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(The Next Web) Newegg teases about accepting Bitcoin soon - Page 6

post #51 of 57
Quote:
Originally Posted by Fruergaard View Post

That depends if this gets any media coverage, since what Newegg does it not really taking the Bitcoin in (since they just dump them again).
We can agree that there may be an rise in Bitcoins, but that will be due to media coverage and people will then think it will get more value, and no one will sell and people want in = price goes up.

It will course a panic buy due to the possible media coverage and the belief that the coins value will rise.
NOT because Newegg begins using it as a payment; AGAIN, why should people first buy a coin, and then use it on Newegg, when they could just use the dollar instead (same price if no fees on transaction) = no fees and time wasted.

There was a panic buy right after overstock launched it's bitcoin implementation. It drove the price of bitcoin back over the $1000 mark. Newegg is a site very close to ALL bitcoin miners. A similar thing will definitely happen again, even if it really should have no overall no economic impact on bitcoin.
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post #52 of 57
Quote:
Originally Posted by ryboto View Post

That's basically the understanding I had. Which still seems ridiculous, to me. I guess it's no more ridiculous than people spending millions on in-game mmo currency, but at the same time, those currencies aren't used outside of the games themselves.

The concept of bitcoin isn't all that strange if you treat it as a commodity or a stock that doesn't give out dividends. To the buyer it really makes no difference what is traded or its value other than what other people will pay for it in the coming days. That is the main reason why most people buy and hang onto bitcoins. It's because they expect the price to rise even further as more people buy for that same purpose.

By nature, you can call it a bubble but bubble or not, it's not that strange of a concept. People are just trying to make money off of their investment.
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post #53 of 57
Quote:
Originally Posted by Fruergaard View Post

When/if this goes online, I can't see why people would go out, buy a bitcoin and then use it on Newegg?
Why not just use USD in the first place instead of wasting money in transaction fees and time?
(since the price for a product should be the same in USD and bitcoins, if the bitcoins is converted to USD).

I agree that there is little meaning in it, unless newegg words openly that they don't like raising their product prices to account for credit card charges...
You see, there are fees for bitcoin transactions, but as long as those are lower than the interchange fee credit card companies charge (average 2% in the US, but it goes up considerably for low volume transactions), newegg can either make more money, or deduct the difference between the different paying methods.

So far, for individuals and small companies, bitcoin charges are pretty lower, and could get much lower than as the bitcoin economy grows.

But this doesn't affect me as a newegg consumer paying in bitcoins, unless there is an incentive (e.g. discounts) for me using bitcoin vs. USD.
Edited by pcfoo - 1/15/14 at 10:18am
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post #54 of 57
Quote:
Originally Posted by Mr357 View Post

A vicious cycle is about to begin. thinking.gif

Yea, was going to say this. Positive feedback loops are lots of fun.
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post #55 of 57
Quote:
Originally Posted by ryboto View Post

I still don't understand what the hell a bitcoin is, no matter how many definitions I read. You basically waste energy and somehow you create a currency? Where did the demand come from that even gives it value!? Just doesn't make any sense.

Bitcoin is fiat money, just like the US dollar. They each only have value because people think they do. The question that naturally follows then is, "Why do people believe a given fiat currency has value?" Any currency that someone else will take from you and give you something else you desire in return has value for that very reason--you can obtain something you want with it. It doesn't matter if that currency is gold, diamonds, bitcoins, dollars, bananas, or coal.

A currency's intrinsic value can vary substantially with truly "fiat" currencies being those which have very little to none such as paper dollars (you can burn them for heat or use them as insulation) or the balance of a bank account (you can't do anything particularly useful with numbers in someone else's database). Gold these days has important industrial uses, but classically it wasn't particularly useful for anything outside of its perceived value. On the other end of the spectrum is basically classical barter: Bananas you could eat as food. Coal you could burn for warmth. You can also trade them for other things which may be more useful for your goals. You get the idea. Dollars have value because the government says they have value and people accept that. Bananas have value because they are food. Bitcoins have value because other people will take them in exchange for goods or other currencies. They did not always have monetary value, but rather it was a slow evolution over years between being worthless and now.

