The Currency Revolution - With Bitcoin

[qwertyuiop]

I've seen a few threads about Bitcoin in the past, but there has been quite a lot happening within the Bitcoin community in recent times that I think would be a great point of discussion.

For those that haven't come across Bitcoin before check out - http://www.weusecoins.com/ - for a short introduction video explaining them in pretty simple terms.

I'd like to outline some of the benefits and uses for Bitcoin and you can determine for yourself if they sound like a sustainable and worthwhile idea to pursue.

Decentralized and free from control: (They run on a P2P (peer-to-peer) network (like bit torrent) meaning a few things. 1. Nobody is in full control of it's ecconomy, so somebody can't just decide to create more bitcoins and inflate the currency without consensus from the Bitcoin community. 2. If a 3rd party wished to shut down the Bitcoin protocol it would be EXTREMELY difficult. To the extent of either requiring to shutdown the internet or locate and delete all backups of the BlockChain (generated when using the vanilla Bitcoin client) So these backups are located worldwide, so any attempt by the gubberment to shut it down would be relativly fruitless.

Always running: Doesn't close over the weekend, your account/ ability to send/receive Bcoins cannont be restricted or frozen by some 3rd party.

International and No/low fees: Thanks to the internet we are able to send bitcoins for free or for priority sending a fraction of a cent to anywhere in the world. These transactions can be done in a matter of seconds to minutes...No waiting days for international transactions to clear whilst also losing a good % for bank/paypal/creditcard etc. transaction fee's.

New privacy model: Bitcoins are Pseudonymous. Meaning that they are as anonymous as you wish to make them. You can create as many bc receiving addresses as you like. For example, 16JsKCejmoZnsuiGuzs6VbFNH5g8Am6bFh is one of my addresses. Without me telling you it its got no real link to me at all. If I wished to...I could create a new address every time I want to receive coins. Alternatively if you wish to be transparent about your income (Helpful for business) you can remain using the same address - But it will be known that any money being received into that is going to you.

Transparent system: The Bitcoin protocol is a open-source development - So it's being developed by many minds rather than an exclusive group. All transactions go through the BlockChain - https://blockchain.info/ - So I can know that address x sent address y 2 coins. Once x sends the bc the transaction is verified by the network ( The method of verification probably requires some 'level 2' knowledge of Bitcoin due to some key terms such as miners and how all that works...But It's worth checking out the wiki for how verification works and prevents double-spending0 It's really quite ingenues. Bitcoin is a novel way of solving the two generals Problem - https://en.wikipedia...rals%27_Problem -

Divisible: Bitcoin can be divided into 'Satoshi's' (the pseudonym of the original creator of the Bitcoin idea) a satoshi is 0.00000001 BTC. Making bitcoin perfect for both micro and macro payments.

Capped at 21 million coins: The Bitcoin protocol only allows for 21 million coins to ever be able to be created. This makes Bitcoin a deflationary currency, as in its value generally increases as it cannot be devalued by printing more...Which is the case around the world... US debt crisis (QE3 in the U.S creating $40 bil a month) or The soaring inflation rate present in Argentina.

Secure: Again, somewhat complex being explain within layman terms. Read into SHA2 and AES-256 then their relation in use to bitcoins. Their sheer complexity to solve aswell as requiring to solves through brute force. (essentially you have to figure out a factorization of a massive ussualy prime number through trial and error a equation^256 /2 on avg times. If you have a basic knowledge of exponents you realize how powerfully large this is when taking a few seconds/mintues per equation.)

No charge-backs: A double edged sword. Like cash If I hand $5 to a store keeper walk out, find my item is damaged I need to go back to the shop keeper to retrieve that money. Then the shop keeper can accept or decline. This is a far safer system for merchants. The flip side would be if I were using paypal. If I get a crap item, I can complain to paypal who has the power and authority to simply reverse the funds. Using this system enables consumers to take advantage of that and just as there are many scammers on ebay etc that claim 'I didn't get my package' there is little that can be done in defense.

Environmentally friendly / efficient: The cash isn't plastic, paper, gold or some other precious metal. It's binary, generated through globally connected computing power. So it can be interpreted as a 'waste of electricity'

Safer than cash: Imagine you could put $2000 in your wallet at home, hidden in a book at work, under a rock at your local park AND on your phone all password protected that potentially could take a few thousand years with all the current computing power in the world to crack. It's as simple as copying your encrypted wallet file onto your medium of choice (usb, SD card, google servers, you can even create a paper wallet!) So ask yourself...Can you back up the same money in multipul places and have it password protected? Cold storage is a fantastic security measure. (cold/hot storage being determined by the wallet being connectable to the net or not)

Since bitcoin can't be printed by governments, their central banks can't use it as a tool to buy hard assets, influence markets, finance wars, or redistribute wealth. The rise of cryptocurrency would mean the end of the political era of nation-states.

