Bitcoin Combines Ph.D-Level Computer Science With Sub-Kindergarten-Level Monetary UnderstandingA “currency” is like “art”: it is anything that we use as “currency.” At times, cigarettes and small candies have served as currency. Tobacco was a currency in colonial Virginia. In Ancient Greece, iron pots and tripods once served as a sort of currency. Ancient Chinese used gardening tools as currency.Some people use bitcoin as a means for transactions in goods and services, so it is, for them, a currency.But is it a good currency?The Bitcoin project is an odd combination of very advanced, Ph.D-level computer science, regarding encryption and record-keeping, and very primitive, sub-kindergarten-level monetary understanding.What do we want from a currency? What are the characteristics of an ideal currency, and how do we manifest those in a practical, real-life system?I think it is easy to see, today, that cigarettes, candies, iron pots and gardening tools are not ideal for use as currency.Today, there are two basic ideals: one is a currency that is as stable, reliable, predictable, and inert as possible — a universal constant of commerce. The other ideal is a currency that you can actively manage to produce certain economic effects, or other government policy goals.Bitcoin does not serve either of these functions. It is certainly not stable, reliable, predictable and inert. Nor is it a suitable platform for active economic management.In practice, the first ideal, or the “Classical” ideal — of a stable and inert currency — was most often realized through a gold standard system. The second ideal, or “Mercantilist” ideal — of an actively-managed currency — is realized as today’s floating fiat currencies.In both of these cases, the base money supply is adjusted, on a daily basis, to attain the policy goal. In the case of a gold standard system, the base money supply is adjusted via an automatic mechanism similar to a currency board, such that the currency’s value maintains its defined parity relationship with gold bullion.In the case of the floating fiat currency, the base money supply is adjusted on a daily basis to achieve whatever economy-fiddling monetary distortion goals the currency managers have. - Read more here: http://www.forbes.com/sites/nathanlewis/2013/04/18/bitcoin-combines-ph-d-level-computer-science-with-sub-kindergarten-level-monetary-understanding/
Little is known about “Satoshi Nakamoto,” the mysterious person—or people—who created Bitcoin, the world’s most popular digital currency.
But now we may have one more detail: Nakamoto reportedly owns as many as a million bitcoins and hasn’t spent a single one since the currency’s inception in 2009. At today’s exchange rate, that stash of bitcoins is worth $96 million.
Nakamoto’s supposed holdings are far beyond any previously reported Bitcoin fortune. Celebrity Bitcoin investors the Winklevoss twins (best known for their dispute with Mark Zuckerberg over the founding of Facebook) own a little more than 90,000 bitcoins. They told the New York Times last week that “they believe that some early users of the system probably have holdings that are at least as large.”
Journalists on the hunt for Nakamoto have made some educated guesses about the person or persons behind the pseudonym, but the inventor’s identity remains a mystery. So how is it possible to calculate Nakamoto’s fortune in a mostly anonymous crypto-currency?
Although Bitcoin users are anonymous in the sense that they aren’t identified by name, their activity is logged in a universal register of Bitcoin activity known as the blockchain. By analyzing public blockchain data, Bitcoin blogger Sergio Demian Lerner discovered someone who has been mining bitcoins—running the software that introduces new bitcoins into the system—since block 1.
In other words, this early miner was involved in creating the very first bitcoins.
While it can’t be proven conclusively that the miner is Nakamoto, Lerner is convinced by the consistent mining patterns, which have stayed the same since Bitcoin’s first block.
And besides, he adds, “this entity is the only entity that has shown complete trust in Bitcoin, since it hasn’t [spent] any coins.”
As some commenters have pointed out, though, “trust” might not be the reason Nakamoto has refused to spend his fortune. It might just be basic economics.
Bitcoin is kept artificially scarce by software that regulates how much new currency can be introduced into the system. Right now, there are just over 11 million bitcoins in circulation—meaning a million-bitcoin fortune is nearly a tenth of the entire market.
The currency’s value plummeted from a high of $265 earlier this month to just $96 today when panicked speculators cashed out in droves. It’s not hard to imagine what would happen to the value of Nakamoto’s Bitcoin reserve—and the entire Bitcoin market—if he dumped even a small percentage of it. - http://www.dailydot.com/business/satoshi-nakamoto-bitcoin-fortune-100-million
After last week’s meteoric rise in both value and public awareness, things just keep getting worse for BitCoin this week. The world’s largest Bitcoin exchange, Mt. Gox, was temporarily closed down today by a cyberattack while another, BitFloor, permanently closed Wednesday.
