topic: Thoughts for Improving Bitcoin's Popularity  (Read 1799 times)
the joint
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August 31, 2011, 03:10:22 AM
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In light of some recent discussions I've had on this forum, I'd like to voice a few thoughts.

In terms of 'fads,' Bitcoin definitely meets the criteria -- It's new, it caught on fast, it took a few hits, and now we see a lot of die-hards mixed with late newcomers.  One could also argue that Bitcoin is still faddish and the these 'late' newcomers are still joining early.  This argument would be based upon the assumed longevity and durability of Bitcoin.  Both could be viewed as correct, but one fact remains the same.  Bitcoin is an isolated fad.

I've spent a lot of time on this forum in the past 2 months.  During those two months I've observed many reasons why I think Bitcoin has remained isolated this long.  Obviously, some of these reasons are technical and revolve around the idea that Bitcoin is not 'merely' a fad, but a new currency that inputs a certain level of risk.  Beanie Babies were fun, but hardly risky.  You bought a happy meal, you got your toy as a free bonus, and you were happy to put that beanie baby up on a shelf until you later realized that some of these beanie babies became extremely valuable to some collectors.

Bitcoin has not caught on in the same way beanie babies have.  Beanie babies are fun, they're cute.  People like cute stuff.  People like fun stuff.  Figuring out Bitcoin is neither cute nor fun unless your interests happen to include computers and spending long hours in front of a computer reading up on new technologies.  Fiat currency is far easier to understand for everyday use, acquire, and is overall more convenient.  Moreover, people in general do not have a lot of foresight when it comes to money.  People are notoriously bad with numbers when they conflict with emotion.  Studies have shown that people would rather have $50 today than $52 next week if given the choice.  

Let's look at some other things that grew exponentially at a very rapid pace.  Some good examples are HotOrNot, MySpace and YouTube.  People are social beings.  Social status is arguably one of the most driving forces that motivate people and this is seen everywhere from social networks to cell phones.  There is, however, nothing about BitCoin that currently focuses on the peoples' social nature.  In fact, it does the opposite with claims of increased anonymity.  Given that people are generally honest and fair (which is obviously debatable given the large number of Bitcoin scams), the transaction mechanism behind Bitcoin is a nice idea.  But, it does nothing to help its economic model.

Additionally, I look at the content on this forum.  Granted, I will admit that I am guilty of unnecessary belligerence/hostility toward others if I feel they make (in my opinion) notoriously dimwitted posts.  But there are additional isolating factors on this forum that reflects the mindset of the community.  For example, I don't know about you, but I HATE the word troll.  To me, troll is a symbol.  It's a symbol that represents the isolated nature of Bitcoin and the community.  It's projective, and while troll is used to denote users that make off-topic or careless posts, it is a reflection of this community within larger society.  It too is off-topic and careless.  It does not truly consider what the population at large wants.

In my opinion, the Bitcoin community, its users, and its merchants/businesses need to reflect upon society at large.  Be clever -- using a little manipulation to attract the average Joe can help to fulfill 3 goals:  1.)  Increasing Bitcoin's popularity  2.)  Giving Average Joe what he wants   3.)  Finally garnishing the attention that Bitcoin/cryptocurrencies deserve due to their novelty and improvements upon fiat currency.

What do people want?
People want to feel safe.  People want to be loved, accepted, understood, appreciated, complimented.  They want to be sexy.  They want to be famous.  They want the world to revolve around them.

While I haven't given sufficient thought as to exactly how Bitcoin can address these desires, I have a few general suggestions.  The first of these is simplification and security rolled into one.  Find a way to merge the Bitcoin client with a miner ALREADY REGISTERED TO A POOL.  So, in other words, the only thing to do to get started would be 1.)  Download client/miner  2.)  Click confirmation email which will confirm your account and provide you with username and secure password 3.) Start mining.  Perhaps an automatic account on Mt. Gox or TradeHill could also be created when downloading this client.  

Next, with the simple startup initiated, consider their desires.  People should somehow be recognized and rewarded for their involvement with Bitcoin.   Create a social network site like Second Life.  Linden dollars worked only because of Second Life's social nature.  Create something like HotorNot.com  where it costs only .1 BTC to put up a photo.  Have contests on the site where the guys/gals that receive the highest ratings of sexiness are rewarded in BTC which they can then cash out in USD.  Create a site like YouTube where Ads  linked to popular videos are paid for with BTC.  

