Speaking as someone who knows a lot about economics, I think PT Barnum put it best...[1]
Economics is very clear in predicting how this will end up. Bitcoins have no intrinsic value and therefore the long-term price will be precisely zero. Each generation has its tulips [2]; each generation claims that the persistence in tulip price means that there is permanent intrinsic value; each generation is disappointed [3].
The only thing interesting about bitcoins is that this provides an opportunity to watch a bubble: observe the justifications people make, observe how nay-sayers appear to be wrong, and watch the progression.
You say you know "a lot about economics" and yet you don't know that currencies don't necessarily need to hold any intrinsic value. They are simply means of exchange. Paper money in the form of US Dollars has no intrinsic value (the value of the cotton paper... less than a cent per bill?). As long as people assign value to something and use it for exchange... it's a valid currency.
Will people all quit on Bitcoin some day and its value will fall to $0? Perhaps. But it won't be because it has no intrinsic value. It will be because they decided it's not a good currency.
Societies have used seashells and wampum in the past as currencies, which also have limited "intrinsic value". They're simply scarce resources that everyone agreed could be used for exchange - just like Bitcon.
You mean "a system of money in general use in a particular country" (Oxford). Yeah definitely not a mainstream currency yet. That's why we use the polite term "alternative currency" which is short for "a system of money in limited use across many countries."
Ummm tons of currency have dealt with ridiculous inflation. Go to Africa, go to 1920s Germany - their are examples where currency fluctuated 100s% a day. It doesn't mean it's nota currency. Again the problem with a lot of the discussion here is that many people simply don't understand the definition of a currency. A currency is not defined by how stable it is.
I don't have a particular answer to your rhetorical questions, but I do have some thoughts on inflation and deflation, specifically with regard to their relationship to hoarding and the money supply.
First, deflation encourages hoarding when the holder can afford to spend at some infinite later date, but some spending happens earlier than the heat death of the universe by necessity (e.g. food and shelter, grandma needs assistance, execution of wills).
Second, when a currency is printed (inflated) by its host country, the effects of the increased money supply aren't experienced proportionally or immediately everywhere. Instead, the first pallet of new money retains most, if not all, of the buying power represented at the previous level of supply. This represents an asymmetrical information advantage for the producer of the currency, and represents a disadvantage for the currency consumer who probably isn't in a position to know whether they are selling goods for "cheaper" currency. For example, if you were playing poker, and had the ability to print Aces on demand and legally inject them into the game, the other players might not like that (esp. if the new cards are injected after they've already calculated their odds and placed a bet).
Various economic philosophies consider it best to have some level of inflation to lubricate the flow of goods and services between buyers and sellers, and in these cases it would be useful for everyone if the size of the money supply was widely known. Unfortunately, there are many different definitions for money supply such that it's actually pretty much impossible to know how much the value of one unit of the currency has changed between two points in time without comparing them to a third, also variable, commodity or currency (e.g. gold, foreign currencies)
Bitcoin, on the other hand, has a deterministic money supply where any individual can determine the upper bound of the amount of supply at any time. In our poker analogy, the deck might be short a few cards, but no one has an extra stack of Aces in their shirt sleeve, and everyone can calculate their odds independently. Advanced investors can even enumerate the public ledger and determine the level of lost or otherwise illiquid coins to determine a tighter bound.
The ability to have a good understanding of the supply of the currency is one reason that Bitcoin is so exciting for long-distance transfers.
> But it's still not a currency, kind of like how "alternative medicine" isn't really medicine.
All you're proving there is how educated people like ourselves don't take alternative medicines seriously (and for good reason too). However technically that example is actually countering your point since the "alternative" prefix just signifies another style of; such as "alternative music" is still music.
>>All you're proving there is how educated people like ourselves don't take alternative medicines seriously (and for good reason too).
So I'm not going to argue one way or the other, I just want to be clear. You think the stuff listed in this link[1] is nonsense? Or what is your definition of alternative medicine? Anything that doesn't come from a first-world scientific study?
