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Bitcoins - digital currency Bitcoins - digital currency

07-15-2011 , 11:08 AM
IMO, the biggest flaw in Bitcoin is the initial distribution of coins.

Why was PayPal successful? Because it got in the hands of a LOT of people early. They did this through giving away $10 per new account for a while. Then it became the standard for online payments, and domination. This caused a ton of people to get accounts, be able to make payments, and sustain the economy.

Bitcoin really screwed this up. Not sure if it was intentional or unintentional, but the end result was an incredibly small number of people with a ridiculously large number of coins. Everyone else was fighting for scraps. Imagine a system where every person that downloaded the client got 10 BTC (assuming no cheating). You have a huge number of people with a small number of coins. It becomes easier to start commerce since everyone has something to spend. The system was supposed to somewhat model that, with CPU power being the way to prevent cheating, but it was flawed in a few ways. The first is, it was extremely undemocratic once GPU mining took off. GPU users are at a 100x advantage. The second flaw was the constant rate of giving coins away. The early adopters got rewarded at a rate of 1 million times of current adopters. This kind of disparity is not a good way to get widespread adoption.

I wish I had an answer to the GPU vs. CPU problem, but Gavin tried to solve the problem by the faucet, which of course had rampant cheating. The faucet almost should have been the major answer for widespread distribution. It's just a very challenging problem.

The second problem is much easier to solve. Rather than raise difficulty based on how fast things are getting solved, raise the reward with the difficulty, just not as fast. A difficulty of 1 would give you .0001 Bitcoins per block solved. A difficulty of 100,000 would give you something like 1 BTC per block solved. This would make it so the more people using the system, the more gets released. There could be time targets where the reward gets cut as well. This leads to a distribution where a lot of people have a few of them, they can start using them, and the economy gradually grows.
Bitcoins - digital currency Quote
07-15-2011 , 07:02 PM
The hard part is getting to the point where anyone is using the system. Massive potential rewards for the initial users is a pretty good way to get people to take a risk at the beginning. Mining is required to maintain the whole system while also making sure that people can't just get bitcoins for nothing. Part of the reason for mining was to keep people from cheating by requiring them to do something in order to get bitcoins.

GPU mining probably messed up the distribution of coins.. but it also provided a lot of publicity and made hardcore computer users aware of bitcoins sooner than they would have otherwise. Theres alot of value in the publicity of huge returns for bitcoins investments and easy money from mining.
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07-15-2011 , 07:08 PM
Poker sites also do not need to make a complete conversion to bitcoins. What are the downsides of a $100/week bitcoin withdrawal limit? It costs nothing to implement and theres not too much risk in keeping a relatively small amount at mt gox. The upside is obvious - instant cashouts, low fees, and its easy and quicker to turn btc into usd than pokersite money to usd.
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07-16-2011 , 02:25 PM
Quote:
Originally Posted by TomCollins
I'm going to guess not wanting to be thrown in a Federal Pound Me in the Ass prison, along with no profit being there, is enough to deter most people capable of this.
I assume it would be some company in Costa Rica or similar who aren't within reach of the US DOJ.

I believe the profit is there, this could even be bodog or an existing site just adding a bitcoin deposit/withdraw method as I described and and letting their games run in USD.

Neteller, moneybookers, credit cards and other gambling payment processors etc all take exorbitant fees the poker sites eat. A small investment of man-hours to setup a bitcoin deposit/withdraw method and potentially millions of dollars of payment processing fees instead goes into the site's pocket.
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07-16-2011 , 04:58 PM
Quote:
Originally Posted by Valhalla1
A small investment of man-hours
lol

Quote:
Originally Posted by Valhalla1
A small investment of man-hours to setup a bitcoin deposit/withdraw method and potentially millions of dollars of payment processing fees instead goes into the site's pocket.
A significant investment to support a small market, while making the site more vulnerable to accusations of money-laundering.
Bitcoins - digital currency Quote
07-16-2011 , 09:50 PM
Quote:
Originally Posted by Valhalla1
I assume it would be some company in Costa Rica or similar who aren't within reach of the US DOJ.

I believe the profit is there, this could even be bodog or an existing site just adding a bitcoin deposit/withdraw method as I described and and letting their games run in USD.

Neteller, moneybookers, credit cards and other gambling payment processors etc all take exorbitant fees the poker sites eat. A small investment of man-hours to setup a bitcoin deposit/withdraw method and potentially millions of dollars of payment processing fees instead goes into the site's pocket.
How are you going to market it to US players? Are you planning on never setting foot in the US again? Never flying through the US again? For peanuts?
Bitcoins - digital currency Quote
07-16-2011 , 11:45 PM
Quote:
Originally Posted by TomCollins
IMO, the biggest flaw in Bitcoin is the initial distribution of coins.

