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Blockchain CEO calls Apple 'gatekeeper to innovation,' says Bitcoin app removal signals payments... - Page 5

post #161 of 204
Quote:
Originally Posted by SolipsismX View Post

1) PayPal and Square use legal tender and report their transactions to the appropriate bodies. I can also get off a plane in Russia or Thailand and have my US currency converted to Rubles or Baht right at the airport. I can't do this with bitcoins so stop pretending that legal tender and bitcoins are all the same thing.

2) You or the other anti-Apple person on this thread said that Apple removed all apps that allow payments because they are trying to corner the market on iOS payments. Is this no longer the case?

Using LocalBitcoins.com one can find in-person buyers and sellers of Bitcoin anywhere in the world.

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post #162 of 204
Quote:
Originally Posted by SpamSandwich View Post

Using LocalBitcoins.com one can find in-person buyers and sellers of Bitcoin anywhere in the world.

And maybe find yourself under indictment if you use it.

http://arstechnica.com/tech-policy/2014/02/florida-prosecutors-file-legal-charges-against-heavy-bitcoin-traders/
Edited by dasanman69 - 2/12/14 at 8:30am
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post #163 of 204
Quote:
Originally Posted by dasanman69 View Post

And maybe find yourself under indictment if you use it.

http://arstechnica.com/tech-policy/2014/02/florida-prosecutors-file-legal-charges-against-heavy-bitcoin-traders/

Buying and selling Bitcoin wasn't the problem, this was: "A law enforcement officer contacted Michelhack and said he wanted to use bitcoins to purchase stolen credit cards online."

The idiot should've avoided the obvious entrapment.

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post #164 of 204
Quote:
Originally Posted by SpamSandwich View Post

Buying and selling Bitcoin wasn't the problem, this was: "A law enforcement officer contacted Michelhack and said he wanted to use bitcoins to purchase stolen credit cards online."

The idiot should've avoided the obvious entrapment.

That's what raised flags but not what they were charged with. Their use of the site violated laws against unlicensed money transmitters.
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post #165 of 204
The exchanges seems to have gone down recently:

http://www.zdnet.com/bitcoin-under-mutated-transaction-dos-attacks-but-funds-safe-7000026237/

Part vulnerability in the bitcoin protocol, part DoS attack.

"it's possible for an attacker on the network to mess with the identifier — or hash — of a transaction, which is used by wallets to confirm a transaction between them. Once confirmed, the hashes form part of the Bitcoin 'blockchain' ledger of historical transactions.

An altered hash doesn't affect the underlying value or the destination of the funds, but until the transaction is confirmed, the funds involved are not safe to accept"

They say it will be fixed in 24-48 hours but it highlights three issues:

- The development of the protocol is not held to security standards and they've known about the flaw since 2011. Fixes clearly are done when they feel like it. That's not very reliable.
- Transaction reputation. When a bank authorises a transaction, there is a reputation behind that, not only of the bank itself but the bank's relationship with the customer making the payment. Peer to peer transactions don't have this kind of reputation and this flaw exploits that.
- Accountability. These transactions are now locked up, who do you call to fix it?
post #166 of 204
Here's an example of the difference between a real wallet and a bitcoin wallet:

http://www.zdnet.com/mac-trojan-steals-bitcoins-7000026144/

"SecureMac is reporting a new Mac trojan they call OSX/CoinThief.A. The malware targets Mac users and spies on web traffic to steal Bitcoins. They say the malware is in the wild and have received multiple reports of stolen Bitcoins.

SecureMac cites a recent post on reddit of a user who lost 20 Bitcoins, worth well over $10,000 US."

http://www.reddit.com/r/Bitcoin/comments/1xf2qj/my_wallet_just_emptied_into_this_address/

People don't normally have $10000 in their real wallets and a digital theft is pretty much blink and it's gone. A physical theft you can at least try to prevent. You wouldn't even have time to shut off the wifi or pull the plug before a bitcoin transfer was started.

These things happen with Paypal too, credentials are stolen, linked bank accounts drained:

http://voices.yahoo.com/paypal-fraud-drained-checking-account-262593.html

but they cover you for fraudulent transactions.
post #167 of 204

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post #168 of 204
Quote:
Originally Posted by SolipsismX View Post

It's getting worse for bitcoin: http://www.theverge.com/2014/2/25/5444866/mt-gox-goes-offline

Apparently they handled 80% of all bitcoin transactions at one point. Two people are up in arms about it:

http://blogs.wsj.com/japanrealtime/2014/02/14/bitcoin-protester-confronts-mt-gox-executive/

"“I want get my bitcoin back, or get Mt.Gox to bring back public confidence that the company is solvent and people’s money are safe,” said the 40-year-old protester. He deposited 250 bitcoins, with a current value of around $99,000, into his Mt.Gox account in early January, intending to keep them there temporarily, an action he now regrets. He said he won’t use the exchange again."

"Another frustrated Bitcoin trader from Australia, who wished to remain anonymous, also staked out the Mt.Gox offices last week, managing to get some time with executives, though he said he wasn’t completely satisfied."

That's how to show them, buy a $1400 airline ticket to their office, scribble on a card, stand out in the rain (wearing Google Glasses helps show you mean business) and never again use the exchange that stole $99,000 from you. They will rue the day they crossed the bitcoiners.

This highlights why you're damned if you do and damned if you don't - if you let governments control currency, they'll abuse it for their own ends; if you take away that control, you leave yourself open to abuse from 3rd parties that the government can't protect you against.
post #169 of 204
Quote:
Originally Posted by e1618978 View Post


Here the shoe is on the other foot - Apple is abusing its market power in an attempt to corner a position in payments.

Oh, because they also banned the Starbucks payment app or the paypal payment app or the Visa Qiwi payment app or...oh wait, what were you saying again? I forgot.
post #170 of 204
Quote:
Originally Posted by Marvin View Post

Apparently they handled 80% of all bitcoin transactions at one point. Two people are up in arms about it:

http://blogs.wsj.com/japanrealtime/2014/02/14/bitcoin-protester-confronts-mt-gox-executive/

"“I want get my bitcoin back, or get Mt.Gox to bring back public confidence that the company is solvent and people’s money are safe,” said the 40-year-old protester. He deposited 250 bitcoins, with a current value of around $99,000, into his Mt.Gox account in early January, intending to keep them there temporarily, an action he now regrets. He said he won’t use the exchange again."

"Another frustrated Bitcoin trader from Australia, who wished to remain anonymous, also staked out the Mt.Gox offices last week, managing to get some time with executives, though he said he wasn’t completely satisfied."

That's how to show them, buy a $1400 airline ticket to their office, scribble on a card, stand out in the rain (wearing Google Glasses helps show you mean business) and never again use the exchange that stole $99,000 from you. They will rue the day they crossed the bitcoiners.

This highlights why you're damned if you do and damned if you don't - if you let governments control currency, they'll abuse it for their own ends; if you take away that control, you leave yourself open to abuse from 3rd parties that the government can't protect you against.

