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Bitcoin

Discussion in 'General Discussion' started by Legendman3, Jun 14, 2011.

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  1. Legendman3

    Legendman3

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    So when are we gonna add Bitcoin to the list of ways to pay? Because right now one bit coin is 18.7 USD or 12.9 EUR or 1504.9 JPY and rising. So I see it as a valid, reliable way to buy things. Of corse the price rises and fluxes so fast your head hurts so you can use some types of programs that instantly sell your bitcoins for USD.... Just a suggestion ;)
     
  2. ColossalDuck

    ColossalDuck

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    I believe the bitcoin will crash and burn. Its a really neat idea, but it isn't getting enough popularity to work.
     
  3. saymoo

    saymoo

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    once it is backed by banks, as in approved. (like the creditcard system)
    Adoption will rise, especially with business use. Once that has started, bitcoin might be picked up by the masses.
    (look at paypal)

    Anyway.. just als killer1390, i think this will not happen.
     
  4. jashan

    jashan

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    Personally, I'll add Bitcoin as payment method to my game as soon as possible. I was actually a bit surprised to only see it mentioned on these forums a single time (Paypal for Canadians) - especially with all the media hype it recently got. But I guess a lot of people still aren't even quite aware of what Bitcoin really is. While I agree that there's a risk it will be made illegal and more or less disappear, or be speculated into uselessness ... or simply not go mainstream, it certainly has a great potential - especially for games.

    I've just finished a blog posting on Bitcoin I started writing yesterday. Nice coincidence this thread got started ;-)

    Bitcoin - The Perfect Payment Method for Microtransactions in Games

    This gives a really short introduction to Bitcoin and lists some of the benefits and risks / challenges I currently see. I guess only time will tell how it really works out in the end.
     
  5. Legendman3

    Legendman3

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    Wow that is a nice coincidence. I do see that bitcoin has alot of problems but that is because it is a bit confusing/new/non-mainstream so some people will get a wrong idea of it and try to do bad things to it. But of course Considering how great of a potential it has I see it growing though. Since it is allowed to be divided to 8 decimal places it would be great for micro transactions. I will also go read your blog post now.
     
  6. Bigshoes

    Bigshoes

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    Doesn't that defeat the purpose of BitCoins?
     
  7. Null_Reference

    Null_Reference

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    Bitcoin is very interesting, I happen to be one of the early adopters that made a fat stack last week when the value spiked to $30.


    But honestly, I think bitcoin will fail in the long run. It will probably never go away, but it will also never fulfill its potential. There will almost certainly be laws created against bitcoin use, and while that wont kill bitcoin itself, it will ensure that bitcoin never sees use beyond the e-blackmarket.


    Also, from a business perspective its risky to accept bitcoins. The value fluctuates wildly, if someone bought your product with bitcoins during the $30 spike, only 6 hours later the same bitcoins would be worth half of what they were when you got them. Being at the mercy of the extremely fickle bitcoin market is not good for business.
     
  8. Legendman3

    Legendman3

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    There are programs that automatically sell bitcoins for currency so that you wont have to worry about fluxes.
     
  9. varedis

    varedis

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    I don't think that's what was meant. At one point you could be selling your product for $30 and the next at $6.00 that's not really good business practice in the long run.
     
  10. andorov

    andorov

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    Seems like an extremely risky proposition. If it were to start getting counterfeited, there would be no central authority to track down and punish offenders. I'm surprised anyone is even buying into it frankly.
     
  11. saymoo

    saymoo

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    Bitcoin is very weak in security. (read about it on the net.)
    Just recently 10K USD in bitcoins has been stolen form a client using bitcoin, because of the weaknesses in the system.
    (Userkey file on local machine = very bad security design!)

    Therefor many people hasitate the adoption of it. Secondly you cannot hardly buy anything seriously with bitcoins yet. So no reason to take the risk even.