The main thing is the decentralized, because without that none of the others really matter.

When you casually mention "can't be inflated or devalued" that really means "can't be inflated or devalued". That's something that no other type of offers. Not even gold and silver (as more mining finds more gold and inflates the supply).

Bitcoin's issuance cannot be corrupted. What that means is that when GPU miners start to panic about the upcoming block reward subsidy drop to 25 BTC per block and begins the wailing and gnashing of teeth, none of that matters, the miners can't change the protocol. Come block 210,000, the issuance rate will drop from 50 BTC to 25 BTC. Period. Sorry, but that's the way this incredible uncorruptible system of money was architected. The world has never had a system of money anything like this.

Bitcoin started in Jan of 2009 and since then has been growing. Being a digital currency its quite straight forward to collect statistics for So check em' out here - https://blockchain.info/charts -

Personally I see Bitcoin as a real step into the future. We need to base our affairs on a solid ground, rather than various governments that act in their own interest.

A note to Torsten: Perhaps you would be willing to look into accepting donations in btc or accepting btc payments through your web store.

A single bitcoin is currently worth about $11.80 AUD... If you have any questions about bc I'd be more than willing to try to answer your questions or point you in the right direction.

Edited September 25, 2012 by LUWA

[ThunderIdeal]

sounds pretty great, what are the cons?

i remember a news story about a year back, loads of bitcoins got stolen, or the value plumetted...?

[at0m]

sounds pretty great, what are the cons?

i remember a news story about a year back, loads of bitcoins got stolen, or the value plumetted...?

 

Loads of places getting hacked/pretending to be hacked. Constantly. I blame it largely on the people who run the places but also the fact that it's a very niche/hobby thing still, not many can afford proper security consultants and such.

Cons:

Unstable

Because of the relatively small amount of them and the 'early adopters' getting truck-loads of them for pretty much nothing it's /very/ easy to manipulate the market.

Loads of scammers

Everywhere. Seriously.

Lost coins

When they're gone, they're gone forever. If you lose your wallet.dat (without a backup) file or forget the password those coins are gone, forever.

It's still very "geeky" in a lot of senses

By this I mean it hasn't properly picked up mainstream adoption. There are some great examples to throw around but the amount of places that did/do accept them isn't enough to justify putting loads of 'real' money into it.

Just playing devils advocate here though. I'm a big supporter of bitcoin but there are still huge downsides with it.

Be careful, be safe and don't feel bad about asking questions.

[qwertyuiop]

Yes, it's currently fairly unstable. In any given day its not uncommon for the prices to fluctuate 10-20 cents either way. However I wouldn't call it easy to manipulate the market. 10021400 bitcoins now exist. ~$118 million aud

Yes, scammers are very present in the BC community. However they use the exact same techniques (high interest investments etc) So by following the - If it sounds too good to be true it probably is - rule, you'll be fairly safe. Common sense is your shield.

It's at a fairly low level of adoption currently, which is one of the main issues for it. The practical uses of it are being developed... But if you've ever heard of the infamous tor site The Silkroad, and its level of success it is a good example of a functioning free market and the benefits of a reputation system and feedback for a not reversable currency.

[whitewind]

Environmentally friendly / efficient: The cash isn't plastic, paper, gold or some other precious metal. It's binary, generated through globally connected computing power. So it can be interpreted as a 'waste of electricity'

The interwebs is a huge use of electricity

[qwertyuiop]

Environmentally friendly / efficient:* In comparison to current methods / infrastructure being used.

[Foo]

I love the idea, always have. But i dont want to put any real money into bitcoins untill it is more well adopted.

[qwertyuiop]

I'd Just like to bump this topic again.

It's been about 5 months since I originally posted about Bitcoin. They were $11.80 and have since climbed and climbed to about $21 aud / per btc. I'm not going to say I told you so, but perhaps this will merit another overview of it.

Bitcoin would suit this site perfectly, allowing for transactions between members within minutes paving the way for more streamlined and confident trading.

Along with holding funds in a currency/commodity with huge growth potential as its user base growths through the realization of its usefulness.

