[slackline]

Figured its geeky enough and interesting enough to deserve its own thread in this sub-forum....

Anyway, what do people think this means for the future of Bitcoin?

http://www.bbc.co.uk/news/technology-26420932

Surely it's exactly what a lot of people were concerned could happen and with no safety net when they're gone, they're gone.....

If you gamble on investments you run the risk of losing it.  I'm risk averse and they always seemed risky to me.

[SA Chris]

Isn't it just another pyramid or ponzi scheme? For every person who gets rich from it, there's 2, 6, or 14 people (or however many people are holding up the pyramid, based on a progession) who miss out?

Or anyone could invent an online currency and say my "Chriscoin" costs £1 today, tomorrow it will cost you £2. So if you buy today I guarantee it will double in value overnight.

[Plattsy]

Not sure what will happen to BitCoins. Is there a semi related precedence in actual currencies?Other virtual, lesser known, lesser value currencies haven't been mentioned so I'm assuming they're not affected. Perhaps the void BitCoins leaves behind if they fold will be replaced by another virtual currency (e.g. LiteCoin).

I find this all very interesting. I've gone from wishing I'd bought some when I first came across them to thinking I'm best off well out of it.

How smug will folk be who've cashed out already?

[Jaspersharpe]

Isn't it just another pyramid or ponzi scheme? For every person who gets rich from it, there's 2, 6, or 14 people (or however many people are holding up the pyramid, based on a progession) who miss out?

Not really as there's a $7bn worldwide market in them already and the value isn't just going up. If it works then it's a really interesting alternative to the current financial system but there a hell of a lot of buts.....

I usually think Peston is a dick but this is quite a good (if simplistic) explanation:

http://www.bbc.co.uk/news/business-26335547

It's not the idea of Bitcoins as an investment that I think is interesting it's their use as an alternative currency but I think the MtGox fuck up could seriously screw the whole thing. It's about 10% of the entire circulation that's been nicked.

I find this all very interesting. I've gone from wishing I'd bought some when I first came across them to thinking I'm best off well out of it.

Me too, like most risky investments (as slackers said).

[slackline]

Not really, since there are are a limited number of any given cryptocurrency, so you can't dictate their value simply by generating more as is done with traditional reserves.

You're right in that anyone can start their own, for example two more recent ones

[imghttp://upload.wikimedia.org/wikipedia/en/thumb/c/c5/Dogecoin_alternate_logo.png/110px-Dogecoin_alternate_logo.png]http://[/img]


...although the later has had some problems.

Its a bit cryptic (!) really but the Wiki Entry is a good starting point.

[Eddies]

A friend of mine has a couple of machines set up to 'mine' for bitcoins... one in his house and one for his parents!
Quite a tidy turnover from what he's told me.

[Sloper]

A good example of why regulation needs to be well structured and robust, the loss seems to be a lack of regulation of a trading platform rather than an issue with the 'currency'.

The currency is only as strong as the belief in the backer's ability to meet their obligations.

I'm not sure that bitcoin etc have a parallel with early fiat currency as during the early days of fiat currency there was a link to the physical value of the same.

personally trading in things like this is riskier than gambling in a casion where the risks are well known and quantifiable.

[remus]

A good example of why regulation needs to be well structured and robust, the loss seems to be a lack of regulation of a trading platform rather than an issue with the 'currency'.

Quite the opposite. As i understand it there was a technical issue with the way the currency is/was defined that allowed the bitcoins to be stolen from mtgox without them noticing.

[Paul B]

There's a flipside to this currency though, like the recent cryptovirus only accepting payment via Bitcoin / Online currency to avoid being traceable.

http://www.dailydot.com/crime/cryptolocker-virus-ransom-bitcoin/

[slackline]

A friend of mine has a couple of machines set up to 'mine' for bitcoins... one in his house and one for his parents!
Quite a tidy turnover from what he's told me.

I hope he's read up on the trade off between electricity costs and the value that can be mined as the former can far exceed the later if you don't choose the correct hardware and setup (and currency to mine).

[Jaspersharpe]

There's a flipside to this currency though, like the recent cryptovirus only accepting payment via Bitcoin / Online currency to avoid being traceable.

http://www.dailydot.com/crime/cryptolocker-virus-ransom-bitcoin/

True and conversely every transaction IS traceable (although it may not be so easy to find out who has made it) so using it for nefarious purposes might not be the best idea either. As mentioned in this article.....

http://www.telegraph.co.uk/technology/10673546/Who-is-the-reclusive-billionaire-creator-of-Bitcoin.html

Sentiment in the more paranoid parts of the cryptography community is that the NSA is a potential creator, as the protocol leaves a permanent trail of transactions that could be a very useful tool for law enforcement.

Certainly, anonymity is one of the biggest myths about Bitcoin. In fact, there has never been a more easily traceable method of payment. Every single transaction is recorded and retained permanently in the public “blockchain”.

[slackline]

If you gamble on investments you run the risk of losing it.  I'm risk averse and they always seemed risky to me.

