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2. Is there any class action suit or law enforcement action we can participate in?
I'm in the same situation. Does anyone have any updates on this site, and potential law suits?
This is actually based on a misinterpretation of Gresham's law, commonly abbreviated "bad money drives good money out of circulation". If you look at the full form of the law it's actually referring to money which is overvalued and undervalued, respectively, when compared to the market price. For example, under bimetallism in the U.S. there was a legally-fixed exchange rate between gold and silver coins, while the actual market values of the two metals fluctuated. When the law caused gold coins to become undervalued, people hoarded them and spent their silver, and vise-versa. The coins were legal tender, so merchants had no choice but to accept them in payment of debts at the fixed exchange rate, even if the coins were currently worth less than their face values.
In the case of Bitcoin there is no fixed exchange rate; if the value is generally expected to increase over time, that will affect the net present value to the merchant as well as the buyer. The increase or decrease will not cause bitcoins to be under- or over-valued with respect to other free-market currencies. Gresham's law would only apply if there was a fixed exchange rate between bitcoins and fiat currency. For example, if the U.S. government declared that USD $1000 was equivalent to 1 BTC for the purposes of legal tender, when the actual exchange rate was $1100/BTC, people would have an incentive to settle their debts with the overvalued USD rather than the undervalued BTC.
In the case of Bitcoin there is no fixed exchange rate; if the value is generally expected to increase over time, that will affect the net present value to the merchant as well as the buyer. The increase or decrease will not cause bitcoins to be under- or over-valued with respect to other free-market currencies. Gresham's law would only apply if there was a fixed exchange rate between bitcoins and fiat currency. For example, if the U.S. government declared that USD $1000 was equivalent to 1 BTC for the purposes of legal tender, when the actual exchange rate was $1100/BTC, people would have an incentive to settle their debts with the overvalued USD rather than the undervalued BTC.
I think you are right, Gresham's law in its proper form might not apply to Bitcoin. Still there are people seeing bitcoins as undervalued, choosing to keep their bitcoins and pay with dollars. My point was that this is not a real issue for Bitcoin. As long as (enough) people behave remotely rationally, the economy will self-regulate:
Too much hoarding will reduce the perceived "fair" value of bitcoins, thus reducing the hoarding.
High circulation/usage will increase the perceived value, thus increasing hoarding/reducing circulation.
I think we will see oscillations in the valuation becoming more damped as more and more people, and maybe speculators in particular, enter the Bitcoin economy.
1. bitcoin value can be foreseen to increase vastly
2. holding bitcoin is foreseeably more profitable than spending bitcoin
2. holding bitcoin is foreseeably more profitable than spending bitcoin
The effect (and truthfulness) of that would be dampened by people finding bitcoins risky. After a vast increase in value, some speculators will take profits, and other, more modest investors, will find themselves with too much of their holdings in bitcoins (above 10% in my above example), and thus wanting do diversify out of it. This will dampen the increase in value, or might even reverse it.
I think we witnessed the effect of this when BTCUSD passed 200. We can hope that when Bitcoin matures, investors/speculators will react more quickly, reducing the volatility.
P.S. As a sidenote, some bitcoin clones are trying to rule out the possibility of runaway deflation by implementing a demurrage fee (all holdings gradually leak away to miners, approximating inflation at a controlled rate). I actually consider this a safer bet than Satoshi's, but unfortunately the only credible project trying to do this (freicoin) is operated by a foundation which wants to control and distribute 80% of the initial money supply, and as an opponent of planned economy, I will keep my distance from their project until they've successfully done this or finished trying.
I think many people like the idea that they can store value in the same commodity as they use for trade. With demurrage baked in, the currency will be less useful.
I'm regularly reading articles about how deflation [sic]* will kill Bitcoin, and I'm just not getting it. I'm not an economist (as is true for many of those writing said articles), but let me put this in laymen terms with an example, and see if anyone can poke holes in it.
Some time in the not too far future:
Average Joe decides to put some of his money in bitcoins. Not only have they a tendency to increase in value measured against most fiat currencies, but they can also be used to buy a lot of stuff, especially online. The valuation is somewhat volatile, and he has been warned that bitcoins might be entirely worthless at some point, so he decides to limit his holding to, say, 10% of his savings, although he starts out with a lower amount, say 5%.
