Topic: Buckle Your Seatbelts - page 2. (Read 2768 times)

check http://www.bitmit.net/

Haha this auction for 100,000 also was interesting..


I think that this is the first rumblings in an all out war on bitcoin.

When will there be a bitcoin auction site like EBay?  Or will that be the thing that makes LiteCoin move ahead?  Seems like a race to replace EBay and PayPal has begun.  Should be an interesting year.

Enjoyed this EBay description for a batch 2 ASIC Avalon rig:


Hmm, too bad we Americans outsourced all our chip factories and are dead in the water.  How much VC would we need to buy an old Texas Instruments factory and get it running by summer? 

I'm peripherally aware of the BFL issue but I haven't taken the time to get informed in detail.  I don't know that it would be a big problem for the market price, since those dollars already weren't spent buying up bitcoins but went to BFL instead.  If that amount came out of the market now it would certainly cause major problems, but it's only money that never went in, in the first place.  Or am I missing something?  If my central hypothesis is correct (see the OP) then there is plenty of new money headed toward bitcoin very soon.  The major media mentions this week can't hurt.  As I write this the "bitcoin bonanza" story is still front page news on cnbc.  With the potential user base of "bitcoin aware" folks doubling rapidly, I think that within the year most people in the US will have heard of it for the first time.  To use a line from the Matrix, "it's going into replication".  The bitcoin user base will now be best displayed on a log chart.  Eventually as with all new technologies the exponential phase will end as saturation begins, but if I'm right that could be as soon as this year too (the beginning of saturation, not the end).

I sincerely hope more players than Avalon are eventually able to start shipping ASIC's and ratchet the difficulty way, way up to secure the system.  If an investment of a measly few million bucks is enough to control the system right now then we have a big problem.  The miners (hopefully) knew from the beginning that it was a competition dominated by economics.  I started getting bitcoin by mining soon after I found out about it.  I took what money I could scrounge and bought 2 5850 cards.  I was pleased with the ROI and the cards paid for themselves but not much more as the difficulty soared.  I would have done much better by buying coins outright at the price then, but I thought mining was interesting and I'm not really sorry.  I learned.  Hopefully others have/will have a similar experience.  I still have the 2 cards and they are good for gaming, I wouldn't have spent that much on a "frivolous" purchase just to play games with.  I'll soon be building a new PC and perhaps I will find someone who is interested in exiting mining with a top-end card to sell for a good price.  Market economics at work yet again.

I think you're right on too.

one thing that has been brought to my attention is a potentially devastating blow to the bitcoin community with butterfly labs possibly heisting over 100million dollars for their claimed products with backorders.  there is much info on it.  they are offering money making machines for next to nothing and people all over the world are falling for it and ordering, they've sold thousands of these in preorders, and have been promising to deliver since august of 2012.  when I was looking they had promised to deliver by the end of march, now they are pushing back to end of june. 

sounded like a scam to me, so I did a ton of research on it.  and here's what I came up with from reading through the forums

brian micon youtube video -shows CEO's reaction to brian micons doubt that they are legit.
I've read multiple threads stating that the CEO of said company is a convicted felon for mail fraud already, for 25 million.  this is what THEY DO!?

the whole thing smells of scam to me.  I lived on the streets of NYC and LA and I know scammers, I can read minds fairly accurately, if you want to give it a shot watch the CEO talk to the public carefully delivering exactly what they want to hear.)  (I have a 75% rate of mind reading, from lots of ayahuasca experience)(so I don't trust him lets just say that) 

but many customers just rant and rave about this imaginary product they are getting and stand up for him even though many have been yannked around since august.  with promises.  and now they are up to something like 120 million and the number rises everyday how much they are heisting from people.

if they are legit, their products will revolutionize BTC mining, and simultaneously boost the BTC economy drastically with stability and a good future(IDEAL SITUATION).  if they are a scam, and we collectively recognize this, BTC value will plummet immediately. 

two ways to go.

which would provide a good opportunity to buy up BTC cheap before it recovers in the next few years.  or I am feeling like litecoin might end up being more trusted as its not tied with silk road and such.  so this is how I'm playing my cards

I am waiting until realization of said product is delivered or realize its a scam, and I am immediately trading out for litecoins if it is scam.  lite coins should surge ahead while bitcoin collapses.  then I am going to buy up btc and possibly 5X or 10X my investment.