Bitcoin really screwed this up.
Why are you assuming there was a "mistake"?

It took me 2 weeks to figure this out...
That "fixed creation of BTC" = "deflationary spiral"...
Which is a quasi-Ponzi scheme to enrich the creators.

There's been no mistake...
The creators are out with $500K or $1000K profit...
And working on the next quasi-Ponzi crypto-currency.
Because Bitcoin has been discredited.

A business class currency...
Cannot not work without a trusted Central Authority...
Completely decentralized like BTC are toys.

How naive do you have to be...
To believe that "Bitcoin is exactly like gold"?

So many young people fall for "toys" like BTC...
Because they have no experience with financial markets...
Forex trades 4 TRILLION $$$ per day...
It's by FAR the biggest, decentralized, unregulated market...
Why would a Pro Trader **** around with BTC?

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

BTC got me back into Forex (as a sideline to my core stock trading)...
And I've already traded > $40,000,000 as I ramp up...
By the end of summer I'll be doing 100 x $100,000 trades/day...
I have to build and optimize a lot of infrastructure.

On $10 million/day in Forex you might NET > $500/day long run...
But that adds up *** if it's a sideline ***...
And there's *** no real ceiling *** if your methods work...
A $1,000,000 trade in any Top 10 currency...
Is a drop in the bucket, so you can ramp up fast...
Your margin is 2-3% = very Capital Efficient...
And it's classic Stats Arb = my specialty...
As opposed to near pure gambling w/BTC = Pink Sheet trash.

Just saying...
That faster the *** talented among you ***...
Get into financial markets, the better for you...
I wasted > 10 years of my life on sports betting...
Though that taught me about the nature of randomness...
And I was profitable with stocks from Day One.

Above all...
Think like a bookie... not a sports bettor.
Bitcoins - digital currency Quote
07-17-2011 , 12:25 AM
Quote:
Originally Posted by RedManPlus
Why are you assuming there was a "mistake"?

It took me 2 weeks to figure this out...
That "fixed creation of BTC" = "deflationary spiral"...
Which is a quasi-Ponzi scheme to enrich the creators.

There's been no mistake...
The creators are out with $500K or $1000K profit...
And working on the next quasi-Ponzi crypto-currency.
Because Bitcoin has been discredited.

A business class currency...
Cannot not work without a trusted Central Authority...
Completely decentralized like BTC are toys.

How naive do you have to be...
To believe that "Bitcoin is exactly like gold"?

So many young people fall for "toys" like BTC...
Because they have no experience with financial markets...
Forex trades 4 TRILLION $$$ per day...
It's by FAR the biggest, decentralized, unregulated market...
Why would a Pro Trader **** around with BTC?

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

BTC got me back into Forex (as a sideline to my core stock trading)...
And I've already traded > $40,000,000 as I ramp up...
By the end of summer I'll be doing 100 x $100,000 trades/day...
I have to build and optimize a lot of infrastructure.

On $10 million/day in Forex you might NET > $500/day long run...
But that adds up *** if it's a sideline ***...
And there's *** no real ceiling *** if your methods work...
A $1,000,000 trade in any Top 10 currency...
Is a drop in the bucket, so you can ramp up fast...
Your margin is 2-3% = very Capital Efficient...
And it's classic Stats Arb = my specialty...
As opposed to near pure gambling w/BTC = Pink Sheet trash.

Just saying...
That faster the *** talented among you ***...
Get into financial markets, the better for you...
I wasted > 10 years of my life on sports betting...
Though that taught me about the nature of randomness...
And I was profitable with stocks from Day One.

Above all...
Think like a bookie... not a sports bettor.
Seems like your post tries to get us to believe you rather than to be convinced by your argument.

You could be completely right, but I need you to explain more...so what if the creators made millions off of the deflation of btc?

Also, you seem to immediately cast into a negative light the fact that btc is decentralized. Could this not be a big plus? The dollar is currently at a moment of truth--it's fate will largely be determined by government action in the next few weeks: such a thing could never happen with btc--it's value will always be primarily according to its convenience and quantity.
Bitcoins - digital currency Quote
07-17-2011 , 01:09 AM
Quote:
Originally Posted by Valhalla1
A small investment of man-hours to setup a bitcoin deposit/withdraw method
Quote:
Originally Posted by Bascule
lol

A significant investment to support a small market, while making the site more vulnerable to accusations of money-laundering.

so you think it would take millions of dollars and months of work by teams of programmers to implement a bitcoin deposit method? Trust me, it wouldn't.

