re: Let's play a game called Bitcoin Forensics

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When I start trying to hide assets then I may be interested. Until then, not really unless as a hobby.

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Well said.

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Otherwise I just don't see the point.

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There are many legitimate uses of bitcoin. I know you are reasonable in these discussions and I think you'll agree with some of these benefits, but I also know that others here are going to attempt to dismiss them and say that they aren't really benefits.

1. Bitcoins are a "push" type of transaction, meaning that the owner of the coins has to initiate the transaction, as opposed to credit cards which are pull transactions initiated by the merchant. There is a level of confidence that comes with this.

2. Bitcoins don't require you to provide any personal information to a merchant in order to transact, where with credit cards, you typically have to provide your name, address, zip, etc.

3. Bitcoins don't allow for chargebacks. Some will argue that that's not good for the consumer. I argue that it's great for merchants, however.

4. Bitcoins don't require a bank for safe storage.

5. Bitcoin transaction fees are zero or near zero (typically fractions of a US penny).

6. Bitcoins allow for near instant transactions anywhere in the world, at any time of the day, during any day of the year.

7. Bitcoins cannot be seized or frozen.

8. Certain companies/organizations cannot by blocked by bitcoin. For instance, PayPal and the Credit Card companies acted on pressure from governments to block donations to WikiLeaks. That is impossible with bitcoin.


Do any of those resonate with you?

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5. Bitcoin transaction fees are zero or near zero (typically fractions of a US penny).

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Wiki, when you talk about this, are you strictly referring to a BTC to BTC transfer of money between individuals? I somewhat agree and disagree with the other benefits you have listed, but the transaction benefit seems really out of place.

I have discussed this with you in other posts, but I think one of the major limitations to BTC at the moment seems to be the high fees associated with 3rd party transactions that require the conversion of BTC to USD to purchase goods (ex. +$2 USD to order a pizza, higher USPS shipping fees than standard services because sites aren't updated based on the current trading rate).

I haven't really looked into it, but I am just guessing the initial purchase of BTCs require these types of fees as well. Since most BTC to BTC transactions, which require no conversion or 3rd party, are extremely limited to the normal consumer (at this time) how is this even a benefit?

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as opposed to credit cards which are pull transactions initiated by the merchant.

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Huh? The consumer initiates the transaction. The merchant just accepts the transaction.

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with credit cards, you typically have to provide your name, address, zip, etc.

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WTF? I've never had to give my address using my credit card. Half the time I swipe the card myself and the sales clerk never even looks at my card. What the heck are you talking about?

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Bitcoins don't allow for chargebacks. Some will argue that that's not good for the consumer.

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No kidding. How does "All Sales Are Final" on every purchase you make sound to the average consumer???

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Bitcoins don't require a bank for safe storage.

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Neither does cash. And if someone is going to convert their bitcoins to a usable currency, they will need a "bank" called an "exchange" to do it. And bitcoin "wallets" can be lost (see below), meaning the entire balance of bitcoins a person owns can disappear.

And at least 3 of those exchanges (or whatever the 'storage' sites are called) have been hacked and bitcoin holders have had hundreds of thousands of dollars worth of bitcoins stolen from them.

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Bitcoin transaction fees are zero or near zero (typically fractions of a US penny).

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Credit card transactions are free to the purchaser. So are cash transactions. So are most transactions taking place via checks or debit cards. So what you are saying is consumers would have to give up free transactions costs to ones costing "fractions of a penny."

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Bitcoins allow for near instant transactions anywhere in the world, at any time of the day, during any day of the year.

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Ditto for credit or debit cards.

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Bitcoins cannot be seized or frozen.

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But they can be stolen...and have been, very easily it appears. And how many people have to worry about their bank account being frozen or seized? I don't even know anyone who has ever had their bank account frozen or seized.

Besides, just because bitcoins have not been seized does not mean they can't be seized.

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Certain companies/organizations cannot by blocked by bitcoin. For instance, PayPal and the Credit Card companies acted on pressure from governments to block donations to WikiLeaks.

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Okay, you got me! If I ever want to donate to an illegal operation, I'll have to turn to bitcoins to do it!

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Do any of those resonate with you?

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The only thing that resonates with me is there are no advantages for me as a purchaser to use bitcoins over either my plastic or my cash. You're really appearing to be desperate listing those things above as "advantages."