Mt. Gox took to Facebook on Thursday to confirm that the website’s closure was in fact due to a DDoS attack, a “denial of service” hack. At the time of writing, the problem seems to have been resolved and the page is up and writing.
On April 10, the extreme fluctuations in Bitcoin’s value – which went as high as $260 before plummeting to as low as $50 over the course of a few days – overloaded Mt. Gox’s servers, causing the website to suspend trading for several hours. Over the next two days, it was hit by two different DDoS attacks.
During the Mt. Gox outage, many people took their Bitcoins to other exchanges, including BitFloor. Apparently Bitcoin’s rollercoaster value was too much for them to handle, and BitFloor’s founder, Roman Shtylman, posted a statement on its website announcing the website’s closure.
“Unfortunately, our U.S. bank account is scheduled to be closed and we can no longer provide the same level of [U.S. dollar] deposits and withdrawals as we have in the past,” Shtylman wrote. “As such, I have made the decision to halt operations and return all funds. Over the next days we will be working with all clients to ensure that everyone receives their funds. Please be patient as we process your request.”
In September, when Bitcoins were only worth about $10, BitFloor was robbed of about 24,000 Bitcoins.
Some experts are saying that the Bitcoin exchange's troubles may be at least part of the reason for Bitcoin's struggling value. - http://www.ibtimes.com/bitcoin-faces-more-problems-worlds-biggest-bitcoin-exchange-hacked-another-closes-1202563
Money is supposed to be a store of value. After the recent collapse in the dollar convertible price of Bitcoins, the inevitable scrutiny in the viability of the monetary system is warranted.
Intellihub.comApril 17, 2013
The official description of Bitcoin states: Bitcoin is an experimental, decentralized digital currency that enables instant payments to anyone, anywhere in the world. Bitcoin uses peer-to-peer technology to operate with no central authority managing transactions and issuing money carried out collectively by the network. Purported myths and ground rules on how the alternative currency operates, provides calculated reading. Whether this accounting system can or would be accepted as an credible medium of exchange on any large scale is certainly an open question.
The need for an alternative currency to fiat debt created tender is apparent. However, establishing faith and acceptance in a competing and digital method of payment for transactions is almost inconceivable to the average consumer.
The Business Insider in Bitcoin Is Changing The World provides an analysis and a risk warning report.
“Bitcoin’s inventor, Satoshi Nakamoto, is a mysterious hacker (or a group of hackers) who created it in 2009 and disappeared from the internet some time in 2010.
Reddit, a social-media site, and WordPress, which provides web hosting and software for bloggers. The appeal for merchants is strong. Firms such as BitPay offer spot-price conversion into dollars. Fees are typically far less than those charged by credit-card companies or banks, particularly for orders from abroad. And Bitcoin transactions cannot be reversed, so frauds cannot leave retailers out of pocket.
Yet for Bitcoins to go mainstream much has to happen, says Fred Ehrsam, the co-developer of Coinbase, a Californian Bitcoin exchange and “wallet service”, where users can store their digital fortune. Several Bitcoin exchanges have suffered thefts and crashes over the past two years.
