Why Do You Use Bitcoin?

[Cryptoman]

I selected other because my primary motivation is smashing the state.  The hope is that if enough people use Bitcoin and/or other untraceable currencies, then the state will be unable to collect sufficient tax revenue and will implode in bankruptcy.  This is a just outcome for political entities that use force or the threat of force on peaceful citizens.

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[ronaldmaustin]

Interesting.  Maybe when you are done, you can cut and paste how you see US Banking laws applying to Bitcoin in the US.  I would think that much of the law may turn on whether Bitcoins are considered an actual commodity or if they have value only as currency.  Also, a comparison with PayPal and how PayPal manages to skirt numerous banking laws.  I think a legal analysis would be interesting in contemplating the future of Bitcoin.  If Bitcoin is successful, the US will absolutely try and shut it down.  But that's when the unique aspects of Bitcoin, like no central authority, kick in.  They'll have about as much luck shutting it down as file sharing.  When people see that the goverment tried to shut it down like e-gold, but was unsucessful, that's when I think Bitcoin will really take off.  So hopefully you cover lack of ability to enforce the law as much as you cover applicable law itself.  Good luck.

[snedie]

I started mining this week simply to try get some spare cash to pay for rent. My system has dual 5970's and I was thinking to sell them in order to pay rent (And it would only be a month or two worth of rent). Then I stumbled on Bitcoin which has now given me a way to make money from the 5970's without loosing them, granted though it only covers half my rent each week when group mining but I can make up for the rest in other ways (Cough suck sucky 5 dollar).

Other than that though, my view of Bitcoin is similar to others on here in that it provides a very stable economy in which to invest. It isn't at risk of inflation at the whim of a government and because it isn't central it's almost impossible to crash.

It would be interesting to see what your conclusions are on Solo vs Group mining in your report. Would you consider posting your conclusions once the work is written?*

*Do not directly quote your work unless it has been viewed, verified and signed by an official of your university as been YOUR work. If not there is a good chance someone will steal your work and without it been verified your assignment will become void.

[Anonymous]

The main reason I am attracted to bitcoin isn't listed so I chose other.
Personal secession from the government and agorism creating an economy so that when the state inevitably fails an alternative will exist.

[reubgr]

@ronaldmaustin: You've made three excellent points. Whether one might consider a bitcoin a commodity would influence whether bitcoin falls under the jurisdiction of the Commodities Futures Trading Commission, which has rules that mirror but also differ significantly from the way that the SEC regulates securities. I am also planning to touch upon the PayPal bank vs. money transmitter issue. Finally, as you mention there are definitely parallels with, say, bittorrent and other file sharing systems that the law has had some difficulty in shutting down. I will definitely post a link to my essay once I am done.

@snedie: Thanks - that's a very interesting reason. Do you think you'll be able to profitably mine for the foreseeable future? It seems like the difficulty keeps increasing, reducing the profits available significantly. Regarding solo vs. group mining, I am planning on mentioning the group mining collectives, but I probably won't be making any real analysis on that point. The only legal question that comes to mind is whether there is a possibility that a share of of collective profits would fall under the definition of a security, but that seems unlikely although I haven't examined the issue in any detail (remember - this isn't legal advice to you or anyone and I am not a lawyer, yet). What exactly are you wondering about regarding Solo v. Group mining?

@Cryptoman, @noagendamarket: Thanks for sharing, folks. Would you mind letting me know if either of you hold other alternative currencies, besides Bitcoin?

[Meni Rosenfeld]

It seems like the difficulty keeps increasing, reducing the profits available significantly.

Currently the difficulty is expected to decrease in the next update (e.g. http://bitcoincharts.com/charts/). It has been suggested that difficulty lags about a month after the BTC/USD exchange rate. It looks like for now the exchange rate has stabilized and so did the difficulty. I don't expect the profitability of mining to significantly change for the time being.

[Cryptoman]

@Cryptoman, @noagendamarket: Thanks for sharing, folks. Would you mind letting me know if either of you hold other alternative currencies, besides Bitcoin?

I also hold Pecunix as well as gold, silver and other hard, tradeable assets.

[reubgr]

@Holy-Fire: Thanks for your thoughts. Why is the difficulty expected to decrease? I see that the bitcoin has lost value since its Feb 13th or so peak, but the difficulty has apparently still been increasing since then. For example, look at : http://bitcointalk.org/index.php?topic=3586.msg50681#msg50681 and also http://bitcoin.atspace.com/income.html. Could you point me to the discussion that talks about difficulty lagging a month behind the exchange rate?

@Cryptoman: thanks for your response! Did you have e-gold in the past?

[Cryptoman]

No, never held e-gold or other digital, gold-backed currencies before Pecunix.  Never had sufficient trust/confidence in any of the others.

[Meni Rosenfeld]

@Holy-Fire: Thanks for your thoughts. Why is the difficulty expected to decrease? I see that the bitcoin has lost value since its Feb 13th or so peak, but the difficulty has apparently still been increasing since then. For example, look at : http://bitcointalk.org/index.php?topic=3586.msg50681#msg50681 and also http://bitcoin.atspace.com/income.html. Could you point me to the discussion that talks about difficulty lagging a month behind the exchange rate?

