Not if you know where to look. People are buying coins on Bitcoinary within minutes. https://www.bitcoinary.com/
> it can still be completely devalued by litigation.
I doubt that. You can't litigate globally.
> Basically, all it takes to completely devalue bitcoins is to have one event that makes most bitcoin owners think the amount of time they have to cash out is minimal.
True for nearly all currencies or stocks. http://en.wikipedia.org/wiki/Wall_Street_Crash_of_1929
> But anyways, If mtgox was raided or taken down (and please don't say its not possible- Its totally possible)
Unlikely, but I suspect another exchange would spring in its place.
> There is no intrinsic value in bitcoins unless it is possible to easily trade them with a outcome of receiving capital.
Same for all currencies. The value of currency is belief in the piece of paper you hold.
> However, I doubt BTC would ever get gov backing, so it will eternally be at risk.
Perhaps not, but Bitcoin doesn't have to be the currency of a country to be successful. It's just an alternative currency and with some intersting properties.
I suppose if you dont mind the risk of your paypal account being limited, or the chance of being fucked in the trade- sure.
> I doubt that. You can't litigate globally.
Tell that to the USA and Megaupload. They took down one site (in another country) and the rest of the filelockers immediately shut down out of fear. Nobody wants to go to jail / lose their profits. Exchanges are motivated by profit, not philanthropy or zealotry to the bitcoin cause.
> True for nearly all currencies or stocks.
Stocks are a tangible asset. They are tied to the ownership of a company. Sometimes they pay dividends. Bitcoins are tied to nothing. Currency is tied to the status/growth of the nation attached to it.
> Unlikely, but I suspect another exchange would spring in its place.
Didnt happen that way for megaupload. Or pokerstars.
> Same for all currencies. The value of currency is belief in the piece of paper you hold.
Agreed. Other currency's have the benefit of being nation backed though.
Isn't a second, or third such p2p currency due to come? Won't this distroy the current bitcoin uniqness, thus devaluation, etc, ?
What is protecting the bitcoin from this?
I believe more in a energy-bound trading value for the future, much like the petro-dollar. Why not solar-coins, based on the value of solar energy ( GWh based ) traded on the markets? We all consume energy, right?
Link: https://en.bitcoin.it/wiki/FAQ#What_if_someone_creates_a_new...
Take my advice (and prediction too): Energy backed currencies will be the future. Not now, but in 50-100 years.
Gold ( used to back currencies now) is also popular, but it has also _some_ intrinsic value attached to it. But at some point the switch will be made so that the currencies will be backed by the amounts of energy reserves/production.
I'm sure Firaxis wasn't the first to think of this idea - but it does make sense as energy has intrinsic utility and value. If not pure energy, then definitely currency backed by resources that create energy (ie, solar farms, gas/coal mines, nuke plants, etc).
Also, in order to appeal to the proven Bitcoin audience, new cryptocoins might in fact attempt to be complementary to their 'older brother' Bitcoin -- fix some of the issues in certain domains, but interoperate. (They might even find it useful to make some of their initial distribution to exactly the set of Bitcoin holders, as a starting gift.)
I hate when people use word 'intrinsic' when criticizing bitcoin. Anything that is in limited supply, transferable and durable becomes valuable or forgotten. There's no way that bitcoin will be forgotten and bitcoin is as durable as any P2P network. Whether you can legally buy and sell bitcoins is irrelevant. Of course I'd much prefer if bitcoin was mainstream than black market but being black market only still places price of bitcoin higher that it is today, I believe.
I also think that Bitcoin will suffer from the same problems that plagued Flooz: the chief advantage of underground currencies is that they better support a black market, and this limits their potential to break out into the mainstream economy. As I see it, there's three reasons why I would want to use bitcoin:
1. Price speculation
2. Purchasing illegal goods (which currently dominate the bitcoin economy, per my understanding)
3. Money laundering
The first does nothing to support the bitcoin economy, while the second and third expose it to risk from government action (and also make it icky: if bitcoin is mainly used to buy drugs, guns, and child pornography, then I don't really want to use it to buy dinner).
On the other hand, a reputable company may take a chance by simultaneously investing in bitcoin, and then attempting to drive adoption, e.g. by subsidizing purchases made through bitcoin. That might help it shed its black market pedigree and break out into the mainstream.
If you'd mentioned Flooz as counterexample to the claim that WoW gold has bright future as currency and store of value then I'd wholeheartedly agree.
MtGox is just biggest place where people trade bitcoins but there are many alternative markets. Talented developer can set up new market within few months. Of course fall of MtGox would anger and put off many people but end of MtGox is not the end of bitcoin.
Price speculation and money laundering increase value of bitcoin which attracts more investors to it and draws public interest to bitcoin. Purchasing illegal goods with bitcoin is also good because it provides immediate utility as more and more things nowadays are illegal.
> if bitcoin is mainly used to buy drugs, guns, and child pornography, then I don't really want to use it to buy dinner
Does financing manufacturing of military grade weapons that are constantly used to kill lots of people not bother you? Does financing dictatorships by purchasing of their oil with dollars not bother you? Does participating in global casino where whole banks play (calling it "investment") that artificially raises cost of such basic things as food for millions of impoverished people not bother you over your dinner bought with dollars? I think this last thing is what dollars are "mainly" used for nowadays.
When megaupload was raided, it wasn't the only one that was effected. Almost all of the other file lockers shuttered/closed immediately. Its foolish to think other exchanges would not follow suit if one was taken down. If there is no way to turn your bitcoins into another currency, you would be silly to think you could still buy goods that cost someone else money with them. Whos going to spend money to lose money?
