Topic: worth the wait? - page 2. (Read 6292 times)

We have a great grass-roots marketing department!  Thousands of enthusiastic people who are telling everyone they know, and they have the best marketing hook ever - the only thing better than "it costs nothing to try" is "FREE* MONEY" (* with purchase of GPU), and they're sitting around here dreaming up ways to make Bitcoin more attractive to this group or that group, and setting up sites to cater to them whenever a viable one is found.

However:



The problem is that the "somebody who cares" - any stakeholder - has a massive financial incentive to push Bitcoin, and to omit or downplay any problems when making their pitch.  Those incentives are transparent to everyone, and it's very hard to be credible when we have such an obvious conflict of interest.



... and are glad that they didn't hold amidst volatility, or are disillusioned when their free money rig rapidly became unprofitable due to difficulty and exchange rates.  "No press is bad press", and yes, at least we have a large base of people who have gotten past the initial hurdles of getting an address and transferring some coins.  But we have to get them to come back after they've already lost interest.  Did we do ourselves harm by scooping up everyone in one frantic push last year, rather than having a system that could grow more slowly and sustainably?




My arguments are based on my personal experience.  I've mentioned that I'm involved in Bitcoin to basically everyone I know and without exception the response from anyone who'd heard of it has been a wide eyed "oh my god it's a scam get out".  It's only after reassuring them that I'm not selling off my investments and putting it all in BTC that they will settle down and talk about the non-speculative-investment aspects of Bitcoin.  This is among software developers, cryptographers and dot com veterans - the ones who should be naturally interested in it during the incubator stage we're in.

Outside that group and into non-tech people who have never heard of it, they usually want to know: what's it good for (easy pitch), then what can I use it for today, which is where it goes wrong - outside of vice, HYIP, and small international transfers, there aren't many things Bitcoin's doing well enough (yet) to keep their interest.

But there's one huge exception:



I wholeheartedly agree.  It's why I'm here, and I expect an ongoing continuous draw among others who can see this.  Unfortunately it's a niche, which is why I believe there's a significant opportunity for another currency to overtake Bitcoin with broader appeal.

How was it eradicated?  I don't know what you're referring to there.

Great thread with interesting arguments!

Thank you.

+1

This is exactly what I did. I bought close to that USD amount between the rise from $6 and drop to $17. I've bought more since then, each time bringing my average price down. Soon enough I'll be even, and even a rise to $6 will be profitable. Dollar Cost Averaging works well, especially if you're in it for the long term, or just use it like a large savings account, like I do. I went to UK for two weeks using money I saved up in Bitcoin, Though it was $3k worth, since part of the Bitcoin used was bought as $7 and part at $2, selling at $4 or so meant I spent exactly the same as I would have had I saved it in a bank. Volatility just averages out over the long term.

I don't have the guts for that.

These are some superb points. Admin should install a +rep feature.

Revalin - nicely stated arguments. Though, I fundamentally disagree that the fixed supply is a problem. The fixed supply, and the profit speculation derived from it, has helped bootstrap Bitcoin tremendously. And remember, specualtion works in two ways. You say there is "nothing keeping speculation in check"... but speculation is its own check. One can make just as much by shorting and overbought asset as by buying and underbought asset.

And let's remember a very important point - unless the inflation rate perfectly matches the rate of adoption, then there will still be speculation on price. And it is impossible to know adoption, meaning that any specified inflation rate will be a guess, and it is not a far step from there to what the US has now, where smart, educated men sit around all day and try to gauge how much money to print.

One of the brilliant economic insights of Bitcoin is that money supply is irrelevant to its usefulness. We need not print 10% when 10% more people use it. Let the price rise when it's in demand, and let it fall when not so. A steady, arbitrary, asymptotic inflation rate that falls to zero is all you need for a currency. And if by setting it up that way it creates incentive to speculate and buy coins early on, that infuses the Bitcoin economy with capital to build itself up.

