Bitcoin Blogger

Thomas Edison, Bitcoin, and Intrinsic Value

2013-02-02T17:05:00.001-08:00

A Response To Smiling Dave's Article Named, "Bitcoin and Intrinsic Value"

Smiling Dave is a blogger who has in an interest in Austrian Economics. He has written several articles about the demise of bitcoin. In one of this articles, "Bitcoin and Intrinsic Value," he describes a hypothetical situation where Robinson Crusoe is isolated on an island where he finds gold:

The first value comes from answering the question, “What could Robinson Crusoe do with [gold]?” Crusoe had nobody on his island to buy from or sell to, so the gold coin had no use as money. But it did have some use. He could use it for jewelry, if he was vain. He could use it as a component of his computer chips, or whatever.

OK, now Crusoe comes off the island back to civilization. He finds that everything has a price pretty much as he valued things on the island, except for one thing. His gold coin, he finds, is worth much more than he thought. “Why are people setting such a high value on something of so limited a use?” he wonders. Then he finds out that gold is the coin of the realm. Aha, that explains it. It has a use in civilization it never had on the island. You can easily buy stuff with it, anything from everyone. That is a useful feature, that increases the usefulness, and thus the price, of gold.

- Smiling Dave

In these two paragraphs Smiling Dave is explaining why gold has intrinsic value, and claims that bitcoin has no intrinsic value because it has no use on the island. I am going to describe a situation where bitcoin does indeed have intrinsic value.

Imagine a scenario where instead of Robinson Crusoe another man named Thomas Edison, a prolific inventor, somehow became stranded on an island. Thomas Edison loved to invent new contraptions, but in order to secure his distribution rights he had to file an application with the patent office. Because he was isolated on the island he felt it was futile to invent unless he was able to prove with 100% certainty that he was the first person to conceptualize his ideas. The patent office would only grant rights to Thomas Edison if he submitted his patent application before anyone else did, but maybe they would grant him some leniency since his ship was capsized a day before. He knew that it could be a matter of days that other competitors could reach the patent office. Is there any way for Mr. Edison to prove that he was the first person to think of his new idea?

As he was thinking a bottle was washed ashore with a note and an algorithm explaining how it was possible to timestamp information inside something called a "blockchain". The note was signed by "Satoshi Nakamoto," and it contained a special key which had tokens that allowed him to timestamp his latest invention. Mr. Edison followed the instuctions and implemented the algorithm, which he did with pen, paper, and a whole lotta mathematics. Without a doubt he had proof that he was the first to come up with his idea, even though no one was on the island.

OK, the following day a ship picks up Thomas Edison and returns to civilization. He finds that everything has a price pretty much as he valued things on island, except for one thing. His tokens were also known as bitcoins, and he finds that it is worth much more than he thought. "Why are people setting such a high value on something of so limited use?" he wonders. Then he finds out that the bitcoin is the coin of the realm. Aha, that explains it. It has a use in civilization it never had on the island. You can buy stuff with it. That is a useful feature, that increases the usefulness, and thus the price of bitcoin.

Conclusion: Did Thomas Edison just solve a block using pen and paper? My point of the story is that it is feasible to perform bitcoin transactions on the island since it is based on mathematics. One could even change the story slightly and include a mining rig on the island, which would make the story even more believable, or there could be Internet access on the island, which allowed him to broadcast his transactions to the bitcoin network via satellite or whatever. Or, maybe Satoshi included a solved block inside the bottle. Nevertheless, it is still possible, however improbable, that with just pen, paper, and mathematics for someone to utilize the bitcoin protocol. The time-stamping ability of bitcoin is an intrinsic property and that is why bitcoin has intrinsic value using Smiling Dave's logical foundations to formulate his arguments.

The Sequel: Thomas Edison returns to the island to put a cryptographically signed message in a bottle so anyone in the universe will know he was the one who wrote the original message. Cryptography has intrinsic value...