I agree. I just don't think it would kill bitcoin. Because killing one exchange would just make others more popular. That's what happened when most popular bitcoin exchange in my country lost their wallet. :-)
World consists of many countries with many laws. I just don't see all of them cooperating in killing bitcoin.
Besides how well megaupload raid worked for Hollywood people?
Nice try, buddy, but it's services all the way down. If I can pay for food and rent with it, no exchange is needed.
That said, right now you basically can't. Soon, though, soon.
And if they were really serious they could 'just' devote some computing time to destroying the blockchain.
5 of the top 10 (out of the Top500) computers are in the US. If they were really serious they'd spend the money and burn the time and own the block chain.
The global network hash rate is currently 35 Thash/s.
A typical GPU found in a supercomputer (Nvidia Tesla K10/K20/C20xx) does roughly 100-200 Mhash/s.
A typical modern CPU core does roughly 1-2 Mhash/s.
You would either need 175k-350k GPUs, or 17.5M-35M CPU cores to attack Bitcoin. If you look at the Top500 list, they have maybe a few tens of thousands of GPUs combined, and about 10M CPU cores (watch out, the core counts in the list combines CPUs and GPUs, I found this out when making sense of the numbers years ago: http://blog.zorinaq.com/?e=14 )
Plus the network hash rate is predicted to increase by at least +20 Thash/s (to 55 Thash/s total) in the next month due to Avalon finishing delivery of their first batch of ASICs. Bottom line, no, all Top500 computers combined could not attack Bitcoin.
(Just curious)
The US has NO jurisdiction on many of the Bitcoin exchanges (btcchina.com, btc-e.com, bitcoin.de, virwox.com, cavirtex.com, bitcoin-central.net, etc). In fact, if the US were to seize the biggest US-based exchanges (mtgox.com, etc) I would expect the exchange rate to naturally go up on all the other worldwide exchanges, because of the reduced supply of Bitcoins due to the seizure. (The US only represents a fraction of the total Bitcoin economy, so I doubt non-US Bitcoin users would sell in panick.)
That is a nice consequence of the fully decentralized nature of Bitcoin. No single government can take it down.
The US claim jurisdiction on anything with a .com - and they've seized control of .com domains hosted abroad previously.
> No single government can take it down.
The US would find it trivially easy to take down Bitcoin if they wanted to.
"The US would find it trivially easy to take down Bitcoin if they wanted to."
No they cannot. For the same reason that the US cannot take the illegal drug market down, or cannot take Bittorrent down. Decentralized systems or industries (whether in the digital or real world) are very resilient.
Care to elaborate?
The attacker generates a blockchain that's larger than the real blockchain. That prevents any transactions being confirmed. To do this the attacker needs as much computing power as the rest of the Bitcoin economy, and they need to want to spend money to destroy Bitcoin. (Because they'd make more money either mining or double spending).
Even if that did happen, I think bitcoin could recover. All you'd need to do is get everyone to agree on a point in time where the blockchain was untarnished and to reset to then. That would be easier than it sounds, given the small number of existing clients. It would be damaging, but only in the short term.
This is no different than, say, linking your bank account to TD Ameritrade to do stock trading. And nobody uses this excuse to claim that it is a "major pain in the ass" to start trading stocks as an individual investor.
You seemed to use an argument to explain that it is a major pain slowing down the adoption of Bitcoin. I am just pointing out it is not the case for stock trading platforms, so it should not be the case for Bitcoin exchanges.
The open issue is whether these will be fatal or simply learning and buying opportunities.
And even if fatal, will the lessons learned help spawn a followup that fixes the issues (whether they be technical, social, economic, or legal)?
Sorry, but this is categorically false. There have been many mediums of exchange in history that were not hinged on the fiat currency of their time. Bitcoin has the advantage in the sense that it can potentially become ubiquitous thanks to today's technology.
I address that in my post (read it). Those mediums you mention have always been government/nation backed or had tangible value (spices/jewelery/precious metals/etc.). Also, you pretty much said it yourself in your post. There have been mediums. Not anymore, they didn't last.
Also, Even though Bitcoin cant be destroyed in a physical sense, it can still be completely devalued by litigation. The US has shown they are serious about anti-gambling and if this starts taking off, they simply need to go after the exchanges. Making it hard to buy bitcoins = BTC value goes down. Making it hard to sell (remember when pokerstars was shutdown? Everyone withdrew everything from ALL sites) and the value goes down catastrophically fast.
Basically, all it takes to completely devalue bitcoins is to have one event that makes most bitcoin owners think the amount of time they have to cash out is minimal.
How do you think the market would react if mtgox had a 'megaupload' style moment? It doesn't even have to be realistic- The US gov could just say terrorists might be using it to funnel funds or something.
But anyways, If mtgox was raided or taken down (and please don't say its not possible- Its totally possible) the effects on the market would be massive and instantaneous. When megaupload was taken down, all its competitors shut down out of fear as well. Its likely that would happen in this situation in a similar fashion.
There is no intrinsic value in bitcoins unless it is possible to easily trade them with a outcome of receiving capital. Yes you can trade bitcoins for services, but the person giving you services is not going to do that unless HE can get cash from this. People are not going to trade services/items to each other in a giant circle if the value of the currency is not hinged on a dollar amount.
I think the pro-bitcoin line to counter what I am saying is that someday people wont care if it converts into USD, because bitcoins will be more valuable. Its not totally bullshit- The USD is no more 'real' than a bitcoin, with the exception of it being established and backed by our gov. However, I doubt BTC would ever get gov backing, so it will eternally be at risk.