But the real threat is competition. Bitcoin-boosters like to point out that, unlike fiat money, new Bitcoins cannot be created at whim. That is true, but a new digital currency can be. Alternatives are already in development. Litecoin, a Bitcoin clone, is one. - Read more here: http://intellihub.com/2013/04/17/the-risk-and-reward-of-bitcoins
Original video can be found here: http://www.bloomberg.com/video/bitcoin-atm-coming-to-a-corner-near-you-gE5ZaW_RQCCAY4bzUHgchw.html
BitCoin ATM: http://www.bitcoinatm.com
BOSTON--(BUSINESS WIRE)--April 17, 2013--Foodler, the online food ordering service that connects consumers with the widest variety of restaurants for immediate delivery, today announced that it is the first food ordering service to accept Bitcoins to pay for delivery and takeout.Bitcoin, a decentralized digital currency, has become an increasingly popular form of payment since its inception nearly four years ago. With a growing number of local bars and restaurants accepting Bitcoin as a valid method of payment, Foodler is now offering its users the option of paying with Bitcoin at Foodler.com and via the Foodler iPhone app. For those users with existing Foodler accounts, Bitcoins can be spent almost instantly, with the food delivered within an hour.Foodler users with a Bitcoin wallet can select a Bitcoin payment option from within their Foodler account page. A unique Bitcoin address and corresponding QR code will be securely generated for every user and for every transfer a user performs. The Bitcoin deposit will then be posted to a user's Foodler account as 'FoodlerBucks,' a recognized form of payment for delivery, takeout and tips for any participating Foodler restaurant.Christian Dumontet, co-founder of Foodler, explains, "Interest in Bitcoin is soaring and, as people are becoming accustom to using Bitcoin to pay for everyday items -- whether it be at a coffee shop or local restaurant -- we wanted to provide an easy way for the more than 11 million people with Bitcoins to pay for their meal deliveries." - Read more here: http://online.wsj.com/article/PR-CO-20130417-908270.html
In this episode of the Keiser Report, Max Keiser and Stacy Herbert discuss the role of market making in the orderly functioning of markets which explains the disorderly functioning of Mt.Gox, an exchange missing the vital market making function. They also discuss the virtual specialist technology, payments systems and DDoS attacks. In the second half of the show, Max Keiser talks to Tony Gallippi of Bitpay.com about money in the cloud and bitcoin in transactions.
OkCupid, one of the world’s most popular dating sites, will now introduce Bitcoin to millions of people who have yet to hear of it. Bitcoiners can now pay for a list of functions at the OKCupid website, such as PM’ing individuals with priority messages.
On Tuesday, despite Bitcoin’s recent correction, OKCupid announced its acceptance of the digital currency for users wanting to pay for the site’s bonus features. The popular, free dating site boasts approximately 4 million active users, and will now become on the world’s largest websites accepting Bitcoin.
OkCupid users hold the option pay on average $12 per month for access to “A-List” extra options such as browsing other profiles anonymously. The real price will be denominated in dollars and will be adjusted for Bitcoin users to reflect currency exchange rates, as determined by Coinbase. - Read more here: https://www.goldsilverbitcoin.com/love-bitcoin-okcupid-first-online-dating-site-to-accept-btc/
The following guest post is by Alex Ferrara, partner in Bessemer’s New York office where he focuses on investments in the software and Internet sectors.
As Bitcoin tops the charts as the hot new tech phenomenon, there has been chatter of whether or not it will succeed as a mainstream currency, missing a more important point. Bitcoin is already a success, offering great potential beyond providing a new store of value or currency. What is perhaps more exciting about this relatively new innovation is the growth of the underlying network of participants, and the economic incentives that are promoting its growth. Roughly 30 plus years after the birth of the Internet, we may be starting to see an important new technology layer emerge that is designed specifically to enable secure online transactions. Disclosure: Bessemer is not currently invested in Bitcoin or any companies in the space, but always has an eye on what is hot in tech.
Signs of a Tipping Point
Opponents of Bitcoin claim that this virtual currency allows for exchanges made in the dark corners of the Internet where anonymous buyers can purchase any number of illicit items from anonymous sellers. While there might have been issues with illegal activities in the early days of Bitcoin, the market has changed dramatically in the past several months. For example Bitpay, a company that enables legitimate merchants to accept bitcoin as a form of payment now serves more than 10,000 merchants (an increase of 10x in the past 6 months) and is processing more in transaction volume than the infamous Silk Road marketplace.