this is just what I am visualizing.

but the originating post in this thread I agree with in the long run, but we have much growing pains to go through in this economy.  its not necessarily going to be just investing in coins and sitting on them.  its going to be like riding a bull.  I prefer to ride bucking mammoths.  or diablos.

anyway.  not to pop the hype, but being realistic.  the BFL issue has hardly been discussed as repercussions to the bitcoin community.  the BFL people are always elusive and make these PR announcements that are completely what you want to hear but say absolutely nothing, like george W bush would do in a press conference. 

anyway, just wanted to ask if anybody saw any holes in my theory with BFL and the repercussions with the BTC economy.  if they successfully heist 130 million from the BTC economy that's 13% of the entire economy stolen.

but my paranoia could be just paranoia and they could be just assholes that have no tact with public relations, but who are going to deliver said product...

look into it and get some media on their asses put some pressure on em... and be smart with your money people

Yes, you bring out some more good points.  My main worry is that bitcoin has now reached step 3 on the "Gandhi Acceptance Curve".  I.E. "First they ignore you, then they laugh at you, then they fight you, then you win."  It is foolish to think that the existing banking system (and government) won't eventually perceive bitcoin and other cryptocurrencies as an existential threat.  Obviously, the easiest point to attack the system is at the fringes; the exchanges.  Just imagine a "Kim Dotcom" style takedown of all the major exchanges, who suddenly find their DNS domains seized regardless of where they are located physically.  Until some major exchange begins operating Silk Road style, through Tor, Freenet, I2P, or some such then we have a point of severe vulnerability.  Eventually I predict that they will all have to do so.  Game theory suggests that there is almost certainly a "black Friday" or "black Monday" or whatever day it is, coming to the bitcoin system when the authorities launch a coordinated attack.  I hope to spur more discussion about what to do now to begin to prepare for this before it happens to ensure as much robustness as possible.  Right now if Satoshi Dice by itself is stressing the system then it shouldn't be hard for authorities with money as no object to create ridiculous transaction volume and spam the blockchain causing an effective DOS attack on the network.  Or for that matter, just flood the network in an attempt to saturate bandwidth.  How resilient is the network right now against this kind of attack?  Has any testing been done?  I don't know the answers to these questions, but perhaps someone who does can chime in here.

I think the best thing that can be done at this point is to spread the word and help the bitcoin ecosystem grow as big as possible as fast as possible.  Bureaucratic inefficiency will ensure that the regulation process will always be a step or two behind, and hopefully the technological innovation can always stay a step or two ahead.  But make no mistake, it is a chess game and the objective is checkmate.  As has been said so many times before, the more actual real world businesses that accept bitcoin, the less the risk that the exchanges represent.

By way of example, let me include this reply I wrote previously in a private email to a friend:


1.  You're in Cyprus, and you have EUR10000 in the bank and BTC1000 bitcoin.  The authorities close the banks over the weekend and threaten to take 10% of your balance.  You now have EUR9000 in the bank (which you can't get into) and BTC1000 in bitcoin which you can.  The bitcoin price in euros is about EUR57 right now.

2.  You book a flight out of the country because you think things are going to get worse.  Thankfully you kept enough cash on hand to do this.  At the airport, the authorities are checking luggage with a metal detector and seizing gold and silver.  Maybe you will get it back someday, maybe you won't.  They also have cash-sniffing dogs.  Since you're not carrying gold and silver or large amounts of cash, they don't bother you.  Perhaps you go to stay with relatives in Turkey.

3.  Upon arrival, you find a local bitcoin dealer using your smartphone and cash out a small amount of bitcoin back into euros for immediate expenses.  Then you open a local bank account and begin a larger transfer of bitcoin back into euros using an online exchange with a lower commission.  Eventually they reopen the banks in Cyprus and you are able to transfer the remaining EUR5000 (after the bank failed and was reorganized) into your new account.