Transfer of Wealth To Asia Accelerating Faster Due to Unreasonable U.S. Regulation. U.S. Losing Bitcoin Race

2012-02-24T10:19:00.001-08:00

Politicians in the United States frequently talk about the transfer of wealth to China. Jobs are moving from the U.S. to China due to lower costs. Most of the manufacturing jobs that formerly existed in America have been transferred to China, Vietnam, South Korea and other Asian countries. There is, however, another transfer of wealth that is occurring that is not so apparent to government authorities. The future of banking jobs, financial institutions, and anything involving money transactions are also beginning to move to countries outside of the U.S. Currently the value of the U.S. dollar is strong compared to other currencies, but this will soon change. The U.S. has too much regulation, overhead, and red tape over the transmittance of money. If it were not for needless U.S. regulation more successful bitcoin companies would have been created on U.S. soil, thus creating more jobs. Instead companies such as “Mt. Gox”, based in Japan, and “Bitcoinica”, created in Singapore/China, are completely dominating the bitcoin market. The U.S. is destroying itself from the inside because of excessive regulation.

In America, credit card companies, banks, and PayPal charge high fees when compared to other systems. Expect to pay 2-3% fees for purchases that are under $10. Some may argue that these fees protect the consumer from fraud because it allows credit card companies to perform charge-backs on the merchant. In China, however, the banking system works differently and favors the merchant instead of the consumer. Most transactions in China are irreversible when using a system like Alipay. Alipay is the most popular payment website in China with hundreds of millions of active users. According to Zhoutong, founder of Bitcoinica:

"...the root of all reversibility is the Visa/MasterCard credit card system used by Americans. Chinese banking system is entirely different. Chinese people don't use Visa/MasterCard for domestic purchases. [Online payments] require strict authentication, banks are usually not responsible for fund losses, etc. Everything is very Bitcoin-like, and non-reversible. More than half of Alipay's transactions are escrows."

So in the Chinese system they only pay for what they need. If for some reason they need to use escrow then they can pay for escrow services. In the U.S. credit card companies force consumers to pay for escrow services even when you buy a Happy Meal from McDonald’s. This can be seen as a waste of consumer’s money. The merchant loses, the consumer loses, and the credit card companies win. The Visa/Mastercard credit card system is inefficient when compared to the Chinese.

Why do Americans continue to use Visa and Mastercard if these credit card companies are practically stealing from them? Big banks and credit card companies control the financial plumbing of United States by lobbying Congress and state legislators to create laws which make it difficult for small start-up companies to be competitive. A small business attempting to go into the business of transmitting money would have to hire expensive lawyers to follow federal and 50 state laws. There is a general fear among American entrepreneurs of breaking laws, paying hefty fines, and/or going to prison. These feelings of uneasiness and fear has stifled innovation in the financial sector. For example, FaceCash, has been involved in a dispute with the California government over the Money Transmission Act (MTA). For over seven months Aaron Greenspan, founder of FaceCash, has been trading snail mail with government authorities who have no idea how the MTA laws should be enforced. In that same time frame Bitcoinica and Mt. Gox grew from practically nothing to trading around tens of millions of dollars worth of bitcoins a day.

Another small company named BitInstant is being forced to move from New York City to New Hamphire because they cannot afford lawyers to take care of all of the legal paperwork. Erik Voorhees, the Director of Communications for BitInstant says:

"We've not even been in business for a full year, and yet we've spent tens of thousands of dollars hiring lawyers to consult us on which licenses we need, in which states, and more important, they advise us on which areas of business we must stay away from because those areas open up new requirements and huge financial costs. Unfortunately, in practice this means many of our best ideas have simply been thrown into the waste bin - not because they would be illegal, but because our lawyers have said that pursuing them means paying hundreds of thousands of dollars in license fees, and much more time on the lawyers' invoices."

Mr. Voorhees continues on later saying, "...our margins are too thin, and our risks too great, to comply with perpetually arduous regulations - we will either fall apart, or be forced to go somewhere else."

Over-regulation is beginning to destroy another American dominated sector. The U.S. will lose the bitcoin race to other countries since most bitcoins will be owned by companies beyond the borders of the U.S. In addition, not only will Asian companies own more bitcoins but Chinese individuals may own more bitcoins than American people. Why? Because the Chinese are now able to buy bitcoins with Alipay while Americans cannot with PayPal. PayPal, Mastercard, Visa, and even Google Checkout have rules which make it impossible for merchants to sell bitcoins. It is ridiculous that Chinese individuals have more freedom to buy bitcoins while citizens of the United States are forced to buy bitcoins through “non-standard” methods due to excessive laws.

