this is pretty interesting.

But why is this better than xferring money online through bank accounts and such? The institutions already provide a very high level of security, service, and depending on your level with them, you can move money around fee-less it seems.

This has proven to be a problem for Americans wanting to play poker.

but those are the ones who stole from me

Most traditional transactions are not "cash like". You can sell me something, I pay by paypal and then tell paypal I never received it. This source of friendly fraud increases business cost and legit customers end up paying for it in higher prices. Bitcoin is irreversible. If you give me 20BTC then that transaction can never be reversed (similar to cash). Obviously that means it has all the risks AND dangers of cash.

While the banking network is robust it is also centrally controlled. Americans learned the govt via control of the banks made it very difficult to transfer money to poker sites. If poker sites accepted bitcoins those transactions couldn't be prevented. Hell if PS for example ONLY accepted bitcoins it is unlikely the govt case would be much more difficult (maybe impossible).

One use would be playing poker. It isn't illegal for US player to play poker it is simply defacto banned by making movement of money very difficult. I don't have complete trust that our govt will always do the right thing. This is different than "fearing" the govt. I am just a realist. The govt often does STUPID wasteful things and the war on poker is just one example. A decentralized transaction network makes it more difficult for the govt to interfere in the private decisions of where citizens want to spend their money.

Another use is to avoid transaction monopolies. VISA & MC and the banks make roughly $300M a year simply allowing people to use their own money. This is on top of their ability to borrow at next to nothing then purchase risk free treasuries and simply collect a spread on imaginary money (money created out of thin air by the Fed). You are worried about "miners (transaction verifiers) on bitcoin network making couple hundred bitcoins out of thin air. Our federal reserve does it and those profits flow to banks at the determent of everyone else (larger money supply = inflation = your dollars buy less but banks make an risk free spread on money that was never theirs).

Regarding VISA/MC, their duopoly makes fair market pricing of those transactions difficult. It isn't a coincident that VISA and MC have almost the exact same prices and keep those prices artificially high. That is impossible in a P2P transaction system. Given that anyone can validate bitcoin transactions and can charge anything they want you instantly have a free-market based system that becomes very difficult to control. Need a transaction validated very rapidly? You can pay a "high" (say 3%) transaction fee. Just need it validated eventually? You could pay a very low transaction fee (say 0.01%). Each entity validating transactions can choose how low of a fee they are willing to accept and likely will have to change their threshold based on demands of the market.

Look I am not saying to put any serious money in Bitcoin, it could certainly crash and burn. Developing a secure decentralized transaction system is very difficult and Bitcoin has some major problems (high volatility of exchange rates, low transaction volume, long term deflation risk, etc). I am just saying the reason for Bitcoin is valid and eventually some system (if not Bitcoin some future system) will capitalize on that need.

I think it will become a viable option for poker when we get several futures exchanges up, this way you can "lock in" the value of your bitcoins daily, or hell, hopefully the sites will absorb that type of confusion and do it for you.

It's pretty interesting what the implications for money laundering would be. I would strongly recommend that you NOT play poker for bitcoins in a state that has passed laws explicitly banning online poker, or B&M poker. Then for the rest of us in states where poker is legal, I still think it's a bit of a gamble of whether or not the DOJ/FBI whoever, would consider it laundering. While you might think you are protected under the law, it's the FBI's interpretation that matters, and we've all been witness to their overextension.

but can you buy hookers and blow with BC?

@RiverPlay:

Yes, yes you can. One of the biggest reasons the government is taking an interest in BC is because it's very easy to buy illicit items.

It's kinda sad, but it's really one of the strongest attributes of the system right now, as there are few vendors selling normal stuff. One element that has propped up the value is that people have been buying "mining equipment" like mad, and so vendors have been selling graphics cards, in bitcoin. That said, I bought my stuff in USD.

Actually, they are all in whole numbers, we just use a decimal point to make things easier to read.

You can add those layers on top. It doesn't exist now. PayPal is great for buyers. It's a disaster for sellers. You basically are SOL when you get scammed, they seize your funds, and you are screwed.

There was a service where you could escrow money, they take a small cut, and then release funds when items are received. If Bitcoin were to take off, you would see a lot of similar things to what we see now. Banks, e-wallets, etc... You'd see buyer protection services. Right now it's just a bunch of amateur-hour sites out there, but if it became significant, it would likely pop up. But the fees would likely be a lot smaller.

Irreversible transactions where you can't track who the person on other end is means you should be extremely careful with your coins and extremely careful with your wallet. Getting ripped off is easy. But you would be the same way with cash- if it's someone you trust or you can't get ripped off, use cash. If you want protection, you'd use a credit card or escrow.