"By definition Alternative Medicine has either not been proved to work, or been proved not to work. You know what they call alternative medicine that’s been proved to work?
Medicine."
They were initially valued as collectibles (just like gold) and then as a speculative investment. Now that a market exists and there is liquidity, they are valued for other reasons as well (payment system, black market transactions, hide wealth ... etc). Explain how we get to 0 from here since they will always have an underlying value as a collectible and speculative investment?
Are you referring to the relatively recent industrial uses of gold and diamonds, or are you counting ornamentation as intrinsic value? Don't see the argument for the intrinsic value of paper money at all, but would love to be enlightened.
You could pay taxes using the German Papiermark or Zimbabwean dollar, and look at what happened to them...
Intrinsic value is not determined by the ability to pay taxes.
Fiat money has zero intrinsic value (well, beside the value of the paper and metal bills and coins are made of, but this value is negligible - spare the US penny coin).
Your original claim was that fiat currencies had intrinsic value. I don't see how 1) or 2) support the fact a fiat currency has intrinsic value. On the contrary, history shows that fiat currencies always significantly lose value over time. The USD for example has lost 85% of its value over the last 50 years. How is this observation compatible with any sort of intrinsic value? "Guns" and "taxes" did nothing to prevent this loss of value...
What you are trying to say, I believe, is that fiat currencies will likely have some value in the future because they are in demand (notably from taxes). That is true, but this is no different from Bitcoin: it has value because it is in demand. I would argue that the potential demand for Bitcoin is higher than the potential demand for USD, if only because there are billion of people across the world from countries with terrible fiscal policies for whom Bitcoin is clearly superior to their local inflation-ridden currencies. Compare this number to the merely 200 million tax payers in the USA.
This argument comes again and again in this discussion, and I still dont get it. Why would you value something because it can be taken away?
By that logic, increasing taxes makes the currency more valuable. Lets go to 99.9% taxes on dollars and see our money shoot to the sky!
Even if you had a job that paid you entirely in bitcoins, and conducted every transaction in bitcoins, you would still have to pay taxes, and (under the current system) they would still be denominated in US dollars.
You know, there was a startup back in the spring that allowed municipalities to accept bitcoin for fees and taxes. Haven't heard any more about them though...
So tying the dollar to the gold standard is meaningless, because paper money is in itself intrinsically valuable? I thought the dollar was fiat [1], i.e. without intrinsic value. Just like bitcoin.
In all fairness the intrinsic value of Gold and Diamonds has only come about in the past 200-300 years... just about when, globally, we started seriously moving towards a purely fiat system.
Intrinsic. Those people have not been making use of the intrinsic value of Gold, they have been making the same use as in fiat money and bitcoins today, as a rare commodity considered acceptable as a financial instrument. That's (rarity) not an intrinsic value.
That is to say, its intrinsic value includes electrical conductive properties and capacity for use in electrolytic plating. I am ignorant, what are some other intrinsically useful properties of Gold (and Diamonds?)
Well diamonds actually have a ton of useful properties -- beyond just being pretty to look at -- but that doesn't actually justify the price per se.
The problem with Gold is also it's virtue: it's rare. Rarity is good in that it implies value. But let's say you're the American economy and you're growing 2% this year. Should your money supply be governed by how much of it you can dig out of the ground? That is, for example, when South African gold mines were discovered the money supply internationally radically increased, despite having no relationship to economic output. That ends up not working out very well.
Bitcoin though could be thought of more like gold and diamonds not because those things are good to think of as currencies -- they really are not good currencies at all-- but because their all commodities with limited supplies that have markets that move on vagaries with little relationship to any economic necessity or output.
Well diamonds are also valuable because of their use as a coating for cutting instruments. But, much like diamond, your point is solid; gold and diamond have been valuable over the years for the sole reason that people are willing to accept they are valuable.
The value of paper money is something like "If you want to exchange your work for goods and services, you will need to provide paper money to the local gang, or else." If the gang in power changes, or at the whim of the gang in power, the money can quickly become worthless. For instance, I have not succeeded in trading réis or markka for bread or gasoline recently.