Only fools who deliberately ignored what was happening allowed themselves to get caught in this MtGox mess. Anyone paying attention would've taken their BTC into a paper wallet many months ago. I think those who foolishly kept their accounts online let greed bypass common sense. Because MtGox's problems had so depressed the price of BTC only on their site (down to about $100, versus more than $500+ everywhere else), people vainly thought they would risk it and see if they could ride it out. Dumb move. It's OK to be "greedy", but be smart about it.
Edited by SpamSandwich - 2/25/14 at 12:00pm

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post #171 of 204
Quote:
Originally Posted by SolipsismX View Post

It's getting worse for bitcoin: http://www.theverge.com/2014/2/25/5444866/mt-gox-goes-offline

Bitcoin is not MtGox. How many times must that be said? MtGox is probably insolvent due to the stupidity of the founders. You should be aware that for about a month, BTC-e (another trading platform, like MtGox) surpassed MtGox in worldwide volume of trades. People knew of MtGox's problems, especially within that elite community of buyers and sellers.

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post #172 of 204
Quote:
Originally Posted by SpamSandwich View Post

Bitcoin is not MtGox. How many times must that be said? MtGox is probably insolvent due to the stupidity of the founders. You should be aware that for about a month, BTC-e (another trading platform, like MtGox) surpassed MtGox in worldwide volume of trades. People knew of MtGox's problems, especially within that elite community of buyers and sellers.

I'm aware of that, but it's still have a negative effect. If I put money in a bank it's FDIC insured. I don't ever have to worry about the bank folding but what about the people that were holding bitcoins with Mt. Gox? For bitcoin to be taken seriously by the world it can't be seen as that much of a risk.

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post #173 of 204
Quote:
Originally Posted by SpamSandwich View Post


Bitcoin is not MtGox. How many times must that be said? MtGox is probably insolvent due to the stupidity of the founders. You should be aware that for about a month, BTC-e (another trading platform, like MtGox) surpassed MtGox in worldwide volume of trades. People knew of MtGox's problems, especially within that elite community of buyers and sellers.


LOL. Does not matter.  So are you telling you need to worry constantly about your trading platform will go under?  The report shows that over 8% of all Bitcoins in existence got stollen and maybe more with this MtGox fraud.  Mt Gox had been the biggest bitcoin platform for a very long time and now they go up in smoke.

 

No wonder Apple does not want to touch this with a 10 foot pole.

 

So where are all the bitcoin lovers now?????

Classic Ponzi scheme.

post #174 of 204
Quote:
Originally Posted by sog35 View Post
 


LOL. Does not matter.  So are you telling you need to worry constantly about your trading platform will go under?  The report shows that over 8% of all Bitcoins in existence got stollen and maybe more with this MtGox fraud.  Mt Gox had been the biggest bitcoin platform for a very long time and now they go up in smoke.

 

No wonder Apple does not want to touch this with a 10 foot pole.

 

So where are all the bitcoin lovers now?????

Classic Ponzi scheme.

 

Anyone even remotely familiar with the risks of online crypto wallets recommends a printed paper wallet instead. If this fact is still not generally understood, then people are not paying attention to real risks that have been demonstrated time and time again.

 

Trading in Bitcoin and other crypto coins is risky. That's a large part of the appeal. If one is risk averse, then instead keep money in a bank or under a mattress...while it continues to lose value thanks to current monetary policy.

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post #175 of 204
Quote:
Originally Posted by SolipsismX View Post


I'm aware of that, but it's still have a negative effect. If I put money in a bank it's FDIC insured. I don't ever have to worry about the bank folding but what about the people that were holding bitcoins with Mt. Gox? For bitcoin to be taken seriously by the world it can't be seen as that much of a risk.

 

Sure it has a negative effect, people react emotionally to bad news. That's just human nature. However, when "the crowd" reacts emotionally and sells, Warren Buffet recommends one buy instead. "Buy low, sell high". Just stay away from MtGox.


Edited by SpamSandwich - 2/25/14 at 12:06pm

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post #176 of 204
Quote:
Originally Posted by SpamSandwich View Post
 

 

Sure it has a negative effect, people react emotionally to bad news. That's just human nature. However, when "the crowd" reacts emotionally and sells, Warren Buffet recommends one buy instead. "Buy low, sell high". Just stay away from MtGox.

 

React emotionally?  After losing $100k in bitcoins I would to!!!

 

MtGox refused to allow for withdrawls for several weeks.  Now those people with accounts could have lost EVERYTHING.  No govt agency will insure this loss right now.

post #177 of 204
Quote:
Originally Posted by sog35 View Post

React emotionally?  After losing $100k in bitcoins I would to!!!

MtGox refused to allow for withdrawls for several weeks.  Now those people with accounts could have lost EVERYTHING.  No govt agency will insure this loss right now.

Who puts that amount of money into something uninsured? They gambled and they lost, welcome to the cold hard world.
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post #178 of 204
Quote:
Originally Posted by SpamSandwich View Post

Sure it has a negative effect, people react emotionally to bad news. That's just human nature. However, when "the crowd" reacts emotionally and sells, Warren Buffet recommends one buy instead. "Buy low, sell high". Just stay away from MtGox.

But the negative effect is on bitcoin as a whole regardless of whether it's reasonable or not. If a priest diddles a boy it's bad for the Catholic church as a whole..

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post #179 of 204
Quote:
Originally Posted by dasanman69 View Post

Who puts that amount of money into something uninsured? They gambled and they lost, welcome to the cold hard world.

Most of the bitcoin system ($7.3b) is uninsured. There's one company offering insurance here:

http://www.bbc.co.uk/news/technology-25680016

but pretty much everyone else is just trusting that it's all going to be ok. They are trusting that the major exchanges aren't going to go down and there are no security issues to devalue their holdings.
post #180 of 204
Quote:
Originally Posted by Marvin View Post

Most of the bitcoin system ($7.3b) is uninsured. There's one company offering insurance here:

http://www.bbc.co.uk/news/technology-25680016

but pretty much everyone else is just trusting that it's all going to be ok. They are trusting that the major exchanges aren't going to go down and there are no security issues to devalue their holdings.

From a link from the article you posted…


That's something you will forever kick yourself for doing.

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post #181 of 204
Quote:
Originally Posted by SolipsismX View Post

From a link from the article you posted…

That's something you will forever kick yourself for doing.

Maybe, at the very least they'd come to realise that opportunities can come out of nowhere and disappear just as quickly. Bitcoin went up in value 16,000x (1,600,000%) in 3 years. Just $100 of coins at the end of 2010 would be worth millions now. People make decisions based on circumstances at the time though. The people who gain think it's because they are smart, the people who lose think it's because they're unlucky. The 3rd co-founder of Apple Ron Wayne said he didn't regret his decision to leave the company:

"Wayne drew the first Apple logo, wrote the three men's original partnership agreement, and wrote the Apple I manual.
Wayne has stated that he does not regret selling the stock as he made the "best decision with the information available to me at the time".
Had he kept his 10% stock it would have been worth over $35 billion in August 2011.

