Please explain how a bitcoin blockchain record can testify in court that a copy of a document is authentic. Hint, you're infront of a jury, you have a blockchain hash, and opposing council has a notary public with 40 years of experience, both copies of the document differ, the original cannot be found. Hers has an official looking seal, you have some random numbers.

Please explain how I can buy a pack of cigarettes at 11 pm in under 5 minutes with bitcoin.

In short most of your claims are highly exaggerated and don't work beyond the most trivial scenarios.

Here's an imaginary possibility. A hundred and fifty years from now, courtrooms come with computer systems built from scratch and operated by court clerks. Their sole purpose is verifying blockchain records. The jury knows to trust the machine. In fact, the jury instructions tell them to.

None of the jury members have ever seen official documents on physical paper. They only know about paper documents from watching historical fiction movies. In such movies, the possibility that the documents are forged is always a major plot factor.

Subsequent cases would be able to use the precedent, and win with less interesting experts.

http://en.wikipedia.org/wiki/Howland_will_forgery_trial

If you think about it, this is a lot more convincing than getting a ribbon-covered document from a foreign jurisdiction that you may not be able to read, even if it authenticated by a series of trusted authorities (a chain of embassies in this case).

Now iam replying to this from a phone

Just saying technologies improve over time, bitcoin is a very interesting mix of technologies, probably the most exciting thing to come along since email, web, bittorent and social networks

In fact the whole value of the currency is based on the fact it takes work, and therefore time, to create.

Look, bitcoin is a platform and it is in it's infant stages. But, it has huge potential. Potential does not mean odds of success are 100%

https://blockchain.info/charts/avg-confirmation-time

Bitcoin-type technology has tons of potential, my friend.

The point of the person you're replying to is that, for 99.999999% of businesses, there is no benefit to using BTC. It doesn't offer the buyer any protection, it's extremely volatile, and it would require an overhaul of the entire economy's infrastructure to implement in any meaningful way.

Also, nice strawman with the laptop. Ever heard of smartphones?

BitCoins don't have any resistance to movement, or very little. Physical money does. This means the difference between BitCoins and physical money is perhaps comparable to the difference between massive particles like atoms and massless particles like photons, or to the difference between a classical conductor and a superconductor. Which is only to say that the same rules don't apply - new behaviors are observed.

We are in a new world and the study of economics is about to take a huge left-turn.

You can add direct-debit to bitcoint with a trusted third party. (And there might even be clever ways to do direct debit in bitcoin without that third party.)

CoinKite will be interesting to watch.

[0] https://coinkite.com/

I really fail to see what problem that isn't already solved in this regard.

Actually, once you've been verified by an exchange (required prior to buying Bitcoins unless you do a private party sale), selling Bitcoins is easy; it's getting your USD wired/ACHed to your bank account that can be time-consuming. This is due to the legacy banking system, and not some problem inherent to Bitcoin.

EDIT: By the way, it's not "very difficult" to sell Bitcoins. If I want to sell a Bitcoin, I log onto my Bitstamp account, put in a limit order. When the sale is executed, I submit a short, pre-filled form for a wire transfer to my bank. I then wait a few days and the money is in my bank account, in USD. Not hard.

http://www.investopedia.com/terms/l/liquidity.asp

Part of the value of dollars as a medium of exchange is that the value does not fluctuate greatly from day to day or minute to minute. In the short term, you can rely on prices remaining fairly stable.

You make a good point, and my above explanation was a bit confused.

I think BTC faces both problems:

There's high volatility, driven by the current level of speculation and the fixed quantity of Bitcoins that exist on the market. This makes Bitcoin a fairly poor medium of exchange since it is unlikely to hold a stable value from one day to the next.

There's also (I suspect) poor liquidity, driven by the low number of people involved in the exchanges (compared to other assets and currencies). While it may be easy to exchange Bitcoin from a process standpoint, you may not be able to get a price sufficiently close to the last quoted price when you go to exchange for dollars. It may be more liquid than a house, but it is much less liquid than USD, EUR, GBP, etc.

Is my liquidity assumption mistaken?

Unless you're an investment banker, yes. There are multiple exchanges that handle daily volume in the 10's of millions USD, with order books deep enough that you could cash out millions of dollars worth of bitcoin without moving the price more than a few percent.

That's nothing compared to what Wall St or the city is used to, but it is plenty enough liquidity for all but the most well off individuals, and growing. When the Winklevoss twins get their bitcoin ETF to IPO, I expect these numbers to increase by orders of magnitude.

Also, none of that is counting the significant volume of transactions which occur non-public or off-exchange.

You're absolute (and obviously) correct about Bitcoin's volatility, but you're mistaken about its liquidity.