In addition, at least three of the leading U.S. bitcoin startups have demonstrated their commitment to preventing illicit activity by registering with the financial crimes enforcement network agency of the federal government and strictly adhering to the same anti-money-laundering processes followed by major U.S. banks. Lastly, several of these bitcoin companies have raised capital from leading venture capital firms, which not only provides credentialing but will allow them to invest in areas of infrastructure, compliance and customer awareness. Bitcoin is rapidly becoming a legitimate online currency alternative. Read more here: http://www.forbes.com/sites/groupthink/2013/04/15/bitcoin-and-the-future-of-money
In 2009 Satoshi Nakamoto invented a new electronic or virtual currency called Bitcoin, the design goal of which is to provide an equivalent of cash on the Internet.1 Rather than using banks or credit cards to buy stuff online, a Bitcoin user will install a piece of software, the Bitcoin client, on her computer and send Bitcoin directly to other users under a pseudonym.2 One simply enters into the software the pseudonym of the person one wishes to send Bitcoin and the amount to send and the transaction will be transmitted through a peer-to-peer network.3
What specifically one can get with Bitcoin is somewhat limited to the few hundred websites which accept them, but includes other currencies, web hosting, server hosting, web design, DVDs, coffee in some coffee shops, and classified adverts, as well as the ability to use online gambling sites despite being a US citizen and to donate to Wikileaks.4 However, what allowed Bitcoin to break into the mainstream – if only for a short period of time – is the Craigslist-style website “Silk Road” which allows anyone to trade Bitcoin for prohibited drugs.5
On February 11th, 1 BTC exchanged for 5.85 USD. So far 8.31M BTC were issued, 0.3 Million BTC were used in 8,600 transactions in the last 24 hours and about 800 Bitcoin clients were connected to the network. Thus, it is not only some idea or proposal of a new payment system but an idea put into practice, although its volume is still somewhat short of the New York Stock Exchange.
The three features of cash which Bitcoin tries to emulate are anonymity, directness and lack of transaction costs, all of which are wanting in the dominant way of going about e-commerce using credit or debit cards or bank transfers. It is purely peer-to-peer just like cash is peer-to-peer. So far, so general.
But what makes the project so ambitious is its attempt to provide a new currency. Bitcoin are not a way to move Euros, Pounds or Dollars around, they are meant as a new money in itself; they are denominated as BTC not GBP. In fact, Bitcoin are even meant as a money based on different principles than modern credit monies. Most prominently, there is no “trusted third party”, no central bank in the Bitcoin economy and there is a limited supply of 21 million ever. As a result, Bitcoin appeals to libertarians who appreciate the free market but are sceptical of the state and in particular state intervention in the market.
Because Bitcoin attempts to accomplish something well-known – money – using a different approach, it allows for a fresh perspective of this ordinary thing, money. Since the Bitcoin project chose to avoid a trusted third-party in its construction, it needs to solve several ‘technical’ problems or issues to make it viable as money. Hence, it points to the social requirements and properties which money has to have.
In the first part of this text we want to both explain how Bitcoin works using as little technical jargon as possible and also show what Bitcoin teaches about a society where free and equal exchange is the dominant form of economic interaction. In the second part we then want to criticise Bitcoin’s implicit position on credit money. From this also follows a critique of central tenets of the libertarian ideology.
The first thing one can learn from Bitcoin is that the characterisation of the free market economy by the (libertarian) Bitcoin adherents (and most other people) is incorrect; namely, that exchange implies:
Mutual benefit, cooperation and harmony.
Indeed, at first sight, an economy based on free and equal exchange might seem like a rather harmonious endeavour. People produce stuff in a division of labour such that both the coffee producer and the shoemaker get both shoes and coffee; and this coffee and those shoes reach their consumers by ways of money. The activity of producers is to their mutual benefit or even to the benefit of all members of society. In the words of one Bitcoin partisan:
“If we’re both self-interested rational creatures and if I offer you my X for your Y and you accept the trade then, necessarily, I value your Y more than my X and you value my X more than your Y. By voluntarily trading we each come away with something we find more valuable, at that time, than what we originally had. We are both better off. That’s not exploitative. That’s cooperative.”6
In fact, it is consensus in the economic mainstream that cooperation requires money and the Bitcoin community does not deviate from this position: “A community is defined by the cooperation of its participants, and efficient cooperation requires a medium of exchange (money) …”7 Hence, with their perspective on markets, the Bitcoin community agrees with the consensus among modern economists: free and equal exchange is cooperation and money is a means to facilitate mutual accommodation. They paint an idyllic picture of the ‘free market’ whose ills should be attributed to misguided state intervention and sometimes misguided interventions of banks and their monopolies. - Read more here: http://gegen-kapital-und-nation.org/en/bitcoin-finally-fair-money
Even if it crashes, Bitcoin may make a dent in the financial world
IN 1999 an 18-year-old called Shawn Fanning changed the music industry for ever. He developed a service, Napster, that allowed individuals to swap music files with one another, instead of buying pricey compact discs from record labels. Lawsuits followed and in July 2001 Napster was shut down. But the idea lives on, in the form of BitTorrent and other peer-to-peer filesharers; the Napster brand is still used by a legal music-downloading service.
