Bitcoin price hits $102 – i guess.

Some Bitcoin sold on BTC-E.com Monday morning for $102. If you look closely. It all happened in 1 minute and was done by one person. . . So if one person somewhere does it, I guess that makes it a headline everywhere. I bought a hat from my buddy for 0.05BTC, they should print the new headline that Bitcoin has soared to the price of 20 hats!

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If you’re new to all this, and not a trader, here is how an exchange works briefly. Buyers and sellers place orders. I place an order to buy 100 oranges for $1 each, you place an order to sell 100 oranges for $2 each. After we’ve placed our orders, we wait and see if someone else fulfills them. So if I or someone else like your offer to sell 100 oranges at $2 each, we can fulfill your order by spending the price you’ve set and buying some of your oranges. Likewise, if you want to unload a whole lot of oranges fast, you can fulfill my order to buy and sell your oranges to me at $1 a piece. Once you’ve filled my order completely, you can then move on and sell to the guy who is only willing to pay 99 cents. The price quoted on the exchange is always the most recent trade that occurred (someone fulfilled someone else’s order). Now if you’ve got enough oranges, you can fulfill everybody’s buy orders all at once – even the guy asking way too little. This is what happened on BTC-E . Of course as soon as this fulfilling of all buy orders happened, people quickly placed new buy orders at reasonable prices and sold them – creating a new most recently traded price that was up where it should be.

So I’m left wondering why someone would do this and I can only think of 2 scenarios. Maybe the seller misunderstood the announcement from Mt Gox and took it to mean the bitcoin protocol was compromised. If you can hack bitcoin, its all worthless, you’d be smart to sell it all. But this is someone with a whole lot of bitcoin, you’d think they’d know what they were doing. Which leads to my second conclusion which is that this was very much an expenditure. No one was trying to save their shirt before a crash, they were creating a headline. If you kept an eye on the buy orders in every exchange and waited for the right time, you could calculate exactly how much you would need to spend to tank the price to $102. I’ve heard it was about 6000 Bitcoins, or 3-4 million dollars.

Is the headline “Bitcoin price hits $102” worth a few million to anyone? Who has that kind of money to spend? Maybe the same organization that has the resources to launch a massive attack on all Bitcoin exchanges this week? Its not hackers, they love bitcoin, soooo. Who does that leave but big government? This would mean all the somewhat positive vibes from the US gov lately are through clenched teeth. Nothing new I guess. They say one thing publicly and do something entirely different.

Also this week, JP Morgan claims bitcoin is “vastly inferior” to gov fiat. hmmmmm

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Bitcoin has no competitors

Just get this out of the way first. Alt currencies are not “in competition” with Bitcoin. The communities mining and holding those currencies may be in competition with the miners and holders of BTC, but Bitcoin and Litecoin themselves are no more in competition than the metals gold and silver are in competition with each other. These are things. Things don’t compete.

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OK, Recent action from Apple to cut the last Bitcoin App from their phones seemed to help a recent price drop, i think, because speculators believe Bitcoin just got a new competitor. Gloves are off, a big company is going to take them on sort of thing.

Businesses who process money are going to be hurting from virtual currencies, but its more like how the bottled water company is in competition with the river. You could buy their product, or drink from the river free (supposing rivers weren’t gross).

So what are Apple’s options here to take on Bitcoin with their own currency system.

1)They launch their own p2p crypto currency, the Apple Coin (already taken). Premine a crap load and then have a huge ad campaign and flashy wallet and miner. The coin would have a healthy community of I-miners from the popularity of the brand, but the success would be very short lived. Sure the company stashed a crap load, but what happens when people start independently trading the currency? The volatility in price would force them to either constantly adjust their product pricing- which would surely be terrible for sales or buy and sell coins to regulate the price, but this wouldn’t last long either. If the company needs to keep buying coins to keep the price up, that could get expensive. If they need to sell their stash to keep the price low, they’ll lose their dominant position. This is the nature of a crypto currency. Once you create it and a community adopts it, it is beyond your control.