The pace of financial innovation is occurring faster outside of the United States and it is due to a mountain of outdated laws, piles of paperwork, inefficient government, and a lack of understanding of technological concepts by legislators. Will the United States continue to let this virtual gold slip through its pockets?

FOX Reports on Bitcoin

2011-11-27T19:25:00.000-08:00

Buy Bitcoins With PayPal or Credit Card

2011-10-30T18:24:00.000-07:00

Memory Dealers is proud to announce that it's acquired the rights to sell the famous Casascius Physical Bitcoins. Customers can purchase these physical Bitcoins (which have hologram-coded private keys) with credit cards or Paypal. Each coin is worth its face value in BTC and is cast in brass with the special tamper-proof hologram on the back.

Available versions:
1 BTC
25 BTC (plated with real gold)

FREE shipping on orders over $50 within the USA.

To learn more about these physical Bitcoins, visit www.Casascius.com
(note: avoid Casascius.net, it is a fraudulent phishing scam)

Click HERE to purchase from MemoryDealers.com

Bitcoin A Popular Target for F.U.D. (Fear, Uncertainty, and Doubt)

2011-10-26T14:54:00.000-07:00

Eric Mack of CNET news has just released an article titled, "Are physical Bitcoins legal?" He compares it to the recent case of "Liberty Dollars", which appear to be designed to look like U.S. legal tender.

Liberty Dollar

The man responsible for creating the Liberty Dollar, Bernard von NotHaus, was convicted of "making coins resembling and similar to United States coins." When I look at a Casascius bitcoin it does in no way resemble a U.S. coin.

Casascius Bitcoin

Here are some other alternative currencies that were created that are completely legal.

Ithaca Hours (Legal)

BerkShares (Legal)

Twin Towers Silver Coin (Legal)

Happy Halloween Silver Coin Available at Apmex (Legal)

Zynga ZCoins (Legal)

Facebook Credits (Legal)

Bitcoin Set To Unleash Massive Tsunami Wave Of New Development With New Features

2011-10-24T13:03:00.000-07:00

Bitcoin will be more than a currency if multi-transactional features are added to the core code. Right now the developers of the crypto-currency are designing initial support for new types of transactions. What are multi-transactions? Multi-transactions allow the possibility of ‘contracts’. According the wiki, “A distributed contract is a method of using Bitcoin to form agreements with people via the block chain. Contracts don't make anything possible that was previously impossible, but rather they allow you to solve common problems in a way that minimizes trust.” This means services based on cryptographic trust are now possible that was previously only possible with paper, pen, and a line to sign. The new possible services that could be developed include escrow services, secured deposits, dispute mediation, assurance of goods, smart property, etc. These features would eliminate the need for paper contracts in many different industries. In addition to banking, currently existing sectors that could be affected include title companies, lending services, billing services, ownership of anything digital (cars, phones, computers), home loans, car loans, funding services, etc. The cost of creating these contracts in bitcoin will be practically zero.

Suppose there is a person called ‘A’, ‘B’, and ‘C’. The new transactions could include the following:

(A and B)
(A or B)
(A and B) or C

Bitcoin will be more than a global currency. Right now it can replace paper based cash. It is now being designed to be able to replace paper contracts in many financial industries. Bitcoin could be the world’s first global cryptographic contract system. Anyone will be able to do business with anyone, anywhere in the world and in an cryptographically trustworthy manner.

Why It Is Impossible For Bitcoin To Fail

2011-10-21T13:17:00.000-07:00

The media has been lampooning bitcoin by proclaiming that bitcoin has failed. For example, popular technology columnist John C. Dvorak has said that bitcoin is a “screwball scheme to bypass the system” and that bitcoin is “bogus currency”. In another article written by Tim Worstall of Forbes magazine, he declares (for the second time) the death of bitcoin in an article titled, “The End of Bitcoin Part II”. Timothy B. Lee a contributor to the online website, “Ars Technica”, writes a gloomy article that announces bitcoin has “imploded” due to a 90% reduction in price.

