"Fastest growing" is the worst metric. If I have one Bitcoin and I make a second Bitcoin, the supply has grown by 100 percent! Beat that, US mint!
However, the situation is not as you make it out to be. Bitcoin mining is extremely popular and the growth rate of the currency is so fast that it is outstripping the algorithmically inbuilt balancing mechanism and possibly depleting the bitcoin "reserve" 15 to 55 years earlier than planned.
So I'd say "fastest growing currency" is actually quite apt (if a bit sensationalist).
Anyway, it's been more than a year since the previous comments in this thread and a lot has happened with bitcoin. Mainly it seems that the technical validity of the protocol is now a moot point leaving the obvious economic shortcomings to be proven. Also it seems that regulation is a more effective tool than I had speculated, as far as I can tell there is now nowhere on the intenet that you can buy bitcoins (apart from selling drugs for them ;-) ) without registering your bank credentials. So, if you want anonymity better get mining.
Some, in my opinion, interesting developments that are unforseen consequences are: namecoin -- a distributed DNS system piggybacking on bitcoin mining (they have their own blockchain but mining is simultaneous), the more general concept of using the bitcoin blockchain to store signatures for timestamped unforgeable "proof of existence", and attempts to make bitcoin truly anonymous. Finally, as Luke pointed out, real life businesses are playing around with accepting bitcoins.
I am still extremely intrigued, so far as to have gone to the trouble of mining myself an bitcoin -- 0.000001BTC to be exact. Unfortunately the mining pool doesn't pay out shares smaller than 0.01 which would take me appoximately 3 years to achieve, so yeah, not doing that anymore ;-).
I also stand by my criticism of the economic flaws of the currency, in particular easy manipulability, inbuilt deflation, etc. but I have found another quite interesting point of criticism. Currently the network is protected by the vast amount of computational power working on "the one true blockchain". What happens when the last bitcoin is minted? True, this will probably not happen in my lifetime, but the amount of computing power working on the blockchain is due to the financial incentive of getting bitcoins. If the financial interest falls away, the computing power will go away making an attack on the network easier by orders of magnitude.
EDIT: I just reread the original whitepaper. After some initial time the network imposes automatic transaction fees which replace "mined" bitcoins as the incentive to keep your hardware churning on the blockchain.
There are sites that allow you to do cash deposits for Bitcoins, at least in the United States. It requires a level of trust, but I tried it with a small amount a last year and everything worked out fine.
I have also been interested in this bitcoin phenomenon and am considering purchasing some as an investment. Earlier this year, bitcoins were about $12 each, peaked at $290 in april, and is now down to around 100$ each. That's about 8x profit if you bought it in January and sold it now. Granted the market is volatile but there is a ridiculous amount of profit to be made.
Long term trends show approximately 20-25% increase per month, and even more in the future at a nonlinear rate. If you were lucky and bought bitcoins back in 2009 when they were 1000 bitcoins for a dollar, selling just $10 worth would net you $1 million today. People have estimated that bitcoins may reach $1000 each in 2-3 years. With sites such as coinbase or mtgox you can trivially convert dollars to bitcoins and vice versa. My knowledge in economics is not very high so I am still reading about it before I make any decisions. Anyone have any insight on whether this is a good idea?
Anyone have any insight on whether this is a good idea?
As long as you never invest more than you can afford to lose, and making sure you skim your profits off any money you make before you re-invest it. I don't know if it's a good idea or not, but it could be a fun little game.
Just be warned, it will crash again. Bitcoins have a boom-bust cycle. Depending on how intelligently and conservatively you act, you've got a good chance of both making money, and losing every cent you put into it. Frankly, chances lean towards the latter no matter what you do.
You also might think about the fact that part of tor got shut down in that child porn sting. If the federal government did the same thing but with The Silk Road, I think we would see a large decrease in the value of bitcoins.
Isn't New York state looking into regulating bit coins as a currency?
I don't know, but I do remember how a bunch of libertarians who don't understand how tax works were carrying on about how the feds claiming that not claiming bitcoin income on your taxes was tax evasion means that they acknowledged the legitimacy of the currency.
Thus, I tend to take it with a huge grain of salt whenever anyone talks about the US government dealing with bitcoins as an actual currency - because the most enthusiastic and knowledgeable sources in the bitcoin world tend to be mad-keen libertarians and ancaps who are generally not quite in touch with the real world, to put it charitably.
