Bitcoin Hits $1 Billion

As usual on HN, any submission about Bitcoin is met with concerned comments about its high volatility, present impracticality as a currency, disadvantages versus precious metals, current concentration of transactions in a single exchange (MtGox), potential for market manipulation by governments and/or speculators, etc.<p>This is analogous to being present at the creation of the World Wide Web, but instead of getting excited about its obvious potential, one decides to stay on the sidelines because it's still unproven technology, almost no content has been made available online, commercial opportunities are virtually non-existent, etc.<p>As hockey superstar Wayne Gretzky said, "a good hockey player plays where the puck is. A great hockey player plays where the puck is going to be." Judging Bitcoin based on where it is today, instead of where one thinks it will be in the future, is shortsighted.<p>--<p>PS. My full thoughts on Bitcoin's potential: <a href="http://cs702.wordpress.com/2011/05/29/on-the-potential-adoption-and-price-appreciation-of-bitcoin-in-the-long-run/" rel="nofollow">http://cs702.wordpress.com/2011/05/29/on-the-potential-adopt...</a> -- I wrote this almost two years ago, but my views haven't changed since then.<p>--<p>Edit: In hindsight, I see how my quoting Gretzky could come across as arrogant, which was not at all my intention. The only point I was trying to make is that <i>new</i> technologies like Bitcoin should not be judged based on what they look like today, but rather on how one thinks they will look in the future.

I want to be able to get behind Bitcoin I really do. I just don't understand the purpose it serves.<p>As an asset class it's far too volatile even for someone who plays naked options. Imagine putting $10,000 into an asset class that swings 20-30% daily on a regular basis. Trading curbs eat your heart out.<p>As a currency it's too impractical and there are serious hurdles involved with turning central bank currency into Bitcoin and vice versa.<p>We think Wall Street plays a rigged game. Manipulating the Bitcoin market would not only be possible for someone with a small amount of capital, but the regulatory boards(SEC/FSA) don't seem to be interested in coming within 50 parsecs of the stuff.<p>Bitcoin is an interesting idea with the potential to change the world, sadly the world just isn't ready. More importantly the people running the world aren't ready.<p>The moment Bitcoin starts to worry a Government or a big bank they'll simply manipulate the market. Oh, and you wouldn't even know.

So, in a sentence: Bitcoin is being used by people as a highly liquid, defensive store of value from within Cyprus, where capital controls are preventing people from moving their money out through traditional means.<p>This is what gold used to be used for. But gold is not liquid, and Bitcoin is. It appears that hackers have made something better than gold, the longest standing store of value in human history. What an incredible achievement! For the first time in history, I can somewhat safely make the argument that we now live in a post-gold economy. Gold is still there, but we now have something even better for storing value.<p>This is getting deep into the economics of mediums of exchange, which are important for understanding what is going on here.<p>I did a talk on Bitcoin a while ago where I went into describing Bitcoin from a medium of exchange perspective rather than a technology one. It may help you to understand what is going on here, and why I think that this will continue into the future: <a href="http://www.slideshare.net/KyleDrake/bitcoin-the-cyberpunk-cryptocurrency" rel="nofollow">http://www.slideshare.net/KyleDrake/bitcoin-the-cyberpunk-cr...</a>

I particularly enjoyed this line:<p>"For a bit of perspective, that's how much Facebook spent on its acquisition of Instagram last April."<p>Some might argue that the comparison employed distinctly encourages a <i>lack</i> of perspective.

Remember: "What we want from a monetary system isn’t to make people holding money rich; we want it to facilitate transactions and make the economy as a whole rich." - Paul Krugman<p>EDIT: To be clear - this quote is not intended (by me) to be a knock on BTC. It's just an elegant statement of my own opinion that the value of 1 BTC is not all that indicative of its value to the economy.

One thing that hit me recently on bitcoin is I realized that for the first time in history micropayments are 100% possible.<p>I'm thinking all kinds of startups should spring up from that, but I haven't thought of any yet. What are your thoughts?

That article is incorrect, it says there are 109,000 BTC in circulation. It's more like 11 million.<p><a href="http://bitcoincharts.com/bitcoin/" rel="nofollow">http://bitcoincharts.com/bitcoin/</a>

While I can appreciate the need for the Bitcoin model I refuse to take part of it due to level of fraud involved. How much Bitcoins have been acquired by malicious bot-nets and held by small number of black hats? How much of the value is directly linked to drug trade or worse?<p>Sure, similar arguments can be made about using cash but there are fundamental moral issues with Bitcoin I can't agree with. I would like to believe a better model is possible. Thoughts?

Seems like using Amazon's EC2 to mine Bitcoins could now be profitable, anyone know if this is actually going on? Per this couple year old article (<a href="http://glennfrancismurray.com/cost-defective-mining-with-gpu-clusters-amazo" rel="nofollow">http://glennfrancismurray.com/cost-defective-mining-with-gpu...</a>) looks like the break even point was around ~$30/BTC.

Great! A $1B down, and now only $23B more until it becomes 1% of the total US money that the Federal Reserve has printed!<p><a href="http://research.stlouisfed.org/fred2/series/M1/" rel="nofollow">http://research.stlouisfed.org/fred2/series/M1/</a>

I'm curious, why hasn't anyone implemented a mining client in javascript, so you could in effect has visitors to your website mine coins for you. It might be a create way to fund content instead of advertising.

Basic BTC 101 question. Are there a fixed number of txns in a block or is it variable?<p>(And what do you recommend I read to learn this kind of stuff)

Is nobody else here bothered by the following statement?<p>It's on the first page, last sentence of the original paper on Bitcoins...<p>"The system is secure as long as honest nodes collectively control more CPU power than any cooperating group of attacker nodes." [1]<p>[1] <a href="http://bitcoin.org/bitcoin.pdf" rel="nofollow">http://bitcoin.org/bitcoin.pdf</a>

The market cap isn't the stat to watch on BTC- the daily volume is. With volume at something in the low millions of dollars it'd be very easy for the currency to be manipulated by dollar-based traders. There's not much evidence that there are large deep pocketed investors who will toe som imaginary line in the wake of a retail investor sell-off. Until volumes pick up the daily price ont he various exchanges represents the valuations of a distressingly low number of traders.<p>That said, I think bitcoin is super exciting and want to see it succeed. But it needs to be much more heavily traded, regardless of its dollar exchange rate, for that to happen.

You can still see the fun that was had yesterday here:<p><a href="http://bitcoinity.org/markets?currency=USD&#38;exchange=mtgox" rel="nofollow">http://bitcoinity.org/markets?currency=USD&#38;exchange=mtgo...</a>

Pretty much seems to have hit the speculation threshold. Perhaps the Eurozone crisis will do for Bitcoin what the first Gulf War did for CNN.

Anyone have statistics on the total size of BTC transactions? Has BTC 1B in trade occurred yet?

People keep comparing the "value" of bitcoin against the USD. If bitcoins were a truly useful currency, then there would be no need to value them against another base currency.

Hooray! I love bitcoin!

I wonder when governments will start cracking down on Bitcoin holders for unpaid gains taxes.

wow!

The key to prosperity is printing money to fund productive activities. Eg: hire people and pay them.<p>Instead, we print money and give it to Wall Street and the super rich.

I'm going to start calling it ShitCoin. Not because it's a scam and I hate it, but in the sense of "Oh, <i>shit</i>".<p>(BitCoin is doing well right now because of the Cyprus crisis.)<p>I have no clue about its directional future, but I can see it being, for the next 10 years, a way of betting against the world-- a distinction that gold used to have.