Since the of the value of bitcoins tend to go up, he ends up using dollars for most of his shopping and only use bitcoins when there is all but no choice. [Gresham's law; this is as far as I can tell, one of the main attacks mounted in articles worrying about the slow increase in bitcoin money supply]. He only uses bitcoins when there are large savings to be had, like when paying small amounts or at places like bitcoinstore, or when paying sites that are abroad or seem too shady to leave a credit card number at (Average Joe has a weakness for HD-porn).
Now, focusing on the monetary issues, one of two "bad" things could happen to Bitcoin:
1) The value of a bitcoin increases slowly over time. Mr. Joe is happy with his bitcoin holdings, but find that even though every coin becomes more valuable, his total holdings are shrinking. Since it has been a good investment so far, he replenishes his holdings to 5%, or maybe slightly more.
2) The value of a bitcoin increases rapidly. Mr. Joe is spending a fair amount, and still sees his holdings increase in value. Once his total Bitcoin holdings approach 10% of his savings, he start spending bitcoins for stuff he could equally well buy with fiat, or sell some of them. Over time he decide to increase his holdings above 10%, but only slowly, because economy experts on TV keep reminding him that the value will collapse one day.
Now, I'm aware that these two are not the only possible outcomes for Bitcoin, but they seem to be what economists worry about. So let's not discuss stuff like bitcoin value dropping, quantum computers breaking encryption or governments outlawing bitcoins here. As far as I can tell, Mr. Joe's behaviour in situation 1 will contribute to keep the Bitcoin economy stable and thriving, while his behaviour in situation 2 will contribute to move the Bitcoin economy towards situation 1. Can someone please point out for me what the big problem is, or where I have made a fault assumption?
* Bitcoin money supply is currently not deflating and will not for a long time. The word is often used to describe a decrease of prices, which is not it's original meaning.
Some time in the not too far future:
Average Joe decides to put some of his money in bitcoins. Not only have they a tendency to increase in value measured against most fiat currencies, but they can also be used to buy a lot of stuff, especially online. The valuation is somewhat volatile, and he has been warned that bitcoins might be entirely worthless at some point, so he decides to limit his holding to, say, 10% of his savings, although he starts out with a lower amount, say 5%.
Since the of the value of bitcoins tend to go up, he ends up using dollars for most of his shopping and only use bitcoins when there is all but no choice. [Gresham's law; this is as far as I can tell, one of the main attacks mounted in articles worrying about the slow increase in bitcoin money supply]. He only uses bitcoins when there are large savings to be had, like when paying small amounts or at places like bitcoinstore, or when paying sites that are abroad or seem too shady to leave a credit card number at (Average Joe has a weakness for HD-porn).
Now, focusing on the monetary issues, one of two "bad" things could happen to Bitcoin:
1) The value of a bitcoin increases slowly over time. Mr. Joe is happy with his bitcoin holdings, but find that even though every coin becomes more valuable, his total holdings are shrinking. Since it has been a good investment so far, he replenishes his holdings to 5%, or maybe slightly more.
2) The value of a bitcoin increases rapidly. Mr. Joe is spending a fair amount, and still sees his holdings increase in value. Once his total Bitcoin holdings approach 10% of his savings, he start spending bitcoins for stuff he could equally well buy with fiat, or sell some of them. Over time he decide to increase his holdings above 10%, but only slowly, because economy experts on TV keep reminding him that the value will collapse one day.
Now, I'm aware that these two are not the only possible outcomes for Bitcoin, but they seem to be what economists worry about. So let's not discuss stuff like bitcoin value dropping, quantum computers breaking encryption or governments outlawing bitcoins here. As far as I can tell, Mr. Joe's behaviour in situation 1 will contribute to keep the Bitcoin economy stable and thriving, while his behaviour in situation 2 will contribute to move the Bitcoin economy towards situation 1. Can someone please point out for me what the big problem is, or where I have made a fault assumption?
* Bitcoin money supply is currently not deflating and will not for a long time. The word is often used to describe a decrease of prices, which is not it's original meaning.
Thanks for the reply.