There is no denying that bitcoin has dropped in price, but the question is has it failed? Mr. Dvorak compares bitcoin to other failed currencies including Beenz, sponsored by Oracle dictator Larry Ellison, and Flooz a currency sponsored by Whoopi Goldberg. What Mr. Dvorak fails to realize is that Flooz and Beenz are corporations, central authorities that control the existence and value of their monetary units they have created. If the corporation fails, perhaps by filing for bankruptcy, by dissolution, or even by, heaven forbid, a nuclear strike from a war then the currency will fail. Bitcoin, however, has no central authority and because it is decentralized it cannot fail. Bitcoin is based on a peer-to-peer (P2P) network based on thousands of users running the bitcoin software client. If one were to attempt to stop the proliferation of bitcoin one could argue the entire Internet would have to be stopped.

Bitcoin can drop in price, but it is highly unlikely, most likely impossible, that the value of bitcoin will drop to zero. Using the price of bitcoin as an indicator of failure is like using the price of gold to determine failure. Gold cannot “fail”. Bitcoin cannot “fail”.

Bitcoins Give Rise to Crypto Casinos

2011-08-28T11:03:00.000-07:00

Many online casinos use auditing services that allow accountants to verify a casino's winnings. Companies such as PricewaterhouseCoopers are hired so online casinos can earn a certificate to proudly display on their website that claims they are honest and trustworthy. Gamblers have to trust the auditing service and the casino that their games are completely fair. There are some cleverly developed gambling websites, however, that utilize cryptography to provide a greater level of trust that no human-based auditing service can provide. Cryptographic casinos allows patrons to verify each bet and that the games are fair.

One such gambling service is "bitlotto.com" which operates on top of the bitcoin network. To play, one needs to send 0.25 bitcoins to a bitcoin address. The transaction itself is the lottery ticket. Because the bitcoin block chain is visible to anyone you can see how many bitcoins were sent to that address, and thus how many lottery tickets have been bought for that specific lottery draw. BitLotto claims to be "anonymous, transparent, and cheat-proof with a 99% payout."

Another gaming site that uses a "crypto-proof" to prove the honesty of their games is "bitjack21.com". This blackjack site allow you to bet with bitcoins but the proof does not use the bitcoin blockchain. Instead, bitjack21.com developed their own cryptographic method that relies on a random number generated by the client computer that predetermines the location of each card before they are dealt. Once a hand is complete the user can verify that the cards that were dealt were in the same order as the order generated by the random number, and that card positions in the deck did not change during the hand. bitjack21.com claims they are "the only bitcoin blackjack site on the internet that can mathematically prove, in a verifiable manner, that [they are] 100% honest."

Cryptographically fair games provide a much higher level of trust to the end user. If you want to gamble online look for gaming sites where you can check and validate each wager that you will make. Remember to gamble responsibly and at your own risk. :-)

Buy Bitcoins Locally With Cash At Chase or Wells Fargo

2011-08-15T21:36:00.000-07:00

http://www.betabeat.com/2011/08/15/bitoin-exchange-chase-wells-fargo-exch/

Update: ExchB.com is not longer in service.

You Can Now Buy Bitcoin With Cash at Any Chase or Wells Fargo

By Adrianne Jeffries 8/15 8:36am
The Redwood City-headquartered ExchB, founded in May 2011, just started accepting cash and check payments via brick-and-mortar banks to speed up the sometimes-lengthy process of crediting an account with USD in order to buy BTC. “ExchB customers can walk up to any of over 15,000 locations nationwide and make a cash deposit at any Chase or Wells Fargo branch,” president David Sterry wrote last week. “Simply walk up to the teller, deposit your cash or check, and e-mail us an image of your receipt. Cash clears when we verify your e-mail and check deposits typically clear overnight.”

Right now, it’s tough to buy Bitcoin with cash unless you’re meeting someone face-to-face. But in the wake of the most recent Bitcoin crash, a few high-profile incidents that drove the price down to $5 or so from around $13, it’s tough for any exchange, even a U.S.-based one with a phone number that goes to voicemail, to convince users of its trustworthines.

Although trust in Bitcoin is gaining again. MyBitcoin users report receiving the .49 percent refund they were promised after the popular service shut down, claiming it was hacked. The price of the e-currency has rebounded to $11 or so this morning.

ExchB, which bills itself as the first U.S.-based Bitcoin exchange, also announced a few new deposit methods and no fees on check withdrawals.