As for your confusion about the electrical cost of bitcoin, I would say this: You are thinking about it the wrong way. Mining for coins isn't the point of the currency. Mining is only the method that has been chosen to distribute units of the currency to the hands of those who want to use it. The currency is meant to have a particular volume of coins and those coins are available to facilitate transactions. In order to launch a new currency not backed by a government, however, those coins have to be distributed in some fashion. Bitcoin and other cryptocurrencies distribute the available volume of coins to anyone willing to invest some processor time toward cracking blocks. The purpose of this is to uniformly distribute the currency until its entire volume is within the hands of those wishing to use it.

The physical analogue to the distribution of bitcoin through hashing would be if the government decided that there would be exactly a million dollars worth of currency that people could do transactions with and it dumped dollar bills along the side of the road from a truck. Each day they dump more dollars out of the truck, but each day they provide fewer dollars than the day before. As more people decide they want to take part in the collection of those distributed dollars, they become more rare to each individual person. This acts as a sort of multiplier of their perceived value.

Much of bitcoin's current value comes from two things:
- People already see that they can get things they want from it, be it goods or dollars. Because of this, in the minds of those around you bitcoin has value. This was a slow evolution that took years, and there is certainly no magic to it. Being that we live in the glorious future, the process was rather well documented. If you were to look back to 2010, you would see that bitcoin had no monetary value. It was essentially like any other cryptographic hobbyist project such as people who ran Distributed.net's RC5 client for solving the RSA challenge back in the late 90s. Individual users weren't earning money for it and there was only some vague sense of a potential monetary payoff down the line. I think the first transaction that ever occurred was that somebody bought a pizza for like 10,000 BTC. It would have had to have been between two enthusiasts since there would have been no other external value yet.
- Mining allows anyone to receive coins. This smells like free money because it's money earned without significant labor, so there is a rush to take advantage of that situation. The demand is great and thus the value is multiplied.
post #56 of 57
Quote:
Originally Posted by SectorNine50 View Post

I would do Bitcoins if all of the energy being expended was actually used to perform some sort of actual work, like folding. Right now people are being rewarded for wasting electricity... It'd be like if the US mint handed you a brand new bill for every one of their crossword puzzles you solved.

On the grounds that there is literally no actual reason these bitcoins are being rewarded, I can't help but conclude that they will inevitably collapse.

The guy (Bobby Lee) behind BTCChina (brother of the Charlie Lee ,who founded litecoin) said it's more like a lottery than a crossword puzzle. When you hash you're just generating a "ticket" and when you pool you get a cut of the BTC reward.

The BTC block reward is an incentive to "mine", which secures the network. We waste electricity all the time clearing payments and such, the only difference is people mining do it on a individual level rather than having a a datacenter. It boils down to how much power efficiency the user has. 80+ is already 80% efficiency, Bronze is 82-85%, Silver is 85-88%, Gold is 87-90%, Platinum is 89-92%.

Bitcoins have value in money transfer between countries and in nations where hyperinflation is rampant and/or bank abuse of funds. Cyprus was a perfect example.

Last I checked Chinese yuan (currency manipulated by their government to be artificially low) is actually stronger than it was 10 years ago. You get less on exchanges than before (About 8 yuan per USD in 2002-2005, now about 6 yuan per USD).

This "quantitative easing" (QE = printing money) is one of the things really killing the US economy. Bitcoin is deflationary by design in contrast.

In order for a cryptocurrency to do useful work, it has to have the proof of work be hinged on the "actual work", there's stuff like curecoin, gridcoin, and primecoin that prove that it is possible.
Edited by AlphaC - 1/15/14 at 2:26pm
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post #57 of 57
Quote:
Originally Posted by AlphaC View Post

The BTC block reward is an incentive to "mine", which secures the network. We waste electricity all the time clearing payments and such, the only difference is people mining do it on a individual level rather than having a a datacenter. It boils down to how much power efficiency the user has. 80+ is already 80% efficiency, Bronze is 82-85%, Silver is 85-88%, Gold is 87-90%, Platinum is 89-92%.
That's only the PSU, which is mostly inconsequential to the grand scheme of things. The processor efficiency is what's really important, and how many "hash" it can perform per watt (and the speed).

The bitcoin network is literally built to be inefficient, as the hash computation is just padded information (upping the difficulty is just adding more zeros to the computation). Whereas other payment systems are designed, not to necessarily be efficient, but don't require busy work to function.
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