Unfortunately I get a mix of messages like "Warning: array_key_exists() expects parameter 2 to be array, null given in /var/www/post/include/template.inc on line 17 Warning: Invalid argument supplied for foreach() in /var/www/post/include/template.inc on line 25" and "You are not allowed to use this service!" (from http://ceptacle.com/cash). Still, it seems like the overall idea is somewhat similar to what I had in though, although I'm not sure how the user would be able to administrate his wallet. Wouldn't it be possible for malicious merchants to steal coins (more than what you are willing to send to them) by tweaking the code on their site?
I was thinking more in the direction of a browser extension that connects to some online wallet, like blockchain, through their API (eg. https://blockchain.info/api/blockchain_wallet_api). When properly configured, it would pop-up when users click payment links (bitcoin:[address]), ask for confirmation (and amount, if not encoded in the link). All payments would be denominated in bitcoins to avoid exchange rate and bank issues altogether. Since the user retains full control of his wallet (assuming you trust the online wallet provider), only the (small) amount he agree to send to the merchant could be stolen.
Unfortunately I get a mix of messages like "Warning: array_key_exists() expects parameter 2 to be array, null given in /var/www/post/include/template.inc on line 17 Warning: Invalid argument supplied for foreach() in /var/www/post/include/template.inc on line 25" and "You are not allowed to use this service!" (from http://ceptacle.com/cash). Still, it seems like the overall idea is somewhat similar to what I had in though, although I'm not sure how the user would be able to administrate his wallet. Wouldn't it be possible for malicious merchants to steal coins (more than what you are willing to send to them) by tweaking the code on their site?
I was thinking more in the direction of a browser extension that connects to some online wallet, like blockchain, through their API (eg. https://blockchain.info/api/blockchain_wallet_api). When properly configured, it would pop-up when users click payment links (bitcoin:[address]), ask for confirmation (and amount, if not encoded in the link). All payments would be denominated in bitcoins to avoid exchange rate and bank issues altogether. Since the user retains full control of his wallet (assuming you trust the online wallet provider), only the (small) amount he agree to send to the merchant could be stolen.
If Visa and MC charge 2.5 to 4.5 percent depending on the card and the transaction and bitpay charges .99 as it's lowest rate what has the merchant really gained by switching?
Are you saying merchant have nothing to gain from cutting one of their expenses (one of the biggest in some trades) by 60-77%? That sounds like pretty big savings to me.
I'm looking for a browser extension that would enable the browser to handle bitcoin payment links (eg. "bitcoin:1xxxxx?message=Pay%20bitcoins") directly, by sending money from an online wallet. For small transactions this might give a super-easy user experience, something like one-click payment and no installation of software or wallet required. Does such a thing exist?
Perhaps it's a good thing to incentivize the liquidity providers.
I would say it most certainly is a good thing. Liquidity and (narrow) spreads are very important to users (not up there with trust, but still pretty important). At the ideal(ized) exchange, users wouldn't need to worry about these things, and even big orders wouldn't cause the market to swing. From what I can tell Bitfloor usually have a very narrow spread, but volume/liquidity is somewhat lacking.
Also, I think you should welcome professional traders and bots, as that is probably the fastest and best way to achieve high volume and liquidity on the exchange. Sure, that will require you to provision extra network/computing capacity and a good API, but I'm pretty sure that cost is easily outweighed by the "services" they provide to regular users.
Good luck with your project. In order for Bitcoin to survive its own popularity, more and better exchanges are needed. Not to mention the irony of the Bitcoin world having all but a single centralized exchange...
If u aren't conservative you just haven't grown up yet.
How do Bitcoin fit in that view?
Oh yeah, the same thing the analysts told when people talked about a housing bubble. And last year?
Jan 15th: 1BTC = 10,50
Feb 16th: 1BTC = 16 -> +50% growth within one month. Did get Bitcoins more attraktive? Can you buy now from Amazon? In bars? No!)
5March: 1BTC = 25 -> + 50% growth withing a half month. Again, Bitcoins did not get substantiall more valuable)
20Mrch: 1BTC = 50-> +100% within another half month. Again, no big change in termes of attractivness to Bitcoin occured).
400% in 2 months but nothing happened to justify this change? I'm really a big fan of Bitcoin. But in my opinion it would be madness to buy now (a big amount for investment).