I don't think "intrinsic value" is a term in economics. It's a term in investing.
Economics is far from clear about predicting how Bitcoin will end up. The professional economics world has yet to seriously weigh in about Bitcoin. I just searched the top 10 journals on this list: http://faculty.maxwell.syr.edu/whorrace/journals.htm and none of them appear to have anything published about Bitcoin.
That said, Bitcoin does have "intrinsic value" as a payment processor. Think about PayPal. There's two kinds of value in PayPal. First, they have their deposits, which are denominated in various different currencies, and which are backed by various governments and insured. Then there are the people, the servers, the contracts, the buildings, all the other stuff that's necessary for those deposits to actually move around the globe. Ebay didn't buy PayPal's deposits, which aren't really PayPal's, they belong to their customers, eBay bought PayPal's assets.
Think of Bitcoin like that stuff... a distributed payment processing company. It just as reliable as PayPal, except no one can ever freeze your account, and you can only transfer Bitcoins. PayPal was worth $1.5 billion to eBay, so that's a reference for your "intrinsic valuation" that you're working on.
You might be thinking "well PayPal wouldn't be useful if it could only transfer Bitcoins and the value of Bitcoin is $0 so there's a chicken and egg problem!" Except I don't see a scenario where Bitcoin goes to $0. Let's imagine Bitcoin crashes all the way down to $0.01. Bitcoin is still useful if you're trying to get money to your grandma in Cuba, or to pay your Latvian web development contractor. Maybe it's extremely volatile, but that's OK because you otherwise have no way to get your money where it needs to go, and you're only going to keep it in Bitcoins for a few days. You buy some Bitcoins, send where they're going, and the other side cashes them out.
Now why is this relevant? Well, if during those 4 days, there was $1,000,000 worth of money that people were trying to send this way, then there need to be at least $1m worth of Bitcoins to "float" those transactions. Essentially those people all show up on Monday being like "we don't care how much it costs because we're selling them again in three days, we just need $1m worth of Bitcoins to send to our grandma/contractor/etc". Therefore the "value" of Bitcoin goes up to at least $0.05 ($1m/21m).
This is just one of Bitcoin's many "intrinsic" values. It is the "payment processor of last resort" for everyone who falls through the cracks of Western Union/Paypal/etc. This creates a floor below which Bitcoin is unlikely to fall.
I'd really like you to say more on why, to you in particular, and not just in theory, this is important.
For example I've been using money and doing traditional banking for a long time. In the US at least the only reason my money would be seized is if I get hit with a lawsuit or don't pay my taxes (or perhaps in a divorce). (Have I missed anything?).
As such that is something that I am willing to accept.
So what are your specific concerns with respect to not having to trust a central controlling authority?
Ok educate me, because I really don't know (my grandmothers both lived in the US): what's wrong with Western Union or PayPal for this purpose?
In many ways this simply moves the problem (overall complication) from a private sector solution much closer to a government solution because it means exchanging bitcoin for real currency will be intensely regulated and have its own fees associated with it.
And maybe someday bitcoin will be worth some monetary value other than the currencies you can exchange it for, but we are not near that.
Sending $100 to Grandma via Western Union? Be prepared to spend $15-$20 for the privilege.
Or if you want to go the bank route, be prepared to drop $12-$30 for an international wire (depending on your bank). Oh, and she might have to pay a $15-$30 receiving fee for an incoming international wire, depending on her country and bank.
At first, Paypal seems a little better -- only about $4.50 that you have to pay from your end. But Grandma still has to pay $2.50, and god help her if she needs any help from customer service. And then she still has to withdraw money to her bank account, since most international banks still charge up to $5-$10 for this. So in toto, Paypal might actually the two of you combined about the same amount as Western Union.
Speaking from experience: Western Union is awful. Absolutely horrible. They basically stole $50 from me after their representative typo'd a number and then didn't have the authority to fix it, and then I was asked to prove my transaction by faxing them a receipt which I hadn't kept, therefore losing my $50. Avoid them at all costs.