    How nobel the phylosophy is on which Bitcoin is build. It will never work that way, because of the caveats, the lack of major support (companies backing it up, using it as a serious way of paying. So you can actually buy many things), and (current) insecure design.
     
    Last edited: Jun 16, 2011
  12. spiralgear

    spiralgear

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    The theft was not a result of bitcoin insecurity, the bitcoin wallet and bitcoins themselves are VERY secure. This user that lost his coins left his wallet file in an insecure location on his computer, and a hacker simply transfered the money to their own bitcoin wallet. The coins and the system were working exactly as intended, the user simply left his coins unsecured.
     
  13. echtolion

    echtolion

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    Last edited: Jun 16, 2011
  14. saymoo

    saymoo

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    Thus the Bitcoin is insecure by design. Because most users will be ignored about security in that manner as Bitcoin requires.
    For a stable secure system, those things should be the responsibility for the service deliverer, in this case Bitcoin.
     
  15. KyleStaves

    KyleStaves

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    This. In a perfect world every user would keep their wallet.dat file encrypted and on a hardware dongle that is only attached to the computer while in use. However, the reality of the situation is that the wallet is an enormous weak point for the average user, to the point where the system as a whole is inherently insecure for widespread adoption.

    If anyone can read this article and believe it is appropriately secure for widespread, general population use then I would honestly love to come live in your world. For mine is filled with individuals who call me up to "fix" their computer when they have no sound and forget to turn both the speakers and the windows volume up...

    https://en.bitcoin.it/wiki/Securing_your_wallet
     
  16. jashan

    jashan

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    When you are smart enough to counterfeit Bitcoins, then you probably deserve the profit you make. Good luck on trying (you might want to start reading and understanding the source code of the client for a start - it's open source after all, so that should be easy enough ... ;-) )

    Regarding the issue of Bitcoins being stolen (or people losing their private keys): That certainly is a serious problem. However, people just have to understand that Bitcoins are like cash. If you have $500,000 laying around in your house, and someone breaks into your house, it's likely they'll steal that money. If you have $500,000 worth in Bitcoins on your computer, and someone breaks into your computer, and knows what Bitcoins are and knows how to use them ... it's likely they will steal it (they might not get away with it, though - due to the way the system works there are ways to track such criminals down, Bitcoin is by far not as anonymous as some people try to make it look; at least not unless you put serious effort into making it so).

    Just like with large amounts of cash, it's wise to store large amounts of Bitcoins in some sort of safe. So, if Bitcoin lives to its potential, that's what banks would still be useful for: Storing large amounts of Bitcoins for you safely. There already are companies providing that service - but it'll take its time until they have earned people's trust ;-)

    The issue has nothing to do with "bad security design", though. PGP is probably one of the most well-respected security tools out there, and it follows the same principle: your private key is a file on your computer (what PGP has that Bitcoin currently doesn't have is a "passphrase" but it's likely that the Bitcoin clients will eventually implement passphrase protection as well which would put it on par with PGP / GPG - however, even that won't help you much when you have a keylogger on your system).

    Someone from the stone age wouldn't really understand how and why we "secure our houses" - just like most people today have a hard time securing their computers. But that will eventually change. It's human evolution. And of course, the software goes through its evolution, too, to make things more secure and more easy to use. Just look at what Apple did to "backups" with TimeMachine (and that already elegantly solves one part of the problem: losing your wallet due to data corruption).

    In a decentralized system (which is the key feature of Bitcoin), there is no service deliverer by definition. They certainly still have to work quite a bit on security of the clients, though (encrypted wallet and backups is scheduled for the next version). Keep in mind that Bitcoin is still officially beta - even if there's currently Bitcoins worth $120,000,000 floating around ...


    The issue with exchange volatility is the one I currently consider the greatest challenge. However, after the "crazy week" where it went up to $30, then down to $11, then back up to $20 seems to be over. For the last few days, it's been pretty stable at $20. I'm pretty sure it will keep on rising for a little while, and there's probably going to be more trouble every now and then due to greedy people trying to make quick bucks with trading Bitcoins.

