Quote from: mikegogulski on November 22, 2010, 02:55:24 AM

@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.

Quote from: Lexington on November 22, 2010, 03:40:58 AM

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.

Quote from: creighto on November 22, 2010, 04:45:56 AM

Quote from: Lexington on November 22, 2010, 03:40:58 AM

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.