The form you filled out when you sent the money had carbon copies, which are retained. If data from the form was mis-typed later, they should be able to check their copy, or you might be able to retrieve a copy from the outlet or receiver or something.
I assure you that no-one in WU is trying to steal $50 from you. Mistakes happen, but there is a paper trail, so if you really care, escalate. They operate under the supervision of your country's financial regulator, whom they are deathly afraid of, and are hardly going to risk their banking license pilfering fifty bucks.
The $50 was not worth spending literally hours on the phone with them trying to get the issue resolved. The point is that bitcoin has real value as a painless money transfer mechanism.
>Speaking from experience: Western Union is awful. Absolutely horrible. They basically stole $50 from me
> Avoid them at all costs.
The point is that you wrote a very damning indictment of a company, accusing them of theft, and I pointed out they could probably fix your issue if you actually cared, even without the receipt. You then admitted you couldn't be bothered going through the process.
So what you wrote was basically a load of crap. But hey, bitcoin!
I was so goddamn pissed off that the phone rep, who could barely speak English, had typo'd my number, which I had been very, very careful to say slowly, and to repeat back to him twice, and then be asked to prove myself by faxing a physical piece of paper in order to get my money back, after a total time investment of > 3 hours, after taking into account driving to the store, waiting on hold, etc, that my mindset was very much "fuck this shit." So whatever you say, man. I didn't accuse them of theft. I accused them of being so excruciatingly awful that recovering the $50 was not worth spending more hours of my life dealing with phone reps who could not understand what I was saying.
Fair enough. That does sound pretty annoying, I'd probably be pissed off myself! Anyway, your later comments put your original comment into better perspective, so thanks for replying.
I probably missed something obvious here. But what happens if you mistype a bitcoin address (or worse : someone intercepts your mail and gives a different address).
Well, one potential advantage: Bitcoin removes consumer protection, which allows an exchange to operate at much lower rates. Part of PayPal's difficulty as a business is dealing with the constant amount of fraud. With BTC, the consumer bears the problems.
However, the remittance industry makes an obscene amount of money mainly because it's about marketing services in a retail place to unsophisticated consumers. Once you start trying to compete with retail stores, and comply with regulations, it won't be as competitive.
I'm replying to you but this is meant for both of the current replies, genuinely curious:
What makes you guys think that businesses wont be built around simplifying and derisking BTC transactions? And wont this businesses have fees? Grandma certainly does not know how to use bitcoin.
Why aren't more companies competing with WU? Lots of regulations and a massive amount of retail outreach needed. Plus you need secured locations managing cash in the middle of nowhere.
I looked into doing a remittance business a bit over 10 years ago. By far the biggest problems are not technological, it's the simple logistics of taking cash around the world, and dropping cash off around the world. Bitcoin doesn't really solve anything.
@jnbiche, do you think that most "grandmas" have the ability to securely manage a bitcoin wallet? Based on all the reports of people losing bitcoins, and difficulty with redeeming from places like Mt.Gox in a timely manner, it appears easier to herd cats than to keep bitcoins both liquid and secure. I bet most grandmas would gladly pay the $20 service fee that you cited than to be subject to these risks.
Exactly, people need to differentiate between the unit and the network. One has intrinsic value and the other does not, but they are also intrinsically connected.
But ask people in Cyprus who have had their money confiscated by their bank if they think bitcoins would've been valuable to them, or people in China who've walked across the border with a thumbdrive of bitcoins/litecoins/??coins. Ask anyone who has made an overseas funds transfer if doing so was quicker and more painless than at bank. Volatility is offset by the overall price rise. Saying it has no intrinsic value is a moronic statement.