Bitcoin is not perfect, but I think it approaches perfection, and we shouldn't let the perfect be the enemy of the nearly-perfect.

I have missed out on some great opportunities. I have also been scammed out of $5000 many times over. I never would have thought in my lifetime I would see an opportunity like Bitcoin come along. While I too have "lost" money compared the current value, it has not deterred me one bit and while I do not recommend anyone heavily invest in Bitcoin, many people have asked for my assistance in acquiring some amounts based on my incessant passion about the possibilities.

Revalin,

I have to disagree on the whole "how to sell a cryptocurrency" argument. I truly believe that Bitcoin has a superior incentive model to almost anything I can think of. Even if it's not for the right reasons, all of these "Bitcoin price going to the moon" ideas are actually good for Bitcoin. It means that somebody cares. Bitcoin has not only good but Nobel prize level brilliant incentive systems built-in. Satoshi wasn't just a programmer guru, he understood economics.

All those miners who have jumped on the bandwagon mainly because it's profitable has brought a lot of people to the community. They do not necessarily use Bitcoin much but that is not because they don't want to, there just isn't too many ways ways to use Bitcoin at this stage. But as Bitcoin grows to become more usable, it will have a very strong userbase lurking in the shadows, all of these gold diggers at least know about Bitcoin and if it provides a convenient, cheap way to transfer money (which it does) and becomes more accepted, it'll actually lead to very good things.

Bitcoin mining is just one thing, the incentives that the Bitcoin monetary model has created are absolutely massive. First of all everyone who believes that Bitcoin has potential like to invest in it, at least a small amount. They want a stake and they want to know more about what they're investing in. This is another group of people who are lurking in the shadows that would no doubt start using Bitcoin as a medium of exchange once it becomes more accepted and actually usable.

Then there is the fact that basically everyone who develop something that helps Bitcoin knows that if they succeed, Bitcoin price goes higher. If these people own a stake (bitcoins) then their own stake increases in value if they help Bitcoin become more usable. The incentives are simply massive and I think that this counters the negative effects of level 1 accusations (ponzi scheme, pyramid) very easily. In fact I've noticed that this particular accusation is not so common anymore, it used to be more common. Nowadays the arguments are either "nobody uses it so who cares" or "deflation will ruin everything so it's doomed".

I really don't believe that I would've ever gotten so deeply involved with Bitcoin (now running a Bitcoin startup company) if it weren't for the massive incentives that this whole system has built-in. First I was mainly interested as a miner, then I became an investor as well and now I've become a full blown enthusiast/enterpreneur. For me it wasn't just about the money though, probably less about the money than other things. I believe that Bitcoin is truly a revolutionary invention and a step forward for human monetary systems, even human society as a whole.

But the fact still is that I need money to take care of myself and my family so monetary incentives do matter. Bitcoin has super strong monetary incentives built in which can lead to overshoots due to greed but overall I believe that this model will lead to good things eventually and we'll be better off. This is a huge advantage for Bitcoin over any competitive cryptocurrency that changes these features.

It's important to remember that Bitcoin has grown very significantly in just 3 years and it has basically had no marketing to speak of. Very little money has been used in developing Bitcoin, it's just a software project that has started to blossom for many reasons. For one the revolutionary features of a decentralized digital currency are interesting but many of those who are deeply involved in the Bitcoin community, are there because Bitcoin also provides monetary incentives. Without those incentives it would be just another hobby. Now, for many of us, it's more than that.

I suggest you do this.

1. Order one or more copies of the Bitcoin magazine with some of your bitcoins. http://bitcoinmagazine.net/
2. If you have an Android phone, get Bitcoinspinner.
3. Educate yourself. Take a look at all the cool stuff thats happening.

Think about this.

4. Eric Emerson Schmidt (born April 27, 1955) is an American software engineer, businessman and the current executive chairman of Google.[3] From 2001 to 2011, he served as the chief executive of Google.

