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Old 04-17-2011, 03:27 PM
nfleqbc nfleqbc is offline
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Jerry Brito (of the Mercatus Center at George Mason University) writes about a payment processing system that's more or less impossible to shut down

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To transact online, you have to have an account with a third party like PayPal that you trust will follow your payment instructions. There's been no such thing as "online cash," no currency that could be exchanged untraceably between two persons without a third party intermediary--no such thing, that is, until now.

Bitcoin, an open-source project created in 2009 by Satoshi Nakamoto, is the world's first distributed and anonymous digital currency. That's a mouthful, but it's not difficult to understand.

Since the web has been around, digital currencies have come and gone. Think of Facebook Credits, a digital currency that allows you to buy virtual goods on Facebook applications, or Microsoft Points, the currency of the Xbox Live Marketplace and Zune store. You exchange dollars for them just like you might exchange dollars for euros, then use them to buy stuff from sellers who'll take them, say a patisserie in France, or FarmVille in Facebook.

The web has also seen all-purpose digital currencies, from defunct dot-com bubble start-ups Flooz and Beenz, to the slightly more successful e-gold. Unlike cash, however, digital currencies to date have had a third party intermediary monitoring transactions. That's because digital cash is different from physical cash in one very important way: If I hand you a 100 euro bill, I no longer have it. You can't be as sure of that, however, when the cash is just 1's and 0's. So it's been necessary to have a trusted intermediary deduct the amount from the payer's account, and add it to the payee's.

Bitcoin is the first online currency to solve the so-called “double spending” problem without resorting to a third-party intermediary. The key is distributing the database of transactions across a peer-to-peer network. This allows a record to be kept of all transfers, so the same cash can't be spent twice--because it's distributed (a lot like BitTorrent), there's no central authority. This makes digital bitcoins like cash dollars or euros: Hand them over directly to a payee, and you don't have them anymore, all without the help of a third party.
The introduction to Bitcoin

Very interesting work going on here... I think I have an understanding of how it works and all I can say is "WOW!"
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Old 04-17-2011, 04:11 PM
Caitlyn Cwissy Caitlyn Cwissy is offline
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I didn't and don't understand how you could actually set this us but I posted about some type of peer to peer money exchange before. Hopefully this is the thing that is the UIGEA dagger.
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Old 04-17-2011, 08:17 PM
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Originally Posted by nfleqbc View Post

This is a fancy term for a swaps and derivitave trading. Known as currency trading in back.
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Old 04-17-2011, 10:13 PM
nfleqbc nfleqbc is offline
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Originally Posted by Cwissy View Post
I didn't and don't understand how you could actually set this us but I posted about some type of peer to peer money exchange before. Hopefully this is the thing that is the UIGEA dagger.
It's already set up. There are outfits that will sell Bitcoins for dollars (aka process deposits) and outfits that will buy Bitcoins for dollars (aka process withdrawals). Some are set up for ACH, Paypal, WU, check in the mail, whatever.

All that's needed now is for books to add the ability to deposit and withdraw via bitcoin. The real complication for the books is that if they're going to continue to keep account balances in USD that the exchange rate for bitcoin/USD fluctuates... This twitter account updates daily with a snapshot of the exchange rate... the value has spiked recently as demand for bitcoins has gone up faster than the supply is growing (the supply of bitcoins will grow until about 2040 or so). This is probably due to a spurt of interest in the media over the past few weeks (and Google publishing a bitcoin program).

1 month low: 1 BTC=$0.67 USD
1 month high: 1 BTC=$1.05 USD

Books might use those as their redemption prices (and make some extra money in the process) and offer unlimited "free" withdrawals to bitcoin. In the future, bitcoin might even become the standard currency for sportsbetting. We may even see things progress to where you "deposit" only what you need when you make a bet (putting 20 bitcoins on a ten team pawlay, deposit 20 bitcoins when you place the bet) and withdraw your winnings (just like at a Vegas book or a high street betting shop: cash on the counter to buy your ticket and cash paid if it wins).

Combine bitcoins with some means of bypassing DNS (whether by the methods proposed by the folks behind The Pirate Bay or something like Tor) and this industry is in a position where there is no means of attack by the US government short of turning off the internet.