After leaving Apple, Wayne resisted Jobs' attempts to recruit him back to Apple, remaining at Atari until 1978 when he joined Lawrence Livermore National Laboratory, and later an electronics company in Salinas, California. He is retired and now lives a quiet lifestyle in a Pahrump Nevada Mobile Home Park selling stamps and rare coins in Pahrump, Nevada, and had never owned an Apple product until 2011, when he was given an iPad 2 by Aral Balkan at the Update Conference in Brighton, United Kingdom.
Wayne also ran a stamp shop in Milpitas, California for a short period of time in the late 1970s, Wayne's Philatelics, on Dempsey Road. After a number of break-ins he moved his stamp operations to Nevada. The logo for the business was a wood-cut style design, with a man sitting under an apple tree, with the "Wayne's Philatelics" name written in a flowing ribbon curved around the tree. This was the original logo he designed for Apple Computer.
He holds a dozen patents but never had enough capital to make money from any of them."

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

It seems a shame that he lives like that now when you see Apple's success but he didn't contribute to their ultimate success. When you look at Microsoft though, the opposite happened with Paul Allen:

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

He left Microsoft in 1983, long before Microsoft took off in a big way (before Windows 1.0 I think) but retained his shares as a co-founder, which are now worth a few billion. He has lost out on potentially being the wealthiest person in the world but he's done ok. It's hard to tell how things will work out:

http://www.neowin.net/news/microsoft-co-founder-paul-allen-made-40-billion-stock-blunder

It's so strange to see two very similar circumstances end up in such opposite ways: co-founder of Apple leaves early and ends up in a trailer park, co-founder of Microsoft leaves early and ends up being the 53rd wealthiest person in the world. It's funny how he's described as a self-made billionaire:

http://www.forbes.com/profile/paul-allen/

Yeah he made the billions all by himself while the engineers who worked for 30 years at Microsoft contributed less than he did.

I always wonder why it makes sense for 1 person like Paul Allen to own so much. If you think about the $13b he has and divide it out in property values of say $200,000, that one guy has enough owned assets to buy homes for 65,000 families. The irony being that those 65,000 families are paying for marked up products to use and paying interest on the loans they have to buy the houses and the interest goes to pay the banks, which pays interest on savings to people who have a lot of savings, like Paul Allen. People at the bottom don't have much income growth. But the billions aren't cash, it's all just perception of worth (including the homes). To trade $13b of stock value requires someone else to invest $13b from something else.

There's a big deal made about wealth distribution but really it's the distribution of perception of worth, the confidence people have of value. Technology companies and especially things like Bitcoin are the clearest indicators of what wealth is. Bitcoin comes from nothing, it's just code and text. Facebook comes from nothing, it's just a website, so is Google search. The value all comes from how much people invest their own time in using it.

Collectively, Bitcoin is now a $7b service, solely based on the fact that the people invested in it think that's what it's worth. The speed at which technology has allowed people to connect to each other has accelerated the process of directing people's perception of worth. Inevitably, there will be few developments that many people invest in because successful developments become successful due to trust and trust comes easily from knowing other people are invested in something too (the idea that people look out for their own self-interest gives you an assurance that they will look out for something you share an investment in).

This process seems dangerous to me. Ultimately, the goal to everything people do is improved quality of life but as long as there's the promotion of a few developments out of the value collectivism of many people then it's just going to be that perception of worth is distributed unevenly. This is what causes instability and why currencies are abused because there are too few points of failure and when they fail, they affect so many people.

Bitcoin doesn't tackle this problem, it just goes after the inflationary aspect (and not doing a good job at that so far). Someone could create a service that accepts bitcoins as payment but only spends fiat currency and they could hoard a majority of all coins. Paul Allen alone could buy every bitcoin in existence and still be a billionaire, what happens then? It would fail unless more coins were made, which is one reason fiat currency has that facility. Money is just there to be an intermediary to people's perception of worth they place on varied fields of interest.

The whole idea of bitcoin mining and transaction verification is a distraction because that can be done by a peer-to-peer system anyway. All a decentralized currency needs is enough coins to facilitate high volume transactions e.g allow enough coins for every person in the world to have a reasonable quality of life (minimum paying off a $50,000 property and consumable resources are expected to be earned) so make 35 quadrillion coins, which would be sequential strings. Sell them for 1c each and retain that as a minimum purchase value. When a purchase happens initially, someone would get a unique wallet (public/private key pair - public key could be their wallet id or additional) and a central ledger would encrypt the unique coin string using the public key and this would be stored in the ledger and given to the buyer.

The ledgers would be controlled by trusted central authorities. Now, people might say well that's too big a flaw but we do it with the internet. ICANN controls the central internet registry for who owns domains. Google.com for example is controlled by https://www.markmonitor.com/services/domain-management.php and they say they manage over half the Fortune 100. I believe that there are a handful of top level companies that pretty much control the entire internet domain service in various countries:

http://bgr.com/2014/02/19/who-runs-the-internet-6-secret-companies/

Why do we allow so few people to control so much? It works and our confidence in it working in future is from the assumption that people in the collective sharing in the service will act in their self-interest to keep it working. So, the central register would be distributed between trusted peers and the more the better. They'd actually be best in a ledger hierarchy given that international payments would be so rare. All they'd be tracking is ownership strings.

When someone makes a transaction, they are the only one that has the private key and they have encrypted copies of their coins. To make a peer-to-peer purchase, it's anonymous as the details are only encrypted generated strings. Multiple central authorities would be contacted to exchange the coins. The authority would look up the coin owner id (public key) and send a random string encrypted with it. The coin owner would decrypt it with the private key and send back the string (challenge-response authentication). The central authorities would then take the public key from the other party and encrypt the coins with that public key. It wouldn't matter if anyone had someone else's coins without the private key to decrypt them.

Here's the benefit of having a central authority: you can opt to give them ownership and contact information so that if something goes wrong, you can do something about it. You can have authenticated wallets for large amounts and anonymous wallets for anonymous purchases and you can move money from your authenticated wallets to anonymous ones if you aren't doing things that need zero paper trail.

This setup has the benefit that the verification times are low as it's simple encrypt/decrypt, there's no computation. You can opt for security with personal ids. The encryption protocol is tried and tested the world over. If someone steals your private key, anonymous wallets might be gone but they have to steal your coins too. The central authorities can detect suspicious activity, especially on wallets that aren't anonymous.

What happens to the fiat currency used to buy the original wallets?



You wouldn't technically need it because you've created your own currency out of nothing with the same value. If money runs out, it's up to the multiple central authorities to decide if more is needed and it's in all their own best interests not to add more as adding more devalues it anyway. Traders would also be free to reject coins outside of a certain sequential range.