The main lesson to learn is in the altchains... otherwise it's just replacing one set of paper elites with a crypto elite. That's where the real awakening comes in, anyone can be an early adopter. Also, bitcoin is not a private blockchain, but even central banks could use cryptocoin implementations to move funds around internally. It's a piece of open-source software, that's a very important part of the equation of bitcoin's value: there can be pump and dumps at times, but overall it's severly missing the point to only see it as such.
add: now that I think about it, it'd be interesting for corporations to add the equivalent of an intranet of cryptocoins for budgeting and spending. There are tons of information systems potentials in bitcoin it blows my mind... even without some official government endorsement.. just in the software itself. Some intra/outer mini-exchange interfacing into some b2b portal to then access the public blockchains.
walked across the border with a thumbdrive of bitcoins/litecoins/??coins.
What about walking across the border with the account credentials of a WoW character with a lot of gold?
intranet of cryptocoins for budgeting and spending.
Is there a way to make a "trusted bitcoin" for internal use only where you don't have to do all the computation? I guess at that point it could just be a centralized Excel spreadsheet for all anybody inside the company cares.
I think a company could use an intra-blockchain to run a micro-economy within it. Transactions take place that enable it to function. Also, there is an interface between intra and public blockchains. If your department wants pens, it must buy it internally from the Supplies department. At some point Supplies converts its intracoins to public cash or coins (with management approval^) to buy more pens. You work for intra-coins, and at some point you convert it to cash or public coins. Not sure if the overhead of these micro-transactions are worth it, on the other hand, conglomerates of companies could exist. But the intra-coins have real value, because management will convert them to proper cash or public cryptocoins. The key is making sure an employee can't just cash out with intra-coins somewhere else and quit.
^ the key here is that things can be monitored and controlled on a sped-up blockchain, while still allowing a market mechanism to take place. Perhaps pens isn't the best example, more like certain factors of production.
The more I think about it, the more useful this seems to be. Especially attaching notes to transactions, and mining all coins instantly, and management dishing them out as needed. Perhaps creating more if needed. If the company is running low on cash, it can adjust the exchange rate, so the coins are worth less. If the company is doing well, the value of the coins goes up. This also gives the firm incentive to do well and be efficient, especially if staff are paid in intra-coins.
if you're going to have an intra-company economy with micro-transactions, it's not clear why those transactions are more beneficial than market transactions with trusted external suppliers.
an important and possibly the principal reason for forming companies is to avoid the transaction costs of coordinating numerous independent agents through a market economy.
so, when transaction costs decline, firms don't set up intra-company micro-economies, the supply chain gets vertically disintegrated.
for instance, where before you have a service that could only be supplied by a big company with a data center, now you get a small team providing the service by integrating software and services from a variety of IaaS, PaaS, SaaS suppliers.
basically, either you have a free market, or top-down central planning... if you build a market within the company, there's no point in top-down coordination, and if there's still top-down coordination, no point pretending decisions are made based on an internal free market economy.
Yes I know about this. It's a good question of economics meets information systems. But I do know in larger companies, getting management approval of certain purchases can take a really long time. I have a feeling that with intrachains, management will have more information on hand to determine if and when they can approve of purchases (and they can also track finances better overall.) Also, staff can have a better idea if making such a purchase request is feasible to the company. So firms can be larger, and operate with less oversight... that'd be the goal. I think there are issues of transparency and confidentiality, though, it may be risky for everyone at a firm to know everything happening in the blockchain and a firm's microeconomy in general.. especially if the blockchain is widely used: it could cause political issues, tax issues... other problems.
Maybe I don't understand what you're suggesting. If you view Bitcoin as a currency without a central authority, it's an innovation. But a company would have a central authority, also has the ability to create any kind of financial controls, also the ability to create stock, and different kinds of marketable financial securities. So, a blockchain is just a different, possibly more convenient API than the books and records of the firm, and the stock transfer agent.
I am still thinking through the idea, but in newer comments https://news.ycombinator.com/item?id=6935184https://news.ycombinator.com/item?id=6934281 I've suggested firms run a blockchain hidden from staff for departments to purchase factors-of-production, and then the underlying coins can be sold to the public as a way to raise capital. So I am thinking that a firm could run an intranet where departments and people get coins from management and also earn intracoins, but management can then come in and sell the underlying coins on some special exchange. There's also an intracoin/fiat/btc/ltc exchange tied into this intranet site.