Bitcoin is a liberating of currency from the corruption of current government issued fiat that is essentially stealing straight from your pocket in relation to the % inflation rate each year. Along with fractional reserve banking methods that cause economic instability because they simply don't have as much money as they claim to, so when push comes to shove and they need to pay out...they have none, requiring to either default and dissolve the failed bank (because of it's failed practices) or for the gov to buy it out through the creation of more money out of thin air (that's actually out of your pocket).

It's time we took action to prevent this ever expanding plague of government interference, coercion and special interest funding by taking control of our money, the peoples money and become our own banks.

Again, I'm willing to answer any questions I can - interested to hear any of your thoughts or criticisms on the matter. Thanks

p.s

I realize I may sound like a fanatic, but I truly believe this world can become a better place and none of that can happen while we're not using sound money because otherwise that power is manipulated - certaintly not for the benefit of all

[qwertyuiop]

Just another bump I'm sorry, but now that they've reached parity with their previous all time high hovering around $33 - $34. Seriously, a single Bitcoin is more valuable than an ounce of silver at current prices!

Bitcoin isn't going to disappear anytime soon, I urge you to look into it. I truly only want what is best for the community here and globally and bitcoin is a very very real way of achieving this.

again, thanks for your time reading this.

peace

[ThunderIdeal]

BTC just keeps rocketing in value. i mean rocketing. it feels like a few days ago i bought my first BTC at about 100 AUD each. it WAS only a few days ago. i paid a painful seven percent commission to the company that converted my AUD to BTC but in a few days their value has increased 30-40%. i didn't sign up for this shit. money is supposed become more worthless as you sit on it, due to inflation.

i'm scared! please convert my currency back into something real, something backed by an actual small bit of paper with some faces and numbers on it, something that is consistently devaluing but not fast enough for me to notice. something the big institutions can sting with fees, please, for the sake of the big institutions!

i second the call for businesses (eg SAB) to support the revolution in a small way by accepting btc, unless they decide it would put their profits (livelihood) at risk.

[at0m]

i second the call for businesses (eg SAB) to support the revolution in a small way by accepting btc, unless they decide it would put their profits (livelihood) at risk.

This is the biggest issue right now - Instability. Even going up (at such a fast rate) is a big issue as it's causing people to hoard, waiting for it to go up so they don't pay more (in coins) than they have to :\

That said, implementing bitcoin as a purchasing option is a cake walk. You can use services like bitpay and such or just hook directly into a local (or remote) wallet and `getnewaddress [some identifier for an account, hash of the email or something]` and then mark it as paid when address.balance >= order.totalbtc. No fees, no chargeback fraud, no middlemen hassle and nice and anonymous* ;)

*I will admit it's not 100% anonymous (it's very easy to link addresses to wallets) but there are ways to remove the link between you and your wallets/accounts

[Torsten]

sorry, I didn't see this thread was partly directed at me. It's a good idea to send me a PM if you want a reply to a post - just to make sure I actually saw the post ;)

where can I spend bitcoins - other than on silkroad ;) I know that smart cyprians are using them to get around their currency restrictions, but as with any currency you need buyers and sellers to make it work.

i was one of the first australian businesses to accept paypal - many years before they opened it up to AU$ and australian customers and at the time the only reason i could use it was because I could spend the money with my overseas suppliers. No australian suppliers accepted paypal nor could you withdraw paypal into australia. So bitcoin seems to have a similar problem from what i can see. I am not really interestd in investing or aving as I like money to keep going round, so it is of little use unless I can spend it.

[at0m]

sorry, I didn't see this thread was partly directed at me. It's a good idea to send me a PM if you want a reply to a post - just to make sure I actually saw the post ;)

where can I spend bitcoins - other than on silkroad ;) I know that smart cyprians are using them to get around their currency restrictions, but as with any currency you need buyers and sellers to make it work.

i was one of the first australian businesses to accept paypal - many years before they opened it up to AU$ and australian customers and at the time the only reason i could use it was because I could spend the money with my overseas suppliers. No australian suppliers accepted paypal nor could you withdraw paypal into australia. So bitcoin seems to have a similar problem from what i can see. I am not really interestd in investing or aving as I like money to keep going round, so it is of little use unless I can spend it.

To answer your first question of where to spend it: Check out https://en.bitcoin.it/wiki/Trade for a pretty large list of places that will accept it.

There aren't many in Australia, yet, but it's only recently starting to gain adoption, and even then it's still only in mostly tech-savvy areas. Someone has to be the first though, right?

