I think we are just not quite there yet with bitcoin, we are perhaps at a precipice where it could take off, or form a speculative bubble that bursts and dies out, perhaps people move on to the next great p2p anonymous currency. It lacks the killer app to take it to the next level. This killer app will probably initially come in the form of trading bitcoins for drugs, porn, and gambling.

You might compare this to the early days, we all used Napster to get files. Then we switched to Morpheus, or Kazaa, or bittorrent, or whatever. Rememer freenet? It was going to be the anonymous internet future, but it died out and a 'competitor', tor, took over the 'market' for an anonymous internet. Maybe a competitor will spring up that pushes bitcoin down?

Similarly, PC's in the early days were at a precipice. IBM had launched the PCjr with great fanfare, trying to get the PC to the masses. It failed miserably. People weren't going to peck away at a chiclet keyboard on DOS 2.1. But Bill Gates ripped off Apple's gui and bringing it to the masses in the form of Windows was the killer app that sent it to the next level

'probably'? These all already exist, and are doing real business, in a far more efficient way that using any other currency.

Just because you think people are purely speculating on btc for exchange rate gain - doesn't mean there are not real economies actually using btc for real trade and commerce. That is the killer app: fast, frictionless, anonymous (if done properly), international transactions with no 3rd parties involved (banks, governments, Paypal, Western Union, etc.) If people can't see real value in that, then they should probably stay away from bitcoins.

actually I'm quite aware of the underground markets, and most of the real down and dirty black market stuff still trades via pecunix

All good points. That's the biggest risk, IMO. That some other protocol that is superior comes out and makes this valueless. There's significant risk that this becomes worth little. But there's a reasonable chance it goes up quite a bit. The other big risk is a government clamp down. Not that they can do much to stop what is out there, but they'll have the power to stop a lot of the ways people fund it. At least make it difficult for most US users to get money into the system, making it's value hurt a ton.

I think we're 3-6mo from having active in person exchangers in most major cities. It's also going to be hard for US gov to get online exchanges in other countries. And a lot of the trading is decentralized anyway. We focus on Mtgox because it's a lot of data and offers in one place, but I'm sure it's not close to most of the trading.

im pretty sure mt gox is home to the vast majority of BTC trading. maybe there have been some large transactions that took place in person or something, but there's not much else on the internet.

The online exchanges still need to get money wired in somehow. That's where they could stop things. In person exchangers still need to get money to the exchanges somehow. It won't stop Bitcoin, but it will slow down the growth potential.

Seems to be less of a risk to spend 1k on a mining machine than buying 1k of bitcoins. #amiright?

MtGox is obviously the largest exchanger and is pretty important for now, but I think there are already a lot of small time dealers that add up to more. I'm hardly nothing, but I do about 1% of the volume there, it would be more if my poker accounts weren't locked. Small timers easily add to more than the 'real' exchanges.

You can't see everything on the internet. I get PM requests and make a deal, you can't add those up. There is no options market yet, but I've bought a few of those anyway.

Yeah, but it'll be a bunch of specialists who only need to move their net periodically across borders or whatever. Say I sell 80k and buy 72k in a month I've only got to arrange 8k one time to get balanced again. It's not at all like poker where every shmo needs to get money to Isle of Mann for it to work.

Obviously it'll suck when exchanges get hit though. Some will lose funds in transit or balances with exchanges. Some will panic thinking that the exchanges are everything etc.

Where do you see evidence of there being 100 more people like you doing 1k+ of BTC trading a day outside of Mt. Gox?

#bitcoin-otc sees a fair amount of trading. As it's person-to-person it's a bit hard to get an idea of total volume though.

Most of the trading in there is for small amounts of money. There's always some larger orders in the order book but they don't seem to get filled much. I haven't watched that chatroom very closely or anything though.

8200 forum members, probably 10% do some trading. Like I said, we can't see it, but I don't think I'm way high.

This rally is just insanity. I keep hoping for a dip to buy on, but the train keeps moving right up. Eventually some of the early guys are going to sell to try to cash out some value just in case, right?


Also, regarding mining rigs vs. buying them.

Mining rigs will have some residual value in a complete crash. But the odds of a complete crash short term is real low, if anything, you'll see some residual value in the coins. Last time I priced it out, mining was much less likely to be profitable than just buying coins (if I spent $X on mining, I would get Y coins, and if I just bought coins, I would get Y+Z coins). But that was at prices way lower than before. I'll try to make something to actually try to calculate it.

Not really...mining difficulty is going way, way up. The next jumps are likely to be huge based on the new prices. Sure you still have hardware residual value, but you are missing a lot of upside waiting for your miner to generate. And you will get less than you expect unless you are already factoring in large difficulty increases.

I'm trying to do some modeling predicting difficulty. It's hard because there's not a huge number of data points. Price really is driving difficulty, and there's a slight lag. If price goes up too much, the next difficulty tends to go up a ton. Prices stabilize, difficulty slows down.

I'm working under an assumption that it's fairly difficult for the network to grow a lot when the price goes up a lot.

Looks like mining becomes more profitable than buying coins if your rig can last 6 months. Also, if the price is constant or not increasing much, you profit more by mining.

It has been a few weeks since I learned of Bitcoin and checked this thread. Had there been any progress with this currency? Can you actually buy a decent amount ($500-1000)of bitcoin via paypal or another easy way these days or is this still a problem?

Are there any more places that actually accept bitcoin, or are we stuck buying alpaca socks from some 2 bit outfit? Exactly who is using bitcoin for decent sized transactions (not just micropayments).

It's like online poker. The US government doesn't need to do anything to Pokerstars (or bitcoin). They just need to tell all the banks/paypal and businesses not to accept it - making it worthless - and that part is super easy. I doubt people will be moving abroad so they can use bitcoin. haha

There are no easy ways, although at the price now, you can get in slowly through Coinpal.

If you want to buy a lot, you can wire money to mtgox or do an ACH push if your bank supports this.


Not many places, although the poker site is getting more action. It's still nothing, but it's more than it was.


This is somewhat correct, except you aren't dealing with as much centralization as the banks or paypal. You are dealing with a ton of small time people who would sell it. Sure, the gov't could treat them like drug dealers for selling these things. They do that, and it scares enough people away. It's certainly a big enough risk. It would still likely be a niche thing, average Joe wouldn't use it. But look at the drug economy. The government is doing a great job of stopping that, right? They crush one small time dealer, and 5 more pop up.

Coinpal has just had their PayPal account frozen. PayPal have decided to class the selling of bitcoins as currency exchange which is prohibited by the terms of service.

It was a matter of time. Paypal finally woke up to the Bitcoin threat. This is a nice validation for bitcoins.

The funny thing is PayPal allowed him after email contact. One of the biggest private sellers also had his account frozen.

PayPal really making convincing arguments to use their service where they can arbitrarily freeze your account. Screw PayPal.

It's going to be interesting to figure out what kind of loopholes pop up, and eventually they all get closed.

grunch

are there any bitcoin to paypal/amazon/neteller etc exchange sites? would such a site be useful?

There was a bitcoin to paypal site up until a couple of days ago when PayPal froze their account and informed them that buying/selling bitcoins with PayPal was against their terms of service. Any site that exchanges bitcoins to/from other currencies is useful, definitely.

You are going to need to find someone reliable to sell to you. If you are really interested, I am going to try to set something up to buy a bunch and I can sell some to people on PayPal, although I need to make sure I don't get scammed.