I think there's a startup in this:
"reorganize your firm around your own virtual currency which you can then sell on our specialized exchange to raise further capital."
I should really clarify all this in a "tech vision" blog post. It could really be the next big thing, especially if a single (or hub) of firms, its customers and investors can come together around a single virtual currency.
They already have a 'virtual currency' they can sell on an organized exchange. It's called stock. You're going to have to work on your value prop. I fail to see any advantage vs. internal accounting systems, national currencies, existing stock exchanges and financial markets.
Actually, getting company stock from a company in the form of a cryptocoin could be a really elegant idea. The key is having a system that allows holders of stockcoins to claim a dividend payment in the form of the delivery of some other cryptocoin. So turning a blockchain into a stockpool could lead to some really interesting use cases. I think in China bitcoins are regarded as an asset and not a currency. Stockcoins expands on this notion. Thanks for bringing it my attention. This might be the next big thing I was thinking of.. I was just mistaken in wanting the stockcoins to be used within the company for internal commerce: I don't think that's wholly necessary, although intracoins are another interesting idea, they don't necessarily need to double up as stockcoins.
The key is having one blockchain with multiple stockcoins from multiple firms, but I don't think that's possible. It'd have to be 1 blockchain, 1 company, multiple stockcoins. Stockcoinmarket.com .. the future of equity, where companies go to get (and payout) cryptocoins for their stockcoins.
Ah, that's the part I was unsure about. Setting up a new block chain and instantly collecting all coin issuance sets up a lot of nice use cases.
Yes, that's amazing. If bitcoin ever does become widely accepted, it'll be because a new chain of coins is used that have been 100% mined by a private party (or government) handing them out.
When I was at IBM, each manager had fake "Blue Bucks" they used for internal cross-departmental services (moving a cubicle cost $100 "blue bucks," getting a new ethernet drop cost $50 "blue bucks," etc).
If mining all instantly, the key with intracoins is getting the equations right in terms of issuance and supply. There'd have to be some way of issuing them properly. Even if it just equated to the amount of cash reserves and/or cryptocoins the company had, because the idea is that anyone can cash out their intracoins if they need to. Staff need the confidence that they can do that at any time (provided management approves of it (perhaps only some staff have cashout approval privileges)) but the ability has to be there, even if management's willingness is not. For example, an automotive company needs to buy new tires, and it's the tire department that only has intracoins by having sold tires to production line, so that department cashes them out on the company exchange and buys tires from Dunlop. The production line needs some way of getting reimbursed by management or a Sales department who recycles coins back into it (once cars have been sold), so it can then buy new tires and other factors of production to keep making cars. Perhaps Sales would make an order for xx cars from Production and pay with the intracoins it has converted from the cash/cryptocoins it has gained at the edge of the organization.
And this also leads to interesting use cases with company conglomerates -- sort of like frequent flyer points that can be used interchangeably across certain groups of airlines... but in this case intracoins across certain allianced firms.
It would be insane for employees to accept payment in scrip without a promise of a fixed exchange rate. Even with such a promise it would not be especially sensible (because if the company implodes you lose your job and some of your savings...).
(I mean sure, you could trust that management with their total control of the scrip would not manipulate it to the advantage of management, but good luck with that)
I don't want to get into a full debate over the intricacies of the idea, (problems can be ironed out) ...but you could have part employee payment in fiat, part in public cryptocoin, part intracoin... it's up to the employee. But if we want to see public cryptocoins widely used, having it interface with private chains seems like a prerequisite, or at least a good start.
It's really an information systems topic: technical/business/social. Could be the next big thing.. if implemented right.
Yeah, well, I'm agnostic about public crytocoins being widely used. I'm definitely opposed to encouraging people to taking payment in what is essentially a company scrip.
Setting all that aside, I bet one big problem would be compliance with Sarbanes–Oxley.