All the pieces are in place. It's time to put the puzzle together and behave like the past 5, 10, 15 years never happened.
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Old 04-17-2011, 10:35 PM
nfleqbc nfleqbc is offline
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Sites using bitcoin (if I'm not mistaken, there's already more legitimate businesses supporting bitcoin than there ever were that took Neteller)

Some guy set up a sportsbook that only uses bitcoin, and there's an all pari-mutuel book on there as well. Plus these upstanding businesses:

Quote:
Silk Road, anonymous marketplace using Tor (marijuana, shrooms, ecstacy, LSD, DMT, mescaline, and more)
Mr Brownstone Worldwide opiate supply, heroin, china white etc, ships internationally and discreetly
PotPost, Mail Order Medical Marijuana via WEB, TOR & I2P, the finest BCBud, discreet packaging, ship's everywhere except USA, Sweden and Australia.
Anon Supply - Wide selection, fair prices(bitcoins), discreet packaging and worldwide shipping.
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Old 04-18-2011, 01:28 AM
mustaf555 mustaf555 is offline
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Originally Posted by nfleqbc View Post
Sites using bitcoin (if I'm not mistaken, there's already more legitimate businesses supporting bitcoin than there ever were that took Neteller)

Some guy set up a sportsbook that only uses bitcoin, and there's an all pari-mutuel book on there as well. Plus these upstanding businesses:
I hope books are quick to add this.

It would be nice to get access back to the books that pulled out.
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Old 04-18-2011, 01:47 AM
skilled27 skilled27 is offline
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Quote:
Originally Posted by nfleqbc View Post
Sites using bitcoin (if I'm not mistaken, there's already more legitimate businesses supporting bitcoin than there ever were that took Neteller)

Some guy set up a sportsbook that only uses bitcoin, and there's an all pari-mutuel book on there as well. Plus these upstanding businesses:
3 of the 4 businesses you listed are not there anymore.
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Old 04-18-2011, 02:20 AM
Tommyjay Tommyjay is offline
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The operator of this site will make a fortune having books and other gambling forms as customers. If he allows narcotics and pornography, he will get whacked, and that will be the end of that.
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Old 04-18-2011, 03:38 AM
nfleqbc nfleqbc is offline
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The operator of this site will make a fortune having books and other gambling forms as customers. If he allows narcotics and pornography, he will get whacked, and that will be the end of that.
There's no operator. Who gets whacked?
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Old 04-18-2011, 03:46 AM
nfleqbc nfleqbc is offline
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3 of the 4 businesses you listed are not there anymore.
The .onion links are for links accessed via Tor as opposed to the "normal" Internet.
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Old 04-18-2011, 11:59 AM
sylf sylf is offline
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Nfl, great thread. keep updating.
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Old 04-18-2011, 12:54 PM
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There's an interview with one of the founders here;

Andresen on BitCoin and Virtual Currency | EconTalk | Library of Economics and Liberty

Gavin Andresen, Principal of the BitCoin Virtual Currency Project, talks with EconTalk host Russ Roberts about BitCoin, an innovative attempt to create a decentralized electronic currency. Andresen explains the origins of BitCoin, how new currency gets created, how you can acquire BitCoins and the prospects for BitCoin's future. Can it compete with government-sanctioned money? How can users trust it? What threatens BitCoin and how might it thrive?
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Old 04-18-2011, 05:25 PM
nfleqbc nfleqbc is offline
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Timothy B Lee (no, not the one who invented the World Wide Web) is skeptical

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My friend Jerry Brito is one of the best-connected and most insightful observers of the Internet I know, so when he starts talking up an Internet trend, I pay attention. But after reading his case for Bitcoin, a new digital currency, I remain a skeptic.

The article is worth reading in full, but here’s an important part of his case for Bitcoin:

Quote:
The web has also seen all-purpose digital currencies, from defunct dot-com bubble start-ups Flooz and Beenz, to the slightly more successful e-gold. Unlike cash, however, digital currencies to date have had a third party intermediary monitoring transactions. That’s because digital cash is different from physical cash in one very important way: If I hand you a 100 euro bill, I no longer have it. You can’t be as sure of that, however, when the cash is just 1′s and 0′s. So it’s been necessary to have a trusted intermediary deduct the amount from the payer’s account, and add it to the payee’s.

Bitcoin is the first online currency to solve the so-called “double spending” problem without resorting to a third-party intermediary. The key is distributing the database of transactions across a peer-to-peer network. This allows a record to be kept of all transfers, so the same cash can’t be spent twice–because it’s distributed (a lot like BitTorrent), there’s no central authority. This makes digital Bitcoins like cash dollars or euros: Hand them over directly to a payee, and you don’t have them anymore, all without the help of a third party.
It’s an intriguing concept, but the fundamental question about any currency is whether its value will be stable over time. I’ll discuss why this seems dubious in a series of two posts. Today I’ll focus on the demand side; tomorrow I’ll consider claims that the supply of Bitcoins will be more stable than traditional currencies.