The story of Napster helps to explain the excitement about Bitcoin, a digital currency, that is based on similar technology. In January a unit of Bitcoin cost around $15 (Bitcoins can be broken down to eight decimal places for small transactions). By the time The Economist went to press on April 11th, it had settled at $179, taking the value of all Bitcoins in circulation to $2 billion. Bitcoin has become one of the world’s hottest investments, a bubble inflated by social media, loose capital in search of the newest new thing and perhaps even by bank depositors unnerved by recent events in Cyprus.
Just like Napster, Bitcoin may crash but leave a lasting legacy. Indeed, the currency experienced a sharp correction on April 10th—at one point losing close to half of its value before recovering sharply (see chart). Yet the price is the least interesting thing about Bitcoin, says Tony Gallippi, founder of BitPay, a firm that processes Bitcoin payments for merchants. More important is the currency’s ability to make e-commerce much easier than it is today.
Bitcoin is not the only digital currency, nor the only successful one. Gamers on Second Life, a virtual world, pay with Linden Dollars; customers of Tencent, a Chinese internet giant, deal in QQ Coins; and Facebook sells “Credits”. What makes Bitcoin different is that, unlike other online (and offline) currencies, it is neither created nor administered by a single authority such as a central bank.
Instead, “monetary policy” is determined by clever algorithms. New Bitcoins have to be “mined”, meaning users can acquire them by having their computers compete to solve complex mathematical problems (the winners get the virtual cash). The coins themselves are simply strings of numbers. They are thus a completely decentralised currency: a sort of digital gold.
Bitcoin’s inventor, Satoshi Nakamoto, is a mysterious hacker (or a group of hackers) who created it in 2009 and disappeared from the internet some time in 2010. The currency’s early adopters have tended to be tech-loving libertarians and gold bugs, determined to break free of government control. The most infamous place where Bitcoin is used is Silk Road, a marketplace hidden in an anonymised part of the web called Tor. Users order goods—typically illegal drugs—and pay with Bitcoins.
Some legal businesses have started to accept Bitcoins. Among them are Reddit, a social-media site, and WordPress, which provides web hosting and software for bloggers. The appeal for merchants is strong. Firms such as BitPay offer spot-price conversion into dollars. Fees are typically far less than those charged by credit-card companies or banks, particularly for orders from abroad. And Bitcoin transactions cannot be reversed, so frauds cannot leave retailers out of pocket.
Yet for Bitcoins to go mainstream much has to happen, says Fred Ehrsam, the co-developer of Coinbase, a Californian Bitcoin exchange and “wallet service”, where users can store their digital fortune. Getting hold of Bitcoins for the first time is difficult. Using them is fiddly. They can be stolen by hackers or just lost, like dollar bills in a washing machine. Several Bitcoin exchanges have suffered thefts and crashes over the past two years. - Read more here: http://www.economist.com/news/finance-and-economics/21576149-even-if-it-crashes-bitcoin-may-make-dent-financial-world-mining-digital
The Dollar Vigilante, Jeff Berwick, on Fox Exposing Federal Reserve and Illuminati Symbolism on the US Dollar and Defending Bitcoin.