They could just email the customer a bitcoin deposit address when they request it with zero time or effort invested, but it wouldn't take more than a couple of hours for any lackey programmer to setup a web interface to bitcoind so each customer has a unique deposit address

of course I would hope they would spend a few more hours and secure it properly, but knowing how some of these 'reputable' poker sites actually operated, perhaps this isn't a good idea - they'd probably leave $5 mil in customer bitcoin deposits sitting on an unpatched world-accessible windows XP machine that the receptionist uses to surf facebook all day
Bitcoins - digital currency Quote
07-17-2011 , 09:16 AM
Quote:
Originally Posted by Valhalla1
so you think it would take millions of dollars and months of work by teams of programmers to implement a bitcoin deposit method? Trust me, it wouldn't.

They could just email the customer a bitcoin deposit address when they request it with zero time or effort invested, but it wouldn't take more than a couple of hours for any lackey programmer to setup a web interface to bitcoind so each customer has a unique deposit address

of course I would hope they would spend a few more hours and secure it properly, but knowing how some of these 'reputable' poker sites actually operated, perhaps this isn't a good idea - they'd probably leave $5 mil in customer bitcoin deposits sitting on an unpatched world-accessible windows XP machine that the receptionist uses to surf facebook all day
The need to generate addresses. They need to make sure they don't get hacked. They need to make sure their internal companies don't steal the private keys. This is definitely a significant investment (probably not millions), and how much benefit do you think they get out of this?
Bitcoins - digital currency Quote
07-17-2011 , 10:36 PM
Quote:
Originally Posted by Valhalla1
so you think it would take millions of dollars and months of work by teams of programmers to implement a bitcoin deposit method? Trust me, it wouldn't.

They could just email the customer a bitcoin deposit address when they request it with zero time or effort invested, but it wouldn't take more than a couple of hours for any lackey programmer to setup a web interface to bitcoind so each customer has a unique deposit address

of course I would hope they would spend a few more hours and secure it properly, but knowing how some of these 'reputable' poker sites actually operated, perhaps this isn't a good idea - they'd probably leave $5 mil in customer bitcoin deposits sitting on an unpatched world-accessible windows XP machine that the receptionist uses to surf facebook all day
With all the press it generated and the blatant lack of professional web/software developers in the mix, I've got to believe there are a couple of start ups out there working diligently on an easy to use (i.e. mobile) deposit and withdrawal method for bitcoin. Heck there's already a couple of Groupon/Woot clones. That's not to say don't do it, but unless you think you can do it better than anyone else I think the best bet would be to invest time/money in building something that would benefit from the supporting services being there.
Bitcoins - digital currency Quote
07-18-2011 , 11:28 AM
Quote:
Originally Posted by ChazDazzle
With all the press it generated and the blatant lack of professional web/software developers in the mix, I've got to believe there are a couple of start ups out there working diligently on an easy to use (i.e. mobile) deposit and withdrawal method for bitcoin. Heck there's already a couple of Groupon/Woot clones. That's not to say don't do it, but unless you think you can do it better than anyone else I think the best bet would be to invest time/money in building something that would benefit from the supporting services being there.
There may be startups working on it, but they need to be profitable to last. How much revenue do you think is needed to sustain such an investment?
Bitcoins - digital currency Quote
07-18-2011 , 12:07 PM
Quote:
Originally Posted by TomCollins
There may be startups working on it, but they need to be profitable to last. How much revenue do you think is needed to sustain such an investment?
Startups can be launched for super cheap these days. Also, the market for VC monies is very frothy right now. It'll take at least 2-3+ years before these companies have to worry too much about revenue methinks. Until then they either have that VC monies or they're being funded out of pocket/run on ramen.
Bitcoins - digital currency Quote
07-18-2011 , 12:15 PM
Quote:
Originally Posted by ChazDazzle
Startups can be launched for super cheap these days. Also, the market for VC monies is very frothy right now. It'll take at least 2-3+ years before these companies have to worry too much about revenue methinks. Until then they either have that VC monies or they're being funded out of pocket/run on ramen.
But they are most likely tackling areas that are already lucrative but potentially long term unprofitable. Like groupon clones, social network BS, etc...

