Can Bitcoin replace Forex?

[Ingot54]

Chris posted in the nanningbob forum "10.4 A Complete System"

So what do you all think about bitcoin? How long will it be before we are trading it on the FX LOL

http://www.stevehopwoodforex.com/phpBB3 ... start=3190

Personally I can't see it replacing Forex. Can you see the Australian Government accepting payment from China, for 25 trillion cu ft LNG and 100 million tonnes of iron ore in Bitcoin?

As long as Government exists, they will want their slice of any pies that are baked.
The scenario Bitcoin is predicting, is that Government won't always be around I think.

Government do not have a lot of control over it, but recent fraud in Bitcoin savings and transactions seem to be begging for Government to get involved.

If you can't run it clean ... don't expect the Government to clean it up - they'll dismantle it, given the chance.

Google turned up a lot of fraud stories, as well as some history of virtual currencies that have now disappeared:

https://bitcointalk.org/index.php?topic=83794.0

Here is one man's recent experience of them:

http://www.youtube.com/watch?v=aM46MLR_b7s

Note: Don't be put off by the preamble - the Bitcoin story is the first on the list, and starts at 00.55 seconds into the report.

So where is Bitcoin going? Will it survive where others have not?

[Chris]

Yeah, I have only just recently even learned about bitcoin and I still don't really understand it. It seems like they are creating money out of thin air? Seem like it would be an easy thing for hackers to manipulate, but like I said I am not sure I totally understand what it even is. I just think this world is crazy these days. Thanks for the info, I will do a little more reading up on it.

[Ingot54]

Yeah, I have only just recently even learned about bitcoin and I still don't really understand it. It seems like they are creating money out of thin air? Seem like it would be an easy thing for hackers to manipulate, but like I said I am not sure I totally understand what it even is. I just think this world is crazy these days. Thanks for the info, I will do a little more reading up on it.

Me too Chris - I do not really understand it.

I would be happy to deal in sweet potatoes and fish!

That has worked in Vanuatu (formerly New Hebrides which was jointly administered by Britain and France) and it's 1000 islands for a little bit of time now ... and I don't think anyone ever stole the spuds there!

We sure do complicate life!

Bartercard seems to be working ok for business, but the government has been taxing those transactions for some time now too. I am still scratching my head wondering what Bartercard holders receive back from the government for those taxes.

http://bartercard.com.au/What+Is+Barter ... Works.html

I am not in business atm, so don't think I have any use for Bartercard.

Cheers mate

[kwp]

Yeah, I have only just recently even learned about bitcoin and I still don't really understand it. It seems like they are creating money out of thin air? Seem like it would be an easy thing for hackers to manipulate, but like I said I am not sure I totally understand what it even is. I just think this world is crazy these days. Thanks for the info, I will do a little more reading up on it.

Me too Chris - I do not really understand it.

I would be happy to deal in sweet potatoes and fish!

That has worked in Vanuatu (formerly New Hebrides which was jointly administered by Britain and France) and it's 1000 islands for a little bit of time now ... and I don't think anyone ever stole the spuds there!

We sure do complicate life!

Bartercard seems to be working ok for business, but the government has been taxing those transactions for some time now too. I am still scratching my head wondering what Bartercard holders receive back from the government for those taxes.

http://bartercard.com.au/What+Is+Barter ... Works.html

I am not in business atm, so don't think I have any use for Bartercard.

Cheers mate

Appears to be something everyone is going to need to understand quickly...

2013 values
The USD value of a bitcoin increased ten-fold in early 2013 from $13/BTC on January 1 to $190/BTC on April 9th, three months later. Suggested reasons for the rise in price included the European sovereign-debt crisis - particularly the 2012–2013 Cypriot financial crisis - statements by FinCEN improving the currency's legal standing and rising media and Internet interest.[48][49][50][51]
As the market value of the total bitcoin supply approached $1 billion USD, financial commentators described bitcoin prices as a bubble.[52][53][54] On 10 April 2013, Bitcoin dropped from a price of $266 to $105 before returning to a value of $160 within six hours.

http://en.wikipedia.org/wiki/Bitcoin

[Chris]

That is some crazy price action. I read that you can mine for bit coins using your computer but that it would actually cost you more to mine it then it would to just buy one, because of the power usage and hard ware. Does anyone understand really what it means to mine a bitcoin?