Additionally, Schmidt was a former member on the board of directors for Apple Inc. and sat on the boards of trustees for both Carnegie Mellon University and Princeton University.[4][5][6]

Schmidt also revealed that Google wanted to create a rival to Internet peer to peer currency Bitcoin. The company planned to call it "Google Bucks." Though Schmidt said peer to peer currencies like Bitcoin are "a great idea"...

Though they were adviced not create their own currency because of legal issues.


More food for thought.

If only 100.000 each holds 210 Bitcoins and do not sell them for less than $20 than you can get your money back if thats what you want by that time. (Ofcourse there needs to be buyers.)
But right now there are only around 10 million coins. So each one of those only needs to hold 100 coins each.

I'm not arguing against speculation - I agree that it's crucial for a functioning market, and that attempting to control volatility directly would cause widespread damage.  I'm not one of the guys trying to control the market to peg it to the dollar.  I understand all the reasons that won't work.

The problem is Bitcoin has a fixed supply.  As everyone here knows, that makes for some impressive math: if it grows to the scale of a reserve currency each coin would be worth tens or perhaps hundreds of thousands of dollars.  With an upside like that and so many unknowns, net present value calculations can diverge by 4 or 5 orders of magnitude.

That lets speculation run unchecked.  Instead of volatility where the market reacts to present and future events then oscillates around a fair value, we have a market that is inherently unstable:  it's not going to discover a price; it's just fluctuating randomly between "buy as much as you can and hold on" and "waiting while all these people panic so I can buy a ton more", depending on how many giddy enthusiasts we have at the moment.

They're right here in this thread:  "hoped bitcoin would rise to $100000000+" ... "I think bitcoin goes to at least $10000/BTC (and I will wait 20 years)" ... "If Bitcoins were worth 20 cents a piece, I could buy them all for a couple million dollars" ... "The fools selling now will look like idiots in the future"  ... "I only part with it when I absolutely have to"  ... These are not the things people say about a healthy currency.  This is almost a caricature of speculative hype.

Fixed supply isn't the only way.  Instead of growing the value of each coin as the demand for stored value increases, you can gradually issue more to meet demand.  As fiat is issued by a central bank, I've been calling the concept of distributed monetary policy a "decentral bank".  The hardest part is coming up with a reliable method to quantify value.  I don't want to derail into the technical details, but in short: I propose a system based on currency exchange; GEM is based on energy cost; EnCoin is another take on energy cost.

All of them look like viable ways to eliminate the wild get-rich-quick bust/boom cycles.  There would still be volatility and room for speculation: if OPEC suggests that they're considering shifting to EnCoin for trade speculators would run it up; but it would be based on actual economic developments, and it would be over the course of weeks and years, not starry-eyed math of what would happen if Bitcoin became THE currency decades from now.

Think about how much easier it would be to sell people on the idea of Bitcoin if massive value growth was impossible:  no "early adopters", no dismissals as being a pyramid scheme or other scam; much lower volatility without the "rockets to the moon" speculation.  It would be a huge competitive advantage - and it's one that only a competing currency can adopt, because there is simply no way that the Bitcoin community would ever accept such changes.




The security is adequate, and getting better.  Unfortunately it also requires careful measures that cut into usability - keeping keys on paper, secure computers to perform transactions, and economic risks when you make reasonable compromises for convenience.




I think your arguments are good against the usual claims that Bitcoin is not viable and cannot stand on its own.  If Bitcoin was the sole cryptocurrency I think it would be a rough ride, but it would make it.

Some of the problems might be solved technically in ways with few drawbacks: anonymity may be improved; and as you mentioned we have an elegant potential solution to the confirmation delays, though I haven't seen any moves to actually implement it yet.  Others will be controversial: changing signing techniques may reduce mining costs, but it would be a massive change in the balance of power, and shouldn't be done lightly (if at all) at this point.

But others, like volatility, simply cannot be fixed in Bitcoin; the changes go completely against the way the currency was founded.

And it's not the sole cryptocurrency.  None are deployed yet that make truly radical changes, but they are being developed.

