Free Capitalist Network - Community Archive
Mises Community Archive
An online community for fans of Austrian economics and libertarianism, featuring forums, user blogs, and more.

How To Use Bitcoin – The Most Important Creation In The History Of Man

rated by 0 users
This post has 268 Replies | 15 Followers

Top 50 Contributor
Male
Posts 2,551
Points 46,635
AJ replied on Thu, Jan 5 2012 10:34 PM

Peter, you seem knowledgeable about bitcoin. I tried to buy some bitcoins but it was too difficult. How long do you think it will be until it is easy to deal with them?

  • | Post Points: 50
Not Ranked
Posts 13
Points 260
Ramon replied on Thu, Jan 5 2012 11:46 PM

Bitcoin is based on a general platform that is largely unassailable through any currently existing means and not specific to financial concerns. It is more a system of management that works well in a monetary function. That management is the key difference, otherwise it operates no differently than existing systems.

One concern remaining is scalability. If the system can continue to operate smoothly at a size and velocity several orders of magnitude larger than it presently is, there will be no limit to terrestrial use. The only stumbling block will then be centralized control of Internet infrastructure. That is solved with mesh networks, eradicating all remaining options that existing governments have against such decentralized systems.

Lawyers beward as well: Bitcoin contracts may make entire classes of attorneys redundant.

Government is the problem: it acts as a single point of failure. Bitcoin attacks this directly by undermining the primary influential power base in the form of a competing currency. Brilliant.

Not Ranked
Male
Posts 71
Points 1,865
Top 500 Contributor
Male
Posts 269
Points 4,195

AJ:
Peter, you seem knowledgeable about bitcoin. I tried to buy some bitcoins but it was too difficult. How long do you think it will be until it is easy to deal with them?

The same problems that plague users of the banking system also affect the ability to exchange fiat for Bitcoin. I think that if you're having a problem with your bank, specialised processors, such as Dwolla or OkPay mentioned by Michael are a reasonable solution. It also depends on other factors, such as which country is your bank from, how much fees are you willing to pay, what volume you want to buy and so on. Apart from the banks themselves, there do not appear to be particular regulatory obstacles for the time being, so there's a good chance it will evolve to towards more user friendliness. I personally never had problems with this.

Alternatively, you can purchase physical forms of Bitcoin from http://www.memorydealers.com/bieq.html using fiat currencies. The "seignorage" of physical bitcoin is quite a lot, but for a typical user it's probably safer than storing it on a computer.

A word of caution, as I expect the price of Bitcoin to remain volatile, please do not spend more than you're willing to lose.

  • | Post Points: 20
Top 500 Contributor
Posts 146
Points 2,230

The best way to get bitcoins is to sell something.  If you would sell something one Ebay or Craigslist for fiat, then there are a couple of small bitcoin based equivilants to do the same for bitcoin.  They are not large, though.

  • | Post Points: 5
Top 50 Contributor
Male
Posts 2,551
Points 46,635
AJ replied on Sat, Jan 7 2012 10:53 AM

Thanks for the answers, everyone. I am particularly wondering if anyone has any estimates about how long it will take until it is really dirt-simple for the average joe to buy and transact in bitcoins. A year from now? Two?

  • | Post Points: 35
Top 500 Contributor
Male
Posts 269
Points 4,195

AJ:
Thanks for the answers, everyone. I am particularly wondering if anyone has any estimates about how long it will take until it is really dirt-simple for the average joe to buy and transact in bitcoins. A year from now? Two?

This is a complicated question. In my opinion, it is influenced by three main factors: the growth of the services in Bitcoin economy, changes in regulation (of financial markets, banking, etc), and status of competitors (gold, payment system and cryptocurrencies other than Bitcoin, and hypothetical hard fiat currencies such as the Deutsche Mark). I can't predict the outcome.