The withdrawing into 'actual' cash from Bitcoin is still away off being perfect but sites like weexchange, bitinnovate, and even person-to-person exchanges like #bitcoin-otc and localbitcoins are definitely making headway. It'd obviously be better if you spent it or convinced suppliers/local business/etc to accept it and keep it flowing that way but most of these exchanges don't hold onto the coins for too long either before they're resold onto others who will, more often than not, use them

I'd wager that if you started accepting bitcoins (and most importantly advertised that fact) your business would increase quite a bit. That said... the laws in regards to bitcoins is a very grey area. No one's really sure how or if you need to pay taxes on them, what their actual 'value' is due to fluctuations and a whole heap of other things.

I'd highly suggest looking into it. I'm in no way an expert but I do know my way around it, always about if you want some info.

[Torsten]

Looks like there is a pretty big scope for noobs to get ripped off. Been looking at the ridiculous exchange rates and commissions some places charge. 30%... wow.

Looking at https://www.bitinnovate.com , but not keen on installing a module for automatic payment just yet. I could make it a manual thing to see how it goes, ie offer bitcoins as an alternative to manual cash payments.

Any idea how best to achieve that? I don't even understand how money is transferred from buyer to seller.

[at0m]

Looks like there is a pretty big scope for noobs to get ripped off. Been looking at the ridiculous exchange rates and commissions some places charge. 30%... wow.

Looking at https://www.bitinnovate.com , but not keen on installing a module for automatic payment just yet. I could make it a manual thing to see how it goes, ie offer bitcoins as an alternative to manual cash payments.

Any idea how best to achieve that? I don't even understand how money is transferred from buyer to seller.

Ripped off how? When exchanging? buying with bitcoins? selling for bitcoins?

During the exchange process it can be a bit daunting putting your faith into an exchange in the hopes that it will send you the $ in exchange for your non-chargeback-able coins but that's mostly because all of the sites that are doing AUD bank deposits are quite new.

During the buying/selling of products/services for bitcoins it's largely the customer who's at risk of being ripped off which is why some bigger, more reputable places need to start removing some of that stigma. It's far more unlikely that a company that's existed (and been operational) for several years will take the bitcoins and run but some of the newer bitcoin only places that are popping up may do just that :\

I personally haven't done any business with bitinnovate so I can't recommend them - plus their commission is a bit on the high side.

Weexchange on the other hand, I've spoken to their AU director on IRC (#bitcoin-aus) for a few days and he seems like a good guy, he's been around in the bitcoin world for quite awhile too. For them though, you will need to an ID verification (anti-money laundering laws) but as of now the only fee they have is a flat $2.50 for withdrawal to Au banks.

Automated payment modules would be the way to go but I can agree that they are a fair bit of effort to get going especially if you use osCommerce like I think you do.

To do it manually:

• Open a wallet account on a website like blockchain.info OR (and this is the better option imo) download the bitcoin-qt client from bitcoin.org
• (This is where it gets tricky as I've never really used osCommerce myself) you need to tell them to use the cash payment option with an order note of "bitcoin" and then either email them or make a note on their order that they can see with a bitcoin address which you generate from the client/web wallet and their bitcoin total (order.total * bitcoin.current_rate)
• Once that address's balance receives the amount specified, set their order paid and ship out their order

Alternatively, you could get them to email you their orders (I want 1 a, 2 c, 5 d, etc) and then follow on from the 2nd half of step 2.

As for how the transfers take place, the process is pretty simple:

• They will copy the address you gave them
• Open their wallet
• Click "Send coins"
• Paste in the address you gave them
• Enter the amount of coins required
• Hit send

From there, the transaction is pushed into the bitcoin network and almost instantly you will see the funds in the wallet. From there, you need to wait for a few confirmations by the network before the funds become become usable. This confirmations will take between a few minutes and a few hours depending upon the transaction fee (or lack thereof) and the current size of the network (more miners = faster blocks).

I'm skipping a lot of stuff in that explanation but that's the, very basic, gist of it.

Let me know if you need me to clear anything up.

[at0m]

http://bitcoin.org/may15.html

What is happening

If you are using Bitcoin-Qt/bitcoind version 0.7.2 or earlier, you must take action before 15 May, 2013. If you do nothing, you are likely to be left behind and will be out of sync with the rest of the Bitcoin network.

We recommend that you upgrade to version 0.8.1 before the 15th of May to avoid any issues. If you are a solo miner or mining pool operator, please see the the notes at the end of this page for how to upgrade safely.