4.  Six months later, the authorities have now found out about bitcoin and they are not happy that they can no longer steal from the people at will.  You get a visit from a stern-looking men with the government tax authority, who tells you that your online activity indicates that you're a bitcoin user, but that your assets were not declared.  You realize that you should have been smarter about the internet and how to use it anonymously (Tor, VPN connections, etc.) but you apologize that you forgot to do this when you entered the country.  He demands that you declare your assets now.  You say that you have BTC0.5734 on your phone (which by then is worth about EUR300) and you show your phone as proof.  He demands to know the password so this can be verified.  So you give him the password to your "spare change" spending account that has BTC2.5734 and log in to your computer and print out an account summary.  You do not reveal that you have another account (with a different password) that still has BTC870 in it, now worth almost EUR500,000.

5.  Every time there are new bank runs, new capital controls, or new money printing the price of your bitcoin keeps going up.  Everyone in the world wants some.  Things aren't so good in your new country by now, and your relatives all wish they had bought bitcoin back when it was only EUR57.  Since they need money right now, they offer to sell you their house for bitcoins.  By now a lot of local merchants are starting to accept bitcoin directly, but since they are officially "illegal" now, you have to know who to ask.  All of them are so glad to finally be able to get their hands on some bitcoin at any price, since all the major online exchanges are either shut down or have moved to really out-of-the-way foreign jurisdictions.  The largest exchange is now in Zimbabwe, where bitcoin has become the official state currency.

6.  You're in Turkey, and you have EUR10000 in the bank and BTC870.  The authorities close the banks over the weekend and threaten to take 10% of your balance.  You have EUR9000 in the bank (which you can't get into) and BTC870 in bitcoin which you can.  The bitcoin price in euro is now EUR200000.  The European Central Bank has started printing money like crazy and now nobody wants euros any more.  All the other central banks have been doing the same thing too.  The price of everything has reached unbelievable levels and hardly anybody has a job any more.  Your relatives are doing ok only because they now have some bitcoin, thanks to you.  You own their house, their car, and all their assets, but at least all of you have food and clothes.

7.  Your whole family books a flight out of the country because you think things are going to get worse.  You are able to make arrangement with the authorities in Zimbabwe to immigrate there, since everyone in the world wants to but hardly anybody has bitcoin.  This costs you BTC100 per person in your family.  At the airport, the authorities are checking luggage with a metal detector and seizing gold and silver.  Maybe you will get it back someday, but it's highly doubtful.  People are being very clever about how they hide even small amounts now.  They also have cash-sniffing dogs and all electronics are scrutinized for bitcoin apps.  Since you knew this in advance, all your coins are in 2 "brainwallets", where you have memorized the passphrase that generates the bitcoin private key.  A small amount in the first one, in case you are forced to disclose it, and a much larger amount in the second one.  Since your family doesn't look quite as poor and desperate as everyone else, you are able to get through security with only a good-sized bribe to the security guards, who know that you must have bitcoin even though they can't prove it.

8.  Upon arrival in prosperous Zimbabwe, you are taken by limousine to the "new citizens center" where you are treated like royalty.  With the whole world economy in ruins, the only places that are able to operate are those that have bitcoin.  Africa, due to its mobile phones and history of bad governments, was an ideal place for bitcoin to take off and now it's the only prosperous continent on the Earth.  Since the supply of bitcoin is forever limited, all the bitcoin you bring into the country's economy will forever give them a larger share of world commerce, so they are only too happy to solicit new citizens with bitcoin.  Bitcoin is accepted seamlessly everywhere and your money can no longer be stolen or devalued by the government.  You are now so wealthy your living expenses are just pocket change and your whole family can enjoy the best of Africa.

Indeed I did.  The Cyprus situation is going to make bitcoin jump no doubt even more than it has.  One thing also to consider, is that stocks, can perform splits, to keep the share price down.  However BTC can't split, so its not really fair to compare, say, GOOG stock at 700 USD per share, to bitcoin at 600 USD per coin, because A: Google split their stock, and B: their float is 329 million shares.  So based on this, if bitcoin can attract even 10 billion dollars of black market capital (which is what kept the banks afloat in 2008 anyway) then the price of bitcoin could easily go to 1000 per BTC or more.  It's all about the underlying market, and google has not yet opened their own silk road.

I feel there is also some great movement of capital in the form of hedge fund managers, who are going to try and buy very large blocks of BTC, probably by buying out some of the early hoarders.  I wonder what the data is, on the larger amounts held?  I suppose exchanges like MtGox are considered the market makers, and therefore are the ones with the true power, but I wonder how that power could be destroyed/altered and then scooped up by others?