  • | Post Points: 5
Top 500 Contributor
Posts 146
Points 2,230

AJ:

Thanks for the answers, everyone. I am particularly wondering if anyone has any estimates about how long it will take until it is really dirt-simple for the average joe to buy and transact in bitcoins. A year from now? Two?

 

For really simple transactions, never.  But if you think about it, there is a regular convergence as geeks make the tech easier to manage while the general population adjusts to the technology.  Eventually there comes a balance point, and then grandma is suddenly sending text messages on her new cell phone.  It would be incrediblely dangerous (for the users) to completely abstract how the system works from the users.

  • | Post Points: 20
Top 50 Contributor
Posts 2,258
Points 34,610
Anenome replied on Mon, Mar 5 2012 12:57 AM

MoonShadow:

AJ:

Thanks for the answers, everyone. I am particularly wondering if anyone has any estimates about how long it will take until it is really dirt-simple for the average joe to buy and transact in bitcoins. A year from now? Two?

For really simple transactions, never.  But if you think about it, there is a regular convergence as geeks make the tech easier to manage while the general population adjusts to the technology.  Eventually there comes a balance point, and then grandma is suddenly sending text messages on her new cell phone.  It would be incrediblely dangerous (for the users) to completely abstract how the system works from the users.

Eh, I dunno about that. All it will take is a world-wide currency crash, which we're rapidly barrelling towards as it is. After the world recovers from that, we can expect people to be open to new currency ideas, and at that point the prospect of a currency that NO ONE, not even a government, could inflate would be particularly appealing. I mean, you can't even pass a law to inflate bitcoins. Not unless you want to be tyrannical and force the majority or users or w/e to vote to change the system. In which case there'd be capital flight to a new cryptocurrency before they pulled it off.

After that, what we need is the widespread establishment of near-field communication (NFC) via cellphone with which you can purchase anything at the point of sale with a swipe of a cellphone. Assuming that bitcoin is an accepted currency at that point, bam, done, pay for anything in bitcoin.

Autarchy: rule of the self by the self; the act of self ruling.
  • | Post Points: 20
Top 500 Contributor
Posts 146
Points 2,230

Anenome:

MoonShadow:

AJ:

Thanks for the answers, everyone. I am particularly wondering if anyone has any estimates about how long it will take until it is really dirt-simple for the average joe to buy and transact in bitcoins. A year from now? Two?

For really simple transactions, never.  But if you think about it, there is a regular convergence as geeks make the tech easier to manage while the general population adjusts to the technology.  Eventually there comes a balance point, and then grandma is suddenly sending text messages on her new cell phone.  It would be incrediblely dangerous (for the users) to completely abstract how the system works from the users.

Eh, I dunno about that. All it will take is a world-wide currency crash, which we're rapidly barrelling towards as it is. After the world recovers from that, we can expect people to be open to new currency ideas, and at that point the prospect of a currency that NO ONE, not even a government, could inflate would be particularly appealing. I mean, you can't even pass a law to inflate bitcoins. Not unless you want to be tyrannical and force the majority or users or w/e to vote to change the system. In which case there'd be capital flight to a new cryptocurrency before they pulled it off.

After that, what we need is the widespread establishment of near-field communication (NFC) via cellphone with which you can purchase anything at the point of sale with a swipe of a cellphone. Assuming that bitcoin is an accepted currency at that point, bam, done, pay for anything in bitcoin.

 

 

Well, there's this new app at the Android Market called Bitcoin Spinner, now in beta form that seems to work very well. But I still think that it's dangerous for the average user to simply not care how the system works at all, for it would be trivial to create an app to steal user's funds.

  • | Post Points: 20
Top 500 Contributor
Male
Posts 269
Points 4,195

MoonShadow:
Well, there's this new app at the Android Market called Bitcoin Spinner, now in beta form that seems to work very well. But I still think that it's dangerous for the average user to simply not care how the system works at all, for it would be trivial to create an app to steal user's funds.

