Trading bitcoins?

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workathome
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Re: Trading bitcoins?

Post by workathome »

It's not "that hard" to completely and irreversibly destroy Bitcoin, if people in the right position really wanted to

http://www.coindesk.com/bitcoin-miners- ... 51-attack/

tzxn3
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Re: Trading bitcoins?

Post by tzxn3 »


Felix
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Re: Trading bitcoins?

Post by Felix »

Wow, that's harsh.

tylerrr
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Re: Trading bitcoins?

Post by tylerrr »

Chad wrote:Everyone* is making a big deal about Mt. Gox going down...it is, but, yet, it isn't. It's not like banks haven't failed before and taken everyone's money with them. It's not like banks, stock exchanges, armored cars, stores, etc. haven't been robbed (physically and electronically) before. It's not like every single currency on this planet that has ever existed hasn't been counterfeited, stolen, conned, failed, etc. at some point.

All that matters for a currency is what people are willing to believe about a currency. This will be interesting.

On a side note, it will be interesting to find out who actually hacked Mt. Gox. Government? Or, Private? Government is more interesting.

*Not meaning everyone on here.
This is so true in my opinion. It's amazing how the media distorts everything and people buy into it. One exchange fails and the media is acting like it's the downfall of Bitcoin. What a total joke. I bought more bitcoin recently during the crash and I think it will go back over 1000 buy the end of the year.

Plus, most people understand you need to store your bitcoins on your own personal wallet and back them up. Whoever did that, was not affected by Mt GOX downfall at all. You should have enough common sense to not store your money on an exchange, which is a fairly new company.

altoid
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Re: Trading bitcoins?

Post by altoid »

Any thoughts on the IRS ruling of Bitcoin?

Felix
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Re: Trading bitcoins?

Post by Felix »

Could be a test for the idea that bitcoins are great for tax evasion.

Chris
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Re: Trading bitcoins?

Post by Chris »

altoid wrote:Any thoughts on the IRS ruling of Bitcoin?
1) It's good that they made a ruling; now at least people know how to act properly when trading (should they choose to)
2) It makes spending saved bitcoins unattractive: every time you spend some, you need to figure your cost basis.
3) Due to #2, bitcoin services such as Coinbase become more important. It'll start by helping you keep track of tax stuff, then maybe we'll see balance insurance and other traditional aspects creep in.

jacob
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Re: Trading bitcoins?

Post by jacob »

The idea of the tax system is that similar things are taxed in the same way. E.g. liquor is taxed by percentage of alcohol, not by brand, and stocks are taxed by their price, not according to which company issued them.

By classifying bitcoins as a capital asset, which it wasn't intended to be, instead of a currency, which it is, the government has effectively handicapped bitcoins as a currency. Of course it is in the governments best interest to preserve their money printing monopoly and that's likely why most governments have chosen to classify bitcoins as an asset.

I suppose that the practical result is that a lot of people will be breaking the law inadvertently because they won't intuitively be expecting to calculate tax gains or losses every time they spend bitcoins.

Chad
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Re: Trading bitcoins?

Post by Chad »

jacob wrote: By classifying bitcoins as a capital asset, which it wasn't intended to be, instead of a currency, which it is, the government has effectively handicapped bitcoins as a currency. Of course it is in the governments best interest to preserve their money printing monopoly and that's likely why most governments have chosen to classify bitcoins as an asset.
Exactly. This is an easy way to begin to put a lid on Bitcoin, without officially coming out against these types of currencies.

Dragline
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Re: Trading bitcoins?

Post by Dragline »

Yes -- it makes it much more cumbersome to use Bitcoin as a medium of exchange, as opposed to a store of value. But I expect many people who have smaller holdings or are using it for illegal activities anyway will just not report their activities. For example, I would not be surprised to find black markets for marijuana, alcohol and cigarettes where Bitcoin is used to avoid excise taxes.

But this does fit into my thesis of currencies that its going to be of limited use (as legal tender) if its not recognized as such by a governmental authority as such and you can't pay taxes with it.

I think government regulation and crackdown on this stuff is just beginning. Going to be like internet poker/gambling.

gerry_b
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Re: Trading bitcoins?

Post by gerry_b »

"The point is that gold or old toenails have some degree of real value beside being chosen as a trade medium and bitcoins don't."

Value is subjective. This is a basic law of economics! There is no such thing as "real value" anymore than there is such a thing as "unreal value". It almost sounds like you're talking about a theory of "inherent value" which was long ago debunked.

Dollars have value because we know other people also value dollars and so other people will be willing to trade goods or services for those dollars.

If other people are willing to trade goods or services for bitcoin then bitcoin similarly has value.

Felix
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Re: Trading bitcoins?

Post by Felix »

Maybe the word value was chosen poorly in this context. My point is that bitcoins are ONLY good as a currency. Gold can be worn as jewelry, my toenails can be mixed into the oatmeal of people I do not like. There is something to give it that subjective value as a commodity to make it viable as a currency. Bitcoin being a bunch of numbers on a computer and nothing else does not have such 'real' properties.

slimicy
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Re: Trading bitcoins?

Post by slimicy »

Felix wrote: Bitcoin being a bunch of numbers on a computer and nothing else does not have such 'real' properties.
Not being confiscatable is a fairly good value to have.

Felix
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Re: Trading bitcoins?

