Virtual currency - Bitcoins

Seems like a new way for ecommerce to avoid taxes....

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Sales taxes maybe. I don't see how the vendors will be able to avoid income taxes when the bitcoins get redeemed for cash.

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Well, you never really have to redeem them for cash. They can just be spent in exchange for other goods/services.

Hahaha, BLAW

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It would seem that someone at the bottom of the pyramid is going to have to redeem the bicoins for cash to purchase goods from manufacturers, manufactures purchase from farmers/miners etc.?

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They are meant to be used for online purchases of services or digital items, but they can be used to buy anything from someone willing to accept them. Also, the only way to "redeem" bitcoins for cash is to sell them to someone willing to buy them.

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With that, I don't see congress sitting idolly by and allowing their revenue stream to get cut. They would close this loophole in tax law real quick, I would think.

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The problem is that they can't really do anything about it. There is no single entity to shut down, and no way to prevent individuals from joining the network and spending and accepting bitcoins. This is a worldwide network, and the only way to disrupt the system in any way is to control more than half the computing power in the system, which is essentially impossible.

This is really interesting now that you've explained it a little more (I tried clicking on the link to get more info and I couldn't get the page to appear). I could really see this concept working in the service and entertainment industries.

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This is really interesting now that you've explained it a little more (I tried clicking on the link to get more info and I couldn't get the page to appear). I could really see this concept working in the service and entertainment industries.

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To explain a little more (from my limited understanding), the coins are created by the computers in the network. It works like most other distributed computing projects (SETI@home, folding@home), as in blocks of problems are sent out for the computers in the network to work on. Whenever a problem is solved, whichever computer solved it gets a bitcoin (but only after multiple other nodes in the network verify the solution and mark that coin as valid). The problems are set up to become harder as more nodes join the network, in order to control the money supply. I believe right now the system generates 1 bitcoin every 10 minutes, and every 4 years that rate will be cut in half. In other words, regardless of how much computing power is added to the network, the total bitcoin supply will grow at a very predictable, calculated rate. The problem difficulty is also calibrated to ensure that it costs more in electricity to generate a bitcoin than the bitcoin is worth.

Now for the transactions.. each transaction also has to be verified by multiple other nodes in order to be marked valid. Each bitcoin carries along with it a digital transaction history to ensure that counterfeit coins cannot be created. The transaction history only verifies that the bitcoin is valid... it doesn't contain any information about the parties involved in the transaction. So basically the network functions just like any other payment processing service, moving funds from one account to another, verifying that the funds are there and that both parties agree to the transaction.

It's really a brilliant system.. it is self-sustaining, self-checking, and much more resistant to identity and monetary theft than other more traditional payment systems.

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The world's fastest-gaining currency has tripled in price again. Last week, SmartMoney reported that the Bitcoin had exploded from an exchange rate near zero to more than $10 in about a year, making it one of the top-returning assets of any kind. On Wednesday the currency topped $30.

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anyone invest in this?

This is a genuinely horrible investment. I would place it on par with the Iraqi dinar, and it's going to cause a bunch of wannabe internet currency speculators to lose their hats. The only reason it's being talked about so much are weird internet dudes who either 1) hate the government tin-foil hat style or 2) are inveterate early adaptors who always think it's better to replace an IRL system with an online system no matter what.

The primary problem is that, realistically, these things will never be freely tradeable as currency. But that's a practical problem, and pro-bitcoin guys handwave it away: "well of course it will!" So let's pretend that they're right and that bitcoins do become near-universally acceptable as a medium of exchange, thereby overcoming their primary disadvantage. They're still a terrible idea. There are built in structural reasons why the bitcoin can never succeed as an alternate currency. Read this article, which explains why the way the bitcoin is setup guarantees that it will go through periodic deflationary collapses. Put simply, "Bitcoin is not designed to be a functioning currency, it's designed to enrich early adopters. Again, that is why it is a scam. Period."
LINK

Bitcoin is bullshite, many deep web websites/"companies" claim to accept bitcoin as currency for things like a private VPN or websever. There is no point in wasting money on the 10/1 ratio for bitcoins. If you really want to be untraceable, buy prepaid credit/debit cards, establish an offshore VPN connction through an open wifi connection, then use T(a)ils and tor browser. Technically, not even the exit node can view your traffc. I wouldn't be shocked if this bitcoin BS was an elaborate scheme by anon to build a rainbow table to aid in future haxoring. Bottome line is it is a scam.