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Comment Re:Why ever use Bitcoin in the first place? (Score 1) 232

Bitcoin enables a person, anywhere on Earth, to receive computer-based services from anyone anywhere on Earth, very quickly and with very little charged in transaction fees. Additionally you can send large amounts of money anywhere on Earth without incurring what banks charge for international wire transfer fees. I think it will also be good for micropayments - a website that wants to charge its visitors 15 cents doesn't have any good way of doing this presently without being destroyed by credit card fees.

Comment Re:Why ever use Bitcoin in the first place? (Score 1) 232

A stolen briefcase can be broken into, a stolen encrypted Bitcoin wallet file with a secure password cannot. Additionally, Bitcoin is supposed to be introducing two-factor authentication soon, which would, for example, require keys from both a smartphone and a PC to decrypt a wallet and send Bitcoin payments. While it's possible and feasible to make and distribute a trojan that could infect a computer and both copy the wallet.dat file and log keystrokes to determine the wallet password, it would be incredibly harder to do so on both of a single person's computer and smartphone. Whether that is easy enough and safe enough for the masses remains to be seen.

Comment Re:Why ever use Bitcoin in the first place? (Score 1) 232

The difference is that most of the reasons that people have for accepting silver/gold certificates instead of actual gold/silver coins do not apply to Bitcoin. Bitcoin can be carried anywhere (and sent anywhere in the world) without a weight or volume problem. You don't have to physically travel to a Treasury office to redeem Bitcoin certificates for real Bitcoins. You don't have to worry about counterfeit Bitcoins as you might with gold/silver coins. With a moderate amount of encryption and backup you don't have to worry about them being stolen from your computer.

Comment Re:This story is completely overblown (Score 1) 331

I don't think Bitcoin will work in the long run. The main reason is that it's designed to be limited to a fixed amount. This leads to three problems:

1) And financial transaction that requires interest is a problem. Anything from a business loan to a mortgage is basically impossible in a fixed money supply.

Interest on loans does not require an inflationary money system. The money that a person pays as interest either reduces his future spending or will require him to sell more of the future goods/services he produces.

2) Assuming the economy grows, there would be deflation, which will mean people try to hoard their bitcoins instead of spending them. This in turn increases the deflation.

Bitcoin will always have a value less than infinity, and therefore there will always be some fraction of Bitcoin you can take to represent any value to send to someone, and thus Bitcoin will still "work." A deflationary money system does mean that people ought to adjust their prices accordingly, but this is easier than in the past due to fast modern communications and a liquid exchange market.

3) Related to the first two points: One person can over time become the owner of all bitcoins if this person has a sizeable initial stack of bitcoins, and lends them out at interest, and keeps spending well below the gained interest, you end up gaining a larger and larger share of the total bitcoin supply.

How does that work with real estate? Say someone owns a lot of properties, and charges people rent for people to live there, and keeps spending less than he takes in from rent, and buys more land with the difference. Will he then someday own all the land in the world? And thus can we say that the system of land ownership and rent is doomed to fail? No, because first, he won't live that long, and second, the value of the remaining land will increase as its supply decreases. (And third, a human being will find things to spend his money on sometime before he owns all the land in the world.) In the same way, if one person's Bitcoin wealth is great and increasing, it becomes asymptotically hard for him to gain all the Bitcoins in the world, because the value of remaining Bitcoins will approach infinity.

Comment This is all based off of claims from IRC (Score 1) 411

I can't remember exactly where, but someone suggested that this might be a possibility on one of the Bitcoin forums. A day later, someone said in an IRC channel that they had been raided. I'm pretty sure they made it up based on the previous day's speculation. And now a website has picked up the IRC claim, and now Slashdot picks up that website's claim. As far as I can tell there's no backing that this supposed drug bust ever happened, but it's pyramiding into bigger and bigger news based on nothing.

Comment Re:Bitcoin is good, but problematic. (Score 1) 280

I really like BitCoin, But the biggest problem is the "goldrush" is over. While new bitcoins can still be mined, it's expensive, and takes time. Oh, the other big problem is that not enough people accept them.

Difficulty of generating new Bitcoins is a feature, not a bug. If it were easy, they would have no value. The purpose of Bitcoin is to function as a form of money for saving and exchange, not to get rich by using your processor to print money. But you're right on the second part, the biggest obstacle is the lack of businesses that accept them.

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