Are you saying this because you've heard all the arguments for Bitcoin's value and think they're bunk or are you saying this because you're unaware of them?
Once all the "free" bitcoins have been mined, the intrinsic value of bitcoin will be the computing power the network is willing to expend in exchange for that coin as a fee.
Quite apart from using it as a store of value, and international payments processing engine, this could in fact be valuable in and of itself for purposes such as document signing and verification, a kind of peer-to-peer twitter[0], and (I guess here Bitcoin bulls speculate) other hitherto unknown uses. The intrinsic value of a bitcoin is therefore proportional to the value of the blockchain itself.
[0] Actually, why _don't_ we have a twitter clone based on the blockchain? Doesn't seem to me that it would be too hard to implement. Of course, messages will take 10 minutes on average to send, be immutable and permanent, and throughput would be limited, but at the very least it would have a novelty factor.
I think you have a point here. Money is a medium of exchange (check) and a store of value (?). Fiat currencies are backed by the country of origin. Monetary policy for each respective currency is managed by their Reserve Bank. Who or what backs the full faith and credit of the Bitcoin? Which individual or governing body sets the supply of Bitcoins?
Just because the long-term price will reach zero doesn't mean you can't profit in the short-term. Defining "long-term" and "short-term" more precisely is key to finding profit though.
Incidentally, Coinbase's graph has an almost misleadingly modest aspect ratio. If you want to compare their growth to other growth graphs you've seen, compress it by at least half horizontally.
pg, if a reasonably intelligent person asked you to describe bitcoin, how would you do it? -if you'd humor me
I ask, because IMO much of the debate about bitcoin consists of people conflating and abusing definitions and talking past each other. As you are obviously interested in it, I wonder what you see, and perhaps what interests you most about it.
Their "dealing" with it was "oops, we rebooted a server and forgot to make sure transactions were run, here's $50 and enjoy your delayed trade".
After screwing up that badly they should have cancelled the order. Instead, they delivered coins paid for at $800+ at today's prices (~$500). I would be surprised, if BTC had jumped to $5000, if they'd have honored the $800 buy price.
The $50 credit is just inane, too. It's more of an insult to offer $50 than to offer no $ and a good apology. I'm not sure how they came to that decision.
Given their funding, they should have immediately taken full responsibility (let's be clear: a financial company's transactions didn't run cause they rebooted something...) and then offered to complete at the original price, or cancel the transaction - truly make the buyer whole. It'd be totally fine for them to do so, because if they fix their stuff, they won't need to worry about "jobs not running". So in this case, even giving the guy a 10% bonus would engender goodwill, as well as show the world they are serious about handling transactions.
I'll resist any snide remarks about Coinbase using MongoDB.
Edit: It seems after further consideration, they decided to give him today's price since it was their mistake.
Really? Last I saw, they just said they would make it right. We haven't seen confirmation from the original customer saying it was dealt with. Considering all he had gotten from them up to the point of posting on Hacker News was more reassurances that the situation would be fixed, I'm not reassured that it's fixed yet just because there was yet another reassurance given.
Note the title is a bit misleading. They say 650,000 users but the next sentence they state
> "we crossed more than 650,000 consumer Bitcoin wallets"
I'm not familiar with their service but I have 20 or so wallets that I've accumulated over the past 20 months, so I'm guessing its entirely possible for a single user to have multiple wallets, infact its so common that I'd label it the norm.
I wonder what percentage of their users, and wallets hold any bitcoins?
You have 20 Coinbase wallets? Unlike regular bitcoin wallets, there's no reason to have more than one Coinbase wallet. A Coinbase wallet can have an unlimited number of Bitcoin addresses and it is generally tied to a real name with a bank account and/or credit card for purchasing and selling bitcoins.
You don't really have a choice in some cases. Coinbase creates new wallets for referrals and maybe other transactions rather than use the existing wallet
I'm not sure what you're talking about. Coinbase does not create new wallets for any transaction. It creates new bitcoin addresses, but all addresses are contained in one wallet.