Well, quite a few things that can justify an increase in value have happened. Reddit&co, traditional gambling sites and Cyprus being the major ones IMO. Still, I do agree that the value may be rising too fast now, so personally I would welcome a dip to enable me to transfer more money into bitcoin at good rates. [Disclaimer: I have savings in Europe]
I'm not sure if this idea has come up before, but I haven't seen anyone discussing it so I'll post it anyway.
One of the problems with bitcoin, probably one that will get worse over time, is the time it takes to validate payments. But with the rising use of online wallets like blockchain.info, I think there could be a way around this. Lets say that a majority of users have some of their coins hosted with one of a handful major wallet providers. What if these providers had a publicly available interface for checking if a certain transaction comes from one of their wallets (only with the wallet owners approval, of course).
In this situation merchants receiving payments could quickly check with the wallet providers to see if any of them can verify the payment, and if so, confidently (to the degree they trust the different wallet providers) proceed with the transaction without waiting for any confirmations in the block chain.
Such a scheme would give the option of quick transactions in many situations, while leaving the blockchain as a fallback in situations where the user is not using a online wallet (or don't want it known that they are), or where the merchant does not trust the wallet operator, or maybe think the amount transferred is big enough to justify waiting for proper confirmation. The merchants, or even third parties, may verify the information given by the wallet providers with the eventual block chain confirmations, thus giving strong incentives for wallet providers to be honest.
What do you think of this idea? Is it something that has been discussed and shot down before? I can't really see any big problems as this solution is totally voluntary for all parties and doesn't require any changes to the bitcoin protocol itself.
One of the problems with bitcoin, probably one that will get worse over time, is the time it takes to validate payments. But with the rising use of online wallets like blockchain.info, I think there could be a way around this. Lets say that a majority of users have some of their coins hosted with one of a handful major wallet providers. What if these providers had a publicly available interface for checking if a certain transaction comes from one of their wallets (only with the wallet owners approval, of course).
In this situation merchants receiving payments could quickly check with the wallet providers to see if any of them can verify the payment, and if so, confidently (to the degree they trust the different wallet providers) proceed with the transaction without waiting for any confirmations in the block chain.
Such a scheme would give the option of quick transactions in many situations, while leaving the blockchain as a fallback in situations where the user is not using a online wallet (or don't want it known that they are), or where the merchant does not trust the wallet operator, or maybe think the amount transferred is big enough to justify waiting for proper confirmation. The merchants, or even third parties, may verify the information given by the wallet providers with the eventual block chain confirmations, thus giving strong incentives for wallet providers to be honest.
What do you think of this idea? Is it something that has been discussed and shot down before? I can't really see any big problems as this solution is totally voluntary for all parties and doesn't require any changes to the bitcoin protocol itself.
Today, 1 BTC buys more than an oz of silver. This is just phenomenal in one sense, (it's providing one of the best opportunities that have existed in the history in BTC -> to buy silver with your BTC).
Know anywhere to buy silver with prices close to spot? Buying with BTC's are great and all, but if the margin is much higher than when buying with dollars, it doesn't really make sense.
I recently spent some on indirect investment in mining equipment at pyramining.com. It yields a 10% reward over 11months (you get your investment back in batches until 110% has been paid back). The reward increases if you refer others.
If you have spare coins lying around, you can invest them by using one of my referrals and have more to spend when you need them:
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If you have spare coins lying around, you can invest them by using one of my referrals and have more to spend when you need them:
http://pyramining.com/referral/ndq9fmc83
http://pyramining.com/referral/t97hzemfy
http://pyramining.com/referral/x98hrac2s
http://pyramining.com/referral/engtbxy26
http://pyramining.com/referral/nkbreg2m9
The MMM you link to (Mavrodi, Mavrodi, Melnikova) and the MMM in OP (Money Maker Mining) do not immediately look related. Still, if the latter is legit, maybe a name with different connotations would have been better...
I first heard about bitcoins from a fellow computer programmer at work. In addition to sharing an interest for economic development, we are both a bit worried about the current state of civil liberties. After I decided that bitcoins could really help improve both of these, it was an easy decision to climb on-board. 