Bitcoin Roundup: More Merchants, More ATMs, Better than Credit Cards, China Has Reason to Fear It, Krugman Thinks It's Evil, Cowen Thinks It's Overpriced

Some stories and speculations from the Bitcoin beat:

•Attempts on the part of the Chinese government and banking system to restrict free trade in Bitcoin is happening for a very good reason, if you are the Chinese government, Daily Reckoning points out--for all the same reasons a normal human being would love the cryptocurrency:

China tightly regulates all the money flowing in and out of the country. You can’t just bring a bunch of cash into the country, in part to prevent people from buying up the local currency (which is generally believed to be deliberately suppressed). And China makes it hard to get money out of the country as well....

Bitcoin offered/offers an even quicker way to get your money out of the border. Buy 10,000 yuan work of bitcoins on a site like BTC China, transfer those bitcoins to a wallet outside of the country, and then sell those bitcoins in some new currency in a different country. Voilà, your money is liberated!

•Supposedly great economist Paul Krugman thinks that Bitcoin, because it has such rich opportunities for liberating money holders from government control, is private, non-inflationary, has the potential to damage the interest of government central banks, and not backed by violence and force, is for all those reasons obviously evil.

Bloomberg News reports that merchants accepting Bitcoin have tripled in number in the past month.

Entrepreneur magazine on the spread to dozens of countries, and competition in the market to make, Bitcoin ATMs.

• Timothy Lee in the Washington Post explains how use of Bitcoin and Bitcoin like protocols can solve the frustrating problems of credit card companies preventing you from making international transactions you want to make because they suspect fraud. Like with anyone in the Internet age still trying to make a living being a middleman, conventional credit card companies should be a little nervous.

• Economist Tyler Cowen thinks that market competition in alt currencies means the price of Bitcoin in dollars must plummet, and plummet a lot, down to approximately the marketing costs of alt-coin competitors. Bob Murphy thinks his logic is similar to saying that quarters will outcompete dollars in the market since you can get more of them for less.

Reason on Bitcoin.

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  • ||

    Bloomberg News reports that merchants accepting Bitcoin have tripled in number in the past month.

    I don't know much about Bitcoin, but I imagine any business would be happy to adopt a payment method that doesn't require giving a few percent to a middleman.

  • JPyrate||

    MD you may already know this about bitcoin so I apologize In advance. The endgame of Bitcoin is to develop faster, and stronger processors. I know a person who mines Bitcoin in order to afford to do experiments with gold, silver, platinum, and palladium.

  • Firework Surprise||

    "Economist Tyler Cowen thinks that market competition in alt currencies means the price of Bitcoin in dollars must plummet, and plummet a lot, down to approximately the marketing costs of alt-coin competitors."

    How many non-critical-thinking economists have to exist in this world? Extrapolate this thinking and the Chilean Pesos I have sitting in a Jar at my home should immediately become equivalent to my dollars because people want them. Idiot.

  • Raston Bot||

    But then the QuitCoin company comes along, with its algorithm, offering to sell you QuitCoin for $400.

    I'm suffering a disconnect reading Tyler Cowen. Is there a central bitcoin company that sets its $USD valuation?

  • Surly Chef||

    Scrub your brain of everything you read about it by Cowen, then apply logic, reason and common sense to the issue.

  • alpha mower||

    Whats next?
    The sh-tcoin?

  • Raston Bot||

    BitCoin looks like it was designed as a weapon intended to damage central banking and money issuing banks, with a Libertarian political agenda in mind—to damage states ability to collect tax and monitor their citizens financial transactions.

    Stross doesn’t like that agenda, and neither do I;

    authoritarian haz a sad.

  • Count Negroni||

    Stross' article, that Krugman cites, uses a bunch of ancient, bullshit hack papers as sources.

    He's done zero to note that (it's pointed out in the comments). Entirely refuted here.

    For the environmental/carbon footprint one, the source of the numbers suggests that miners would be losing $19 million per day. Obviously not true.

    The Gresham's law paper says that botnets will dominate mining. A desktop computer will do several megahashes per second. With a decent graphics card, it'll do, say 300 megahashes per second.

    The network is at 10 Petahashes. How many computers are in this hypothetical botnet? Complete BS, and a shame that he cites that in his hit piece, and doesn't even respond to it after called out on it.

  • alpha mower||

    Tax the Internet.

  • Plisade||

    I want to buy some but I keep waiting for the price to drop. And yet no matter the bad news (gubmints decrying it, regulations passed), the price still hovers around $800. I'm thinking I just need to dive in now and see what happens.

  • ||

    I hear ya. I bought my first BTC back in October, when it was down around $200. I am kicking myself for not buying more than I did at the time. I waited a long time for the price to come back down, and a few weeks ago I finally just said fuck it and started buying again. I just buy in small quantities whenever I get paid. If you use CashIntoCoins.com they don't charge a fee on transactions of $40 or less.

  • Plisade||

    I'll check it out. Thanks for the link.

  • trig||

    I started mining intermittently when they were about $3.50 so ya the longer you've been into bitcoin pretty much the harder you're kicking yourself for not buying.