Don't get me wrong.  I'm a bear, not a hater, and I don't think it's doomed.  I just see problems that can't be handwaved away, and I think they are significant enough that I consider it overpriced, even now.  My assessment will change significantly if we either discover some significant technical solutions, or if we start seeing significant commerce - actual purchases, not just hoarding - and widespread adoption outside the small niche catering to the community.

Agreed. Wait....weren't you pro Solidcoin at some point?

The volatility is purely market based - and this means the volatility is valid price discovery. If you think the price at any given point is flawed, you can take an opposing position. Bitcoin's volatility is not a flaw of Bitcoin, by any measure. In fact, it's fluidity and ability to be traded by anyone, anywhere, quickly, is one of its shining attributes. Any "means" I can think of to "curb volatility" would be harmful, because they necessarily involve the prevention or reduction in the ability of someone to take large speculative positions. Speculation, contrary to popular belief, is very healthy and the fact that anyone can speculate in Bitcoin is not a bug, but a feature. And of course, volatility will recede with time necessarily, so even if it is a problem, it's one that fixes itself. At most, it is a temporary drawback, not a "significant drawback."



Not true. Your $36,000 figure assumes everyone is paying the average kwh $ for electricity. The Bitcoin system encourages mining by those with the lowest marginal cost of electricity, and thus the real "cost" of mining is far lower than your estimate. And the inflation issue is one which, again, fades with time. The inflation goes away. I see no significant drawback in the mining system or inflation schedule.


Bitcoin is the most anonymous way to buy something online. How is "anonymity" a "significant drawback" of Bitcoin, when it's the best available option? The average user doesn't need "strong" protection, he just doesn't want CamSluts.com appearing on his credit card bill, and Bitcoin is perfect for that. Users who want serious anonymity can obtain it fairly easily - but let's remember anonymity is not a cheap commodity and there is a cost to acquire it. I think Bitcoin has brought that cost down substantially.



The fees, long term, will be priced by the market, meaning they'll be the minimum miners require to mine. It's "possible" that the long-term market price of mining is so low that a 51% attack becomes dangerous, but suggesting it now is just speculation, and cannot be said to be a "significant drawback" when there's no solid evidence that it will ever occur. It's a "possible drawback", true.


The new Armory client already has multisig, offline wallets, easy paper backups, etc. The security of Bitcoin seems pretty darn good thus far. Thefts are news, meaning they're rare, and they always deal with some poor security that is not the fault of Bitcoin (bad VPS company, for example). Again, no "significant flaw" here.



Bitcoin is by no means invincible, and it's future is highly speculative, for sure. But I still see no significant drawback to it's structure. I see a handful of small problems, all of which have pretty good solutions. For a long time people said the "waiting for six confirmations" was a significant drawback, but most people understand that problem has been almost entirely eradicated. There's an important lesson there.

My view is simple: the likelihood of a wholly new coin being vastly better than Bitcoin is less than the likelihood of Bitcoin overcoming those few issues it struggles with. Thus, while Bitcoin may certainly be destroyed by a competitor some day, I see no evidence at all that such a competitor is anything more than theoretical. And I think the myriad problems Bitcoin has solved is too often taken for granted, and too often overlooked by those who focus instead on the limited number of problems not yet overcome.

If you bought it at $15 because you thought it is worth more than $15, then hold on to it. If you can afford to, buy more any time the price drops below $15. The further below $15 it goes, the more of a bargain you are getting.

I only part with it when I absolutely have to, because people are undervaluing it ridiculously. Somewhere up above $15 I might not feel like I am being forced to sell off some of my valuables second-hand to meet my bills if  I am forced to spend some bitcoins, but until then I look around to see if I have anything else I could sell off second hand first before dipping into my precious collection of bitcoins.

I have already been in the position of facing a price of $30 per coin for replacing spent bitcoins, I don't want to face that again until I have a whole lot more bitcoins than I have right now.