I've been using BitcoinSpinner since it came out, right on time for the conference in Prague. Worked like a charm, once I got a Czech SIM card. I read that some of the clients already support NFC, but since my phone does not have NFC I can't test it.
  • | Post Points: 20
Top 50 Contributor
Male
Posts 2,551
Points 46,635
AJ replied on Thu, Apr 5 2012 3:07 AM

Just thought of something: Why is there a demand for bitcoins? Because government legal tender laws make people who want to use something other than fiat paper transfer physical objects such as gold coins, which makes their crime (not excepting fiat currency, tax evasion, possibly illegal labor) easy to punish. 

For example, suppose a freelance editor who works online wants to subcontract some of his editing work to other people who would be happy to do the work for a few dollars less per page than he charges, and he will pocket the difference as entrepreneurial profit. However, due to labor laws, reporting laws, taxes, etc. he crunches the numbers and figures out it is simply not worth it. He cannot make a profit due to the tax and regulatory burden.

However, he could pay in bitcoins, all encrypted, and avoid all those expenses. At present, it is almost certain that there are freelance proofreaders advertizing the fact that they are willing to work for bitcoins, so he could at the very least outsource the proofreading step of his editing jobs for his clients, if not the full package of editing work.

Notice also that he now has an incentive to work for bitcoins himself, since he could earn up to the total value of his wage payouts to employees without having any excess bitcoins remaining to worry about having to cash out, and he could evade all taxes on that portion that he did earn in bitcoins, not to mention that he could potentially get a higher pay rate because his bitcoin-using client would also have fewer expenses to cover. So it's not as if there is this limited pool of bitcoin-using suckers to exploit, and once a few people do this there won't be enough suckers left. No, he actually is incentivized to become such a "sucker" himself, and of course he doesn't even have to worry about whether bitcoin will someday crash, because he never needs to cash out - the worst that could happen to him is he'd lose the bitcoins from his most recent job before he had time to spend them to pay his employees.

Bottom line: He can take on a whole bunch more work from his clients, use a portion of the money to buy bitcoins to pay his employees (or make even more if he can find some additional bitcoin-paying clients), and pocket the rest. Of course, some freelance editors already do this while working within the fiat money system, but the hurdle for the efficiency of their business is much higher, due to taxes and regulations. 

Might this already be happening? It seems to me that there's nothing in particular stopping a huge portion of the service economy from going agoric. 

  • | Post Points: 20
Top 500 Contributor
Posts 146
Points 2,230

Due to the cash-like nature of bitcoin, there is literally no way for us to know if such a thing were going on unless someone were to admit that they were doing it.  However, considering that outsourcing of one's own work has been done in the past using other payment methods; if you can imagine it, it's probably occurred to some others as well.

 

There was a case about a decade ago that concerned a programmer who outsourced his daily coding work to a couple of programmers in India, and was sued by his employer when caught.  I never heard the outcome of that case, though.

  • | Post Points: 5
Top 200 Contributor
Posts 467
Points 7,590

So, if BTC ever does begin to represent any kind of competitive challenge to established, fiat currencies, it will be shut down and in short order. All the crypto algorithms and exchange protocols in the world won't save BTC. It will either die in obscurity or it will be killed by the dollar establishment. Mark my words.

So, if [insert whatever you like] [libertarians] ever does begin to represent any kind of competitive challenge to established, [power], it will be shut down and in short order.  All the [protest] in the world won't save [libertarians].  They will either die in obscurity or they will be killed by the [power] establishment.  Mark my words.

  • | Post Points: 20
Top 500 Contributor
Posts 146
Points 2,230

More than a year on from OP, how is Bitcoin doing?

  • | Post Points: 20
Not Ranked
Male
Posts 57
Points 1,650
Austen replied on Tue, Dec 25 2012 3:44 AM

  • | Post Points: 5
Top 25 Contributor
Male
Posts 4,249
Points 70,775

More than a year on from OP, how is Bitcoin doing?