Fair enough. Wrong word usage but I think thats what the original commentator meant. If not, my fault. That said, unless you have multiple Coinbase accounts, then I fail to see how you could have multiple wallets if they are not synonymous with addresses
What is the point of having multiples of any wallet? Which wallet would be less effective on its own? Don't they all produce a sufficient (indefinite?) number of pseudorandom addresses?
You might want multiple wallets for security reasons. For example, you could have one wallet on your phone for everyday transactions, and a separate wallet on a computer that's normally disconnected from the internet (a "cold wallet"). You can also store bitcoin wallets on USB keys or even on paper and put them in safe deposit boxes. https://en.bitcoin.it/wiki/Cold_storage
Since all Coinbase wallets are the same in terms of security properties, there's no reason for an individual to have more than one Coinbase wallet.
If you're worried about the association of your wallet with your identity, then almost all of Coinbase's services are off limits to you. There would be little reason to create a Coinbase account.
You probably mean you have 1 wallet, containing 20 Bitcoin addresses.
Not sure why Coinbase uses the terminology "consumer Bitcoin wallet", but it is pretty clear they mean "user accounts", where each account is associated to 1 wallet, each containing possibly multiple addresses.
From what I can tell as a Coinbase user, for someone to have multiple wallets they would need to have multiple user accounts. Ie: each user account has 1 wallet.
Kudos for a stunningly misleading graph. The manipulation of numbers is impressive.
Whats wrong with it? Bitcoin to USD has dropped by 50% in the last few days. By taking a "monthly average" and graphing that they've been able to hide this discrepancy.
However there is no legitimate reason to graph the "monthly average" instead of just the price. It's a line graph so it can deal with a range of numbers quite well. In fact the graph has a total of 6 data points for the BTC to USD line, the whiff of BS is strong on this one.
Could someone visit coinbase's career page and confirm that the Apply buttons are not working. https://coinbase.com/careers
Coinbase has one of the more interesting legal positions I have come across in a long time (registration/licensing/compliance work) and I know I will be kicking myself a year from now if I did not make every effort.
So the piece about more women was a little bit weird. It appears that as the broader market (made up of ~50% women) begins to use your product, you experience your demographic skew towards the broader markets' average demographic. Breathtaking.
I think they are trying to illustrate a move towards more mass-market appeal and reach. Depending on which data source you look at, females account for anywhere from 70 to 90+% of consumer purchase decisions in the US. If Coinbase wants to move from being the cryptocurrency enthusiast and tech speculator's toy to actually seeing significant product/service spend in Bitcoins with merchants, increasing their female userbase could definitely help.
No money is actually in the coinbase account. It only stores Bitcoin. If you sell bitcoin, the USD balance will immediate be ACH'ed directly to the bank info you have set up.[1] Otherwise, I guess you won't be able to use the sell feature(?). BTC-e.com is different; you can sell all your coins and have a USD balance[2].
You can create a Coinbase account without banking info. But after you've created it, I'm not sure what good it would be to you. I guess you could just use it to manage your bitcoins and have one place to check. But the real service coinbase provides is transforming BTC to USD and vice-versa. If you're not going to enter your banking info to use that feature, you might as well generate a pub/priv key at bitaddress.org and just make sure you don't lose the private key.
i too signed up in coinbase end of november ,carried away by the hype( before the crash that is)! but thankfully didnt buy any BTC. there may be others like me.
Economics is very clear in predicting how this will end up. Bitcoins have no intrinsic value and therefore the long-term price will be precisely zero. Each generation has its tulips [2]; each generation claims that the persistence in tulip price means that there is permanent intrinsic value; each generation is disappointed [3].
The only thing interesting about bitcoins is that this provides an opportunity to watch a bubble: observe the justifications people make, observe how nay-sayers appear to be wrong, and watch the progression.
[1] http://en.wikipedia.org/wiki/There%27s_a_sucker_born_every_m...
[2] http://en.wikipedia.org/wiki/Tulip_mania
[3] http://en.wikipedia.org/wiki/Extraordinary_Popular_Delusions...