[remix919]

Just to clear things up a bit, I have mined bitcoins before about a year ago or so when the value was at around $30/btc. The concept is definitely very solid, the system is impossible to hack since there is no central computer (government) that controls it. Account values are constantly checked via P2P connections very similar to how torrents work. As for mining for bitcoins, you really do need a solid setup, if you use a common computer, you will never make any money, you would need full rack setups with very expensive GFX cards to do any heavy duty mining. I had actually quit mining for bitcoins because yes, the cost far exceeded the reward. The power cost alone was costing more and that didn't even include the initial hardware cost needed for the racks. Also, the way bitcoin mining worked, it would max out your rack's CPU and GFX card, so it would be running full blast 24/7, eventually causing your power supply to fail and other hardware related issues. Basically, it simply wasn't worth it at $30/btc. At the current value, it may be worth it, but no guarantee it'll stay that high. As far as transactions go, you need to be pretty tech savvy in order to even use bitcoins, which is why I don't think it'll ever fully catch on in the mainstream world. In fact, the reason bitcoins initially got so popular was because of the black market where people could send money in total anonymity and it's still one of the biggest uses of bitcoins.

Anyway, that's just my personal experience from it, hope it helped to clear some things up

[garyfritz]

remix, maybe you can explain this: I mostly understand the concept of mining bitcoins -- basically solving a mathematical puzzle.

My question is: why does anyone attach value to the solved puzzle? Why would anyone pay the miners for the solved puzzle which becomes a bitcoin? Where is the value-added in this process?

[mjws00]

Tons of upside to a non centralized, non traceable, non government controlled currency. Remove politics, and geopolitical agenda, not to mention central banks, and put the power distributed equally to the people. It is wonderfully idealist. There is some pretty huge added value there. Especially if you are somewhat unsatisfied with the way the monetary system has been run/created. We have a defined controlled money supply, inflation and dilution of the currency is at known easily measurable rates.

We have value as soon as two parties agree to accept it in payment for goods or service. Just like any other fiat currency. Even if one can only buy black market goods, there is a market for untraceable non-government controlled transactions. It starts out as flexible barter. But only takes a few producers to accept it to create a legit exchange rate. It grows from there.

It has been interesting to see it fluctuate so wildly. Enough speculators could have some very interesting effects. Liquidity and wider public attention facilitate further adoption. Maybe enough to catch real roots? I'm having fun watching it.

[Dozer]

Yea, it's a little confusing of the role the "miners" play.

Bitcoin is a peer to peer distributed system with no centralized management so it's the collective of Bitcoin miners that runs the whole shebang. The creation of the Bitcoins for the miners is just the incentive to use their processing power to manage the Bitcoin infrastucture.

Bitcoin operates on cryptographic consensus. Mining is the distributed consensus system that is used to confirm the waiting Bitcoin transactions. It enforces a chronological order in the chain, protects the neutrality of the network, and allows different computers to agree on the state of the system. To be confirmed, transactions must be packed in a block that fits very strict cryptographic rules that will be verified by the collective miners network. If there there is a consensus of the miners, the transaction is recorded and approved.

These rules prevent any previous block from being modified because doing so would invalidate all following blocks. Mining also creates the equivalent of a competitive lottery that prevents any individual from easily adding new blocks consecutively in the blockchain.

As the value of the Bitcoins increases, the incentive to add processing power to the Bitcoin network in the form of "miners" also increases. Also, as each Bitcoin is created, the complexity of the crypto puzzle that must be solved to create a new Bitcoin increases to offset the technological advances in cryptographic processing. There is also a limit to the number of Bitcoins that can can be ultimately created. So no unlimited printing of the fiat money. (I'm looking at you Central Banks....)

Whether or not someone thinks Bitcoins are useful/a fad/necessary/irrelevant etc... The way it is structured and the way it operates is really quite brilliant.

[Chris]

remix, maybe you can explain this: I mostly understand the concept of mining bitcoins -- basically solving a mathematical puzzle.

My question is: why does anyone attach value to the solved puzzle? Why would anyone pay the miners for the solved puzzle which becomes a bitcoin? Where is the value-added in this process?

Yes I have the same question?