$10,000 Bet that Bitcoins will outperform Gold, Silver by 100X over the next two years

2011-08-08T19:36:00.000-07:00

Bet Argument Update by MemoryDealers.com:

Bitcoins are the world's first peer to peer, distributed electronic currency. This means that they can be sent directly from person to person over the internet, without needing anyone's help or permission. They are free to send, receive, or to store, and they can be as public or anonymous as you want them to be.

With bitcoins, a person in California can send $20,000 USD worth of value to a person in Russia in a matter of seconds, for FREE.

In comparison:
Paypal would cost about $600, and take a few seconds.
Credit card would cost about $600 and take a few days, to a week, or more.
Bank wire would cost about $40, and take one or two days.

By all of the traditional payment methods, any government can block your transaction for any arbitrary reason.
Because Bitcoins are peer to peer, no one can block your transaction for any reason, ever.
A recent example of this property of Bitcoin being put to use, is with the online gambling industry.
Recently the USA Federal government blocked credit card companies and banks from being allowed to process gambling related transactions.
Since then, numerous online gambling sites that use Bitcoins have launched.
Because Bitcoins are sent over a distributed, peer to peer network, governments are powerless to stop them.

With traditional government issued currencies, politicians are always tempted to just print more whenever they have a budget short fall due to the most recent war, bailout, or “stimulus” package.
When governments do this, all the citizen’s savings lose value in real terms.
With Bitcoins, governments can never take the value of your money in this way.
Because the software is open source, we know that there will never ever be more than twenty one million Bitcoins. No one will be able to provide themselves with additional bitcoins by decree, as happens so often with traditional government issued currencies.

Bitcoins are also resistant to government tracking or seizure. With just a few steps, anyone can store their bitcoins in such a way that governments or other theives are powerless to access them without the correct password.

Bitcoins may also make paying most taxes voluntary since governments will lose the power to track or control who sends bitcoins to whom.
The IRS, DEA, Customs and Border Patrol, and other agencies will no longer be able to seize peoples money at will.

Bitcoins may also bring an end to war. Currently governments force all of their citizens to pay for war efforts whether they are in favor of the war or not.
Once Bitcoin use is wide spread, the people in favor of the wars will no longer be able to force the people against the wars to pay for them.
If suddently, the half the population who does not support the wars stop paying for them, it will quickly become much more expensive for the suppoters of war to continue funding it.
I suspect that many people who claim to be in favor of the current wars would change their mind if they had to pay for all of it themselves.

Because Bitcoins are limited to 21,000,000 and they have so many advantages over traditional government issued currencies,
once even a small percentage of the economy begins using bitcoins, the price will quickly soar to thousands of dollars per Bitcoin or more.

In short, I believe bitcoins are the most important technological revolution since the invention of the internet, and because of that, their price will skyrocket in comparison with Gold, Silver, the US stock market, and US Dollar.

https://bitcointalk.org/index.php?topic=34320.0

Another Bitcoin Mining Rig

2011-07-24T23:53:00.000-07:00

Bitcoin Tattoo

2011-07-11T20:13:00.000-07:00

Why will bitcoin succeed? Well, there are many valid mathematical, philosophical, and economic reasons why bitcoin could prevail. Here is another reason: The concept of bitcoin is so powerful that it can instill passion, desire, and inspiration. People will even get a permanent tattoo to show support for bitcoin!

Here is a proof video of it getting done:

http://www.youtube.com/watch?v=9d_fLh_Vn4o

http://forum.bitcoin.org/index.php?topic=27958.0

The Bitcoin ATM Is Coming at a Location Near You...

2011-07-04T08:49:00.000-07:00

There are many annoyances with bitcoin including the following:

1.) Bitcoins are very difficult to obtain on the Internet.
2.) It is near impossible for an average user to generate bitcoins with his or her computer.
3.) Technical skill is required to obtain bitcoins via an online exchange.
4.) If money is sent from a bank account to an online exchange then the transaction is no longer anonymous and that money can be traced.
5.) Sending cash in the mail for bitcoins could take days, weeks, or not at all and is unreliable.

What is the solution to these many problems? Multiple teams within the United States are attempting to build and distribute ATMs in mass quantities. ATMs will allow bitcoins to be distributed anonymously with cash without the need for an exchange. With bitcoin ATMs it will only be a drive away before an average person can buy bitcoins! The value of bitcoin will skyrocket once a non-technical user can buy bitcoins as easy as buying local goods.