There still needs to be facilities for loans but all that a financial agency could do is buy capital from the central authority. If they run out of capital by over-leveraging, they go broke.

It doesn't eliminate fiat currency because the government will only accept that but it could affect the profitability of the banks.
post #182 of 204
Marvin, that was a very long post leading right back to your old arguments about how you prefer controlled markets, socialist government and restricted freedoms.

That stuff doesn't work! History is our guide.

Bitcoin at its core is a peer to peer monetary system. As we know, all people are self-interested, thus the Bitcoin network operates on incentives. The various trading platforms, BECAUSE they must abide by local and international anti-money laundering and anti-terrorism rules are already hobbled.

Person to person trade with mutually beneficial openness and transparency via the Bitcoin network is lost when a third party becomes involved. If MtGox was completely transparent in their operations, they would likely not have crashed so spectacularly, because investors would've seen quite clearly that money was being siphoned off.

Once again, regulation and interference from self-interested government entities add nothing. Only in cases of theft or fraud does their involvement become necessary.

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post #183 of 204
Quote:
Originally Posted by Marvin View Post

Maybe, at the very least you'd come to realize...

That's a very long reply (which I didn't read) which starts out very defensive and accusatory for simply posting a link to an amazing story.

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post #184 of 204
Quote:
Originally Posted by SolipsismX View Post

Quote:
Originally Posted by Marvin View Post

Maybe, at the very least you'd come to realize...

That's a very long reply (which I didn't read) which starts out very defensive and accusatory for simply posting a link to an amazing story.

When I said 'you'd come to realize', I didn't mean you, I meant the guy in the story who lost the laptop. It's because you said 'something you will kick yourself over' and I worded it the same way. It's probably an instance where the use of 'one' rather than 'you' makes the meaning clearer. You were saying he'd kick himself over losing it, I was just saying that some people who have experienced and lost opportunity sometimes reach the conclusion that their actions are done in the context of the circumstances. Then I decided to ramble for a while. There was no defense or accusation in my post relating to yours, it was more of a continuation on what you were saying. I'll try rewording it.
Quote:
Originally Posted by SpamSandwich 
Marvin, that was a very long post leading right back to your old arguments about how you prefer controlled markets, socialist government and restricted freedoms.

That stuff doesn't work! History is our guide.

Bitcoin at its core is a peer to peer monetary system.

The system I described wasn't government controlled. It can be setup by anyone. Still anonymous, still essentially peer to peer, except that the transaction verifier is a larger more trusted entity rather than a computation.
Quote:
Originally Posted by SpamSandwich 
As we know, all people are self-interested, thus the Bitcoin network operates on incentives.

Ok so in the scenario that someone buys all or most of the bitcoins or creates a service that everyone pays for with bitcoins until that service owns a significant portion, what then? How does that self-interest help the system work? The remaining supply would be severely constrained with no option but to drive up the value solely for the interest of the majority owner. That owner could then destabilise the currency as and when they wanted.
Quote:
Originally Posted by SpamSandwich 
The various trading platforms, BECAUSE they must abide by local and international anti-money laundering and anti-terrorism rules are already hobbled.

I'll assume you wouldn't prefer something specifically to facilitate terrorism and money-laundering but I don't see what difference having sensible regulation makes. I don't see that Paypal is hobbled simply because they follow regulations, it's one of the biggest payment systems in the world.
Quote:
Originally Posted by SpamSandwich 
Once again, regulation and interference from self-interested government entities add nothing. Only in cases of theft or fraud does their involvement become necessary.

And how do you propose your anonymous, peer-to-peer transaction system be covered in cases of theft or fraud? How do you prove ownership and identity in an anonymous, peer-to-peer system while still maintaining privacy? The system you want encourages theft and illegality that can't be prosecuted easily yet you'd still rather have some necessary involvement. Why would any government body perform those protection duties to protect a currency they can't be paid with and how do they do it when they are kept out of it as much as possible?
post #185 of 204
Quote:
Originally Posted by Marvin View Post

When I said 'you'd come to realize', I didn't mean you, I meant the guy in the story who lost the laptop. It's because you said 'something you will kick yourself over' and I worded it the same way.

Ah. Mea culpa.

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post #186 of 204
Quote:
Originally Posted by Marvin View Post


When I said 'you'd come to realize', I didn't mean you, I meant the guy in the story who lost the laptop. It's because you said 'something you will kick yourself over' and I worded it the same way. It's probably an instance where the use of 'one' rather than 'you' makes the meaning clearer. You were saying he'd kick himself over losing it, I was just saying that some people who have experienced and lost opportunity sometimes reach the conclusion that their actions are done in the context of the circumstances. Then I decided to ramble for a while. There was no defense or accusation in my post relating to yours, it was more of a continuation on what you were saying. I'll try rewording it.

The system I described wasn't government controlled. It can be setup by anyone. Still anonymous, still essentially peer to peer, except that the transaction verifier is a larger more trusted entity rather than a computation.

Ok so in the scenario that someone buys all or most of the bitcoins or creates a service that everyone pays for with bitcoins until that service owns a significant portion, what then? How does that self-interest help the system work? The remaining supply would be severely constrained with no option but to drive up the value solely for the interest of the majority owner. That owner could then destabilise the currency as and when they wanted.

I'll assume you wouldn't prefer something specifically to facilitate terrorism and money-laundering but I don't see what difference having sensible regulation makes. I don't see that Paypal is hobbled simply because they follow regulations, it's one of the biggest payment systems in the world.

And how do you propose your anonymous, peer-to-peer transaction system be covered in cases of theft or fraud? How do you prove ownership and identity in an anonymous, peer-to-peer system while still maintaining privacy? The system you want encourages theft and illegality that can't be prosecuted easily yet you'd still rather have some necessary involvement. Why would any government body perform those protection duties to protect a currency they can't be paid with and how do they do it when they are kept out of it as much as possible?

 

Ach! I hate this forum software... I'll try to just address a few points, as this whole quote is such a mess now.

 

Alright, it was not clear you were advocating for self-regulation (you say you meant it to be "setup by anyone") and also because you were advocating a Marxist position about guaranteed incomes for people.

 

Your scenario where "someone buys all or most of the bitcoins" simply is not possible. The vast majority of bitcoins are held by individuals and new bitcoins are being mined all the time (this is mathematically controlled, about 25 new bitcoins every 10 minutes). Because of the nature of bitcoins, a buyer would have to approach every holder individually and bid for their supply. Not every person would want to sell, based on Bitcoin's growth curve. This is an impossible scenario.

 

What is "sensible regulation"? Who decides? Therein lies the problem. The Blockchain (public ledger) is the regulator... No individual should ever be entrusted with that power, which is the problem with politicized central banking authorities.