Bitcoin is quite liquid if you're in the U.S. and many other countries around the world. The only delay is the time required by the legacy banking system to wire or ACH funds in/out of your exchange account.

1) Bid Ask spreads vary by exchange and currency, but it seems that with the exception of BT China an MtGox, the bid ask spreads can be quite wide. Prices for BTC/USD also very a good bit by exchange, meaning the price a merchant sets might be influenced by which exchange they use.

[1] http://bitcoinwatch.com

2) The MtGox live chart seems to imply that an order of a few bitcoins (or a few thousand dollars) could have a profound impact on the actual price of BTC/USD. This does not seem particularly liquid to me, unless I misunderstand the chart.

http://mtgoxlive.com/orders

US/EUR seems to commonly be around 100 billion or so a day.

The only reasons it is different with houses is because people are emotionally invested in them, not all houses are equivalent (and thus their value is unique per house), and liquidity is hence really low, and market prices adjust slowly.

Bitcoins are worth a thousand dollars because people who own them are not willing to part with them for less, and people who are buying them are willing to pay that much. This is economics 101. You can always cash out at the market price, unless liquidity is low; the only time that happens is in a teeny market or a crash.

It's only easy to buy a house for $100M if you have $100M you can spare for house-buying. And then you only get to choose from the rather limited range of $100M houses that are available for sale.

Similarly, you only get to sell a house for $100M if you have a house that nice to sell. And then you only get to sell to the rather limited range of people willing to buy a house for $100M.

But perhaps I've misunderstood. If you happen to have $100M burning a hole in your pocket, it's easy to buy a house that would normally cost $1M with it, because most people with $1M houses will happily sell them for $100M. But the parallel to that is that if you happen to have a house that would normally cost $100M, it's easy to sell it for $1M. Which it would be.

With the exception of Mt. Gox, this is simply not true. It's hard to both buy and sell Bitcoins if you've not been verified at an exchange, but once you do that (not very hard), it's equally easy to both buy and sell. The only delay is the time needed for the wire or ACH to arrive.

I get the feeling that many of you are talking confidently about something you have no experience with. Where are you getting the idea that it's hard to sell Bitcoins?

Bitcoins are a currency, there's no need to convert them. It's just happening now because some people want into this environment.

Have you tried paying your taxes in Bitcoin? The IRS (or regional equivalent) is not going to accept bitcoin any time soon and they will want you to pay taxes on, for example, profits. There is a need to convert, don't believe otherwise.

Companies regularly complains that this costs them 1% or so of revenue.

Not yet.

Saying you're not supposed to convert bitcoin is the statement of someone who thinks bitcoin is NOT an investment. So... not a goldbug.

1. People stop bothering to follow the law, and governments throw their hands in the air and do nothing about it.

2. Governments start accepting Bitcoin for tax purposes.

I am not confident that either of these will happen...

Yes, unless you want to, you know, buy something...

You need grocery stores, gas stations, clothing stores, and restaurants to start accepting it. Until then, it's really just a novelty for middle class college Libertarians.

Do you think that cryptocurrencies spring fully-formed from the forehead of Zeus?

That bar/grill is a novelty -- and it probably only accepted BTC in the first place because there was a BTC EVENT held at it.

There's even projects that accept donations in bitcoins, you'll see wallet addresses like this: 1JBEGFXW6ywMtZnCbjvKGJXDtdR6g6KmMi

Their utility isn't tied to the fact that you can turn them into more of your favorite currency later, that stupidity is what's driving the current bitcoin bubble. Wait till people realize what you can do with them.

Try buying an iPhone 3g right now on Craigslist. I bet it takes you all of two minutes.

Then try selling it. I bet it takes quite a bit more time.

Asymmetry.

Currently (and for the last years), the price of BTC has been rising implying that's actually easier to sell BTC than to buy? Moreover there are exchanges that are entirely symmetric (when opening accounts you do not need to qualify as a buyer or seller).

Asymmetry is a nice word but I don't see what's asymmetric here?

Also there is some basic lapse in logic here. Just because a WoW nerd can trace the currency on a technical level, does not mean it is "easy."

Why is this guy an expert? He was an equity analyst for a long-time, but obviously not good enough to get rich. And there are thousands of Wall St. analysts walking around in NYC. I wouldn't even trust their opinion on equities, much less something new. Never read opinion pieces written by journalists.

Even if you take the assumption that bitcoin will fail, the problems/issues the protocol or something similar solves are far too beneficial to ignore.

So basically if bitcoin fails, some other similar form of digital currency will rise up in its place. I feel as though its a 'cat is out of the bag' scenario.

* disconnected operation (solve the double spend problem in a disconnected setting) (this would really make something gold-equivalent)

* a provably correct, but cryptographically secure ledger (meaning real anonymity)

* proof of work based on a single crypto standard seems risky. Use 5 of them.