I understand these ideas aren't extremely well thought out as I did not take a lot of time to write this post, but my general point remains the same.  Consider what you want to happen, and then consider what it really takes to get there.  If you want everyone to use Bitcoin, you need to figure out what everyone wants.  That includes the high school jock, the cheerleader, and likely all the people with whom many of us were never friends with.  To make Bitcoin thrive, you need to understand people.  And, so far, I haven't seen much of that.

Thoughts/opinions greatly appreciated.

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August 31, 2011, 03:23:25 AM
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While I haven't given sufficient thought as to exactly how Bitcoin can address these desires, I have a few general suggestions.  The first of these is simplification and security rolled into one.  Find a way to merge the Bitcoin client with a miner ALREADY REGISTERED TO A POOL.  So, in other words, the only thing to do to get started would be 1.)  Download client/miner  2.)  Click confirmation email which will confirm your account and provide you with username and secure password 3.) Start mining.  Perhaps an automatic account on Mt. Gox or TradeHill could also be created when downloading this client.  

Bad idea.

Next, with the simple startup initiated, consider their desires.  People should somehow be recognized and rewarded for their involvement with Bitcoin.   Create a social network site like Second Life.  Linden dollars worked only because of Second Life's social nature.  Create something like HotorNot.com  where it costs only .1 BTC to put up a photo.  Have contests on the site where the guys/gals that receive the highest ratings of sexiness are rewarded in BTC which they can then cash out in USD.  Create a site like YouTube where Ads  linked to popular videos are paid for with BTC.  

Great idea. =)

Good sentiment in your post, OP. Well-written.  Your observation that Bitcoin is not likely to "catch on" in the same manner as Beanie Babies is correct - Bitcoin is not easy, cute, and cuddly. Instead, it's damn complicated, weird, and controversial politically, economically, and even philosophically.

It will take a while for the populace to realize that, unlike Beanie Babies, Bitcoins can actually revolutionize the very foundations of society =)


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August 31, 2011, 03:43:48 AM
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While I haven't given sufficient thought as to exactly how Bitcoin can address these desires, I have a few general suggestions.  The first of these is simplification and security rolled into one.  Find a way to merge the Bitcoin client with a miner ALREADY REGISTERED TO A POOL.  So, in other words, the only thing to do to get started would be 1.)  Download client/miner  2.)  Click confirmation email which will confirm your account and provide you with username and secure password 3.) Start mining.  Perhaps an automatic account on Mt. Gox or TradeHill could also be created when downloading this client.  

Bad idea.



I guess I'd like to ask you why you think this is a bad idea.  I guess I imagined that they would still have the option to change pools/exchanges if they wish, but I was suggesting this as a solution to overcoming the technical difficulty of startup mining.

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August 31, 2011, 12:51:05 PM
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While I haven't given sufficient thought as to exactly how Bitcoin can address these desires, I have a few general suggestions.  The first of these is simplification and security rolled into one.  Find a way to merge the Bitcoin client with a miner ALREADY REGISTERED TO A POOL.  So, in other words, the only thing to do to get started would be 1.)  Download client/miner  2.)  Click confirmation email which will confirm your account and provide you with username and secure password 3.) Start mining.  Perhaps an automatic account on Mt. Gox or TradeHill could also be created when downloading this client.  

Bad idea.



I guess I'd like to ask you why you think this is a bad idea.  I guess I imagined that they would still have the option to change pools/exchanges if they wish, but I was suggesting this as a solution to overcoming the technical difficulty of startup mining.

Because there is already too much of a threat of a single mining pool getting too large a share of the mining and being able to manipulate the blockchain.

 However I've seen things about pool hoppers, I haven't looked at how they work but would they solve at least this problem? As long as they weren't all synchronized and hopping to the same pool at the same time.

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August 31, 2011, 03:54:47 PM
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Assign newbs to random pools. Unless there is collusion, would decrease manipulation threat
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August 31, 2011, 05:26:34 PM
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What if they used a p2p pool as a default?
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August 31, 2011, 05:50:55 PM
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I responded to something similar to this in another thread but I think it's very important:

The main thing causing lack of growth of bitcoin is that it is just a geeky pain in the ass not geared towards the common person and the common person would not even understand a need / use for it except maybe for two things right now:

#1 silk road

College kids find out about silk road, which only takes bitcoin, which leads them to find out about bitcoin and want to buy stuff.  It is ridiculous but this is probably the number one thing holding the bitcoin to any real value right now because why in the hell would you go through all the hoops and hassles for anything else?  Wire money to some strange internet company you know nothing about to get a weird intermediate currency / commodity to buy what? Overpriced socks and bad dry and canned food? Why not just BUY the stuff with your currency.