 

Finally, Bitcoin ISN'T anonymous! It's not easy to track and trace every person who owns bitcoins, but they are not invisible. In fact, in cases of theft and fraud, people have been blacklisting certain bitcoins. We have existing laws that protect individuals from theft and fraud, in fact, these laws are one of the reason government exists. Our court system exists because mob rule is not the way to do things. Good laws protect our individual constitutionally protected rights and in the case of bitcoins, we are talking about property rights.


Edited by SpamSandwich - 2/26/14 at 1:49pm

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post #187 of 204
Quote:
Originally Posted by SpamSandwich View Post

Your scenario where "someone buys all or most of the bitcoins" simply is not possible. The vast majority of bitcoins are held by individuals and new bitcoins are being mined all the time (this is mathematically controlled, about 25 new bitcoins every 10 minutes). Because of the nature of bitcoins, a buyer would have to approach every holder individually and bid for their supply. Not every person would want to sell, based on Bitcoin's growth curve. This is an impossible scenario.

Bitcoins are being generated now but they converge to 21 million - less than double the amount in circulation now. If their value evens out where it is now, people will sell to anyone willing to buy, opening up the possibility of a majority ownership. Do you think the value is going to keep going up by another 10x, 100x? The latter would make the top ~50 owners billionaires.

What is driving the price up?

http://arstechnica.com/business/2013/08/firm-says-online-gambling-accounts-for-almost-half-of-all-bitcoin-transactions/

Here's more drug activity - Silk Road was taken down by the FBI, it relaunched and this happened:

http://money.cnn.com/2014/02/14/technology/security/silk-road-bitcoin/?iid=EL

"The revived online black market Silk Road says hackers took advantage of an ongoing Bitcoin glitch to steal $2.7 million from its customers."

http://www.businessinsider.com/senator-calls-for-bitcoin-ban-2014-2
Quote:
Originally Posted by SpamSandwich View Post

What is "sensible regulation"? Who decides? Therein lies the problem. The Blockchain (public ledger) is the regulator... No individual should ever be entrusted with that power, which is the problem with politicized central banking authorities.

The developers of the bitcoin protocol are a form of regulation. These rules weren't decided peer-to-peer:

https://en.bitcoin.it/wiki/Protocol_rules

What I would call sensible regulation is the kind of regulation governing money used in illegal activity. Self-regulation is a pipe-dream, it works great until you put it into practise.
Quote:
Originally Posted by SpamSandwich View Post

Finally, Bitcoin ISN'T anonymous! It's not easy to track and trace every person who owns bitcoins, but they are not invisible. In fact, in cases of theft and fraud, people have been blacklisting certain bitcoins. We have existing laws that protect individuals from theft and fraud, in fact, these laws are one of the reason government exists. Our court system exists because mob rule is not the way to do things. Good laws protect our individual constitutionally protected rights and in the case of bitcoins, we are talking about property rights.

How do you prove ownership if someone has stolen your bitcoins?

Say you have $5k in a wallet. You have piece of malware on your computer and a transaction was started without your consent sending your $5k to someone else, describe your interaction with law enforcement and what the outcome is.
post #188 of 204
Quote:
Originally Posted by Marvin View Post


Bitcoins are being generated now but they converge to 21 million - less than double the amount in circulation now. If their value evens out where it is now, people will sell to anyone willing to buy, opening up the possibility of a majority ownership. Do you think the value is going to keep going up by another 10x, 100x? The latter would make the top ~50 owners billionaires.
 


What is driving the price up?

http://arstechnica.com/business/2013/08/firm-says-online-gambling-accounts-for-almost-half-of-all-bitcoin-transactions/

Here's more drug activity - Silk Road was taken down by the FBI, it relaunched and this happened:

http://money.cnn.com/2014/02/14/technology/security/silk-road-bitcoin/?iid=EL

"The revived online black market Silk Road says hackers took advantage of an ongoing Bitcoin glitch to steal $2.7 million from its customers."

http://www.businessinsider.com/senator-calls-for-bitcoin-ban-2014-2
The developers of the bitcoin protocol are a form of regulation. These rules weren't decided peer-to-peer:

https://en.bitcoin.it/wiki/Protocol_rules

What I would call sensible regulation is the kind of regulation governing money used in illegal activity. Self-regulation is a pipe-dream, it works great until you put it into practise.
How do you prove ownership if someone has stolen your bitcoins?

Say you have $5k in a wallet. You have piece of malware on your computer and a transaction was started without your consent sending your $5k to someone else, describe your interaction with law enforcement and what the outcome is.

 

Marvin,

 

How many major drugs busts have you heard of that involve dollars and not bitcoins? I'd wager so-called "illegal drug activity" using bitcoins is easily dwarfed by the use of US dollars, and other denominations. 

 

Prohibition was a failure. The "War on Drugs" has been a failure. There are a number of US states RIGHT NOW that have legalized pot. Are they wrong? Should they be invaded by the federal government? Legislating morality has never worked and it will never work.

 

Also, here's something to ponder... You keep insisting that "illegal" things are wrong. Is targeted murder wrong? Is violating the constitutionally guaranteed rights of Americans wrong? Is drug-running by the CIA wrong? Was Bill Clinton, George Bush or Barack Obama wrong because they used pot (and possibly even stronger illicit substances in the case of both Bush and Obama)? Because all of these things are happening now or have happened in the very recent past. You should consider who really benefits from laws that suppress trade and the exchange of money for things that harm no one but the person imbibing in said "thing"... then look at this again.

 

One more thing... I don't and never have used "illegal" drugs, but I have no problem with others who choose to do so.

 

How does one prove ownership of a bitcoin? You have a private key and the transaction is recorded on the Blockchain. That can be followed.


Edited by SpamSandwich - 2/26/14 at 4:38pm

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post #189 of 204
Quote:
Originally Posted by SpamSandwich View Post
 

 

Marvin,

 

How many major drugs busts have you heard of that involve dollars and not bitcoins? I'd wager so-called "illegal drug activity" using bitcoins is easily dwarfed by the use of US dollars, and other denominations. 

 

Prohibition was a failure. The "War on Drugs" has been a failure. There are a number of US states RIGHT NOW that have legalized pot. Are they wrong? Should they be invaded by the federal government? Legislating morality has never worked and it will never work.

 

Also, here's something to ponder... You keep insisting that "illegal" things are wrong. Is targeted murder wrong? Is violating the constitutionally guaranteed rights of Americans wrong? Is drug-running by the CIA wrong? Was Bill Clinton, George Bush or Barack Obama wrong because they used pot (and possibly even stronger illicit substances in the case of both Bush and Obama)? Because all of these things are happening now or have happened in the very recent past. You should consider who really benefits from laws that suppress trade and the exchange of money for things that harm no one but the person imbibing in said "thing"... then look at this again.

 

One more thing... I don't and never have used "illegal" drugs, but I have no problem with others who choose to do so.

 

How does one prove ownership of a bitcoin? You have a private key and the transaction is recorded on the Blockchain. That can be followed.