If MtGox is in Japan, what could force them to sell out, and who would have the material (Chinese gold?) to buy them out?  That's what your post makes me ask.  1: Who are the top ten market makers in BTC, and 2: How would these be squeezed or leveraged out.

In the case of Potatoes, for example, when they squeezed the potato futures market back in the 70s, the dudes had the McDonalds account, so they controlled the buy side there, and they just oversold the short side, thereby squeezing the markets.  I wonder when BTC futures will begin trading, and will there be more shorts versus longs?  I think it is a presumption that futures trading serves to prevent market volatility, which BTC suffers from and will surely continue to do so?  Just thinking out loud.

Also, since just the first batch of 300 avalon rigs will produce a total of 60 billion hashes per second, which is almost equal to the whole of the existing BTC mining network of "old", then the question would be, how will this hyper-space jump in mining power for some few mining cartels, affect the future pricing of BTC?  These are questions to answer, especially if you seek to protect the money of your people, like small business owners and such.  As you mention, BTC is only for money people can afford to lose, but there are actually more political reasons for shifting to BTC than other reasons.

Haham hey, are any of your Texas bitcoin converts, lawyers, who accept their fees in BTC?  I am guessing not. 

Thanks for all the replies.  I suppose I should have de-lurked long before now, but I try to follow Abraham Lincoln's advice that "It is better to remain silent and be thought a fool, than speak and remove all doubt."

@Vladimir:  excellent point.  I wasn't seeing the money transfer that way.  Obviously the money goes SOMEWHERE, fiat only gets destroyed when debt gets paid off or defaulted on.  If the fiat gets redeposited into someone else's bank somewhere then as far as the banking system as a whole is concerned, it's a wash.  When people start cashing out stocks to buy bitcoin it might be different.

@AnonyMint:  yes, I read your other post and it left me thinking about your points there.  In the long run it could indeed be unhealthy.  I don't think anyone has raised this issue before.  In my opinion, this kind of open discussion about bitcoin is part of what makes it so powerful, all of us together can be smarter than any of us individually.

@itsunderstood:  the logical first adopters (for these second-tier folks beyond the early adopters) are the people I do business with.  I fix computers and sharpen knives.  I'm already sitting at people's computers doing service calls, and most of the people are my long-time clients who know me pretty well and trust my opinion.  Many of them are also local small business owners.  So far I've already done one service call paid with bitcoin.  I had to get the client set up with bitcoin and sell them some of mine first, but I'm looking upon that part as "pro bono" work.  The businesses I'm hoping to get set up are the ones whose services I personally use and I do some bartering with already.  As in, my barber, my chiropractor, and probably soon my mechanic, I think the CV joints in my car are starting to need replacing.  None of those own "chain store" businesses or have real point-of-sale systems requiring payment integration, so for them deciding to accept bitcoin is as easy as making the decision to do so and have me help them set up a wallet (again, pro bono).

Did you see this article over at Zero Hedge?

http://www.zerohedge.com/news/2013-03-29/caught-cyprus-crossfire-small-businesses-suddenly-zero-cash

(excerpt)
The most of circulating assets on our business Current Account are blocked.  Over 700k of expropriated money will be used to repay country's debt. Probably we will get back about 20% of this amount in 6-7 years.  I'm not Russian oligarch, but just European medium size IT business. Thousands of other companies around Cyprus have the same situation.

The business is definitely ruined, all Cypriot workers to be fired.  We are moving to small Caribbean country where authorities have more respect to people's assets. Also we are thinking about using Bitcoin to pay wages and for payments between our partners.
(end excerpt)

So far the business owners I'm dealing with don't really have other employees, mostly very small service businesses.  The concept of paying wages in bitcoin is probably a few more steps down the road, as the workers are going to have to want that as an option.  What I'm trying to leverage immediately is to get paid for MY services in bitcoin, and the only way I can do that is get all my clients set up with wallets and as bitcoin owners.  Once they get started and begin educating themselves, I suspect the idea of expanding the use of bitcoin in their own business will occur to them all on its own.