* provably no way to compromise the network even with overwhelming computational power

Combining 5 proof of work standards just gives you 1 new one. (There might be some robustness to be gained, though.)

I think that was the author's point.

For example, Paypal, Amazon or the IRS could announce tomorrow they will accept payment in Bitcoins but peg their BTC/USD exchange rate to one.

Speculation would all but stop and Bitcoins would become a transaction platform.

It's an open question whether such substitutes will trade on par with the real "in-blockchain" thing. Personally, I doubt it.

If enough goods and service providers followed suit, current speculators would have to take a hilarious loss to buy anything.

what are you, the owner of 100btc going to do:

a) buy $100usd worth of goods at ebay directly

b) cash out at a proper exchange for $100,000usd, then buy $100usb worth of goods on ebay and have $99,900usd left over? or cash out ONE btc for $1000usd, buy $100usd of goods and have $900 usd left over AND 99btc?

How do you expect any even remotely rational players do participate in this farce?

Given the fact that current BTC to USD exchange volume is fairly small, it wouldn't take that many large global goods and service providers pegging their BTC/USD exchange rate to cause the speculation market to collapse.

Those that recently bought their Bitcoins at $900 would sell below the current high price to realize their gain and avoid a potential loss, then those who bought at $800 would follow suit, and so on.

In very short order, Bitcoins could be trading in single digits.

you are proposing taking for example a $100usb product and selling it for 100btc... which at current market value is the equivalent of over pricing it to $100,000usd. Who would buy that when they could pay $100usd for it instead or convert 1btc and functionally pay 0.1btc for it instead of 100btc. What global goods providers would mark up their wares 1000x and who in their right mind would spend anything on that.

Sure, if BTC was worth > $1usd and you were selling them at 1:1 everyone would leap to do that because now they are GAINING by spending their BTC with you.

But your proposal means they loose 1000%. I don't understand what motivates this switch over.

Issuing more buy orders cannot cause a drop in price.

In your scenario, you propose that large businesses around the world issue a practically limitless number of buy orders on BTC, supposedly at a low-balled price, supposedly inducing people to fulfill those orders...

You can't affect the price of anything buy flooding the market with an enormous number of low-balling buy orders. You can create a floor, but that puts a lower bound on how far bitcoins can call - it doesn't induce the fall.

What they ultimately want is to guarantee they're going to receive the equivalent of $X for every widget they sell, so they'll either have to declare that Y BTC = X USD regardless of market prices, or they'll have to accept whatever Y in BTC is equivalent to X USD on a given exchange on a given day -- which is essentially equivalent to doing business in USD directly, with BTC as just a weird payment mechanism.

Businesses are going to be hesitant to accept BTC for the same reason they don't tend to accept payment in kind -- you need dollars to pay taxes and wages.

And you apparently forgot that the total number of bitcoins is severely limited (around 20 million).

Both cases lead to significant losses for whoever is trying to peg BTC to some arbitrary constant value.

What are you, Satoshi Nakamoto?

If enough goods and service providers pegged their BTC/USD exchange rate to one, the initial BTC speculators would take a bath.

But subsequent Bitcoin users would receive the benefit of Bitcoin transaction technology and the benefit of the US government's fiat currency for monetary policy.

Imagine if every goods and service provider pegged their unit product at $1,000,000USD. The VALUE of the US dollar would drop immensely. What force could actually make them do that though? Because no one's going to pay a million bucks for a big mac, unless they have 4 billion in the bank at least. Something that can't happen to bitcoin.

I do have a friend with 900btc though: I told him I was in the market for a dollar, and he just gave it to me, no questions asked. I wonder where he got it from?

In fact, I would argue that the script functionality is a huge flaw in bitcoin, probably the largest flaw. The existence of a scripting language within the transaction log makes it much more difficult to analyze whether I hold bitcoins or not -- my ability to spend bitcoins "held" in my address is contingent on my having additional information at the time that I post the transaction.

Having a generic proof-of-work-chain-based cumulative notary service might be valuable in and of itself. But bitcoin's value as "money" is independent of that functionality, and in the long run, the complexity of that scripting language and the difficulty of answering the question "have I been paid" will become problematic.

Fortunately software excels at automating tasks like this.

You already need software to scan the entire blockchain to determine address balances, is it really that hard for it to keep track of non-trivial unspent transactions separately?

Instead, you'll have a ton of publisher clearing house style "you just received a million bitcoins" notifications, once they enable more of the language in the client. It just seems confusing and unnecessary.

Edit

rationale:https://news.ycombinator.com/item?id=6810806

I'll just leave this here... http://www.befuddled.org/