2)They create a self hosted scam coin currency where they control supply and regulate transactions- essentially no different than a gift card or coupon. This costs money; bitcoin is free. They would either need to charge fees or eat the cost. They could try and get people to mine it and thereby process the transactions, but there is no incentive or hope for growth for the miner. Give miners too much profit, its expensive for the company, give them too little, and they won’t bother mining for you. This is no different than hiring workers for any part of the company’s operations. Their product line and brand might be able to carry the cost, but then why? It would make more sense for them to have paypal host it- hire a company who specializes in the service already. Or better yet, buy a couple bitcoins and colour them Apple so they can have their currency operate free of charge. . . wait a minute.
In short. To compete with bitcoin, a company/bank could sync a gift card like currency to USD and pay all the associated costs or create a crypto that would soon be out of their control and useless to them. Hopefully Apple wastes money on both.

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In search of Coinye.

The story in short in case you haven’t heard it. Developers created a virtual currency using Kanye West as the inspiration with a South Park cartoon image of Kanye on the coin. Kanye threatened legal action. The developers then rushed the release date of the coin to immediate and changed the image used to a much less flattering image also from South Park depicting Kanye as a fish. The coin is out there, being mined and stored, but most of the exchanges and developers have taken the message seriously and are staying away from the coin.

A note to Kanye’s legal team: “Congrats! You’re probably the only people reading my blog this week. I don’t mine this coin, I’ve never owned one and I have nothing to do with its inception. I do want to buy some though, just working out where. . .”.

I would like to personally thank Kanye West and his legal team for doing a great service to Bitcoin and the economic revolution already underway. This battle will prove once and for all that lines cannot be drawn in the sand. Decentralization of just about everything will happen and there is nothing anyone can do to stop that (exception: blowing up most of the world and descending society into a new dark age).

First, the profit ‘stolen’ from Kanye West would be a Bitcoin profit, not a USD profit. It might be possible to determine how many bitcoins a business or developer gained from Coinye, but you can’t depict it in USD; the value at inception, exchange and legal action would all be different. The gov would be forced to give BTC a whole lot of legitimacy they are afraid to bestow if Kanye West was awarded a BTC payout from a lawsuit or equally scary, a USD payout citing a fixed cash value for the price of Bitcoin.

But lets say Kanye and his team are successful somehow. The state stands behind him and goes after anyone/anything they can pin down. Developers are sued for defamation and/or profiting from Kanye’s image. Exchanges and businesses that accept the coin are shut down. What next? The coin doesn’t cease to exist at that point. It can still be mined, stored locally and traded even if not through a major exchange.

If governments start shutting down exchanges, exchanges will simply go to the deep web. This where spies, Wikileaks and criminals talk freely- even operate businesses. I also suspect there will soon be an application based exchange similar to what Pirate Bay is working on. A way to facilitate the exchange of virtual currencies through a piece of software instead of using a domain address listed in a country somewhere. No offices or servers, nothing that can be shut down.

Seeing that the Coinye hadn’t been killed by shutting down some businesses, the only remaining option would to ban the trade of Coinye for things of value- ultimately its that value that the legal team is proposing has been stolen. Since the exchange of Coinye for Bitcoin is unstoppable, they would need to ban the transfer of Bitcoin to gov currency and goods to stifle profit from Coinye. This requires a global ban on trading virtual currencies for goods or cash. An impossible feat. Some governments will smartly encourage Bitcoin and profit from its success, there would never be a universal ban. Those countries that do ‘ban’ it will be terribly ineffectual. America spent billions trying to ban drugs- how is that working out? Drugs are physical. They require farming and manufacturing. Drugs make people do wacky conspicuous things. Drugs also ultimately get traded for cash, goods and services- just like Bitcoin. If you can’t ban drugs, you can’t ban an encrypted computer file- give me a break. Maybe ask how well Hollywood’s ban on P2P file trading is going?

As long as someone somewhere is mining Coinye or has a Coinye wallet, and there is no way to stop that, it will easily outlive the man it was named after.

P2P isn’t going away. Its not a bubble about to burst. We are seeing the rise of a new way for human beings to interact. You can accept it and work out how it can best suit you, or you can fight it and be forever immortalized as a fishman.

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Pic unrelated.