Here's a post  on this very thread from Jan 6, 2012 telling us about Crypto X Change, a bitcoin service:http://mises.org/community/forums/p/24923/452579.aspx#452579

And here's what you see when you go to their site, a year later:

As of 19 November 2012, Crypto x Change stopped allowing trades. There have been a couple of incidents in which we are not allowed to make public which have forced us to close the exchange. We are sorry for any inconvenience, there are delays in support and processing withdrawals. It could take up to another 6 weeks before all withdrawl requests are finished. For all paper correspondence please post to pobox...

My humble blog

It's easy to refute an argument if you first misrepresent it. William Keizer

  • | Post Points: 20
Top 50 Contributor
Male
Posts 2,493
Points 39,355
Malachi replied on Tue, Dec 25 2012 8:48 AM
Dave, you seem surprised at the existence of entreprenurial risk.
Keep the faith, Strannix. -Casey Ryback, Under Siege (Steven Seagal)
  • | Post Points: 20
Top 100 Contributor
Male
Posts 907
Points 14,795

Quite many of the BTC exchanges were taken down by PayPal/credit card companies "reverting" their transactions (basically stealing funds).

The way it works, BTC transactions are not revertible - if you sent Bitcoins, you cannot change your mind. PP/CC transactions are revertible, with some limitations I guess. So there were quite a lot of cheaters buying BTC from exchanges using PP or CC, and after receiving BTC reverting their payments. Not sure whether this was caused by blind preference of "consumers" over "merchants" by both PP and CC, or by their desire to kill BTC exchanges.

Thpough not sure this specific exchange was a victim of a swindle as opposed to initiator - this "we are not allowed to make public" may mean anything.

The Voluntaryist Reader - read, comment, post your own.
  • | Post Points: 20
Top 25 Contributor
Male
Posts 4,249
Points 70,775

...The way it works...

TY Andris, for giving me more to gloat over.

Malachi, Pete, AJ, Anenome, and all the rest, tell me again how fool proof and secure bitcoin is. Enough of it was stolen to close down whole exchanges [plural!]

My humble blog

It's easy to refute an argument if you first misrepresent it. William Keizer

  • | Post Points: 20
Top 50 Contributor
Male
Posts 2,493
Points 39,355
Malachi replied on Tue, Dec 25 2012 6:47 PM
Enough of it was stolen to close down whole exchanges [plural!]
right, because its a bearer good. Financial institutions have been forced to shut down because all of their gold andsilver were stolen as well. Oh teh noes physical currency is insecure waaahhhh lmao ok
Keep the faith, Strannix. -Casey Ryback, Under Siege (Steven Seagal)
  • | Post Points: 20
Top 100 Contributor
Male
Posts 907
Points 14,795

What Malachi said, plus it was not Bitcoin that was stolen - at least, not directly.

Buyer B contacts exchange E in order to buy 10 BTC (Bitcoin) for 60 PPUSD (US dollars@PayPal).

B arranges with PP to transfer 60 USD from B's account to E's account. Upon seeing that, E transfers 10 BTC to B's Bitcoin address (irrevertably).

B changes his mind, and arranges with PP to return the 60 USD from E's account back to B's account. This is where the theft is occuring - and it is PPUSD being stolen, not BTC.

The Voluntaryist Reader - read, comment, post your own.
  • | Post Points: 20
Top 25 Contributor
Male
Posts 4,249
Points 70,775

Not sure what Malachi said. That gold and silver can be stolen, too, so all the bragging that bitcoin is ultra safe and cannot be stolen still stands, even though it can be stolen? Oh sorry, it cannot be stolen. It's just that once you accept a bitcoin and try to get rid of it, you allow your pocket to be picked of USD, plus lose the bitcoin, too. OK. Can't get much safer and ultra secure than that.

