Gold does, but it actually doesn't need to have those non-monetary uses. The primary value of it comes from its ability to be used as money. There are certain properties that make something able to be used as money. These include scarcity, recognizability, portability, divisibility, ability to be stored over time, and difficulty of counterfeiting.

Gold has these properties. And of course, some other metals, like Silver, do also. But anything that has those properties will have value because it can be used to fulfill the role of being money, which is something all modern civilized societies need. Bitcoin has these properties, so it does have value and, assuming the system itself isn't hacked or compromised (which looks unlikely), Bitcoin always will have value.

There can be other cryptocurrencies, but if those other currencies aren't scarce, then they won't have value. If those other cryptocurrencies ARE ALSO scarce like Bitcoin (and have the other properties as well), then those other cryptocurrencies will have value. But that does not effect Bitcoin, because Bitcoins themselves ARE scarce, and have value independent of the existence of these other coins.

Only bitcoins can be used at a bitcoin accepting merchant. The other crypto-currencies won't fill that requirement so they are a different thing. At best they could be a partial substitute, but right now there isn't a similar set of businesses accepting other coins so you can't use them to satisfy your crypto-currency needs.

The first one (Bitcoin) can work because it fills a very different need than existing monies. The second one doesn't have those advantages. And the network effect encourages everyone to stick together. $10 worth of coin you can use at 1000 places is worth more than $10 worth of cryptoX that you can use at 10 places. So if ever the value leaves 0 it will tend back down toward 0 fairly quickly.

how do you actually "buy" bitcoins and how do you "store" them? Is there some kind of bitcoin bank account?

You can buy them from anyone who has them and is willing to sell. There are places that facilitate that like MtGox and BitInstant.

You can store them in a file on your computer yourself using the original bitcoin software or an alternative client like Electrum or MultiBit, bitcoin.org is the place to look for that.

You can leave them with someone else. People have been ripped off for a lot of money this way, but many still do it because it is convenient. instawallet.com is great for a small amount for a short time.

****coins.

lol @ "well, any crypto currency can come along therefore bitcoin is not scarce" - I mean, really. Many other crap knockoffs have been created - SolidCoin, Litecoin, etc etc. None have any traction because bitcoin has the infrastructure built up, the merchants accepting it, and the overall investments to support mining and commerce that people will just not wake up and switch to another system overnight.

The fact is bitcoin is the only viable decentralized cryptocurrency and will remain the only one for some time.

So if you agree there is a value to anonymous (if desired) peer-to-peer global money transfers for essentially free, then bitcoin has a value and will continue to have a value.

Poker is harder than something like sportsbetting, there has to be a trust that the site operator will prevent collusion, ensure fair dealing, etc. With Sportsbetting, as long as you are confident the sportsbook isn't going to run away (and why should they if the business is really profitable), then everything else is public and can't be rigged (nevermind the occasional shady ref).

So I think that poker will take some time to click - for an established player who already handles security well to join the bitcoin universe, but sportsbetting is already there with sites like btcsportsbet and btcsportsmatch. Anyone who has tried to move money to a US facing sportsbook in the last few years should immediately see the value of bitcoin.

I am thinking of investing in bitcoins, should I:

Pre-order a butterfly labs super computer ($30k for 1,000GH/s) to mine bitcoins. According to my calculations, taking into account a 20x difficulty increase and the reward per block halving from 50 to 25 in December, 1,000GH/s will net you about $25578.64 a year at the current exchange rate, with 165 days being the break even point. After that, I'd be "printing money."

OR

Use the money to buy bitcoins themselves on the speculation that bitcoins are about to sky rocket in value. My reasoning for them to sky rocket is that the new ASIC hardware will secure the bitcoin ecosystem, and that in turn will generate a lot of good press.


I'm on the fence and am interested to hear some opinions.

if you do the first one you can have ppl invest in you on glbse

Lots of people have the same question. The question is if/when BFL will deliver, and will it be up to spec? And will you get it AFTER everyone else gets theirs? What if your hardware has a problem, there are possible downtimes and massive technical headaches.

I would suggest #2 because if you are convinced on the exchange rate moving up, that is the easiest way to profit. Too many unknowns with #1 at this point.

Good points. Glad to see there are some bitcoin enthusiasts on here, hopefully some others will chime in.

Do your calculations include electricity costs?

EDIT: wonder how many bitcoin mines have been raided by police expecting to find a cannabis grow, heh

I cannot find anywhere the projected power use of the new SCs. However, they are supposed to use way less power than current technologies per Gh. I have accounted for 1250 watts of continuous power in that calculation- not sure how accurate that number is though.

That is another reason why mining is so appealing to me... I would be getting free electricity which makes the ROI that much sweeter.

Interesting. Mind sharing how you're getting free electricity?

Also - not to spoil your fun, but from what I've read, the computing power required to mine a coin will automatically increase as more computing power becomes available, meaning that if many (or any) others have your idea, then your ROI will be lessened. I think that it's hard really hard to predict this and thus I think you're best off at least hedging your mining investment with coins.

Why doesn't someone make a poker site that runs on bitcoins and then see if it succeeds or fails. Since bitcoins are not recognized by any governments then legally they are the same as play money and so no government regulations are necessary. No big site or operator would ever do anything with bitcoins so a startup should take up the task.

Edit: Oh apparently there are some sites that run on bitcoins. Are they any good?

I created an account on Seals with Clubs and have just been playing the freerolls. The entire notion of being able to instantly deposit or cash out within 5 minutes without having to act like you're smuggling drugs is...completely, jaw-droppingly amazing to me. I mean, after all basically all of us have been through over the last few years...the difference cannot be overstated.

Solar?

is there a historic chart of the exchange rates of bitcoin?

bitcoincharts.com has a lot of data. Choose MtGox USD and 'all data'. It goes back over two years.

http://bitcoincharts.com/charts/mtgo...zm1g10zm2g25zv

Thank you.

could you make a little explanations of the movements in this chart, for the non initiated?

Pretty much people got really excited last summer and bought it up to a point where it just couldn't be sustained.

That Jan 2012 rise is generally attributed to the exposure on "The Good Wife" episode all about Bitcoin with appearance by Jim Cramer.

The recent spikes in both directions may or may not be related to speculation about whether "Pirateat40" will be returning his investors (aka victims) coins.

I stay in hotels year-round which are payed for by my employer. Usually I stay in the same location for months, so it's not like I'll be having to move the machine every other day to a different hotel- that would get old fast.

I am still on the fence. Both avenues have various risks associated, so it's hard to decide which is the better option. I am well aware of the difficulty increase that's coming and have been crunching numbers accounting for a 20x increase, but no one really knows how high it will jump, it is purely speculation.

I'm going to keep poking around some bitcoin forums and try to figure out what I'm going to do. I will let y'all know what I decide and why. Then you guys can sweat me as I lose all my money or become rich like Phil Ivey!

much appreciated.

IMO I see pretty stable growth there with the exception of the huge spike last year. With the ASIC technology coming later this year, I am expecting to see another spike similar to last year.

Or am I putting too much emphasis on the effect that ASICs will have? I think it is a very good thing and will generate a lot of good press. It will strengthen the network and make it almost an impossible feat to make a 51% attack on the currency due to the added speed. Opinions???

media attention was imo the reason for last summer's spike:

http://www.wired.com/threatlevel/2011/06/silkroad/

i couldnt find anything better to compare it to scale-wise on google trends: http://www.google.com/trends/?q=bitcoin,+backgammon


Why is bitcoin $10 now?