Right. The whole point of all the processing is to allow for "proof" that the currency is exactly as it is, not double-charged or fabricated by anyone in the chain. Processing the transaction rewards you with newly minted currency, so it's supposed to be self-sustaining.
The key seems to be how slowly the "medium of exchange" side is taking off, which is messing with the "store of value" side, since it can be valued at whatever, but if no-one's accepting it, you need to cash out into a fiat currency, and so it's running up against effectively a massive exchange reserve requirement that's mucking up all the exchanges.
It seems that in the initial rush of enthusiasm, people were willing to buy bitcoins with cash, and as always happens, early adopters were able to recognize a large profit, but those days are over now. It has exactly the same profile as any other commodity bubble, save for taking a bit longer to fall apart. Unlike some bubbles, where there is a floor under the commodity thanks to its inherent value, bitcoin has zero inherent value.
On the other hand, other than a bit of number crunching, there's not a lot of real money invested in the system, so there's no mechanism for people to "cash out". Whatever bitcoins they have, they are probably stuck with. There's no way for the value to crash due to crazed selling because they can't sell.
edited 6th Jan '14 1:57:47 PM by Fighteer
"It's Occam's Shuriken! If the answer is elusive, never rule out ninjas!"That seems the most likely fate, unless it gets a major, cash-flush investor. The thing is that it's primarily driven by ideology, not economics, so the most likely people to jump in are those with a lot of Libertarian-style minarchist ideals and very little common sense. That and criminals.
edited 6th Jan '14 1:59:22 PM by Fighteer
"It's Occam's Shuriken! If the answer is elusive, never rule out ninjas!"Unless, of course, you use forensic analysis to trace back ownership, as was done a while back.
Which wouldn't be too hard for the FBI. They have to deal with worse stuff in the real world. It's stupid to rely on the pseudoanonymity for anything sensitive.
Blind Final Fantasy 6 Let's PlayOh, what, so the original thing wasn't affiliated with Kanye? It's still farce, just slightly less absurd than I first thought.
By the way, I edited the thread title to be more inclusive.
edited 7th Jan '14 8:06:23 AM by Fighteer
"It's Occam's Shuriken! If the answer is elusive, never rule out ninjas!"Rep. Steve Stockman accepting Bitcoin donations for Senate bid.
How does he plan to buy advertising with those bitcoins, I wonder?
"It's Occam's Shuriken! If the answer is elusive, never rule out ninjas!"But we've just seen how hard it is to "cash in".
"It's Occam's Shuriken! If the answer is elusive, never rule out ninjas!"In a weird, ironic way, bitcoin has been a perfect, almost ideal experiment in the demand-side effects of wealth hoarding and the consequent insufficient liquidity.
edited 10th Jan '14 7:25:55 AM by Fighteer
"It's Occam's Shuriken! If the answer is elusive, never rule out ninjas!"There are some webhosts that accept Bitcoin, which I suppose could be used for online campaigns. Not sure if there are any especially good webhosts using it yet, but.
In a sense, all currencies are supported by an ideology. Bitcoin will hopefully be an interesting data point as to how widespread such an ideology needs to be, or perhaps what ideologies can successfully scale to that point.
Do you highlight everything looking for secret messages?Singapore Lays Out Plan To Tax Bitcoin Transactions.
Heh, once bitcoin transactions become taxable, we'll really see who is that committed to them. Of course, it's set up deliberately to make taxation difficult.
"It's Occam's Shuriken! If the answer is elusive, never rule out ninjas!"

@Fighteer: it's essentially pseudonymous rather than anonymous, though, in that wallets are persistent identifiers and the transaction history is known. Smart people don't reuse wallets, of course, but smart people don't commit crime, by and large. Just like criminal activities in traditional banking may re-use the same anonymous offshore account.
A brighter future for a darker age.