If it takes off, it will be in black/grey markets initially. It's not easier to use than cash/PayPal for people who don't have any coins. So it needs some bootstrapping to get there. Where it will make sense is where people get huge benefits from using it. Right now that seems to be black/grey markets and also remittance or huge fee transfers of funds. This may be enough to give it stability and to increase the economy to add features that mainstream users might want to have (e-wallets, protection, escrow, etc...), and then it might make the leap. Or it might not.

the argument that it's great for poker is a nice one for all of us but if it just opens up the doors for something serious like money laundering, there's no way in Hell i'd want to touch the stuff. It just seems like it would be hell if I ever got audited.

great post

In the short term it seems like it could be a possible solution for payment processing. What I would be thinking is something like: gambler in US buys bitcoin, sends the bitcoin to a poker site, poker site exchanges bitcoin into USD and credits gambler's account with the equivalent.
It would also work very nicely as a way to cash out, all that is necessary is the poker site to have a working relationship with an exchange.

No the poker site should have ABSOLUTELY no public relationship with an exchange.

Want to deposit - send bitcoins to poker room.
Want to cash out - poker room sends bitcoins to you.

How you get go from $$$->BTC or BTC->$$$ is something the poker room has no knowledge of, nor wants any knowledge of.

Plausible Deniability.

Even in that case they will have to have a working relationship with an exchange since they most will most likely want to turn their raked bitcoins into USD.

I was also trying to show the point that bitcoin can be useful by itself and not just have value as a speculative vehicle (tulip bulbs).

I think maybe it would be useful for the poker site to have an exchange option, like you could play in bitcoin when you transfer them, or you could exchange it to USD. If an existing site added this feature it would appeal to a wider audience that way.

Obviously I am not. How can it not be obvious from my post...?

Why do you feel the need to use the term "fiat currency"? All modern money is fiat currency.

There's an artificial hard limit of 21M bitcoins. Creating bitcoins becomes exponentially more difficult as time passes. I don't know why anyone would compare bitcoins to normal money when talking about Ponzi schemes.

Not at all, they can decide to payout people in bitcoins if they bought with bitcoins, and maybe even give an extra % for making any cashouts in bitcoins. That way they don't have to deal with exchanges/banks, you do.

Umm, no.

I'm curious why you say that Bitcoin is a Ponzi scheme but other fiat currencies are not.

I've been reading through this thread and seen the standard accusations about bitcoin. That it is a "ponzi" scheme (definitely no way it is a ponzi, you are thinking it is a pyramid scheme, and you are all still wrong imo). It doesn't have the guarantee of the government etc. etc.

What you guys are missing is that is not important. For purposes of poker, it could be useful in the way that I described in my earlier post.

You do not have to in any way speculate on it's value, you can simply use it to facilitate a transaction without any third party telling you that you are not allowed to make that transaction. Also for the time being, unless our government goes extra-George Orwell there is no precedent for the government banning a digital commodity; for example, I don't really see how bitcoin is that much different from WoW gold from a legal perspective.

So again: pyramid scheme, no legal backing, tulip bulbs. I don't really care, as long as it has at least some value it will be useful for making transactions that would normally be logged and hindered by a third party handling your money.

those calling it a ponzi scheme, would you call stocks a ponzi scheme too? if people want shares (bitcoins) the price goes up, if people wanna get rid the price drops. pretty standard, nothing ponzi about it.

Absolute truth on PayPal. I used to trade instruments and audio equipment and the buyer scamming just got out of control. Escrow was the solution (apart from trading in a closed, trusted community).

I wish this could be an answer for poker with Barton claiming August of next year could be the target for bill passage, and then we'd have to wait 6 months after that for regulatory stuff to take place. But who knows how long it will take for a pro site to enter the BTC arena and replace the amateur **** cornering the market now.

my biggest complain about online payment processors is the ridiculous vig they charge. Paypal charges a 3% on all xfers right?

odesk.com charges 10% should you use their services. If i want to give my employee a bonus, odesk will take 10% of that. what the **** is that.

So for that reason I would rather use bitcoin as I assume it's fee-less ?

but still, how do you manage to argue that its utility > for us than it is for people who will try to use it to move money around to skip out on taxes, and other shenanigans

bitcoin doesn't have fees for most transactions, there is an extremely small transaction fee in some cases, mostly for purposes of preventing denial of service type attacks on the network.
Most of the major exchanges charge something like .65 percent for making a trade. If you find someone who wants to exchange for cash or you sell some goods for bitcoin then it is obviously free.

Regarding your last paragraph: why do you care at this point? Just because it is useful for "shenanigans" doesn't make it not useful for other things. Of course you can argue that all of these things will make the government crack down on it, but for the time being I think that it should definitely be considered an option for poker sites.

Ive been playing ring game poker on betco.in since last night the interface sucks but way better than nothing
Super low volume
Super loose play guys call you down with two big cards and hit river

Still way better than nothing

Obviously not for everyone

Im up on the tables and in the bitcoin market too woo hoo

Lol yeah paypal has many holes, it was ever worse back in the day when everyone and I mean all sellers took your payments blindly before you were "verified" as an account with a legit bank attached to it.