Bitcoins (some free, but I've got nothing to spend them on)

[md]

So... this is kinda spammy since anyone who uses this link will contribute to me getting bitcoins... but... If you're interested in bitcoins as an interesting currency you can currently get 0.1 BTC (or about a US dollar) from coinbase (https://coinbase.com?r=502b0c5cf25394000200066f) simply by signing up and verifying your account. I will get 0.1 BTC for anyone who uses that link as well, so I might be a little biased when I saw CLICK NOW YOU FOOLS! I *think* you can get the same free bit coins (though I get none) if you go to https://coinbase.com and just register.

On to actual discussion about bit coins...

The idea of a cryptographically secure currency is kinda intriguing to me, sort of a real world implementation of the currency system outlined in Cryptonomicon, or apparently used in Diamond Age. The difficulty in actually getting them seems to make the whole thing a little useless though. That and as of yet there is really nothing you can buy with them except things from silkroad and some crappy hosting (or a geek badge!). Has anyone else tried to use bitcoins for anything or have any thoughts on why they may or may not be a good idea? Or really like cryptonomicon...

[edit] Subjects are hard...

[mirhagk]

Bitcoins are useless because they cost resources to obtain, and the resources spent don't help others, they are just spent and wasted. The system is also a deflating system, in which currency increases in value over time, which promotes saving money instead of investing, which is terrible for economies. It also dissuades new people from joining, as the others have an unfair advantage.

It was an interesting idea, but it's a totally unrealistic pipe dream, with no use for the money, and people wasting so much money on farming for no purpose whatsoever.

[md]

I don't think the cost of mining additional bitcoins is a contributor to their useless- (or useful-) ness, especially since the amount of work per transaction decreases as the number of transactions increases. The deflationary nature of the currency does seem to present some issues because yes, in theory it makes holding on to bitcoins a better proposition then spending them. I'm not sure that it's fatal though because in practice if you're using bitcoins it's for the easy anonymity which you can't get from any other currency and thus saving them negates the whole reason for using them. Additionally, until the number of transactions increases significantly the price of a bitcoin in USD is going to fluctuate a lot and make holding on to them risky over the short and medium term (where most people plan).

At this point though it does seem that you are mostly correct in that the currency, while interesting, is pretty much useless. It's possible to gamble, buy illicit substances, and purchase a very few number real-world items and services but that's about it.

[mirhagk]

Yeah bitcoins are great for anonymous purchases, but that's it. Even with that you don't get true anonymity because you still must purchase the bitcoins (or farm them, but in order to get enough from that it'd be a large scale operation, that might be noticed) so it doesn't remove all traces of evidence, but rather just adds (a rather good) layer of confusion to the trail.

The cost of mining the bitcoins doesn't contribute to their current uselessness, but it does contribute to their usefulness as a global currency, or any wide adoption. There are 3 possible situations that could arise because of this:
1. Farming is always profitable in which case it would encourage people to farm bitcoins instead of getting an actual job and contributing to our resources (this would be a temporary state, as this could not last long)
2. Bitcoin Farming is overfarmed, to the point where no-one can make money off of it, and many resources are spent on useless endeavours, actually hurting anyone who farms, encouraging people not to farm, and not to use bitcoin essentially.
3. Bitcoin Farming is set so that the average user can't make money, and the only ones who can are the ones who have very large farms dedicated to it, and who develop specific hardware to farm it. That means the richest few companies will literally be printing all the money, which isn't exactly the best idea.

Eventually if the system received wide adoption it would fall into the 3rd, most stable state. Imagine if in the world all the major banks not only loaned the money, but actually printed and made the money. That's not a world I want to live in, ideally you'd like the control for printing money to be in the government's hands (actually ideally it'd be in the people's hands, but there's no feasible way to do that)

[md]

The thing about a deflationary monetary system is that state 3 takes a while to happen, at which point there is surprisingly little money left to mine. You've got to dedicate rediculous amounts of hardware to guarantee that you get the payout and the payout gets smaller and smaller.

You are correct that it is near impossible to get true anonymity from Bitcoins though. Realistically if you're using them for anonymous purposes you probably want to buy some, then do a bunch of transfers into a variety of accounts spread out all over the place. You'd likely want to do something like that a few times so that you have a large number of accounts from which you can draw tiny amounts, while at the same time bouncing currency among the others to increase confusion. 'Course purchasing some bitcoins is just like any other transaction and isn't actually all that identifiable unless you're running the exchange. From looking at the block list it's pretty much indistinguishable from anything else.

[mirhagk]

Your right that with bitcoin the system will quickly run out of the ability to farm, setting the system back into the 2nd state, where farming is useless, and a waste of time for any involved.

After the farming ends, then you simply have a rapidly declining monetary system. If the population doubles without increasing the available funds, then the value of that money also doubles. For the beginning population double happens VERY quickly, and even worldwide population grows rather quickly.

[ecookman]

Sorry to bring up a dead thread, but I thought you could cash in BitCoins?

[mirhagk]

Only if you can find someone to buy them, which trust me, isn't easy. What payment will you receive? Most payment forms aren't guaranteed, and people are more willing to sell than buy. You also have to do it in largish quantities.

[Dan]

There are several currency exchange markets for bitcoins, the most popular of which is Mt.Gox (mtgox.com) and the canadian version would be VirtEX (cavirtex.ca).

If you are realy intrested there are even sites that aggregate market data for bitcoin: http://bitcoincharts.com