2 - gambling sites

People love gambling and bitcoin is perfect for this as the US has stopped all transfers of any kind to places like pokerstars ect that had a HUGE market of U.S. players now not having anywhere to play.  We haven't seen any major sites embrace bitcoins but little ones have popped up - so you can actually play poker online for real money, but it's still a pain in the ass for the average joe.  Bitcoin is a WORLDWIDE currency / commodity so the amount of time and what the governments would do about it remains to be seen.

All other bitcoin value right now (which I guess would be the #3 thing pegging it to any value) is based on speculation from miners and computer geeks and some investors / traders buying and selling - or a few people trying to move money around without being taxed / noticed. There are some exeptions with the very very few trendy places in NYC and a few other tech hubs in the world that actually have real places that accept bitcoins fpr tangible things like food and items without markups - but again the question begs - why would you use bitcoins there if you are a REGULAR person? You wouldn't, because you would just use your normal currency.  The people spending bitcoins at these places right now are miners who are feeling cool that they got lunch out of letting their gpus run, and it is kind of neat to do this, is is an exciting thing to this small crowd - but how can this excitement be brought to the common man?

I have tried to spread bitcoin and the idea of it to non tech friends and it's a hard sell - unless they are a stoner and you tell them about silk road, then they are motivated.

There needs to be the SAME level of motivation for the average joe and it needs to be easy and greatly improved - the client, the wallet issues, backing them up securely - this all needs to be in a nice friendly app / gui for dummies - otherwise this is going to remain a technotoy currency for hobbyists, despite its lofty ideas. Average people don't want to hear about keys and encryption, it makes them run away, this needs to be built in to the client with backup built in and "and idiots guide" book pdf with the client or app.

The easiest / fastest way to get bitcoins so far is exchB by far (for U.S,).  You deposit cash, you get your money on account very fast - BUT - this is STILL too complex for the average joe... he wants to go to a place like a bank and just hand  money over and get the bitcoins and buy his stuff on silk road or play his poker or send his money to friends in a third world country.  Average joe wants to buy some bitcoins right now and hand over the money and have the coins - average joe is not a stock market person and doesn't understand that now he has to put in a 'bid' order... "what's that?" says average joe? screw this and just uses his cash.


Bitcoin atms, and direct buy bitcoins at current price instantly needs to happen and sell in both directions easily and not on some IRC channel which is again, for geeks. Mom doesn't know what an IRC channel is. Mom knows what ebay is. If mom is really hip, mom might know what paypal is. That's as far as it goes.

The above two companies control the internet trading grid along with amazon, and for bitcoin to break through that grid it needs to be as easy, but of course, banks and ebay and paypal will see this as a threat - so it's hard to do anything direct credit card or paypal to bitcoin OFFICIALLY because it's a chargeback nightmare - but the deposit cash into an atm and get bitcoins might work.

Then there needs to be some more positive national TV coverage, and it just might work.. currently, it's geek hobby at best and only exists because of the above and miners spending and selling.

When the regular people want in, and have reason, and the massive layer of middlemen curs down, it could go through the roof. This is not currently happening though.

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August 31, 2011, 05:54:05 PM
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I completely agree with the need to make the Bitcoin system easier to use for everybody (but this is easier said than done) and about the suggestion to include the social variable into the Bitcoin dynamics. Just a couple of things:

Moreover, people in general do not have a lot of foresight when it comes to money.  People are notoriously bad with numbers when they conflict with emotion.  Studies have shown that people would rather have $50 today than $52 next week if given the choice.

While I agree people is bad with numbers and foresight, taking the $50 now instead of $52 next week makes sense. And it makes sense precisely because people is bad at foresight, therefore its better for them to have the $50 now, than to risk waiting one week and maybe have some development that changes the conditions and they dont get the $52. People know they are bad with foresight and economics in general, therefore they go for the secure option even when it might not be the best option long term. The point is that they dont have the capacity to judge, so its a good solution for them to take the money now.