The average rate of block generation should be 1 per 10 minutes. The last 725 blocks were generated in 8600 instead of 7250 minutes. If this rate continues the difficulty will be adjusted to 64200, and this figure is the estimate given by bitcoincharts. (Well, I think those numbers are correct, I'm extrapolating a bit).

This is the discussion about the lag : http://bitcointalk.org/index.php?topic=4339.0

[reubgr]

@Holy-Fire: very interesting -- thanks!

[JohnDoe]

I selected other because my primary motivation is smashing the state.  The hope is that if enough people use Bitcoin and/or other untraceable currencies, then the state will be unable to collect sufficient tax revenue and will implode in bankruptcy.  This is a just outcome for political entities that use force or the threat of force on peaceful citizens.

I'd love that too, but governments could just move to land value/property taxation if they are unable to tax income and commerce. I think they'd be a lot weaker in that scenario though, so still better than nothing.

[eMansipater]

I voted 'other' because my primary reason for using bitcoin is the unique technological, market, and social applications it enables.  I'm excited about people in countries with unstable currencies using bitcoin on their cell phones, the emergence of microtipping as a business model, and the potential for bitcoin-based disruptive technologies due to programmatic currency operations.  Then, because of my excitement about these possibilities, I am participating in bitcoin as an early adopter, speculator, etc.

p.s. and for the record I'm no anarchist, anti-state, ultra-libertarian, grey-market advocate or any of those.  Just a normal white-market person looking to use bitcoin under the same laws, taxes, etc. as any other technological tool.

[tryptamine]

I sell legally questionable goods and services. It's the only way until I achieve encryption of physical matter.

[Meni Rosenfeld]

p.s. and for the record I'm no anarchist, anti-state, ultra-libertarian, grey-market advocate or any of those.  Just a normal white-market person looking to use bitcoin under the same laws, taxes, etc. as any other technological tool.

It's great to know I'm not the only one!

[Timo Y]

p.s. and for the record I'm no anarchist, anti-state, ultra-libertarian, grey-market advocate or any of those.  Just a normal white-market person looking to use bitcoin under the same laws, taxes, etc. as any other technological tool.

It's great to know I'm not the only one!

I don't care much for ideology. I just go with what works.

Having said that, some aspects of Bitcoin induce cognitive dissonance in me because even on a very practical level they challenge societal norms that I have taken for granted my whole life.

[chickenado]

analyze salient legal issues.

Frankly, I think that the "salient legal issues" are academic, because they are not relevant to the reality of the Bitcoin ecosystem.

Bitcoin will go the way of filesharing networks, and operate in a universe almost completely outside the jurisdiction of any particular country.

Not that the Bicoin ecosystem will be a lawless place.  It will have its own laws that will emerge organically. Whatever US banking lawyers dream up in the meantime, will affect only a small tangential part of the Bitcoin economy.

[reubgr]

@chickenado: Thanks for your comment. You're probably right that Bitcoin could practically survive legal attack the way that filesharing networks have survived. However, the question is far from academic. Whether and how it is legal or illegal will significantly affect how many people use Bitcoin and whether mainstream consumers and merchants will ever use it. Additionally, if Bitcoin and its ecosystem is generally legal, there is a much greater possibility that service providers could attract significant capital investment, enriching the Bitcoin system.

@forever-d: Thanks for your input!

@tryptamine: thanks for being honest.

@emansipater: Thanks for explaining your 'other' vote. I hadn't thought about individuals using Bitcoin in countries with unstable currencies. Although I wonder whether in those particular countries the infrastructure is not good enough to allow efficient bitcoin usage since bitcoin doesn't work particularly well offline. Consider Zimbabwe, with its astronomical inflation rate, for example. I'm sure most individuals there don't have smart phones capable of internet access. They may have dumb phones, though, and I guess it's possible that someone could build some sort of SMS-Bitcoin bridge.

[eMansipater]

@emansipater: Thanks for explaining your 'other' vote. I hadn't thought about individuals using Bitcoin in countries with unstable currencies. Although I wonder whether in those particular countries the infrastructure is not good enough to allow efficient bitcoin usage since bitcoin doesn't work particularly well offline. Consider Zimbabwe, with its astronomical inflation rate, for example. I'm sure most individuals there don't have smart phones capable of internet access. They may have dumb phones, though, and I guess it's possible that someone could build some sort of SMS-Bitcoin bridge.

Proportionately people in the developing world spend a higher portion of their income on technology (mostly cell phones) than anyone else in the world, so this is only a matter of time.  It is estimated already that 1/3rd of the Kenyan economy occurs through mobile-phone transactions, which are used in >90% of households there (most people using mobile phone payments have never possessed bank accounts).  Also, international money transfer services like western union move billions internationally but charge very high fees.  So bitcoin has the potential to be extremely disruptive for these situations as soon as there is a practical solution for them.  Most mobile phone networks worldwide will offer internet service within the next 5-10 years, by which time the $30 netbook may well be a reality.  Personally I think it's going to break like a dam when it does.