VC is going to be dumped into areas where they see potential, not into some tiny ass market with no profit potential. And if they did this, they'd probably buy a ****-ton of coins along the way on the market since they could make the market value go up a ton.
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07-18-2011 , 01:11 PM
It seems this market is really struggling to support the newly minted coins. Are any of you selling yet?
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07-18-2011 , 01:19 PM
Quote:
Originally Posted by maxtower
It seems this market is really struggling to support the newly minted coins. Are any of you selling yet?
I was hoping for a Monday bounce before selling, probably will exit barring a token amount to play around with.
Bitcoins - digital currency Quote
07-18-2011 , 03:16 PM
probably keeping ~100BTC and selling the rest, including whatever I mine

already at a net profit even after paying for equipment due to selling a chunk when they hit 30, then a well timed buy @ ~10 & sell @ ~20 on a weekend dip
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07-18-2011 , 08:39 PM
new exchange focusing on security ruxum just launched beta
http://techcrunch.com/2011/07/18/rux...-new-exchange/

also a blind bitcoin service just went up attempting to make btc transactions more anonymous (i think?)
https://blindbitcoin.com/about.html
not quite sure how blindbitcoin works but it sounds cool..

i sold most of mine off around 19, ended up breaking even, i still have 50 or so that i'll keep to play around with, don't plan to buy or sell more anytime soon, although i might start arbing across exchanges
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07-18-2011 , 09:32 PM
Sold mine today and took a fairly big loss (~40%) since I'm a n00b. I'll probably end up regretting this in 6 months but oh well =/.
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07-19-2011 , 12:10 AM
Quote:
Originally Posted by captZEEbo
Sold mine today and took a fairly big loss (~40%) since I'm a n00b. I'll probably end up regretting this in 6 months but oh well =/.
I think you've got a much better chance of looking like a guy who salvaged 60% of his investment...
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07-19-2011 , 12:19 AM
Quote:
Originally Posted by fynthase
Seems like your post tries to get us to believe you rather than to be convinced by your argument.

You could be completely right, but I need you to explain more...so what if the creators made millions off of the deflation of btc?

Also, you seem to immediately cast into a negative light the fact that btc is decentralized. Could this not be a big plus? The dollar is currently at a moment of truth--it's fate will largely be determined by government action in the next few weeks: such a thing could never happen with btc--it's value will always be primarily according to its convenience and quantity.
Replying to a redmanplus post doesnt work.
Bitcoins - digital currency Quote
07-19-2011 , 12:51 AM
Quote:
Originally Posted by maxtower
It seems this market is really struggling to support the newly minted coins. Are any of you selling yet?
I sold everything 3 days ago.

I wrote a program that does automatic arbitrage and was working/does work well, the problem is that I have to hold an inventory of bitcoins that fluctuate. I originally set out to find a better way to hedge risk than mining, it turned out I ended up speculating more than them. Well... maybe not, our risk is just dependent on different things. Their's depends on difficulty and price, mine depends on price.

The way price was moving the last 10 days was about the nut worse for an arbitrage algorithm. No big moves, just a steady decline. Usually arb opportunities are born from big/quick moves.

My gut says that bitcoin belongs at a price of $5-$6. Had you asked me yesterday I would have said the bounce upward would have happened at $10-$11, but today proved to be $12.4 or so. That said, I think this tiny rally will be short lived.

Bitcoin desperately needs a futures exchange if it wants any real chance of adoption. I don't want to be a bitcoin speculator, but I'm happy to provide liquidity for a profit. If I can hedge the cost of my bitcoin inventory then I'm truly arbing in that I am assuming no risk.
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07-19-2011 , 11:26 AM
Quote:
Originally Posted by MasterLJ
I sold everything 3 days ago.

I wrote a program that does automatic arbitrage and was working/does work well, the problem is that I have to hold an inventory of bitcoins that fluctuate. I originally set out to find a better way to hedge risk than mining, it turned out I ended up speculating more than them. Well... maybe not, our risk is just dependent on different things. Their's depends on difficulty and price, mine depends on price.

The way price was moving the last 10 days was about the nut worse for an arbitrage algorithm. No big moves, just a steady decline. Usually arb opportunities are born from big/quick moves.

My gut says that bitcoin belongs at a price of $5-$6. Had you asked me yesterday I would have said the bounce upward would have happened at $10-$11, but today proved to be $12.4 or so. That said, I think this tiny rally will be short lived.

Bitcoin desperately needs a futures exchange if it wants any real chance of adoption. I don't want to be a bitcoin speculator, but I'm happy to provide liquidity for a profit. If I can hedge the cost of my bitcoin inventory then I'm truly arbing in that I am assuming no risk.
The drop recently and rise again was likely due to Mt. Gox having trouble with SEPA transfers from Europe. Those should be back running again today, which corresponded with the spike. Gonna let those come in, sell on the new spike, then get out.
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07-19-2011 , 11:37 AM
Yeah, I sold at a price that corresponds to what the spike hit anyway.
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07-19-2011 , 10:14 PM
New BTC based poker site: http://btcontilt.com

Apparently based on Poker Mavens software: http://www.briggsoft.com/
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