Bitcoinstore sells electronics for bitcoins. A laptop on there can be around 6-7 bitcoins which is a normal price of $600-700. If you bought 6 bitcoins earlier this year and spent it at the store now you could have gotten the same laptop for under $100.
Unless you have a lot of money and want to engage in currency manipulation, which generally doesn't work nowadays because currency trading has better oversight.
The problem with "If only I had.." ideas is that you can't make them ahead of time. Their value lies in being able to use such things to predict future events. It's a gamble. Do your best to know what your odds are and what you're willing to lose.
The bitcoins I had last year I bought at around $20/per and sold at around $230/per. That being said, I didn't buy them as an investment, but rather for more nefarious purposes (involving a website that you all know about). I have to say, it was the most high quality and professional transaction of that type I've done since I lived in Berkeley, and I hope that when certain things get legalized the online shopping experience on legal sites is as seamless and well-designed as this was.
Rule 547 of the FRCF: If someone doesn't want to talk about a substance for legal reasons, the substance is is either Bucky Balls and Kinder Surprise Eggs.
AHAHAHAHAHAHAHAHAHAHAHAHA. Still hilarious that kids toys are banned in the USA. Who even wants to parent when you can just get your government to ban such trivial things as Kinder Surprise. Gotta spend that taxpayer money somehow!
Comments
So I'd say "fastest growing currency" is actually quite apt (if a bit sensationalist).
Anyway, it's been more than a year since the previous comments in this thread and a lot has happened with bitcoin. Mainly it seems that the technical validity of the protocol is now a moot point leaving the obvious economic shortcomings to be proven. Also it seems that regulation is a more effective tool than I had speculated, as far as I can tell there is now nowhere on the intenet that you can buy bitcoins (apart from selling drugs for them ;-) ) without registering your bank credentials. So, if you want anonymity better get mining.
Some, in my opinion, interesting developments that are unforseen consequences are: namecoin -- a distributed DNS system piggybacking on bitcoin mining (they have their own blockchain but mining is simultaneous), the more general concept of using the bitcoin blockchain to store signatures for timestamped unforgeable "proof of existence", and attempts to make bitcoin truly anonymous. Finally, as Luke pointed out, real life businesses are playing around with accepting bitcoins.
I am still extremely intrigued, so far as to have gone to the trouble of mining myself an bitcoin -- 0.000001BTC to be exact. Unfortunately the mining pool doesn't pay out shares smaller than 0.01 which would take me appoximately 3 years to achieve, so yeah, not doing that anymore ;-).
I also stand by my criticism of the economic flaws of the currency, in particular easy manipulability, inbuilt deflation, etc. but I have found another quite interesting point of criticism. Currently the network is protected by the vast amount of computational power working on "the one true blockchain". What happens when the last bitcoin is minted? True, this will probably not happen in my lifetime, but the amount of computing power working on the blockchain is due to the financial incentive of getting bitcoins. If the financial interest falls away, the computing power will go away making an attack on the network easier by orders of magnitude.
EDIT: I just reread the original whitepaper. After some initial time the network imposes automatic transaction fees which replace "mined" bitcoins as the incentive to keep your hardware churning on the blockchain.
EDIT: I believe this is the one I used.
Long term trends show approximately 20-25% increase per month, and even more in the future at a nonlinear rate. If you were lucky and bought bitcoins back in 2009 when they were 1000 bitcoins for a dollar, selling just $10 worth would net you $1 million today. People have estimated that bitcoins may reach $1000 each in 2-3 years. With sites such as coinbase or mtgox you can trivially convert dollars to bitcoins and vice versa. My knowledge in economics is not very high so I am still reading about it before I make any decisions. Anyone have any insight on whether this is a good idea?
Also, you have to consider very strongly that in the long term, bitcoins are worth $0.
Never invest in currency.
NEVER invest in exchanged currency.
Just be warned, it will crash again. Bitcoins have a boom-bust cycle. Depending on how intelligently and conservatively you act, you've got a good chance of both making money, and losing every cent you put into it. Frankly, chances lean towards the latter no matter what you do.
Thus, I tend to take it with a huge grain of salt whenever anyone talks about the US government dealing with bitcoins as an actual currency - because the most enthusiastic and knowledgeable sources in the bitcoin world tend to be mad-keen libertarians and ancaps who are generally not quite in touch with the real world, to put it charitably.
...Except with bitcoins.
It's a gamble. Do your best to know what your odds are and what you're willing to lose.
Or build a time machine.