Better information of this topic can be found here:

http://www.cryptocoinsnews.com/2014/01/15/coinye-im-sorry-kanye-west-suing-dogecoin-amazon-coinye-exchanges-developers/

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Bitcoin is the end of ‘Old Money’ and Nepotism.

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Imagine the super rich bitcoiner in a world that’s all about bitcoin. Some guy with the equivalent of billions of dollars in spending power. The security of his bitcoin fortune ultimately comes down to safely keeping some files and passwords. Rather unlike our current economy where the rich can secure valuables in vaults and issue credit to run their businesses, the bitcoin rich guy will need to open his vaults and use his actual money to generate profits. He will need to use his BTC on employees, operations, lending, taxes, many many transactions. Lots of wallets entrusted to lots of people. So the bigger you are, the bigger the potential people are going to steal from you. Something that’s always been true of course, but in bitcoin when its stolen you can’t get it back.

The biggest threat for our bitcoin rich guy isn’t in his business though, its in his family. His BTC wealth gives him power. There was a time when power could be stolen in great quantities by killing a relative, and it happened a lot. In a bitcoin economy, the time of scheming nephews will return- only this time he doesn’t even need to knife you, just stealing a password will do it. . . The rich guy then has 3 choices regarding family. #1 He can die with his passwords and the wealth is gone forever. #2 He can put incredible trust in his heirs while living, giving them his passwords and hoping for the best. (which could also result in a destroyed fortune if a thief dies). #3 The bitcoin rich guy could divide his wealth up to all of his family members evenly so that none of them have any reason to steal from him or kill him. Of course in doing this, he ceases to be a significant economic force as an individual.

Anyway you look at it. A consolidation of wealth power on the individual or family is destined to last a couple generations at best.

Bitcoin is the ultimate grinder of wealth inequity. At some point, every fortune, every Bitcoin, is destine to be destroyed. Someone somewhere will die or destroy the wealth and it will cease to exist (at least cease to be accessible). Under a bitcoin economy, the rich guy better not be a bastard. Bastards notoriously have the most disgruntled employees and the most scheming nephews.

So. . .
Want to be rich? . . . You’d better make people happy that you’re rich.

Want to keep your descendants rich? . . . Raise good kids.

chap4266

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Does CNBC really know Bitcoin? Here are 11 myths.

http://www.cnbc.com/id/101298888

OK, I’ll bite this list in the mainstream looks to be worth my time. Some of its good, some of its total crap. These are CNBC’s top 11 Bitcoin myths. Absent from the list, but in my mind also relevant: hackers can get into your wallet and steal your BTC- definitely a myth.

1)Bitcoin is Huge.
CNBC says its in fact quite small- market cap of 10 billion or so. They’re absolutely right. Huge growth, and hence the attention, but a long way to go to rival a gov currency. Although, like good little corporate shills, they’ve compared it to the US money supply of 800 billion. HA! That figure is total garbage and disregards one of the factors driving Bitcoin’s growth. There is way way more money in the US money supply, they are ignoring all the issued credit. A bank or the ‘Federal’ reserve issues credit and it gets passed around, circulated and used in ever way that dollar bills are used. There are unknown trillions out there in the actual US money supply. Why is it unknown? Because the gov stopped tracking it. That’s right, the US gov doesn’t even know how much money is in their total supply- F’n crazy right?! Canada’s is currently around 1.7 trillion, but we have 50 billion in paper bills printed by the government.

2)Bitcoin enables drugs and terrorism.
Of course it does! Its a currency. All currencies enable illegal activity. They claim its too volatile to be useful. This is frankly stupid and I’m tired of hearing it repeated. You can purchase and use BTC in a matter of seconds. Sure Bitcoin’s value is volatile, but it doesn’t have massive swings in a matter of seconds. Also, the silk road drug operation was back in business faster than you could shake a stick- go tell them its not useful, they’ll laugh at you from behind piles of drug money.

3)Bitcoin is a currency,
Yes it is. Like any other it gets its value from the people who will trade something for it. The comparison to credit cards is just strange. Credit cards issue new funds out of thin air to make the transaction, and cost a small fortune to its users. BTC has a fixed supply and no one can issue more like they do at VISA.