There are many ways to distribute bitcoins with an ATM and each development team is handling them uniquely. I could explain in further detail in how these bitcoin ATMs would work, but to protect the business interests of my sources I am going to remain quite for now. Who will win the race to provide the best bitcoin ATM with the most locations?

Here is an early attempt of one team hacking open an eBay bought ATM:

http://biticon.wordpress.com/2011/03/31/bitcoin-atm/
http://biticon.wordpress.com/2011/04/16/atm-progress/

TradeHill.com - A Competitor to Mt. Gox

2011-06-16T21:04:00.000-07:00

Use this link to get 10% off for life:

https://www.tradehill.com/?r=TH-R11260

Bitcoin Billboard in Silicon Valley

2011-06-06T08:54:00.001-07:00

Located in busy expressway in Silicon Valley, California. (Lawrence Expressway just south of Central Expressway)

Each Bitcoin Now Worth $10

2011-06-02T09:10:00.000-07:00

This is a late post since the $10 peak occurred while I was sleeping in the Western Hemisphere. Bitcoin is a 24-hour currency and Mt. Gox operates 24-hours!

Bitcoin miners busted? Police confuse bitcoin power usage for pot farm

2011-05-23T15:46:00.000-07:00

According to computer world:

"In regards to if being a miner will bring the cops to your doorstep, according to the Bitcoin Miner, the power consumption will be somewhat like the electric usage for "marijuana grow-op." An example was "The Canadian town of Mission, BC has a bylaw that allows the town's Public Safety Inspection Team to search people's homes for grow ops if they are using more than 93 kWh of electricity per day." There have allegedly been reports floating in IRC of two different cases of police showing up at a bitcoin miner's residence with a search warrant."

http://blogs.computerworld.com/18335/bitcoin_miners_busted_police_confuse_bitcoin_power_usage_for_pot_farm?source=rss_blogs

http://twitpic.com/51ipav/full

Google Could Be Destroyed! Javascript Bitcoin Mining To Replace AdSense

2011-05-21T13:42:00.000-07:00

There is a new and revolutionary breakthrough bitcoin application that could potentially destroy Google. Yes, that's correct, this technology could completely annihilate Google. Google's business mostly relies on its AdSense program which allows website owners the ability to place ads in their webpages to earn money. However, with 100% Javascript bitcoin miners website owners no longer have to place ads in their website to make money.

JS Miners can be placed into webpages and earn income for the website owner. The advantages for the end-user is that ads will no longer annoy users. NO MORE ADS! The longer a user spends time on a web page the more money the bitcoin miner will earn for the website operator. Website owners are now encouraged to have quality content so users stay and read longer. This means that quality is king and if a user leaves a website immediately then that website is rewarded less. (I could see this potentially saving the newspaper industry.)

JS Miners also removes Google's overhead and more money could potentially be awarded to the website owner. JS miners can also perform micro transactions easier than Google so all mining can be compensated an no amount of money is lost. If a computer mines .000001 bitcoins then this amount is recorded and taken into account.

Yes, it is possible these JS Miners can utilize CPU resources and slow down the computer, but these settings can be adjusted to allow a good user experience. The bitcoin revolution is just beginning...

See thread here:
http://forum.bitcoin.org/index.php?topic=9042.0

Review of bitmunchies.com

2011-05-21T12:33:00.000-07:00

I bought some food products at bitmunchies.com and I was very happy. I spent 1.82BTC and got some beef jerky, cashews, and a Slim Jim (R.I.P. Macho Man). The food was shipped from Colorado.

Products
------------------------------------------------------
1 x Jack Link's® Beef Jerky (original) = 0.594BTC
1 x Slim Jim® Smoked Snack () = 0.063BTC
1 x Planters® Salted Cashews (saltedcashew) = 0.106BTC
------------------------------------------------------
Sub-Total: 0.763BTC
United States Postal Service (1 x 4.03lbs) (Library Mail): 1.058BTC
Total: 1.820BTC

The highest cost was shipping but I got a good deal at the time since bitcoins were worth a little more. The food was tasty, arrived on time, and I enjoyed the service. I recommend bitmunchies.com. I hope other stores open up and let me buy real goods with my bitcoins.