I won't get involved with your points about American politics, but I will make one comment: 

 

you say that legislating morality has never worked, but that doesn't mean that you shouldn’t try. Murder will happen with or without laws, but we don't throw our hands up in the air, give up and say, "Despite our laws against murder, people are still murdering each other, so let's get rid of all the legislation against murder and leave people to murder in peace."

 

Or to put it another way: the issue of drugs is emotive and is very hard to debate without coming down on one side or the other. I don't have strong views; I imagine that Steve Jobs may have taken drugs--after all,  it was all the culture those days. I vaguely heard that drugs were becoming less popular amongst the yufe of today. I've never imbibed, other than some snuff which made me sneeze.

 

Ok, I did get a bit involved, but I won't anymore.


Edited by Benjamin Frost - 2/26/14 at 5:27pm
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post #190 of 204
Quote:
Originally Posted by Benjamin Frost View Post

I won't get involved with your points about American politics, but I will make one comment: 

you say that legislating morality has never worked, but that doesn't mean that you shouldn’t try. Murder will happen with or without laws, but we don't throw our hands up in the air, give up and say, "Despite our laws against murder, people are still murdering each other, so let's get rid of all the legislation against murder and leave people to murder in peace."

Or to put it another way: the issue of drugs is emotive and is very hard to debate without coming down on one side or the other. I don't have strong views; I imagine that Steve Jobs may have taken drugs--after all,  it was all the culture those days. I vaguely heard that drugs were becoming less popular amongst the yufe of today. I've never imbibed, other than some snuff which made me sneeze.

Ok, I did get a bit involved, but I won't anymore.

The case against murder is clearly defined in our Constitution and generally understood worldwide...Life, liberty and the pursuit of happiness.

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post #191 of 204
Quote:
Originally Posted by SpamSandwich View Post

How many major drugs busts have you heard of that involve dollars and not bitcoins? I'd wager so-called "illegal drug activity" using bitcoins is easily dwarfed by the use of US dollars, and other denominations.

What's the ratio of transactions for legitimate and illegal purposes in each currency? The reason people are calling for bans is that there's so few legitimate uses for crypto currency. It's the same reason authorities tackle other parts of the network running silk road as they host all kinds of illegal material: illegal pornography, weapons, stolen credit cards, assassination contracts. There was one called Freedom Hosting taken down late last year:

http://www.wired.com/threatlevel/2013/09/freedom-hosting-fbi/
http://www.newscientist.com/article/dn24345-silk-road-bust-hints-at-fbis-new-cybercrime-powers.html

All bitcoins for transactions.

"The illicit empire of the Silk Road came crashing down on Wednesday after its founder Ross Ulbricht, aka Dread Pirate Roberts , was arrested and charged with narcotics trafficking, money laundering, computer-hacking and attempted murder."

You can't use cash for the things these services are used for nearly as easily. There are some legitimate needs for anonymous currency like support for human rights groups, for maintaining privacy when paying for adult services but it opens the door for everything else that crosses a line that most people would accept as the limit of acceptable activity and violates the freedoms of people trying to pursue life, liberty and happiness - if you are the victim of a credit card theft, of physical abuse or the target in a murder then these services help promote this activity. Where we choose to draw the line is for the best outcome.
Quote:
Originally Posted by SpamSandwich View Post

Legislating morality has never worked and it will never work.

Of course it has worked, what you mean to say is it hasn't always worked. Smoking bans for example work and make people realise that it's for their own good. Gambling regulations promote self-regulation as do alcohol regulation. Absolute freedom doesn't work, it's been tried and that system failed to regulate itself so over time people have developed a balance between freedom and control.
Quote:
Originally Posted by SpamSandwich View Post

You should consider who really benefits from laws that suppress trade and the exchange of money for things that harm no one but the person imbibing in said "thing"... then look at this again.

It's not true that the only harm is to the person consuming the product. If something facilitates the use of hard drugs, it promotes the addiction leading to further promotion (users becoming dealers to fund their habit) and all sorts of other crimes spawn from that. Taking away the supply can in many cases take away or at least diminish the demand.
Quote:
Originally Posted by SpamSandwich View Post

How does one prove ownership of a bitcoin? You have a private key and the transaction is recorded on the Blockchain. That can be followed.

So they'll have no problem tracking down the $350m+ taken from Mt. Gox or the $2.7m from Silk Road 2 or $220k from 85 wallets via botnet or $1m from inputs.io or $40k from coinbase or the $10k stolen from the Reddit guy via malware or the $19k stolen from the blockchain wallet. You should tell them because I don't think they know how easy it is.

How do you prove you were the original owner and that the transaction was unauthorised? If you experience a cash theft, there's the possibility of witnesses, CCTV and a physical event had to take place and there's damage limitation due to the amount you can carry.
post #192 of 204
Quote:
Originally Posted by Marvin View Post

What's the ratio of transactions for legitimate and illegal purposes in each currency? The reason people are calling for bans is that there's so few legitimate uses for crypto currency. It's the same reason authorities tackle other parts of the network running silk road as they host all kinds of illegal material: illegal pornography, weapons, stolen credit cards, assassination contracts. There was one called Freedom Hosting taken down late last year:

http://www.wired.com/threatlevel/2013/09/freedom-hosting-fbi/
http://www.newscientist.com/article/dn24345-silk-road-bust-hints-at-fbis-new-cybercrime-powers.html

All bitcoins for transactions.

"The illicit empire of the Silk Road came crashing down on Wednesday after its founder Ross Ulbricht, aka Dread Pirate Roberts , was arrested and charged with narcotics trafficking, money laundering, computer-hacking and attempted murder."

You can't use cash for the things these services are used for nearly as easily. There are some legitimate needs for anonymous currency like support for human rights groups, for maintaining privacy when paying for adult services but it opens the door for everything else that crosses a line that most people would accept as the limit of acceptable activity and violates the freedoms of people trying to pursue life, liberty and happiness - if you are the victim of a credit card theft, of physical abuse or the target in a murder then these services help promote this activity. Where we choose to draw the line is for the best outcome.
Of course it has worked, what you mean to say is it hasn't always worked. Smoking bans for example work and make people realise that it's for their own good. Gambling regulations promote self-regulation as do alcohol regulation. Absolute freedom doesn't work, it's been tried and that system failed to regulate itself so over time people have developed a balance between freedom and control.
It's not true that the only harm is to the person consuming the product. If something facilitates the use of hard drugs, it promotes the addiction leading to further promotion (users becoming dealers to fund their habit) and all sorts of other crimes spawn from that. Taking away the supply can in many cases take away or at least diminish the demand.
So they'll have no problem tracking down the $350m+ taken from Mt. Gox or the $2.7m from Silk Road 2 or $220k from 85 wallets via botnet or $1m from inputs.io or $40k from coinbase or the $10k stolen from the Reddit guy via malware or the $19k stolen from the blockchain wallet. You should tell them because I don't think they know how easy it is.