I feel I have to throw out a pedantic correction to this. Investing and gambling are both risky (ie a wide variance of outcomes) but the distinguishing factor is that, in aggregate, investing has a positive expected return whilst in aggregate with gambling the bookies/ house win and you lose.

But not guaranteed, there is still a risk that any individual investment will decrease in value over any given time frame (distinctions between currencies/true investments aside), non?

Anyone who thinks they can beat the bookies/house is a fool.

[Bubba]

WRT the OP, I think that most people who are crypto fans believe that MtGox going under is a positive thing for BTC, not a negative.

One exchange going to the wall doesn't make BTC a risky proposition - what is risky is holding a large amount of them on an exchange...especially one that doesn't have a particularly good record regarding stability/security/etc. 

Despite MtGox trying to point the finger of blame at the way BTC is coded, this is nonsense and it's their shitty code that caused the hack/theft/whatever you want to call it.

True and conversely every transaction IS traceable (although it may not be so easy to find out who has made it) so using it for nefarious purposes might not be the best idea either. As mentioned in this article.....

http://www.telegraph.co.uk/technology/10673546/Who-is-the-reclusive-billionaire-creator-of-Bitcoin.html

Sentiment in the more paranoid parts of the cryptography community is that the NSA is a potential creator, as the protocol leaves a permanent trail of transactions that could be a very useful tool for law enforcement.

Certainly, anonymity is one of the biggest myths about Bitcoin. In fact, there has never been a more easily traceable method of payment. Every single transaction is recorded and retained permanently in the public “blockchain”.

I was surprised at this part of an otherwise interesting article.  Whilst transactions are recorded in the blockchain there is no record of who (not even IP addresses) instigated the transactions.  In addition to that it is not that difficult to cover your tracks in the blockchain - look at services like Bitcoinfog.  In other words casual use of BTC could be considered to be semi-anonymous but it's not that hard to make it very anonymous.

A friend of mine has a couple of machines set up to 'mine' for bitcoins... one in his house and one for his parents!
Quite a tidy turnover from what he's told me.

Sounds like bollocks to me unless he's very rich/lucky. Might have worked a few years ago but today a "couple of machines" that generate a "tidy turnover" of BTC once balanced against power costs will cost a fortune. You sure he's mining BTC or something else?


I suspect cryptocoins in one form or another are here to stay despite the fact that the banks are doing their best to prevent their uptake.  I just hope that one day PPC hits BTCs recent highs and then I'll be a millionaire 

[Falling Down]

I bought one for 500 quid last year, partly out of curiosity to see how it worked in practice and partly as a gamble.  I intend to hang onto it for a while and see what happens...

[Bubba]

Don't really understand this stuff well but it seems logical to me that the cryptocoins that eventually achieve widespread use must also be the ones that have excessive volatility designed out of them ... which conversely means ones that no-one gets rich from holding!

PPC a candidate on that criteria? chart vs US dollar

I'm not really expecting PPC to do anything tbh even though it's widely considered to be the 3rd crypto (after Litecoin) and does bring something new to the table, unlike many of the new coins that are just BTC copies.  But that said it's very early days for all this stuff so who knows?  I bought mine for < $1 each anyway so I guess I've already done ok by them...just with I'd bought more whilst they were so cheap.

[Johnny Brown]

Quick, sell them to Falling Down!

[slackline]

Stumbled across buttcoin.org that has this rather amusing explanation of cryptocurrencies

[Monolith]

I see the development and proliferation of Bitcoins as analogous to the development and (hyper) proliferation of other online technologies/instruments such as social network sites. Each new technology supersedes the last (e.g. Myspace to Facebook to...). Even with a relatively unfettered (although calculated) attitude to risk, no thank you very much.

[Offwidth]

When first advised by someone to buy some, I considered it but on balance decided not to.. if I had, I'd have turned very approximately a 100000% 'profit' by now. It may not be an 'investment' but it has made some folk very rich. I do wonder what the 'system' does for those who did buy then, as when they cash in, their bank account would suddenly have enough money to retire on. Does capital gains tax apply?

[Jaspersharpe]

You're supposed to include it as a trading profit so it would be taxable as income (and either income tax, for individuals, or corporation tax would be due).

If you don't declare it as a trading profit then yes, it would be classed as a gain and subject to CGT.

This is the same with any profits / losses on currency trading or indeed any sort of exchange rate gains / losses.

[slackline]

Interesting read

[Monolith]

Talking of short term strategies, I often wish I had the means to partake in a few spread bets.

I 'made' £88,000 in four days from a starting deposit of £10,000 with CMC Markets. It goes without saying that this was virtual currency traded against live time market movements. Since your losses can exceed your initial deposit, you could stand to get in a lot of trouble should you fail to set a sell threshold.

Jasper, where do you see Bitcoins on the timeline front? Short to medium term? Long term?

[Jaspersharpe]

I don't really have a clue which is why I asked the question in the first place!

[Monolith]

But Mr Sharpe, I can offer you a very exciting investment opportunity in a Ugandan tech startup company specialising in social media if you would like? Simply message me your bank account and sort code details and we can get the ball rolling...

[slackline]

Manic Miner