Even if I only earn them through mining, because the higher the price the more people also try to mine; when the price floors, the amount of competition in mining sometimes drops a little. If the price had stayed at $2 a whole lot longer that would've been more money for me once it goes back up.

Look how easily it hit $30 even when it was almost un-known and still imagined to be about to die at any moment. Surely by now it is clearer that it isn't that fragile? So it should be able to easily hit higher than $30 next time around...


-MarkM-

+1

This is a very important point. I believe that competing cryptocurrencies require a critical advantage over Bitcoin to truly challenge it.

At this moment Bitcoin has no serious competition in the cryptocurrency market. That will probably change in the future but the others are definitely fighting an uphill battle.

I definitely don't mind the competition though, that is very healthy. The more currencies we have that are not directly dependent on banks and governments, the better.

I don't believe that alternative cryptocurrencies could offer anything better than bitcoin, but there is one _huge_ thing that alternate cryptocurrencies could offer: marketing.

Imagine a scenario where google would invent their own cryptocurrency, and throw something like 100 million USD to marketing & development of various applications.

Volatility.  Gaining and losing tens of percent in a day is great for speculators, but it's terrible for people who simply want to earn money and spend it on goods.  There are several possible ways to address this (eg, EnCoin, GEM, and my own proposals).  None are tested, but if they work out they could be very successful.  As a related benefit, they would eliminate the cries of "pyramid scheme" which have made Bitcoin a running joke among the people who should be it's strongest supporters.

Mining is very expensive, and all BTC holders pay for it - currently about $36,000 per day - as inflation / devaluation.  The effect is currently overwhelmed by speculation, but I don't think the speculators will pay for it forever.  Increasing exchange rates make this worse.  One possible alternative keeping with an overall Bitcoin-style network is proof of stake instead of proof of work.  Other more radical systems are possible as well.

Anonymity.  It's good enough to protect thieves who steal large amounts and are willing to spend time and money laundering their coins, but at the same time it's hard for the average user who simply wants privacy to get strong protection without effort and expense.  It's a poor balance; going in either direction would help.

Long-term viability.  It's not certain that transaction fees will be an adequate way to protect the network in the long-future.  Right now 51% attacks are very expensive relative to the size of the money supply.  When generation goes down significantly, we may have a problem.  It may be necessary to apply a new policy such as: high fees (limiting the utility as a currency); or reinstating generation / inflation (thus screwing all the people who are speculating that the limited supply will make them rich).  While double spend attacks can probably be defended at a reasonable price, it may be economically viable for a large entity with an interest in destroying Bitcoin (central banks, large commercial banks) to DOS the network by buying hash power.

Security.  Take a look at how hard it is to get something like P2SH accepted (which is looking increasingly likely but it's still not a done deal) - and despite people's hopes, it's not a silver bullet.  It will help people with very large accounts, but I expect it to be prohibitively difficult for the average user to use.

...  Just to name a few off the top of my head.  None of those are deal killers, but they're all significant drawbacks.  Making the fundamental changes to correct them may be too controversial to accomplish in Bitcoin, and an alternative coin may have to do it instead.

In Bitcoin's favor, it has jumped out well into the lead of cryptocurrencies.  I find the current market adoption disappointing (which is what I base my low valuations on), but there is significant infrastructure built up, good name recognition, and an enthusiastic core of community support.  That's a lot for a newcomer to overcome, but in a global market sense Bitcoin is still miniscule, so don't mistake it for an invincible force.

There is always the "good enough" dynamic.

Early on ebay gained critical mass.  Competitors emerged and they all tried to out ebay, ebay.  Ebay had/has some issues but it was "good enough" and thus enjoyed the critical mass which caused competitors to die off. 

While something may replace Bitcoin it has an uphill battle.

I hear this a lot. What if it's not the pioneer, and it's actually the most brilliant in a line of digital currencies?

What are these "significant drawbacks?" I can't think of any that are significant.

Wait... The fools selling now will look like idiots in the future.