How do you prove you were the original owner and that the transaction was unauthorised? If you experience a cash theft, there's the possibility of witnesses, CCTV and a physical event had to take place and there's damage limitation due to the amount you can carry.

http://www.coindesk.com/hold-ukraine-protestors-turn-bitcoin-fundraising/

https://bitpay.com/directory#/

https://en.bitcoin.it/wiki/Trade

There are no "illegal" businesses above. Your continued insistence that Bitcoin is only used by criminals is absurd and you know it.
Edited by SpamSandwich - 2/27/14 at 3:47pm

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post #193 of 204

Looks like Mt Gox customers are out of luck.

 

http://www.reuters.com/article/2014/02/27/us-bitcoin-legal-idUSBREA1Q07U20140227

 

Mt Gox is not solvent so they wont get anything (more debt than assets).

 

Thats what you get when you deal with shadowy people.

 

And some of you wanted Apple to get involved in this?  Guess who the people who lost money at Mt Gox would chase if Apple was involved?  you guessed it right, they would go after Apple.

post #194 of 204
Quote:
Originally Posted by sog35 View Post
 

Looks like Mt Gox customers are out of luck.

 

http://www.reuters.com/article/2014/02/27/us-bitcoin-legal-idUSBREA1Q07U20140227

 

Mt Gox is not solvent so they wont get anything (more debt than assets).

 

Thats what you get when you deal with shadowy people.

 

And some of you wanted Apple to get involved in this?  Guess who the people who lost money at Mt Gox would chase if Apple was involved?  you guessed it right, they would go after Apple.

 

I don't know how many times it must be said, but I'll say it again...

 

MtGox is not Bitcoin. Bitcoin is not MtGox. MtGox's problems have been well known for more than a year to anyone who was paying attention.

 

Additionally, only if you are adventurous and willing to bear very high risk do you get into bitcoins at this stage. It's still the frontier. For first-adopters and those actually seeking high-risk, high-reward investments crypto-currencies might be for you.

 

If you are unwilling to learn ALL of the pitfalls associated with your choice of investments, then you really have no business getting into this stuff.


Edited by SpamSandwich - 2/27/14 at 2:33pm

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post #195 of 204
Quote:
Originally Posted by SpamSandwich View Post

MtGox is not Bitcoin. Bitcoin is not MtGox.

They claimed the problem arose from bitcoin though and not the one operator. Flaws in the protocol were exploited by hackers:

"At this point, 744,408 BTC are missing due to malleability-related theft which went unnoticed for several years. The cold storage has been wiped out due to a leak in the hot wallet."

Same bug responsible for Silk Road 2 apparently.

http://www.scribd.com/doc/209050732/MtGox-Situation-Crisis-Strategy-Draft
Quote:
Originally Posted by SpamSandwich View Post

MtGox's problems have been well known for more than a year to anyone who was paying attention.

You know what people are like though, if they see low prices, they jump on them. This is how unregulated free markets exploit people. The above note says they had 550,000 verified customers.

No matter how many victims there are, people would still say to let the free market sort itself out. That's not a good enough strategy and why people turn away from it.
Quote:
Originally Posted by SpamSandwich View Post

Additionally, only if you are adventurous and willing to bear very high risk do you get into bitcoins at this stage. It's still the frontier. For first-adopters and those actually seeking high-risk, high-reward investments crypto-currencies might be for you.

If you are unwilling to learn ALL of the pitfalls associated with your choice of investments, then you really have no business getting into this stuff.

People have to get involved for it to grow. On the one hand, you try to allay concerns about it and then call it high risk. People are averse to risk in general so that risk needs to be lowered for people to be more willing to adopt it. Stories like these don't help:

http://www.reddit.com/r/Bitcoin/comments/1czrua/

That's over $100k from one person. It's not that big of a loss in reality as these values are hyperinflated because of the rapid growth. People who mined the coins years ago won't have paid anything so they have zero principle to lose. But it puts off people who would be using cash and having a large principle from buying them.
post #196 of 204

So now the largest Bitcoin exchange is bankrupt and all those investors are out of their money.

 

$425,000,000 just disappeared. Gone. Forever.

 

What a scam.  Do you think Apple wants anything to do with that?  Like I said before Bitcoin has to raise their game to Apple's level.  Bitcoin is in the sewer right now and Apple is at the penthouse.  There is absolutely no reason for Apple to extend an invitation to these sewer dwellers.  Get your crap together bitcoin and then we will talk.

 

All this talk that Mt Gox was showing signs of failure months ago is BS.  Then why didn't the Bitcoin powers that be (Mr Satoshi and Co) face Mt Gox and tell them to get their sheet together?  What utter mess.

post #197 of 204
Quote:
Originally Posted by sog35 View Post

So now the largest Bitcoin exchange is bankrupt and all those investors are out of their money.

$425,000,000 just disappeared. Gone. Forever.

What a scam.  Do you think Apple wants anything to do with that?  Like I said before Bitcoin has to raise their game to Apple's level.  Bitcoin is in the sewer right now and Apple is at the penthouse.  There is absolutely no reason for Apple to extend an invitation to these sewer dwellers.  Get your crap together bitcoin and then we will talk.

All this talk that Mt Gox was showing signs of failure months ago is BS.  Then why didn't the Bitcoin powers that be (Mr Satoshi and Co) face Mt Gox and tell them to get their sheet together?  What utter mess.

Literally every statement made in that post illustrates that (A) you do not know what you are writing about, and (B) given the opportunity to learn facts, you resist.

If, for whatever reason, one's personal disposition is to fear, distrust or dislike something, nothing can be done to change such superstitious beliefs until one decides to be curious, rather than prejudicial.

I've nothing further to add to this particular thread, at least a number of factual, non-histrionic links have been posted for anyone interested.

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post #198 of 204
Quote:
Originally Posted by SpamSandwich View Post


Using LocalBitcoins.com one can find in-person buyers and sellers of Bitcoin anywhere in the world.

 

That was true weeks ago and isn't true now.  Besides, what good is it if it's possible to find an in-person buyer if it's not a simple, guaranteed to be quick process from the time you decide you want it, and then you have to worry if you have gotten correct advice about that country's version of what's legal and what isn't?   

 

It's possible to find a date on craigslist too.  Doesn't mean it's a great idea to call that # and meet them at the pier.

post #199 of 204
Quote:
Originally Posted by SpamSandwich View Post
 

Additionally, only if you are adventurous and willing to bear very high risk do you get into bitcoins at this stage. It's still the frontier. For first-adopters and those actually seeking high-risk, high-reward investments crypto-currencies might be for you.

 

If you are unwilling to learn ALL of the pitfalls associated with your choice of investments, then you really have no business getting into this stuff.