  • ||

    Krugman Thinks It's Evil

    Is there anything less surprising than this?

  • MJGreen||

    Krugman thinks it's evil? That's good enough for me!

    *spends Christmas money on bitcoins*

  • Free Society||

    •Supposedly great economist Paul Krugman thinks that Bitcoin, because it has such rich opportunities for liberating money holders from government control, is private, non-inflationary, has the potential to damage the interest of government central banks, and not backed by violence and force, is for all those reasons obviously evil.

    You can pretty much guess where Paul Krugman falls on any issue by assuming that he will always come down on against freedom and in support of empowering political bodies.

  • ||

    I still have a hard time believing that the general public will ever buy into an algorithm based currency. I couldn't even begin to explain how Bitcoin works, and I feel I have a high degree of knowledge about computers and algorithms. And even if I knew it well, there's still a trust issue.

    Of course, the general public is not well versed in fiat currency either. But still, it would seem like crypto-currencies have a high bar to get over before they become widely accepted.

  • robc||

    Why does the general public need to buy in? Its a niche currency, it has value within that niche which is what matters.

    It also matters that the niche is large enough to support things like ATMs.

  • ||

    Well, I suspect that some libertarian cheerleaders might desire to see it actually compete, and possibly supplant, fiat currencies. If that's the case, I'm curious how realistic such a desire is.

    In regards to it being a niche currency, if that's its fate, then so be it. But that makes it simply a curiosity, and not a game changer, and thus there's limited incentive to pay much attention to it.

  • Count Negroni||

    One big key is to separate bitcoins the unit-of-exchange from Bitcoin the protocol.

    You don't notice how flawed the current credit card system is until you make a transaction with bitcoins. You wind up giving all of your personal information to vendors to use a credit card there, and trusting they don't lose control of that data before your card expires. Or ever, really. All they should need is a shipping address or identifier if it is digital, and that you paid them.

    Then you have target compromising all those cards (mine included). Potentially the second time this year that my credit card has been compromised, and I'm fairly careful with it. Huge costs for that fraud.

    Besides that, also consider the businesses that *don't* use credit cards directly, and instead pull directly from your checking account (Paypal) -- that's giving them the keys to the kingdom.

    Transacting with Bitcoin is entirely simple (and will get simpler/better with the payments protocol coming soon). Get an address to send it to (ideally a new one for each transaction). Send the amount specified. Done. If it's a small amount, there's not even really a need to wait for a confirmation (for it to actually be included in a block), as it would cost millions to try to double spend it.

    That, I think, is a game changer.

  • TheZeitgeist||

    The only potential issue I see with BTC in everyday use is growth of the blockchain.

    More transactions = ever bigger blockchain. I think its eleven gigabytes or so now, and when one installs a new wallet the update time to 'catch up' to the current blockchain already is about an hour on a decent internet connection.

    After, say, five years of being a real currency used by millions of people every day, the blockchain is going to be a monster.

  • Count Negroni||

    13 gb, and it took me days to download the entire chain (on a fairly fast connection). That said, you don't need to for most uses. There are wallets that can just check with places running the full client, and that's improved as well.

    It could get huge, but not everyone needs a full copy of it (it just introduces trust, if you don't have the full copy).

  • TheZeitgeist||

    I got the full blockchain in about two hours at my work (Big fiber switch right in the building), and you're right you don't need the whole blockchain. But it is going to be storage/processing problem occupying many a huge data center to maintain the blockchain with transaction volumes remotely approaching one of the mainstream currencies.

    Like take Amazon. They have EC2 for instance, and to process just their own retail transactions in BTC they'd probably need a good chunk of EC2 to maintain their blockchain copy. Wal-Mart's another good example. And something like NASDAQ? Yikes.

    I'm sure it's a solvable problem, but it is a big problem that literally gets bigger by the second.

  • Pompey||

    You don't notice how flawed the current credit card system is until you make a transaction with bitcoins. You wind up giving all of your personal information to vendors to use a credit card there, and trusting they don't lose control of that data before your card expires.

    The really interesting thing about this is, (at least for card not present/online) transactions, much of that information is not necessary

  • alpha mower||

    BitCoin is just another Fiat Currency.....like all the others.
    Dont be dazzled by the hype.
    Bitcoin makes guys like Bernie Madoff and Micheal Milken say, "Dayum! Wish I'd thought of that one."

  • Free Society||

    You don't have to know what a meat grinder looks like in order to eat a sausage. I had a hard time believing that people would buy into central planning as a serious alternative to markets, but then I realized that the Federal Reserve actually does exist, so here we are.

    I have a hard time believing people (markets) won't favor decentralized and unmonopolized and unregulated mediums of exchange.

  • Pompey||

  • alpha mower||

    The algorithm for "Securitized Mortgage Bonds" really worked out great!, didnt it?

  • TheZeitgeist||

    Techno-luddite Krugclown should stick to voodoo witch-doctor shit like economics, where he can always be right.

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  • trig||

    Wow I'll be sure to send you lots of money asap.

  • alpha mower||

    Bitcoin.
    Its just another Fiat Currency.
    Think about it.

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