4)Bitcoin has never been more volatile than now.
Sure, that is a myth.

5)Chinese citizens can’t buy bitcoins
Does anyone actually think that, man I am so out of the mainstream maybe this myth is prevalent. If you can name something people can’t buy somewhere in the world I’d be shocked. Anybody buying this myth is in some sort of fog….Snowmen in Ecuador maybe?. . .

6) Bitcoin is not a store of value
The double negatives are hurting my head now. I think they’re saying it is a store of value right? I agree. Buy one now, sell it later, it stored your value.

7) Bitcoin is untraceable
 This one is tricky, especially for those trying to lie to everyone. Movements of BTC are highly traceable, what isn’t traceable is who owns each of the wallets. But, if you can manage to prove who owns a wallet by where they’ve sent and received BTC- you’ve got the owner traced entirely. This is what makes Bitcoin so great. Big public wallets will always be easy to keep track of the ownership, but small personal accounts will be easy to hide. . . Also, look up the deep web dummies (sorry they’re not dummies, they know all about it are doing the usual mainstream omission of important facts to paint a cozy corporate picture). Deep web is how Wikileaks and international spies stay anonymous on the internet. Yes its is very possible, the whole big brother thing is smoke and mirrors folks. Meant to instill fear of an omnipotent gov that does not exist.

8) Losing anonymity will render bitcoin useless
Please see #7, its is anonymous and will stay that way for small users.

9) It’s a Ponzi scheme
I’m not going to bother, because I don’t actually care enough, but I’d love to see how many times this ‘news’ outlet has called it a ponzi scheme or a tulip mania up until this point. Their first attacks failed, they are regrouping and changing the tune.

10) Bitcoin is “ready for prime time”
The technology is absolutely ready, and volatility is not an issue as stated in #2. Also, Overstock.com is accepting BTC in 2014- sounds fairly big time to me. . .

11) Something better will kill Bitcoin
Yep, I agree this is a myth. Hard to envision how anything will overtake Bitcoin in the p2p revolution.

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Maybe not Bitcoin, but something like it right. . .

Alright, so you’re not keen on Bitcoin, but see the validity of that type of currency. Maybe you’ve read about Litecoin and its better mining protocol. All it takes to get in on all of them at once is $500 and a little of your time. Or better yet, you can use the absolutely free method- coming soon!

Bitcoin-Alternatives

So what would you do with the $500? First you buy about 0.7 BTC. Transfer it to Cryptsy or another exchange.

Keep 0.5BTC. Best case scenario Bitcoin becomes king and you have at least the equivalent of 1 million dollars.

Use the other 0.2 to purchase an assortment of other worthy crypto coins. 2 things to consider: how many coins there are currently, and how fast they get issued. For instance, right now there are twice as many Litecoins as Bitcoins, but eventually, there will be 4 times as many Litecoins. Basically if you want to own as many of the others as you do your 1BTC, buy about 0.05 worth of Litecoins and spread the other 0.15 on the other coins listed on coinmarketcap.com.

You are then covered, any of the front running 40 or so currencies succeeds, you’re on board early with a sizable stake. If you don’t trust Cryptsy, do what I did and store much of what you bought locally where you don’t need to trust a website.

Of course this doesn’t account for the introduction of new and better coins, but its hard to image how anything could be better than what is already offered. Tons of innovation and variations already out there. . .But say there’s a new government backed crypto right? A government issued crypto currency won’t be a new currency at all, but a different rendition of something that already exists. The crypto USD would just be more USD, like bills printed on a new type of paper. A bank issued crypto would also only have an advantage over P2P if the bank offered to back up its value somehow (gold, paper or property). But again this would only be a new format on an old system of value- not a new currency.

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Bitcoin To Crash Out of Existence

Graphs and images don’t lie, and this one scares the crap out of me.

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And then look at this BTC graph and OMG!

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Oh wait, sorry, that’s a pic of last spring.

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hmm, sorry wrong pic again. That’s the summer of 2011.

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New Years 2012…I’m bad at this.

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ARGGGH! Litecoin last May!

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