Original video from FOX Business can be found here: http://video.foxbusiness.com/v/2302645969001/bitcoin-crash-coming/?playlist_id=937116503001
In recent weeks, the digital currency Bitcoin has soared and then dipped in value, along the way attracting more public attention than ever before and speculation as to whether it could become an established and widely accepted way to pay for goods and services.But Bitcoin isn’t the only cryptocurrency out there. Several others are also surging in popularity and value, and they claim to offer technical improvements that make them better suited to mainstream use.Some of these competing currencies already represent significant stores of value. The value of a single bitcoin on the most popular exchange was $93.70 at time of publication, and the total value of all bitcoins in circulation just more than $1 billion (it was more than $2 billion at the market’s high point last week). The largest alternative cryptocurrency, litecoins, were worth $2.31 each and $38 million in total; the next largest, PPCoin, were worth $0.22 each adding up to a total value of $4 million.Bitcoin is based on mathematical techniques that control the production of new bitcoins, make it possible for a person to verify money sent to them is genuine, rule out counterfeiting, and limit the maximum number that can ever exist (to 21 million).The Bitcoin alternatives are inspired by that design, which is published openly, and try to offer improvements.One of Litecoin’s most significant claimed improvements over Bitcoin is that it allows transactions to be confirmed as legitimate much more quickly, says Charles Lee, who designed the currency, which is now maintained by him and a small group of other enthusiasts.Bitcoin transactions are verified by the work of software run by other people using the currency, a process that takes on average 10 minutes and can be much longer, an hour in the case of many exchange sites. Lee says that hinders operators of online stores from using the currency. “With Bitcoin, sometimes merchants are forced to accept unconfirmed transactions because confirmations are way too slow,” he says. “Faster confirmations lead to a more useful currency.” Litecoin transactions are confirmed on average every 2.5 minutes, which Litecoin’s developers say is more practical for businesses.Both Litecoin and the third most-popular cryptocurrency, PPCoin, also generate new coins in a way intended to be more practical than Bitcoin’s design. New bitcoins are created through a process known as mining, in which people run software that competes to solve a computational puzzle. Each time a puzzle is cracked, new coins are awarded and a new challenge is set. In a neat twist, the process of solving a puzzle also confirms the validity of recent transactions made with bitcoins.However, because more powerful computers are more likely to solve these puzzles, an arms race between bitcoin miners has resulted. Today only those with very powerful, customized machines have a chance of profitably mining bitcoins and miners are still racing to build ever more powerful “mining rigs.” - Read more here: http://mashable.com/2013/04/15/bitcoin-cryptocurrency/?lol_litecoins
The digital currency is increasing in value at a stupendous rate. But is it now the "perfect asset bubble"?
Let me begin this column with a lengthy disclosure. One morning last week, I stopped at my bank, filled out a withdrawal slip for $1027.51, and walked away with an envelope full of cash. The odd amount was deliberate; I had been instructed by LocalTill to be exact in everything I did. What's LocalTill? Don't bother Googling it – its shady-looking website offers only murky details, explaining that the firm is a way for "merchants to accept secure transactions when selling goods online". It's something like PayPal, except LocalTill isn't tied to your bank account or credit card, and instead deals only in cash. This makes its transactions less traceable, less regulated, and, as I would soon experience, more final.
Next, per LocalTill's instructions, I drove to a local Bank of America branch and asked for an out-of-state wire transfer slip. I scrawled out LocalTill's New York bank account number and handed my wad of cash to the teller. This was a dizzying moment: I've been on the internet forever and have been well-schooled in frauds that begin with the instruction, "First, wire your money to an out-of-state account ..." Yet here I was doing exactly that. If LocalTill was a scam, I'd have no recourse. So why was I willing to take such a risk?
Bitcoin, of course. Bitcoin is a "digital currency" invented in 2009 by a cryptographic expert who went by the pseudonym Satoshi Nakamoto, but whose true identity remains unknown. It exists only in computers, minted at a regular rate by a network of machines around the world, and its value isn't regulated by any government. The currency, like its creator, clings to the shadows. Bitcoins are like cash in that they aren't tied to your identity, and transactions made with Bitcoins are irreversible and untraceable. But they're like credit cards in that they aren't physical. In the past, if I wanted to pay you for certain unmentionable services rendered, I'd have to get a fancy briefcase, fill it with bills, then take a long, dangerous trip with my stash. Bitcoin allows me to transfer money to you online, instantly, for free. As a result, it's perfect for the black market – a couple of years ago, it became a media sensation when Gawker reported on its use as the central currency on Silk Road, a site that sold virtually any drug in the world. Lately, Bitcoin has also been hailed as an emerging global safehaven, a place for nervous Europeans and panicky gold-bug types to store their wealth away from the prying reach of financial regulators.
I'm not very panicky about the world's currencies, nor am I looking to buy drugs online. Indeed, I don't care at all for Bitcoin as a currency. Instead, I wanted to buy Bitcoins as pure, shameless speculation. I wanted a chance to ride a rocket ship. Partly due to its growing legitimacy as a currency, but mainly because of speculators like me, the value of Bitcoin is entering a bubble phase – its exchange rate with real-world currencies is hiking up at an incredible, likely unsustainable pace. In 2011, back when Gawker reported on Silk Road, you could buy a Bitcoin for about $US9 ($8.60). Since then the price has seen terrific fluctuations, but it has generally gone up. At the start of this year, each Bitcoin was worth about $20. From there, the chart turns into a hockey stick – by March, Bitcoins hit $40, and within a month they'd doubled again.