The fundamental demand-side problem is that it’s not clear why anyone would want Bitcoins—which are, after all, just entries in a database—in the first place. The obvious retort is that the same objection could be made of any fiat money system. The value of a fiat currency like the dollar is a matter of social convention: it’s valuable to me because other people will accept it as payment for stuff I want to buy. Theoretically, if you persuaded everyone that dollars were worthless, this would become a self-fulfilling prophesy. Conversely (the argument goes) all we have to do to make Bitcoins a “real” currency is to persuade some people that it’s valuable. And apparently, the creators of Bitoin have already succeeded in this task.

But dollars have at least two advantages over Bitcoins. The obvious difference is that the United States government requires taxes to be paid in US dollars. Since federal taxes represent a significant fraction of most peoples’ income, they will continue to demand dollars even if they prefer another currency for day-to-day transactions.The more subtle difference has to do with network effects and transaction costs. Dollars underpin the American economy in essentially the same way that the TCP/IP protocol underpins the Internet. The original choice of a medium of exchange was arbitrary, but people needed to pick something and once the dollar was chosen it acquired tremendous momentum. Convincing Americans to switch to a currency other than the dollar is roughly as futile as convincing the Internet to switch to a protocol other than TCP/IP, and for the same reasons.

First, people have made tremendous investment—emotional, financial, and technological—in dollars. Millions of vending machines and cash registers are designed to work with dollar-denominated coins and bills. People expect to see dollar-denominated prices in stores, and they have an intuitive sense for what’s a reasonable dollar-denominated price for a gallon of gas or a dozen eggs. They have dollar-denominated bank accounts, get dollar-denominated paychecks, and expect to retire on dollar-denominated pensions. It’s really hard to persuade Americans to use something else.

Second, currencies are subject to massive network effects. It’s much more convenient to carry a currency that 99.9 percent of people accept than the currency that 0.1 percent will take. People who hold obscure currencies have to waste time and money converting it to a more popular currency before they can perform everyday transactions. And people who conduct business in multiple currencies not only have to perform a lot of extra math, they also have to worry about exchange rate risk—the risk that a change in exchange rate will suddenly make a previously profitable business model suddenly unprofitable.

Together these factors make the demand for dollars “sticky.” It’s hard to see any analogous stickiness in the demand for Bitcoins. As far as I can tell, there are few, if any, markets where Bitcoin transactions are more convenient than traditional fiat currency transactions. I’ve read some claims that Bitcoin is popular in the drug trade and other illicit markets, where the lack of intermediaries has obvious advantages. It’s hard to judge whether these claims are true, or whether such markets are substantial enough to support a new global currency, but I have my doubts.

Illicit uses aside, the demand for Bitcoins seems to be driven by a combination of speculation and ideological enthusiasm. And we have a word for an asset whose value is driven by irrational exuberance: a bubble. I predict this one will pop once the novelty wears off.
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Old 04-18-2011, 05:33 PM
nfleqbc nfleqbc is offline
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Originally Posted by nfleqbc View Post
Combine bitcoins with some means of bypassing DNS (whether by the methods proposed by the folks behind The Pirate Bay or something like Tor) and this industry is in a position where there is no means of attack by the US government short of turning off the internet.
Another piece in the puzzle comes along: Namecoin
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Old 04-18-2011, 06:51 PM
Caitlyn Cwissy Caitlyn Cwissy is offline
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Lee Corso. You still have to buy and sell bitcoins in Michael Ca$h. The Feds will declare bitcoin illegal currency and make it a crime to process bitcoin deposits, redeem bitcoins for US dollars or accept bitcoins for payment. Then what? You can move the stuff all you want but eventually you need to convert to cash. Unless this stuff replaces the dollar as the world's top currency, still fucked.
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Old 04-18-2011, 07:00 PM
Caitlyn Cwissy Caitlyn Cwissy is offline
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Cwissy and I have an idea. Moving bitcoin around offshore books is ak solid. Now you gotta 'liquidate' it. Bitcoin eBay. Hardwork with me. A central system where you buy and sell bitcoin directly from and to bitcoin users all over the world. No processors. Everybody is a processor. Just have to set up the system to make transactions 100% safe, secure and scam proof.
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Old 04-18-2011, 07:03 PM
Caitlyn Cwissy Caitlyn Cwissy is offline
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That's it. Checkmate. Go ahead and arrest 100,000,000 people in 100 countries and shut down 100,000,000 bank accounts.
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