I wonder if the bitcoin advertisers bother to point this out:

Merchants, accept bitcoin, the ultimate ultra safe money in the history of the universe. Oh, did we mention that once you accept a bitcoin, you can never get rid of it without having your pocket picked of USD as well? Well, that's nothing to worry about. Never happens. Except almost always, so frequently that many whole exchanges have closed down cause they were robbed blind thanks to their accepting bitcoins. Ho hum. But really, it's nothing. You're a businessman. It's your job to take risks. So what if you were wiped out? Get over yourself, before Malachi mocks you.

Anyway, thanks for the clarification. E got screwed right away because they accepted bitcoin, which is what will happen to all suckers who accept it, sooner or later.

My humble blog

It's easy to refute an argument if you first misrepresent it. William Keizer

  • | Post Points: 35
Top 50 Contributor
Male
Posts 2,493
Points 39,355
Malachi replied on Wed, Dec 26 2012 4:33 PM
Not sure what Malachi said. That gold and silver can be stolen, too, so all the bragging that bitcoin is ultra safe and cannot be stolen still stands, even though it can be stolen?
for someone who is quite eager to discuss a subject, you certainly dont put much effort into understanding the subject matter or the statements made by the other participants in the discussion. One might even come to believe that your apparent unwillingness to seek understanding is a contributing factor to your confusion. Who told you that bitcoin "cannot be stolen"?
Oh sorry, it cannot be stolen. It's just that once you accept a bitcoin and try to get rid of it, you allow your pocket to be picked of USD, plus lose the bitcoin, too. OK. Can't get much safer and ultra secure than that.
Please do let us know when you feel like making sense. Right now youre just flaunting your passionate refusal to understand.
Keep the faith, Strannix. -Casey Ryback, Under Siege (Steven Seagal)
  • | Post Points: 20
Top 500 Contributor
Posts 228
Points 3,640
Blargg replied on Wed, Dec 26 2012 4:58 PM

Why didn't the exchanges just put a waiting period before they deliver the BTC? This sounds like common scams where someone buys something with a check, the seller cashes it and gives the item, but later the bank calls that the check wasn't valid and demands the money back.

  • | Post Points: 20
Top 100 Contributor
Male
Posts 907
Points 14,795

Why didn't the exchanges just put a waiting period before they deliver the BTC?

I do not know for sure (I am in no way affiliated), but I can guess at least two reasons: the exchanges were created by amateurs and they were eager to establish reputation/market share.

Buying BTC sounds quite risky as it is, and if you add a waiting period on top of it you won't get many buyers.

AFAIK, the surviving exchanges do not deal with PayPal or other payment methods that can be reverted unilaterally. Or if they do, they use a reputation/trust system, plus they limit amounts traded on such transactions, plus they add a premium for risk. Just an example of one reputation system, used by multiple traders: http://bitcoin-otc.com/viewratings.php

The Voluntaryist Reader - read, comment, post your own.
  • | Post Points: 20
Top 50 Contributor
Posts 2,258
Points 34,610
Anenome replied on Thu, Dec 27 2012 12:10 AM

Gee, it's too bad you can only buy bitcoin via paypal and credit cards.
Guess that's it for BTC then :P

Autarchy: rule of the self by the self; the act of self ruling.
  • | Post Points: 20
Top 100 Contributor
Male
Posts 907
Points 14,795

Was it a parody of Dave? :)

BTW, you can buy it using anything. Including services.

The Voluntaryist Reader - read, comment, post your own.
  • | Post Points: 5
Top 500 Contributor
Male
Posts 269
Points 4,195

Users of Bitcoin cannot be forced to be safe. Bitcoin merely allows you to choose the security level yourself out of a wide range of options, some of which are extremely secure against theft (e.g. brainwallets).

Also, you can now use Bitcoin to donate to LewRockwell.com: https://www.lewrockwell.com/donate/

And also I now have a blog: http://www.economicsofbitcoin.com/

  • | Post Points: 5
Page 7 of 7 (269 items) « First ... < Previous 3 4 5 6 7 | RSS