    From my current perspective, whether or not Bitcoin will succeed will largely depend on how people use it. If there's too many people speculating and too few people doing actual business with Bitcoins, that's a problem. But that's not specific to Bitcoins - this world has even seen a tulip bubble.


    That said: I think it's much more likely that the current banking system will crash and burn than that Bitcoin will crash and burn. And I don't think that will take more than another 3-5 years (and it could happen any day now - what we've seen so far was really mild compared to what is very likely to come). Having established a Bitcoin economy by that time might make such a crash a bit less severe for people who have Bitcoins (more important, though, is that you have connections with people in your area that can provide food and water) ;-)


    There was a pretty good article on Bitcoin that explains quite a few of the concepts in The Economist recently: Bits and bob

    The paper which explains the details of how Bitcoin works is also publicly available: Bitcoin: A Peer-to-Peer Electronic Cash System. One should note that the main issue that Bitcoin solves is the problem of double-spending - which makes it possible to trust a digital currency without a third party.

    Finally, Bitcoin does have a couple of weaknesses which the community around Bitcoin is aware of (at least the people reading the Wiki ;-) ): Bitcoin Wiki: Weaknesses
     
    Last edited: Jun 16, 2011
  17. echtolion

    echtolion

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    Securing bitcoins is way more difficult than securing money.

    If I want to secure money, I just go to a bank.
     
  18. spiralgear

    spiralgear

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    Many users use e-wallet services that store their coins on encrypted servers, all they need to do is make an account like you would with paypal. At the moment these services are not used often because the average bitcoin user is a tech savvy person who knows how to secure their files. When that stops being the case, bitcoin security services like these will be even more common.


    Besides, someone else loosing their bitcoins has no bearing on you or the rest of the market. Them loosing THEIR bitcoins has no impact on you keeping YOURS.
     
  19. callahan.44

    callahan.44

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  20. jashan

    jashan

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    ... and three days later, the price has recovered almost to where it was before that crash and trading continues (see also http://bitcoincharts.com/markets/ ) ;-)

    Seems like we're now in the phase where some people are fighting Bitcoin. We'll see how it turns out in the end. Mt.Gox is still down but there's other exchanges - so this whole story certainly helps with one critical issue: Centralized exchanges (up until now, almost everyone was primarily using Mt.Gox - which obviously is tricky).

    Keep mind that Bitcoin is still in beta - and so is the economy around it. Mt.Gox will certainly increase the security on their site quite a bit, which is a good thing. And there's already alternatives like TradeHill (that link contains a referral code that will safe anyone using it 10% of the commission fees ;-) ). So it's not like the end of Mt.Gox would be the end of Bitcoin ;-)

    In the current issue of iX (German magazine primarily focussed on IT stuff, one of the really reputable magazines in that area), there's a one page article on Bitcoin. So as we speak, a lot more people are finding out about it. One of the nice thing about the Mt.Gox hack is that we now know officially that at the moment, there's only about 60,000 people trading Bitcoins on that particular exchange. It's likely that this means there's around 60,000 to 80,000 people using Bitcoin ("80,000" is obviously just a guess, could be more, could be less).
     
  21. varedis

    varedis

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    But during that time you would be selling a product to next to nothing, sounds like a crazy way to run a business.

    I might as well just open a supermarket and leave the doors unlocked every Thursday night with a sign outside saying free food.

    I want to be in control of when the price of a product I am selling goes up and down not some cyber hacker trying to make some money from stolen virtual coins.
     
  22. callahan.44

    callahan.44

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    I don't call a rollback a recovery, and more like a fudge. They can pretend all they want that it didn't happen, but what if someone legitimately dumps all their bitcoins one day (this was only 1 account hacked). The run on the market it caused shows how immature it currently is.