I'm also beginning to prepare for when the banks here begin looking shaky and my main client comes to me wanting to begin doing the majority of their banking (and perhaps payroll) in bitcoin.  I'm thinking of suggesting a dedicated bitcoin workstation in a separate office, running linux, bitcoin-qt and the armory client.  Also with a dedicated local printer and webcam/scanner for paper wallets.  Here's where suggestions from people with more experience and technical familiarity with bitcoin would be helpful:  should there be just one workstation that is online 24-7 to maintain sync with the blockchain, or also an additional one that is offline only for generating private keys?  As a consultant, I want to be able to suggest the highest degree of security that is also practical and cost-effective. 

OP

Were you replying to my post immediately above yours or to the OP?

This is EXACTLY how I am seing this. Thanks for sharing!

Indeed and this first mover advantage is great for the cause, but it is a problem if suitable competitors don't come fast:

https://bitcointalksearch.org/topic/bitcoin-the-digital-kill-switch-160612

Litecoin doesn't fully address the threat either.

A competitor that fixes the threat, also inherently removes the threat from Bitcoin. A win-win for all.

Thanks for an awesome post slilley.

I find it hard to disagree with anything you wrote.  Particularly do I agree with the part about how the recent Cyprus actions of the clueless IMF Europower will inflate bitcoin.  You are right.

I am curious to know more about how small businesses can use bitcoin, for complete abandonment of banks as such.  Can you send me a PM or explain (since we are both newbies here at this forum and have to type here) as to how you might get that going?

I suppose it all has to do with one or two of your bitcoin conversion people, deciding to offer payroll in BTC?  Then perhaps they could be lucky enough to get their creditors/suppliers to accept BTC for bills of lading and so forth?  Your post is great, I think your thread has real potential.

Nice post. Thanks.

I have told everyone I can to get in as well, with only what they can afford to lose, as well, of course.

I am a medium-term bitcoin user, having first jumped on board with mining in 2011.  I no longer mine, but I did accumulate a nice collection of bitcoin at a pretty low cost of entry.  I'd like to address a little of what is currently happening and about to happen with bitcoin.  I'm sure this is obvious to many of you also.  Right now what's happening (IMHO) is that we're entering the next phase of the technology adoption curve, where the initial early adopters are beginning to tell others and word is beginning to spread.  Again IMHO, this is likely to lead to a further 10-100 fold expansion of the fiat price of bitcoin in the near future.

Let me give you a personal example.

Since the start of this year, as the price rise started, I reached the personal conclusion that I needed to begin spreading the word about bitcoin among my circle of friends, family, and business associates.  After all, how would it look if in future years I am bitwealthy and my relatives are not, simply because they didn't get on board sooner.  Really there are only two possibilities with bitcoin: either it fails, or it takes over.  It is a superior form of money, as presumably everyone reading this already knows and I don't need to discuss.  Since it's now gone through some of the early growing pains and not failed, my conclusion (again, probably shared by a lot of early adopters) is that it's now ready for the next steps.  Not ready for the mainstream yet, primarily because of the volume, but ready to take a few more steps.  Now, add to this the fact that the writing is on the wall for the mainstream financial system.  None of us want to see our friends and family get Cyprus'd, especially not if it's preventable.  Back in 2008 the options for wealth preservation were primarily hard assets, including precious metals.  I invested in some years ago and have been pretty happy with how I've been protected against inflation, at least.  But they don't represent an opportunity for significant multiplication the way bitcoin does (when viewed as an investment).

Essentially, you are doing a disservice to everyone you care about if you don't have a conversation with them about bitcoin.  I present it in a low-key fashion.  I'm not trying to twist anyone's arm to invest in what is most definitely a high risk investment.  I make it clear that it could fail tomorrow or go down significantly.  However, the upside is beyond fantastic.  No investment like this has probably existed in the whole history of the world.  Maximum loss: 100% of your initial investment.  Maximum gain: possibly 10,000,000% of your initial investment.  If the probably of bitcoin failing is anything less than 99.9999%, then mathematics dictate that it's a good investment in exactly the same way that lotteries are a tax on people who are bad at math.