Quote
I guess I'd like to ask you why you think this is a bad idea.  I guess I imagined that they would still have the option to change pools/exchanges if they wish, but I was suggesting this as a solution to overcoming the technical difficulty of startup mining.

This is a bad idea in the way you have expressed but its not that bad. It could be done by the private parties. F.e., TradeHill or MtGox could have their own Bitcoin initial package for download with all the tools to use their exchanges. Same with mining pools. But having the Bitcoin community or the main Bitcoin developers choose is a bad idea.

It acomplishes the same you are proposing but without the community or the developers having to pick winners and loosers.
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August 31, 2011, 06:42:09 PM
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While I haven't given sufficient thought as to exactly how Bitcoin can address these desires, I have a few general suggestions.  The first of these is simplification and security rolled into one.  Find a way to merge the Bitcoin client with a miner ALREADY REGISTERED TO A POOL.  So, in other words, the only thing to do to get started would be 1.)  Download client/miner  2.)  Click confirmation email which will confirm your account and provide you with username and secure password 3.) Start mining.  Perhaps an automatic account on Mt. Gox or TradeHill could also be created when downloading this client.
Bitcoin is not about mining! The kind of people to whom your post at large applies, are exactly those who shouldn't know there's such a thing as mining. Nor should they see coins magically appear for them, this will just reinforce the notion of it being "play money".

Making Bitcoin more appealing to the public is well and good, but it should be appealing on its own merits. Bitcoin is not a cute beanie baby, and we shouldn't try making it into one.

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August 31, 2011, 08:43:42 PM
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Bitcoin is not about mining!

Bitcoin mining was a method that at one time (Spring 2011) allowed a person with basic technical skills and standard equipment to invest a minimal amount of time (and money for a good graphics card) and as a result earn a little extra money -- fifty bucks a month to several hundred dollars a month from a single rig even.

The continued earnings from mining have returned to being modest and now lag for the most part the earnings that the individual with a few skills can earn elsewhere.  So mining will not likely continue giving Bitcoin a boost in participation.

If there were another development that used bitcoin and offered an earning opportunity -- something that scaled and provided a little income to thousands and thousands of participants like what mining was doing, Bitcoin would see a further rise in adoption.

I don't know where this next development will come from.  Maybe it will be some compensation method used for awards by a startup that relies on crowd-sourced content, for example.  Or perhaps it will be something like a KickStarter except where the investor keeps equity in the project.  That actually might already be underway to a tiny degree with GLBSE's market system.

Either way, funds provided in exchange for participation is not a new concept and Bitcoin has advantages as a payment network over the alternatives -- especially when those funds are for smaller amounts or when the distribution is global where Bitcoin allows the payments to be made without having to deal with the hassles of different countries, currencies, etc. 
 
When or in what form this happens is the big question, but I won't be surprised when it does arrive.

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August 31, 2011, 10:22:36 PM
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I completely agree with the need to make the Bitcoin system easier to use for everybody (but this is easier said than done) and about the suggestion to include the social variable into the Bitcoin dynamics. Just a couple of things:

Moreover, people in general do not have a lot of foresight when it comes to money.  People are notoriously bad with numbers when they conflict with emotion.  Studies have shown that people would rather have $50 today than $52 next week if given the choice.

While I agree people is bad with numbers and foresight, taking the $50 now instead of $52 next week makes sense. And it makes sense precisely because people is bad at foresight, therefore its better for them to have the $50 now, than to risk waiting one week and maybe have some development that changes the conditions and they dont get the $52. People know they are bad with foresight and economics in general, therefore they go for the secure option even when it might not be the best option long term. The point is that they dont have the capacity to judge, so its a good solution for them to take the money now.

Quote
I guess I'd like to ask you why you think this is a bad idea.  I guess I imagined that they would still have the option to change pools/exchanges if they wish, but I was suggesting this as a solution to overcoming the technical difficulty of startup mining.

This is a bad idea in the way you have expressed but its not that bad. It could be done by the private parties. F.e., TradeHill or MtGox could have their own Bitcoin initial package for download with all the tools to use their exchanges. Same with mining pools. But having the Bitcoin community or the main Bitcoin developers choose is a bad idea.

It acomplishes the same you are proposing but without the community or the developers having to pick winners and loosers.