    Calling it Beta is probably wise from a liability point of view, but real money is changing hands - I call that Live.

    And it isn't business as usual, Mt.Gox is down till tomorrow.

    Users with reclaimed accounts will be able to login to Mt.Gox on Friday June 24th at 3:00 GMT (12:00 JST). Once you are logged back into the Mt.Gox site you will be able to withdraw and deposit funds as per usual. You will not be able to trade initially, but we plan to activate trading within an hour of the site being up (4:00 GMT)
     
  23. jashan

    jashan

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    Actually, the only thing that happened during that time was that you couldn't convert your Bitcoins to another currency on the particular exchange (Mt.Gox). Unless you need cash super-urgently, that's not really an issue. And in that case, you could have traded your Bitcoins e.g. through TradeHill - at an appropriate price (the "down to 0.01" was really just at Mt.Gox, and all those transactions were rolled back ... in other words: it didn't really happen ;-) ).

    So what did happen when Mt.Gox opened? The price of 17.5$ per BTC went down to $13 for a moment and then returned to around $17 very quickly. In other words: Unless your were panic-selling, the whole thing completely went by without any negative effects on your income (EDIT: this is assuming you're a merchant using Bitcoin as a payment method).

    In the end, it seems as if the relevant people involved in this situation did the right things (voluntarily or involuntarily, Mt.Gox had some serious trouble). And the way it looks right now, what I'd consider the "biggest attack on Bitcoin so far" went by without any serious negative impact (except for those that panicked ... but people easily panicking shouldn't be involved with Bitcoin at this point in time anyways, those should probably wait another year or two ;-) ).


    So what I'm interested now is finding safe ways of implementing Bitcoin as a payment method ... one solution that seems feasible is outlined in Separating web server and bitcoin server from a security POV (2nd posting, links to Bitcoin forum).

    The other issue I consider a painful limitation with Bitcoin is that it currently doesn't really support subscriptions ... and I'm planning to run a subscription based service. Oooops ;-) ... I've outlined one possible solution in Subscriptions / recurring payments / standing orders (links to Bitcoin forum). Unfortunately, this requires someone to add new features to the official Bitcoin client (any volunteers!?!? ;-) ) ... however, my feeling is that when this is done right (and Bitcoin isn't trashed by greedy traders ... which includes the bankster-bunch), this could become a very interesting alternative to some of the existing solutions in the long run.

    Certainly, Bitcoin still comes with all the risks any new technology has (worst: it could simply disappear ... maybe), and being a payment method that requires a little investment of time and effort if you want to support it makes that issue more painful.

    But I still certainly find worth considering it as an option. From a customer perspective, I'd certainly prefer having all my subscriptions stored on my local machine and being handled from there over having my subscriptions with Apple or PayPal (or Google). From a developer perspective, if many people see it that way, it might result in up to 30% more income.
     
    Last edited: Jun 27, 2011
  24. AquaLungs

    AquaLungs

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    Just read that using CFW for PS3 you can create your own bitcoins.
     
  25. jashan

    jashan

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  26. AquaLungs

    AquaLungs

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    It supposedly takes ~10 minutes to create a bitcoin, given there's not too many already trying to make them themselves.
     
  27. Dreamora

    Dreamora

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    You mean as if you were payed in USD and happen to live in Switzerland and are forced to ask yourself how much more incapable leaders of 250M countries can be? ;)

    Sure the USD does not flux as much as BitCoins, but with the serious continous lose of value of USD, GBP and EUR I'm unsure in which of the two I would invest more money, BitCoin at least has the potential to be on the plus side, while above lost 25% of their value within 12 months with a constant trend downwards
     
  28. cannon

    cannon

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    It no longer takes 10 minutes to make a bitcoin. Only the founders got to make that many; now it takes quite a lot of time and power just to generate 0.01 bitcoins.
     