Post by Felix »

That was not my point.

I am also not sure bitcoins can provide this:
http://www.theverge.com/2014/1/16/53169 ... oad-server

gerry_b
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Re: Trading bitcoins?

Post by gerry_b »

"Bitcoin being a bunch of numbers on a computer and nothing else does not have such 'real' properties."

The something "else" that gives Bitcoin value is the network. The more people that use Bitcoin, i.e. the bigger the network becomes and the more places I can use Bitcoin and the easier it becomes to use Bitcoin, the more "value" Bitcoin has.

Did you know that many dollars don't actually exist? That they are also just "ones and zeroes" inside a computer?

These digital dollars and bitcoins both fail the "insert into oatmeal of enemies" test.

Yet these dollars with no "real value", since they're just ones and zeroes, are actually valuable. These dollars are valuable because of the network of people that will accept dollars.

To be clear, Bitcoin and dollars are very different, but they certainly share this feature of being valuable because of the network of people that use them.

Felix
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Re: Trading bitcoins?

Post by Felix »

Dollars have value by force. People are forced to accept dollars as legal tender.
The argument for bitcoins usually follows the barter commodity money narrative. I think it does not apply - bitcoins are not a commodity.

gerry_b
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Re: Trading bitcoins?

Post by gerry_b »

"Dollars have value by force. People are forced to accept dollars as legal tender."

This is reductionist.
The force is part of the reason of the dollar's value, but doesn't explain it fully, this explanation is incomplete.
The network (of which force is certainly a component) is a better explanation of the dollar's value. The network not only explains the dollar's value in the US, but also explains the dollar's value in places where there is no use of force to compel the dollar's acceptance. When I was in Argentina and China it was easy to use dollars. It was easy in these places because of the network of people who exchange dollars for goods and services. "Force" does not explain the utility of US dollars in Argentina or China.

"The argument for bitcoins usually follows the barter commodity money narrative. I think it does not apply - bitcoins are not a commodity."

We're going off subject now suggesting Bitcoin is/isn't a commodity, but I'll bite. From Wikipedia:

"In economics, a commodity is a marketable item produced to satisfy wants or needs.[1] Economic commodities comprise goods and services.[2] The exact definition of the term commodity is specifically used to describe a class of goods for which there is demand, but which is supplied without qualitative differentiation across a market.[3] A commodity has full or partial fungibility; that is, the market treats its instances as equivalent or nearly so with no regard to who produced them."

The bitcoin produced so far certainly satisfies some of my wants and needs. Bitcoins are also perfectly fungible. And since nobody really cares who mined any particular bitcoin, the "no regard to who produced them" fits also. Bitcoin certainly seems to fit the definition of commodity.

Felix
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Re: Trading bitcoins?

Post by Felix »

If the Dollar were not the official currency of the US, it would be of no use in other countries. I have some old DM coins. Who will accept them in China? Or in Germany?

Which needs and wants does bitcoin satisfy? Outside of the currency use? That's the point. Hence my toenailcoin example. It's a circular argument, an exercise in begging the question. Bitcoin is a currency. Because it is valuable. Because it is a currency. Etc.

The demand for bitcoins similarly comes from people speculating it will be a currency as there is no value besides this.

gerry_b
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Re: Trading bitcoins?

Post by gerry_b »

"If the Dollar were not the official currency of the US, it would be of no use in other countries. I have some old DM coins. Who will accept them in China? Or in Germany?"

I would, so long as lots of other people accepted your currency as well. This is the network effect. Bitcoin works because there IS a network effect. It's strange to argue against Bitcoin by example of a currency without a network effect.

"Which needs and wants does bitcoin satisfy? Outside of the currency use? That's the point. Hence my toenailcoin example. It's a circular argument, an exercise in begging the question. Bitcoin is a currency. Because it is valuable. Because it is a currency. Etc."

Bitcoin satisfies my need/want to send money instantly at a lower cost than with Western Union. Bitcoin satisfies my need/want to receive payment from customers without having to pay the credit card fees.

These are legitimate wants/needs that obviously have value and that make me richer.

This is not a "circular argument". This is more money (both dollars and dollars converted to bitcoins) in my pocket.

"the demand for bitcoins similarly comes from people speculating it will be a currency as there is no value besides this."

Please see above comment. My demand for bitcoins comes from wanting to send money faster around the globe than I can with Western Union and for accepting payment with lower fees than credit cards allow.

When I make a sale and my fee to the payment service switches from a matter of percent to a matter of cents (usually two cents with Bitcoin) that is a massive savings.

And even besides these concrete savings which have already enriched me, history already has examples of private currency. Private currencies have already been used in history for payment. There's no logical reason a currency cannot have value without the threat of government force behind it.

Felix
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Re: Trading bitcoins?

Post by Felix »

http://www.valuewalk.com/2014/01/bitcoi ... ern-union/
http://www.businessinsider.com/bitcoin- ... rds-2014-1

If that is the USP it is a very weak one for adopting an experimental currency. WU is already going for digital transfers and credit cards offer enough other benefits bitcoin cannot.

I dont sell things to people with credit cards nor have I ever sent money via Western Union.( Who does that regularly?) I guess this is true for most people.

And the problem still remains: the fact that I can accept toenails as payment without credit card fees does not give me a reason to accept toenails in the first place. Same goes for sending them very fast.

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