The terms of the study conducted were $50 now or $52 a week from now, and the $52 would be guaranteed.  But yes I suppose they could die between now or then or something.  But then it really doesn't matter, anyway.  But, if you apply this to things such as interest, then the implications become significant.  People enjoy instant gratification.  Honestly, BTC prostitution or escort services would probably be a killer market.  5 BTC for a girl to suck you off, 10 for some nookie.  I'm pretty sure it'd sell like hotcakes.

Edit:   The other guy suggested that Bitcoin isn't cute like a beanie baby, so we shouldn't make it out to be like one.  Maybe so, but that doesn't mean that Bitcoin can't still target the desires of people in a way that traditional money has done or even can't do.  Sadly, the prostitution example and silk road are probably two methods that would work very well.

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August 31, 2011, 10:25:06 PM
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While I haven't given sufficient thought as to exactly how Bitcoin can address these desires, I have a few general suggestions.  The first of these is simplification and security rolled into one.  Find a way to merge the Bitcoin client with a miner ALREADY REGISTERED TO A POOL.  So, in other words, the only thing to do to get started would be 1.)  Download client/miner  2.)  Click confirmation email which will confirm your account and provide you with username and secure password 3.) Start mining.  Perhaps an automatic account on Mt. Gox or TradeHill could also be created when downloading this client.
Bitcoin is not about mining! The kind of people to whom your post at large applies, are exactly those who shouldn't know there's such a thing as mining. Nor should they see coins magically appear for them, this will just reinforce the notion of it being "play money".

Making Bitcoin more appealing to the public is well and good, but it should be appealing on its own merits. Bitcoin is not a cute beanie baby, and we shouldn't try making it into one.

Mining is actually quite essential to Bitcoin, I think.  Those 50 BTC have to go somewhere, and assuming that Bitcoin becomes widely adopted, even a small fraction of that 50BTC will become radically valuable.  The more miners there are, the more the currency is distributed and the longer it would take on average for each individual person to sell their holdings.  It's like a communal investment that naturally helps stabilize the economy and increase demand/value.

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August 31, 2011, 10:34:47 PM
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Holy shit, either I just had an epiphany, or I didn't and thought I did.

What about bitcoins AS products?  Like the guy who is making tangible bitcoins that are equal in value to a bitcoin.  What if you made 'cute,' 'fun,' and 'functional' products that have a digital retrieval code built into them?

Here's what happens.  The people buy the product because they like the product.  But, the product also contains bitcoins that can be retrieved and cashed out or traded.  It'd probably have to be some cheap novelty item or toy...like a beanie baby!  Or something like it.  Holiday cards perhaps?  Birthday cards?  The whole idea is to get the consumer to pay a price that isn't too far off from the Bitcoin value without thinking they overpaid for their product.  This way, they feel as if they get their 'product' at a significantly reduced rate and then can get their money back, but ONLY by using BTC.

Example:   Consumer pays $5 for holiday/birthday card or toy.  Card or toy has $3 BTC retrieval value.  The hard part would be finding products people want that can be developed cheaply without severely overcharging the consumer for the product and so the product maker doesn't actually lose money developing and selling the item.

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September 01, 2011, 10:13:20 AM
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Holy shit, either I just had an epiphany, or I didn't and thought I did.

What about bitcoins AS products?  Like the guy who is making tangible bitcoins that are equal in value to a bitcoin.  What if you made 'cute,' 'fun,' and 'functional' products that have a digital retrieval code built into them?

Here's what happens.  The people buy the product because they like the product.  But, the product also contains bitcoins that can be retrieved and cashed out or traded.  It'd probably have to be some cheap novelty item or toy...like a beanie baby!  Or something like it.  Holiday cards perhaps?  Birthday cards?  The whole idea is to get the consumer to pay a price that isn't too far off from the Bitcoin value without thinking they overpaid for their product.  This way, they feel as if they get their 'product' at a significantly reduced rate and then can get their money back, but ONLY by using BTC.

Example:   Consumer pays $5 for holiday/birthday card or toy.  Card or toy has $3 BTC retrieval value.  The hard part would be finding products people want that can be developed cheaply without severely overcharging the consumer for the product and so the product maker doesn't actually lose money developing and selling the item.

I tried doing something like this with selling a book as the beginners guide to bitcoins - money of the future.  It was a physical tangble book and each one had a unique code that included your first bitcoin

It was still 60 fraudsters that bid and ebay/paypal sided with the buyer so the most I could get back was the card, not the bitcoin even though I had confirmation of delivery.  This shows me that a lot of the people frauding on ebay in fact don't have their account hacked, but know more about bitcoin then you think.