  29. jashan

    jashan

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    Mining works a little differently from that. Every 10 minutes, a block of transactions is verified. As a reward for supporting the security of the network, there's currently 50 Bitcoins issued to the miner or pool of miners that came up with the correct result first. That's how Bitcoins are "generated" and every 210,000 blocks, that value is halfed (which is how the maximum total number of Bitcoins of around 21 million is assured, I think we'll get there in around 30 or so years). Currently we're at around 140,000 blocks. Furthermore, any optional transaction fees (which can be given in order to make transactions be handled with higher priority) are added on top of that 50 Bitcoins (or later 25 Bitcoins, then 12.5 Bitcoins and so on).

    So basically what's done is that the computing power required to secure the transactions network is distributed and there's an incentive to participate in maintaining that infrastructure. As there's now already a whole lot of computing power available, it's no longer very likely that a single person would "win" the incentive. At the same time, 50 BTC have risen in value quite a bit. At the time when it was still very easy to get those 50 BTC, they were worth only a few cents (in $ or EUR). By now, 50 BTC are worth around 700 EUR.

    So what's done is that many people join together in mining pools and share the love ;-) ... instead of getting 50 BTC maybe, if you're really really lucky, every once in a long while, depending on how much computing power you offer, you get some 0.01 BTC or 0.001 BTC (or some odd number ;-) ) every few minutes. 20 MHash/s (what the PS3 gives you), is quite little compared to the 400 MHash/s to even 2000 MHash/s that GPU based mining rigs would give you (the 2000 MHash/s is reached by putting 3 ATI Radeon HD 6990 into one machine). And besides, the PS3 consumes a lot of power for those 20 MHash/s (much more in relation than the GPU based minings rigs). That's why I wouldn't bother trying to use a PS3 for mining.

    Some more details on mining are available on the Bitcoin Wiki: https://en.bitcoin.it/wiki/Category:Mining
     
    Last edited: Jun 29, 2011
  30. Iron-Warrior

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    Couldn't you just charge the user in USD prices, then covert your bitcoins you receive as payment into USD? This wouldn't exactly be ideal for the user, who might have to pay over the value, but if you're selling something for $30 USD the end result would be the same for seller, they would receive $30 USD.
     
  31. jashan

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    I guess it depends on how you want to set things up and how well established the Bitcoin economy already is. For instance, if you're offering a multiplayer game service and let's assume (for simplicity's sake) that the main part of your costs is costs for the servers. And you can host your servers at a location that accepts Bitcoins for payment (which AFAIK is already possible right now), and their price in Bitcoin is stable ... then you might want to have fixed Bitcoin prices, and adjust the dollar prices for those few who just haven't gotten Bitcoins, yet ;-)

    You might even already be able to buy your lunch with Bitcoins, too.

    On the other hand, if you're still primarily invested in another currency (like EUR or $), the approach you outlined might work and actually be necessary for a sustainable business (depending on Bitcoins longer term volatility). In that case, Bitcoin would really just be a payment method. And it would require that you automate quite a few things (not sure if the APIs that Mt.Gox, TradeHill and others provide would support that kind of immediate exchange - but if there's a need, I'm sure it will be made possible). It would introduce exchange fees to the equation (around 0.5% per transaction), which is one thing that Bitcoin should do away with.

    Finally, there's still the risk that something unexpected happens (like the recent crash). In that case, your automated system might actually give you trouble unless it has some checks implemented that prevent e.g. "dumb selling" when the price just dropped from $17 to $0.01 (as this has already happened it's likely that exchanges will implement mechanisms to prevent that kind of issue, so most likely this was a "bug" that either already is fixed or will be fixed shortly).

    We'll have to see how the Bitcoin volatility issue eventually turns out. The last few weeks were a little intense on that end but the last few days were very stable.
     
  32. seanwilliam1988

    seanwilliam1988

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  33. Aurore

    Aurore

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    No. Please don't necropost.
     
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