If you cannot upgrade to version 0.8.1

If you cannot upgrade to the latest version, you can still avoid the problem. Create a file called DB_CONFIG in the bitcoin data directory, containing these two lines:

set_lg_dir databaseset_lk_max_locks 120000

Look here if you need help finding the bitcoin data directory.

Miners/mining pool operators

If you are creating new blocks (you are a solo miner or mining pool operator), then you should be aware that upgrading from 0.7 to 0.8 requires a lengthy re-indexing operation; you must wait for the reindex to complete before serving work to miners.

And if you are creating blocks and cannot upgrade to version 0.8.1 for some reason, you should not set_lk_max_locks in a DB_CONFIG file until May 15th; if you increase locks before then you run the risk of creating or building on blocks incompatible with the rest of the network.

Why this is necessary

A bug caused a temporary block chain fork on 11 March, 2013. After investigating that bug, we determined that the bug can happen even if the entire network was still running old versions of Bitcoin-Qt/bitcoind. Therefore, the only option is to require everybody to either upgrade or workaround the bug.

Edited April 8, 2013 by at0m

[Scarecrow]

Just checked, and currently 1 BTC is worth ~$190 AU

holy crapola, so much for prices going back down again after a while.

source: http://bitcoincharts.com/charts/mtgoxAUD#rg360ztgSzm1g10zm2g25zv

[edit]

Here's an interesting article regarding the recent skyrocketing price of bitcoins, if anybody is interested.

http://motherboard.vice.com/blog/why-bitcoins-price-is-skyrocketing

Edited April 9, 2013 by Scarecrow

[Yeti101]

Even News.com.au is talking about Bitcoins http://www.news.com.au/technology/techknow/bitcoin-fervour-goes-viral/story-fnda1lbo-1226615233325

[at0m]

http://www.abc.net.au/7.30/content/2013/s3732468.htm

It was even mentioned by Alan Kohler on the ABC finance segment!

[Bigred]

What goes up must come down, Im over bitcoin

Edited April 11, 2013 by bigred82

[at0m]

The growth was unsustainable and the bitcoin community puts way too much business into mtgox. It's a distributed currency with a single, centralised exchange...

I have faith that it will bounce back to the $200 mark again but hopefully not as fast it is did the first time.

This crash/price correction obviously isn't a good thing though if it wants to get taken as a serious currency.

I don't have anything really invested in it so I'm just along for the ride

[Torsten]

you can't run a tight margin retail business with an exchange that varies more than about 10-15% in a month. This makes bitcoin very unattractive for small retail sales.

so are you saying that using mtgox is not a good idea? as in not good for the currency or not good for the retailer? They seemed rather attractive.

[Foo]

you can't run a tight margin retail business with an exchange that varies more than about 10-15% in a month. This makes bitcoin very unattractive for small retail sales.

so are you saying that using mtgox is not a good idea? as in not good for the currency or not good for the retailer? They seemed rather attractive.

Charge more

[at0m]

you can't run a tight margin retail business with an exchange that varies more than about 10-15% in a month. This makes bitcoin very unattractive for small retail sales.

I completely agree. There are a lot of people who're in bitcoin for the money and using it like a stock and I think that's not wrong but not the right way to go about it. Unfortunately, I think I'm in the minority here :\

so are you saying that using mtgox is not a good idea? as in not good for the currency or not good for the retailer? They seemed rather attractive.

MtGox as a service is great however the fact that it is handling the majority of bitcoin <-> 'real' money transactions is worrying. It's a single point of failure, as has been displayed over the last few days.

Sellers frenzy at the hint of a drop in value and flood the market with coins and the mtgox trading engine ends up getting nearly an hour of lag in transactions and causes a crazy selling frenzy which forces the price down. It's also speculated that there's some manipulation going on here but it's all unproven and a bit on the conspiracy side of things.

In an ideal world, the bitcoins would be spent as bitcoins. However, as that's not overly like yet, if one was to cash out the best way would be distributing it among multiple (unfortunately smaller and slightly less trust worth) exchanges and some person-to-person transactions. Don't keep all your eggs in one basket, etc.

So to answer the question in fewer words: Yes it's good but not when it's the only exchange as it creates a point of failure for both the currency and the end user. The only thing they have going for them is their trust and even that's dwindling in light of recent trade lag and such.

[Bigred]

What goes up must come down, Im over bitcoin

sell sell sell bit coin will be back to about 12 dollars in a month