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September 01, 2011, 11:07:50 AM
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Mining is actually quite essential to Bitcoin, I think.  Those 50 BTC have to go somewhere, and assuming that Bitcoin becomes widely adopted, even a small fraction of that 50BTC will become radically valuable.  The more miners there are, the more the currency is distributed and the longer it would take on average for each individual person to sell their holdings.  It's like a communal investment that naturally helps stabilize the economy and increase demand/value.

Right, but if the difficulty continues to hover around the point where the average electricity cost to mine those 50 BTC is more than what those BTC will pay for, then the only people with a real incentive to mine will be those who are either stealing their electricity from someone else, are irrationally willing to pay a premium to get the bitcoins they want to spend by mining over a long period of time, when they could just buy then directly for less, or are speculators convinced that the price will go back up but still irrationally decide to mine as their way of "buying in", when, again, they could just buy them directly faster and more cheaply.  

I'm all for bitcoin succeeding, but it seems that unless miners can be compensated for more than what would be breaking even at near to whatever the common electricity rates are when using the most efficient hardware, then you end up with a "lowest common denominator", unethical currency system. I say this because I don't think you can claim to have an ethical currency system that is primarily built on the backs of individuals getting compensated for stealing electricity, nor can you say this about one that primarily benefits from irrational human behavior. Well, I guess you could argue that the latter is still ethical, in the sense that it is akin to "profiting off the proceeds of running a casino", but I don't think the former can be legitimized so easily. Now, there are also those who will pay higher than market rates to mine for their bitcoins, instead of buying them directly, simply because they want to support the cause, but I don't think that those kind of contributions alone can sustain it.

Collecting transaction fees to make mining perpetually marginally profitable, even for those who don't steal their electricity, may be the only way to go about maintaining at least something that can't be argued to be based in large part on unethical practices.
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September 01, 2011, 03:32:50 PM
 #16

Mining is actually quite essential to Bitcoin, I think.  Those 50 BTC have to go somewhere, and assuming that Bitcoin becomes widely adopted, even a small fraction of that 50BTC will become radically valuable.  The more miners there are, the more the currency is distributed and the longer it would take on average for each individual person to sell their holdings.  It's like a communal investment that naturally helps stabilize the economy and increase demand/value.

Right, but if the difficulty continues to hover around the point where the average electricity cost to mine those 50 BTC is more than what those BTC will pay for, then the only people with a real incentive to mine will be those who are either stealing their electricity from someone else, are irrationally willing to pay a premium to get the bitcoins they want to spend by mining over a long period of time, when they could just buy then directly for less, or are speculators convinced that the price will go back up but still irrationally decide to mine as their way of "buying in", when, again, they could just buy them directly faster and more cheaply.  

I'm all for bitcoin succeeding, but it seems that unless miners can be compensated for more than what would be breaking even at near to whatever the common electricity rates are when using the most efficient hardware, then you end up with a "lowest common denominator", unethical currency system. I say this because I don't think you can claim to have an ethical currency system that is primarily built on the backs of individuals getting compensated for stealing electricity, nor can you say this about one that primarily benefits from irrational human behavior. Well, I guess you could argue that the latter is still ethical, in the sense that it is akin to "profiting off the proceeds of running a casino", but I don't think the former can be legitimized so easily. Now, there are also those who will pay higher than market rates to mine for their bitcoins, instead of buying them directly, simply because they want to support the cause, but I don't think that those kind of contributions alone can sustain it.

Collecting transaction fees to make mining perpetually marginally profitable, even for those who don't steal their electricity, may be the only way to go about maintaining at least something that can't be argued to be based in large part on unethical practices.
This is ridiculous.

The first mistake is assuming that the only cost of mining is electricity. In addition there is the capital cost of the hardware, with a trade off - FPGA are expensive but energy-efficient, while old GPUs are cheap but inefficient.