Three weeks ago, I began hearing about Bitcoin everywhere I turned. One afternoon I had lunch with a partner at Andreessen Horowitz, the large Silicon Valley venture firm, who told me that he'd been fielding pitch after pitch for start-ups that offered Bitcoin-related services. After lunch, I got an email from David Barrett, the chief executive of the fantastic, expense-reporting start-up Expensify. Barrett wanted to let me know that his firm would soon let people submit expenses and get paid by their employers in Bitcoins. He explained that the feature wasn't a gimmick. Bitcoin would be helpful for people who regularly submitted expenses internationally; other services – like PayPal – charge hefty fees for moving money overseas, but with Bitcoin people could send money for free. - Read more here: http://www.smh.com.au/digital-life/digital-life-news/will-bitcoins-make-you-rich-20130411-2hn05.html
Bitcoin mining is the new gold rush and it is costing upwards of $150,000 per day in electrical costs.Bitcoins are mined by unlocking blocks of data that produce a specific pattern known as a Bitcoin “hash” algorithm. In order to mine for the Bitcoins users often team up to share the cost of data mining. As each block is discovered it leaves less blocks up for grabs. That means users spend more time looking for Bitcoins and therefore use more electricity.As TechCrunch notes, because the process of Bitcoin mining is so intensive users are often running high end graphics cards that are better equipped than CPUs when it comes to data mining. Those massive GPUs mean a higher power consumption rate.According to Bitcoin tracking company Blockchain.info, Bitcoin miners are consuming a crazy 1,005.59 megawatt hours of electrical consumption each day. Based on current national cost averages that’s $150,000 per day.While that is a lot of money to spend Bitcoin Miners are earning $470,000 in Bitcoin-related revenue per day since Bitcoin currency is at an all time-high.The real question will be whether or not Bitcoin mining stays profitable. The cost of Bitcoin mining is worth the reward at the moment because the virtual currency is worth so much money.If you think it is time to get into the Bitcoin mining game on your own you might want to think again, Bitcoin Miners typically work in teams and share computing cycles or they run massive computing rigs that do nothing but mine for Bitcoins 24 hours a day, seven days a week.Some experts are questioning the actual profits earned from the practice, noting that system deprecation and power consumption overtime could leave Bitcoin Miners in the red.In the meantime Bitcoin’s are a hot topic and with money to be made we can likely expect the average power consumption per day for Bitcoin Miners to increase.
investmentu.com / By Justin Dove, Investment U Executive Editor / Friday, April 12, 2013It’s happening all around you, at this very second, and you probably haven’t even noticed.Right now, on the same networks that carry your internet data, people are exchanging goods and services – completely off the grid. Out of the reach of the tax man, the Fed, or any other government regulation.You see, there are two types of web…The Surface Web is what you and I are used to. It’s the part of the World Wide Web that’s indexed by search engines like Google.The second goes by many names, but we’ll just call it the Dark Web.And just like eBay (Nasdaq: EBAY) and Amazon (Nasdaq: AMZN) have created thriving online marketplaces on the Surface Web, there also exists thriving black markets on the Dark Web.So what makes these underground markets possible?Bitcoin.Credit cards leave a paper trail, and sending cash through the mail is too risky. So Bitcoin evolved as the solution to this problem – a completely anonymous, decentralized currency to facilitate the online version of the black market. But now, it’s becoming something much greater than a black-market currency…As Jeffrey Tucker explains below, it’s an ingenious solution to a free-market problem.So in other words, the government hates it.And unlike fiat currency, there’s no chance of inflation ever becoming a problem, as there will never be more than 21 billion bitcoins . (Because each “coin” can be broken into millions of smaller pieces, scalability shouldn’t be a concern either.)So in other words, The Fed hates it, too.Which is precisely why we love it…A Currency Based on Libertarian ValuesSure, there will be wild swings of volatility for such a brand new concept…- Read more here: http://www.investmentu.com/2013/April/bitcoins-digital-gold-for-digital-age.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+InvestmentU+%28InvestmentU%29