Gavin, Bitcoin Lead Developer, Speaks On State of Bitcoin

2011-05-19T09:05:00.000-07:00

Gavin says:

So with the recent avalanche of press interest in bitcoin, I thought I'd share my thoughts on how I'd like to see bitcoin positioned. I'm not writing this as "This is the Official Bitcoin Organization Position" -- as always, I expect everybody to have, and express, their own views.

I'll restate what I see as the goal of The Bitcoin Project: To give us control over our finances by establishing a stable, secure, global, "democratic" currency.

I think positioning bitcoin as "revolutionizing the financial system" is the goal-- not more radical statement I've heard (like "destabilizing governments"). Most people either like or are indifferent to their governments (I know, I know, sheeple and all that... lets not go there). I don't think most people get the warm fuzzies when thinking about bankers and Big Corporations; bitcoin as "The People's Money" is the right way to think about it.

Also, whenever I talk to the press, I try to be realistic. Bitcoin is still an experiment that has never been tried before; there is still a good chance it will fail, and there is still a lot of work to do to make it stable and secure. I'm excited because bitcoin is a big idea that might change the world for the better, but I also realize that our little project is just a baby compared to the decades-old financial systems that we all use every day.

I think it is important to set expectations; I still wouldn't recommend that my mom use bitcoin for anything just yet, because it is not easy enough to use securely. And the road ahead is likely to be bumpy; there will be technical issues that need fixing, there will be legal questions, there will be price bubbles, and there will be scams. I predict that some company using bitcoins to do something illegal will be caught and prosecuted, and that will be mis-reported as "Bitcoin is illegal."

I said a year ago that creating solid technology was just the first step in a long road for bitcoin. I'm very pleasantly surprised at how far the bitcoin project has come in a year; the innovation and experimentation and level of interest and excitement is fantastic.

Here's an email exchange I had with a reporter yesterday:

Quote
Specifically, do you agree or disagree that this project is "dangerous"? If you disagree, how would you describe the potential significance of bitcoin in a future Internet economy?

New technologies are always at least a little bit dangerous-- they can usually be used for both good and bad (think of gunpowder or ChatRoulette), and are certainly dangerous to the status-quo that they replace (think of cars and buggy-whip-manufacturers).

Bitcoin is a really ambitious project; we're trying to let people take back control of their money instead of trusting bureaucrats or bankers or politicians to keep it stable and safe. It is international, decentralized, and completely open to innovation, very much like the Internet. Like the Internet, I expect its early years to be full of amazing successes and spectacular failures, and I don't think anybody will be able to predict in advance what will succeed and what will fail.

I think the real question is whether or not bitcoin will appeal to the majority of people who are happy with our current financial system. If it doesn't, bitcoin may fade away or end up as a niche currency used for a tiny percentage of global financial transactions.

The thread is here:
http://forum.bitcoin.org/index.php?topic=8940.0

BitBills.com Card Review

2011-05-16T19:35:00.000-07:00

I recently ordered some bitbill.com cards in the mail and they have arrived! Wahoo! I ordered each type of bitbill (1, 5, 10, and 20 BTC) but they all didn't arrive yet so hopefully the rest will arrive soon. I only got the 1 BTC bitbills as of now.

So what did I think of them? Well, they looked just like what I had ordered, however, the cards themselves don't have the feel of credit cards. The material is not as strong as a conventional credit card. There seems to be a thin piece of plastic sandwiched between two sheets of clear plastic. When you rub your thumb over the hologram it is raised so there is definitely something under there. The private-key-QR-Code is an actual piece of paper under the hologram. The larger public-key-QR-Code looks like it was printed on the card since I could not feel the bump using my thumb. The circular hologram on the front is some type of metal foil that rests on top of the QR Code. The rectangular hologram on the back is also raised. The hologram on the back says "AUTHENTIC", "GENUINE", "VALID", and "SECURITY", and the front hologram has a globe that has the words, "SECURE".

The edges of the bitbill look like they have been cut with minute fraying on the edges. The cards still look pretty cool though, and it does say "beta" on it. I expect bitbills.com to make the cards even better in the near future, but this is a good beta.