If the "average" electricity cost (whatever that means)  is higher than purchase cost, it only means that those who mine will be those who have a comparative advantage in doing so. These are people who...:

1. Can afford FPGA / ASIC (perhaps developed in-house) as part of a scalable, profitable business.
2. Already have the hardware for other needs, such as GPUs for gaming.
3. Live in a place where electricity is cheap.
4. Live in countries where there is a need to import bitcoins and it is easier to buy computers than to send money overseas for purchasing bitcoins.
5. Speculate that the difficulty will decrease.
6. Enjoy mining or think they can learn something from it, and are not straw Vulcans.
7. Last and least, irrational people and those who steal electricity and can get away with it even after the bill goes through the roof.

Relating to this my earlier comment, the average Bitcoin user is not any of the above, and thus shouldn't be introduced to mining.

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September 01, 2011, 04:20:53 PM
 #17

The only way to give bitcoin market value is to peg it to the US dollar and set up some proper bitcoin banks with worthwhile security and PoS systems (so you can deal in bitcoin credit, which can be transfered instantly instead of bitcoins themselves), which would make people actually use it since they're not gonna lose all their profits by two dollar price drops overnight and suchlike.
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September 01, 2011, 05:41:37 PM
 #18

Mining is actually quite essential to Bitcoin, I think.  Those 50 BTC have to go somewhere, and assuming that Bitcoin becomes widely adopted, even a small fraction of that 50BTC will become radically valuable.  The more miners there are, the more the currency is distributed and the longer it would take on average for each individual person to sell their holdings.  It's like a communal investment that naturally helps stabilize the economy and increase demand/value.

Right, but if the difficulty continues to hover around the point where the average electricity cost to mine those 50 BTC is more than what those BTC will pay for, then the only people with a real incentive to mine will be those who are either stealing their electricity from someone else, are irrationally willing to pay a premium to get the bitcoins they want to spend by mining over a long period of time, when they could just buy then directly for less, or are speculators convinced that the price will go back up but still irrationally decide to mine as their way of "buying in", when, again, they could just buy them directly faster and more cheaply.  

I'm all for bitcoin succeeding, but it seems that unless miners can be compensated for more than what would be breaking even at near to whatever the common electricity rates are when using the most efficient hardware, then you end up with a "lowest common denominator", unethical currency system. I say this because I don't think you can claim to have an ethical currency system that is primarily built on the backs of individuals getting compensated for stealing electricity, nor can you say this about one that primarily benefits from irrational human behavior. Well, I guess you could argue that the latter is still ethical, in the sense that it is akin to "profiting off the proceeds of running a casino", but I don't think the former can be legitimized so easily. Now, there are also those who will pay higher than market rates to mine for their bitcoins, instead of buying them directly, simply because they want to support the cause, but I don't think that those kind of contributions alone can sustain it.

Collecting transaction fees to make mining perpetually marginally profitable, even for those who don't steal their electricity, may be the only way to go about maintaining at least something that can't be argued to be based in large part on unethical practices.
This is ridiculous.

The first mistake is assuming that the only cost of mining is electricity. In addition there is the capital cost of the hardware, with a trade off - FPGA are expensive but energy-efficient, while old GPUs are cheap but inefficient.

If the "average" electricity cost (whatever that means)  is higher than purchase cost, it only means that those who mine will be those who have a comparative advantage in doing so. These are people who...:

1. Can afford FPGA / ASIC (perhaps developed in-house) as part of a scalable, profitable business.
2. Already have the hardware for other needs, such as GPUs for gaming.
3. Live in a place where electricity is cheap.
4. Live in countries where there is a need to import bitcoins and it is easier to buy computers than to send money overseas for purchasing bitcoins.
5. Speculate that the difficulty will decrease.
6. Enjoy mining or think they can learn something from it, and are not straw Vulcans.
7. Last and least, irrational people and those who steal electricity and can get away with it even after the bill goes through the roof.

Relating to this my earlier comment, the average Bitcoin user is not any of the above, and thus shouldn't be introduced to mining.

ugh tv-tropes a huge thief of time

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September 01, 2011, 10:08:03 PM
 #19

Not trolling here but well we need to contact people running drug cartels, tax evasion, money laundering, etc. and tell them to invest in bitcoins.  This will drive the price up

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September 02, 2011, 01:23:14 AM
 #20

Not trolling here but well we need to contact people running drug cartels, tax evasion, money laundering, etc. and tell them to invest in bitcoins.  This will drive the price up

Honestly, it's a good idea.  But do you really trust drug cartels to be smart and only make local transactions and communicate without any traceable reference to BTC?  If this actually happened, this WOULD get a governmental ban.

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