 

  Possibly, remotely.  But bitcoins are being pushed as currency as well.  It isn't possible for it to ever work at both sides as a non-regulated item of value.   If it is acknowledged as a failure as currency then it may have a slim chance as a speculator's high risk investment.   But as for now, it's more people who feel the need to stick it to their government with a casino player's mentality than anything else.

post #200 of 204
Quote:
Originally Posted by jlandd View Post

That was true weeks ago and isn't true now. Besides, what good is it if it's possible to find an in-person buyer if it's not a simple, guaranteed to be quick process from the time you decide you want it, and then you have to worry if you have gotten correct advice about that country's version of what's legal and what isn't?

The whole process of acquiring coins could do with being overhauled. BTC-e has all Cyrillic text and broken English:

https://support.btc-e.com

They say things like:

"Dear users! Due to unplanned work in DC may be problems with сrediting and withdrawal of coins. Promise to solve the problem soon."

The site Bittylicious looks nice (possibly UK only):

https://bittylicious.com

but you can see it's a properly registered company and compliant with money laundering regulations. All you do is enter your email, your bitcoin address, the amount and they'll give details to pay by bank transfer. They then act as the middle man to the sellers and you never have to deal with the sellers directly. To get a Bitcoin address, you'd just setup a client program and make a wallet.

When you deal one to one, you'd never know what they'd try and pull off. They'd take your money via an electronic transfer first and might start a transfer but reverse it or not even bother starting it. Like this sort of thing:

http://www.theguardian.com/money/2014/mar/01/paypal-bitcoin-scam-ebay

"Will Phillips is £5,300 out of pocket after falling victim to a very 21st-century financial scam involving hacked PayPal accounts and the digital currency bitcoin.

What seems to have happened is, in the space of one night, fraudsters hacked into legitimate PayPal accounts and, posing as these people, bought his bitcoins on eBay and made off with them. This type of scam is not new, and usually PayPal comes down in favour of the individuals whose accounts were hacked. In this case, the account holders have had their money refunded. However, Phillips is now being pursued for more than £1,300 that PayPal says he owes them.

He listed his bitcoins on eBay and had no problems finding buyers. A man in Hounslow, Middlesex, bought half a coin for £520. Phillips waited until the money was in his PayPal account, then sent the currency to the wallet address provided. Hours later, the man reversed the payment.

However, the way bitcoin works means that while you can't see who owns a wallet, anyone can view bitcoin transactions via websites such as Blockchain.info – so it was easy to establish his bitcoins had gone into the man's wallet.

It was a similar story with other eBay buyers that night. One bought two bitcoins (4 x 0.5) for just over £2,000. Phillips was reassured by the fact she had a decent eBay rating. As soon as the money hit his account, he transferred the bitcoins to the wallet address, and she emailed back saying she would be interested in buying more.

But in the morning all the money from her in his PayPal account had been put "on hold". PayPal, he was told, suspected her account had been hacked. It said it needed more information about the woman before it could release the funds, and suggested Phillips email her to speed things up. She pinged back a pithy two-word response: "F*ck off!"

By this point Phillips was "panicking a bit – something was very wrong and I realised I may have lost my bitcoins and the money". He told Guardian Money: "These people quickly had their money refunded by PayPal, and I lost all mine. Neither eBay nor PayPal has provided me with any sort of explanation or even leniency, instead focusing on chasing me for money I now owe them."

After doing some detective work, he believes all the bitcoin buyers were fraudsters who hacked into legitimate accounts, and that every fraudulent transaction made against him that night can be linked. "It looks like it is just one person, or one group," he says, adding: "I'm not looking for sympathy or a sob story but some accountability from PayPal, and also for this to serve as a warning to others. PayPal's only response was that they don't cover selling digital goods, since they can't prove the goods were sent/delivered. I can prove this, have told them and have sent them the proof, but they will not accept it."

He adds: "Why should I be liable for eBay and PayPal accounts being hacked to fraudulently buy from me? Under their terms and conditions I am not offered any seller protection – I was unaware of this at the time – but as a consumer, surely I must have some rights?"

Phillips says he has also been told the Financial Ombudsman Service won't be able to help, while the police "don't seem interested".

Money tracked down the man who supposedly bought £520-worth of bitcoin from Phillips. He told us: "Someone hacked into my eBay and PayPal accounts – I didn't buy anything from Mr Phillips." He says the money went out of his PayPal account but was later paid back. He adds: "I was more concerned with my PayPal account. I thought this was the safest on the planet but obviously not."

Last month, eBay's UK arm banned sales of bitcoin and other virtual currencies from its auction and "buy it now" formats. As a result, people can only sell via its classified advertising.

A PayPal spokesman told us he could not comment on individual cases but said: "Bitcoin transactions aren't covered by our seller protection programme because they are regarded as intangible goods."

In January, the UK's Financial Services Compensation Scheme (FSCS) warned that virtual currencies are not regulated. That means the FSCS will not step in if a consumer suffers a loss as a result of a website that exchanges or holds bitcoins goes out of business.

This followed a similar warning in December from the European Banking Authority (EBA), which said consumers needed to be aware of the various risks. It added that the digital wallets used to store virtual currencies "are not impervious to hackers". And consumers are not protected by any refund rights under EU law when using bitcoins and the like to pay for items. Just for good measure, the EBA added the virtual currencies "may be misused for criminal activities," and that there can also be tax implications for people."

Then there's the issue with the client software. The official apps for it try to download the blockchain, which grows in size for every transaction:

http://www.reddit.com/r/Bitcoin/comments/1pssvp/blockchain_taking_years_to_download/

Some lighter clients won't download it but those aren't from the main code base. The blockchain for Bitcoin right now is over 14GB:

https://blockchain.info/charts/blocks-size
https://bitcointalk.org/index.php?topic=382739.0

"the solution is clear.. there is no problem..

the 1mb block size (per 10 minutes) calculates as a maximum capacity of 52gb a year. so far in the last near on 5 years blockchain has only accumulated 14.5gb of the nearly 260GB (5 years)of possible space.

so this shows that the blocks are not anywhere near getting filled to even be close to the 52gb a year capacity. and even after 10 years IF every block was filled from now on. that is only half a terrabyte of disk space.

now thats 10 years of full to capacity usage.. so chances are the blockchain may be less.

now i want you to cast your mind back to 10 years ago, where ADSL was only just poping up, and 120gb hard drives were concidered extreme..

nowadays internet speeds are 10meg on average and upto 100meg.. as oppose to the 512k-2mb 10 years ago.

so imagine what would be classed as "standard" in the next decade. we would not think half a terrabyte was very much and the download speed would not be a problem for noobs to get hold of the whole blockchain."

That's the problem with not having a central ledger because they get multiple parties to verify transactions peer-to-peer and they need a transaction history to do that and it can be corrupted:

https://bitcointalk.org/index.php?topic=290878.0

"Just opened my laptop and started Bitcoin QT and received the message blockchain corrupt, I clicked OK and now it appears "Reindexing blocks - 204 weeks.

Also, my Bitcoins are Unconfirmed."

https://bitcointalk.org/index.php?topic=256965.0

These systems need to just work for mass adoption.
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