I have an Android smart phone and I used an app named Google Googles to take a picture of the public-key-QR-code on the back of the card. Google Googles was able to successfully convert the public-key-QR-Code into a bitcoin address. I entered the key into blockexplorer.com to verify if there was 1 BTC on the card, and I am happy to say there was. :-)

I do not think it is possible to remove the hologram on top of the private key QR Code without significantly destroying the card. In the next few days I will be attempting to remove the private key QR Code without destroying the card. This is just a test of the card and I do not have malicious intent. :-)

Bitcoin Gets Serious With Sadness, Anger, and Legal Threats

2011-05-16T14:46:00.000-07:00

When each bitcoin was worth less than a quarter the bitcoin community was very happy and donations flourished. Members gave bitcoins to other members with little or no hesitation. Now each bitcoin is worth approximately $8.00 each, and now some bitcoin enthusiasts are becoming angry at each other. One bitcoin.org forum member was able to acquire over 300,000 bitcoins from one of his former employers who thought bitcoins had no value. Those bitcoins were sold for $5,000 when they were actually worth over $2 million dollars! There are also others who were not so lucky. For example, there was a very reputable bitcoin merchant, bitcoin4cash.com, who seemed to have failed to live up to his word by not being able to sell his bitcoins at his claimed prices. The market was just too volatile and bitcoin prices were skyrocketing. Some people are now angry at him and are boycotting of his services. We will never know the truth since it's one's word versus another, but bitcoin4cash.com does have a good reputation.

Bitcoins are much more valuable now so losing them can be heartbreaking. Scams are showing up in forum posts so please use ClearCoin.com, an escrow service, whenever possible. Don’t send your bitcoins without truly knowing if the seller has a good reputation. Keep separate passwords for your email, computer, and websites so your accounts cannot be hacked. Recently, there has been brute force password cracking on the bitcoin exchange site, mtgox.com. In addition, deepbit.net recently had some bitcoins stolen from multiple accounts.

You MUST have basic computer security knowledge to store bitcoins on your computer. Install anti-virus software. Don’t open emails with attachments or images. Don’t go to websites that could hack into your machine. Back up your wallet.dat on a separate medium just in case your hard drive should crash.

When someone bought a pizza for 10,000 bitcoins everyone was happy. Someone got their pizza, and another got some bitcoins. Those days are long gone.

Bitcoin at Mt. Gox Hits $5 A Bitcoin

2011-05-10T11:02:00.000-07:00

$5 Parity Has Been Reached

Users From Overclock.net Rushing To Mine Bitcoins

2011-04-30T10:13:00.000-07:00

A forum thread called "Earn $ with your GPU; a Bitcoin mining guide" had 165 pages of posts in a mere three days at overclock.net. Users there were curious to how people were making money and some were skeptical. The administrator at overclock.net closed the thread so management could look into it further.

A user named "Enterprise" at overclock.net has said:

This thread has been closed pending an investigation from Upper management. Thank you.

The believers in bitcoin hope the admins at overclock.net understand the legitimacy of Bitcoins. Obviously there is a mass hysteria with bitcoins and overclocking enthusiasts are beginning to buy graphics cards to generate bitcoins. Expect the difficulty rate to rise in the near future.

http://www.overclock.net/other-software/1001123-earn-your-gpu-bitcoin-mining-guide.html

Bitcoin Technical Lead To Present at CIA

2011-04-27T16:58:00.000-07:00

Here is what Gavin, the tech lead for Bitcoin, says...

I want to get this out in the open because it is the kind of thing that will generate conspiracy theories: I'm going to give a presentation about Bitcoin at CIA headquarters in June at an emerging technologies conference for the US intelligence community.

I accepted the invitation to speak because the fact that I was invited means Bitcoin is already on their radar, and I think it might be a good chance to talk about why I think Bitcoin will make the world a better place. I think the goals of this project are to create a better currency, create a more competitive and efficient international payment system, and give people more direct control over their finances. And I don't think any of those goals are incompatible with the goals of government.

I'm only very slightly worried that talking about bitcoin at the CIA will increase the chances they'll try to do something we don't want them to do. I think accepting their invitation and being open about exactly what bitcoin is will make it less likely they'll see it as a threat.

PS: Full disclosure: I'll be paid a one-time fee of $3,000 to cover expenses and pay me for my time. I don't want any "Gavin is on the CIA's payroll" rumors to get started, either...

As always, comments and questions and discussion welcome. I'd really rather not hear any conspiracy theories about how they'll secretly implant a mind-control chip in my head while I'm there, though....

http://www.bitcoin.org/smf/index.php?topic=6652.0