Here is a list of disadvantages to using bitcoins:

-Bitcoins Are Not Widely Accepted. Bitcoins are still only accepted by a very small group of online merchants. This makes it unfeasible to completely rely on Bitcoins as a currency.
-Wallets Can Be Lost. If a hard drive crashes, or a virus corrupts data , and the wallet file is corrupted, Bitcoins have essentially been “lost”. There is nothing that can done to recover it. These coins will be forever orphaned in the system. This can bankrupt a wealthy Bitcoin investor within seconds with no way form of recovery. The coins the investor owned will also be permanently orphaned.
-Bitcoin Valuation Fluctuates. The value of Bitcoins is constantly fluctuating according to demand. As of June 2nd 2011, one Bitcoins was valued at $9.9 on a popular bitcoin exchange site. It was valued to be less than $1 just 6 months ago. This constant fluctuation will cause Bitcoin accepting sites to continually change prices. It will also cause a lot of confusion if a refund for a product is being made. For example, if a t shirt was initially bought for 1.5 BTC, and returned a week later, should 1.5 BTC be returned, even though the valuation has gone up, or should the new amount (calculated according to current valuation) be sent? Which currency should BTC tied to when comparing valuation? These are still important questions that the Bitcoin community still has no consensus over.
-No Buyer Protection. When goods are bought using Bitcoins, and the seller doesn’t send the promised goods, nothing can be done to reverse the transaction. This problem can be solved using a third party escrow service like ClearCoin, but then, escrow services would assume the role of banks, which would cause Bitcoins to be similar to a more traditional currency.
-Risk of Unknown Technical Flaws. The Bitcoin system could contain unexploited flaws. As this is a fairly new system, if Bitcoins were adopted widely, and a flaw was found, it could give tremendous wealth to the exploiter at the expense of destroying the Bitcoin economy.
-No Physical Form. Since Bitcoins do not have a physical form, it cannot be used in physical stores. It would always have to be converted to other currencies. Cards with Bitcoin wallet information stored in them have been proposed, but there is no consensus on a particular system. Since there would be multiple competing systems, merchants would find it unfeasible to support all Bitcoin cards, and therefore users would be forced to convert Bitcoins anyway, unless a universal system is proposed and implemented.
-No Valuation Guarantee. Since there is no central authority governing Bitcoins, no one can guarantee its minimum valuation. If a large group of merchants decide to “dump” Bitcoins and leave the system, its valuation will decrease greatly which will immensely hurt users who have a large amount of wealth invested in Bitcoins. The decentralized nature of bitcoin is both a curse and blessing.
LINK

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One thing that many in the bitcoin community are looking into are remittances sent by migrant workers back to their families. If bitcoin can break into that market, it could help the currency grow quite substantially. Western Union fees aren't cheap, you know??

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I'll give you a blowjob in the middle of Airline Highway if you can convince one illegal Mexican to accept bitcoin as payment.

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Item 1 I don't get. I have never had a merchant initiate a transaction I didn't want. If one did there is fraud protection.

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The porn industry is notorious for charging credit cards on a recurring basis and making it difficult to cancel.

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Item 4 speaks to bitcoins as a store of value and not as a method of exchange. That's fine, but in that context bitcoins are simply another asset that happens to be fairly volatile.

I don't store cash outside my front pocket. At all. I do store assets in other ways but I'm not willing to invest everything in any asset, that portfolio would be a bit undiversified.

Out of curiosity, suppose I wanted to save up the bitcoin equivalent of $500,000. Is this truly costless as you say? I rather doubt it but am not expert on the subject.

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Well, there would be conversion costs associated with getting the $500,000 into bitcoin, but after that, storage is free if you want it to be. In other words, you could simply put that $500,000 BTC equivalent in one single private key, print that private key, and put it in a safe at your house. Obviously I wouldn't suggest that. A smart bitcoin user would store multiple encrypted copies of their wallets, either in the cloud, on their own hard drives, or in printed format. It all depends on your choice though.

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Item 6 - I've never had trouble using credit cards this way. Have you?

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Actually, credit card transactions aren't really instant in terms of finality. This kind of goes back to the chargeback topic. Merchants can be hit with chargebacks months after a purchase is made. They may appear instant to a consumer, however.

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Item 7 - I do not anticipate this being a problem for me.

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I imagine the people of Cyprus didn't either, and yet they haven't been able to get at their money for a week now.

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Item 8 - I don't anticipate this being a problem either.

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This is the problem with these threads....everyone is always like "I don't have a need for that" and then they dismiss it simply because they can't see any personal value in it. That's ridiculous. It's not about if YOU will use it. Do you think overall that people throughout the world may find value in those qualities? That is the question.

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Do you mean that people will be paid, by their employers, in BTC? Otherwise, it seems that you would still have to take your non-BTC currency and convert it over at some point.

How would that even work for most companies? As far as I know, I can't go to my employer and request that I am paid in Euros or some other non-US currency. How would that work for tax reporting purposes for the company?

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I know most companies right now probably won't do it.

However, the Internet Archive has offered to pay a portion of its employee salaries in bitcoins if they so choose.

Also, just last week a Finnish software firm offers to pay part of staff’s salary in virtual Bitcoin currency

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How would that work for tax reporting purposes for the company?

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I don't know. :dontcare:

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I agree with the author that it will be interesting to follow, and it is one of the reasons that I enjoy these threads. Reminds me of some Harvard Business Review case studies.

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You are witnessing the beginnings of a revolution. It's not going to change the world overnight, but you'll definitely notice the effects in 10 years.

I'm starting to read these threads by Wiki solely to watch you harass him until he finally caves and responds to you. You are a breath of fresh air in these threads

//ETA: I have reached the part of the week where I've settled on the weekend, comic relief is necessary