Here's the response: EVERY LAST PERSON is interested and wants to invest.  I have turned one bitcoin user (me) into more than 10 new bitcoin users who all want to invest at least 1,000 USD into bitcoin.  Many have already done so.  This is just within the last three weeks.  Now those people that I told are telling their own circle of friends, family, and business associates and word is spreading like wildfire.  Among intelligent adults who can do math, it doesn't take long to arrive at the conclusion that the best strategy is to put at least SOME assets into bitcoin.  Those whom I told first are now sitting on 100% or more gains over the last few weeks and can't believe it.  There is a tremendous amount of money out there currently drawing 0% (or near enough) interest that people are DESPERATE for any investment opportunity with a rate of return.  Even the POSSIBILITY of a rate of return.

Here's my prediction: the seeds have been planted and word is spreading like wildfire.  Right now the number of "bitcoin-aware" is probably doubling every week or two.  I know that it normally takes new ideas a long time to go mainstream, but I think many people are unaware how much monetary repression is out there and is affecting people's lives worldwide.  As I tell people, my generation (mid 40's) cannot retire.  The math doesn't work.  There is no low-risk investment out there that yields enough (after inflation) to build a nest egg.  On the contrary, all relatively low-risk investments have a negative real rate of return.  Only a fool would think that there will be anything like Social Security by the time I would be eligible for it.  So, I have gone renewable and sustainable in an attempt to live as cash-free a lifestyle as possible.  If I don't NEED money it doesn't matter so much if I don't HAVE money.  I have been fairly successful at this over the last few years, but not everyone lives on rural property and has the option to grow a garden and raise animals (for starters).  But back to bitcoin....

Yesterday something interesting happened.  I heard from a business associate that they were now planning on cashing out a $50,000 CD that's paying virtually zero interest and putting all of it in bitcoin.  Now, if this was someone retired and that was their whole life savings I would discourage it as far too risky, but this is someone who can afford to put that kind of money at risk.  Keep in mind that this was someone who hadn't heard of bitcoin two weeks ago.  I have at least one local business in town buzzing where almost all of their employees are getting in.

Now let's do some math.  Ten times more bitcoin users, each investing 10 times more money, gives 100 times rise in the bitcoin price.  However, price is set at the margin so it's not really that simple, but you get the idea.  Also, more and more people are beginning to see the writing on the wall for the financial system and are beginning to move not just out of greed or a desire for a higher return on investment, but out of fear that somewhere else is going to be the next Cyprus and this show has a lot longer to play.  Those who study understand that fractional reserve banking is the definition of a ponzi scheme and will fail when it can no longer expand.  That point was reached in 2008 and only running the money pumps at ever-increasing speed has kept the Titanic afloat since then.  Again, old news to everyone on this forum I hope.

Here is what has begun to happen.  A TSUNAMI of money has begun to move into alternative assets.  Anything that looks like a lifeboat will be swarmed with passengers from the sinking Titanic.  Bitcoin is going to get a large share of this, because unlike gold and silver that will hold their value and go up (probably a lot, but by a limited amount), bitcoin is going to MULTIPLY by 10x, 100x, or even 1000x.  Sooner than you might think.  Obviously this is just one opinion and I can't claim to know, but I'm watching this psychology take hold day by day among the people I'm talking to.

And then there's the other side of the bitcoin (so to speak....).  Which is that as all this money flows OUT of banks, brokerages, and stock markets it's going to make them weaker and help catalyze the very thing that bitcoin is designed to work around, which is the failure of the fractional-reserve, fiat currency ponzi scheme.  Bitcoin could literally be the thing that brings down the system.

I also have an ulterior motive.  When the day comes that the banks close here in the US, I have some hope that enough bitcoin "critical mass" has been accumulated here in the small town I live in that we can go bitcoin and keep functioning, at least somewhat.  I have read news articles about hard-hit towns in Greece rediscovering the power of local currency.  Now imagine if that local currency was bitcoin, so all the towns using "local currencies" could trade with each other as well!  Within the next week, I hope to have at least two local businesses set up to accept bitcoin.  There's now a small town in central Texas with probably one of highest bitcoin adoption rates per capita of anywhere on the planet, and all with just a few weeks of effort by one dedicated bitcoin enthusiast and evangelist.  Let's see, 10 in a town of 6,000 is about 166 per 100,000.  Next week it'll be higher.  How good can you do in your location?  If you value your friends, family, and business associates, talk to them right away and let them know about bitcoin so they can get on board to reap the maximum reward from (A) the protection of being insulated from inflation, theft and bank failure, and (B) the rapid appreciation in price.