How to buy a physical Bitcoin?

Sys,

Really? The concept is superbly simple - we all have BTC wallets and they have unique addresses. To send money anywhere in the world, to someone else, pay a retailer, or pay a bill, just send BTC to their wallet address. All done instantly.

Now to use fiat - you must have a bank account and your identity must be verified and your SSN submitted, and you must have a verifiable address. You must find an agent that will convert your currency into the destination currency, and pay a fee and commission. Then use your foreign currency account, or agent to wire the foreign currency to the foreign bank - and likely pay another fee. If its all within the US then send a check, initiate an EFT, or ACH transaction and pay a fee, or pay for a wire transfer and pay a fee - and then wait several days or hours.

And you think somehow Bitcoin is complicated? Are you kidding?

As for setup and security - go to Coinbase, open an account. Use it like a regular bank account with all the same bank level security. The difference is it is all in BTC and transactions are instant and global.

What needs to happen is that the implementation and the GUI's need to represent exactly the simplicity I have just described. What the average Joe doesn't need to know is how it works - those internals all need to be hidden as does the security that we take for granted with regular banks.

With Coinbase there is no reason why they should be more likely to be hacked than any regular bank. Or do you think you know that they have any actual weaknesses - they'd love to hear from you. They have a great support team.

As for internals - the block rate creation needs to change or have multiple chains. The current transaction commit rate is far too slow compared to say Visa and Mastercard current TPS rates - many orders of magnitude higher. The foundation know this. As for decentralized mining - this will move out of the hands of hobbyists very soon and will need large pro installations likely run by governments to maintain the global ledger. As for the 51% issue - at the moment we are approaching Moores law on the hashing power, or will be by the end of 2014, beyond that it is not clear the next upgrade path, perhaps the difficulty will level out. Will there be a separate entity capable of amassing that much hashing power and maintain it to outpace the decentralized combined power? I suspect some clever minds better than me will figure out ways to prevent that.

Bitcoin right now is a superb concept - how it evolves and how governments decide to control and regulate it will determine its future. The libertarian in me would love to see it stay firmly independent but that is simply naive. The one thing the creators wanted was that independence, but in the end it will depend on government support for its survival - the exact opposite of the original intent. But that is how the world works right now.

 

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It seems to me that (1) is telling that the main advantage to the store owner of accepting bitcoin (speed of actually getting the funds) is starting to disappear. So on (2): What is the "real value" to either the store owner or to the customer with bitcoins?

I.e. If less than 1 in 10,000 stores now see bitcoin's advantage as attractive why would more see it attractive as (1) degrades the slight advantage it now has to the store owner, ONLY.?

You may be legally correct that I'm not supposed to write check and pay with it and then transfer funds from bank's saving to the checking account to get one more day of interest on them in the savings account but with the bitcoins you bought, say 12 months ago, you have lost at least a full year of interest the funds could have been earning in your saving account until the day they are used to buy something. Why, except for speculation in this "commodity" as you called it, would anyone want to lose interest they could have collected?

SUMMARY: There is "negative advantage" to bitcoin as a currency, vs. check or credit card for the buyer of store item or service and decreasing advantage (1) to the store owner to accept bitcoin and the declining advantage was already so small that only something like 1 in 10,000 store owners wanted to mess with bitcoin. I.e. bitcoin will NEVER be attractive as a currency. It is only a commodity with zero intrinsic worth.

 

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Billy,

No, speed is not the primary reason store owners want Bitcoin. Credit cards and debit cards charge merchants some 3%+, Bitcoin fees are a tiny fraction of that. Merchants can then either pocket the improved margins or pass those savings, some or all, in lower prices to consumers - both merchants and consumers will benefit. I purchase everything now with a credit card and gain 1% in card rewards. I'll get the same benefit or better if products I buy with bitcoin are at lower prices. What we see with some Bitcoin merchants are discounts if consumers use their BTC - the savinga are already starting.

The other major benefit to both merchants and especially consumers is the absense of personal details in the transaction. I.e. there are no credit or debit card details for a hacker to steal or intercept, like the recent debacle with Target. Bitcoin essentially removes the problem of identity theft via financial transactions, that is a huge benefit.

No. Answered above.

So say you stole 2 days of illegal credit for a $1000 purchase. And say your savings acount interest rate was a generous 3%. Your extra interest is 3 / 365 * 2 * 1000 / 100 = $0.16. Wow you'll soon be rich.

Your example of not earning interest in BTC doesn't make sense yet. BTC was about $30 a year ago and now it is $580. That's a really huge gain. But really the price has not yet stabilized enough where we can make such choices and there are as yet no money markets or ETF funds where I can invest BTC to gain regular style returns. Those are in the works I understand. But for now I am holding some BTC for speculation since I expect it to increase in value over time as it gains acceptance. But for purchases on say Overstock or Amazon and others I have so far bought the exact amount of BTC for specific purchases. E.g. with my Coinbase account I can purchase BTC instantly and then plug that into the checkout box on Overstock, etc. With Amazon I can purchase Amazon e-gift cards with BTC and use them immediately. See https://www.egifter.com/bitcoin/

It's a bit convoluted for the moment until more merchants accept BTC directly and the price stabilizies. To be honest for me right now it is somewhat hilarious, novel, and just fun. A little bit of a hobby to discover how the system operates in practice and to look for weaknesses and advantages.

No, you are entirely wrong. Merchants will be clamoring for this as soon they can get it and it appears reliable, it directly and positively affects their bottom line and for small businesses this is a major gain. The savings from avoiding the huge credit and debit card fees, and resulting security needs, is a major advantage, and when more merchants come on board they will be doing everything possible to attract new consumers to use BTC since it is a major advantage for them.

 

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That's the niggly bit though. If it's possible to have a mathematic model to identify the "average blocks per day", then it would possible to place it into an exponential framework based upon additional people joining to mine to get the factor for block discoveries. It basically makes crunching for hashes moot, since people might as well be award coins just for joining. If it gets to that point then it ends up looking like a Ponzai scheme. (the only things that attempt to separate it from ponzai , is Bit exchanges and mining for hashes)

 

And checks have no fee. My question asked what advantage did Bitcoin have over checks, not credit cards.

~99% of stores do accept credit card* as there is some risk that the check will bounce - just like there is some risk the bitcoin will be stolen or held at place like MtCox and "evaporate" or decline in value before it can be converted into cash. I. e. holder of bit coins is a speculator mainly as they have little use and no intrinsic value as a "floor" on how low their value can fall.

However, bitcoin's main disadvantage is the no more that 0.01% of stores will accept them. I think I could get more US stores to accept my Brazilain Real! (with me taking a 10% beating on the current exchange rate).

* The store, in part, considers the card fee like insurance. Many stores, dozens of times more than accept bitcoin, have their own credit cards so there is no fee and cost of processing charges on them to cash is very small - less bitcoin fee I would guess. I have one from the main grocery store I use - they don't take bitcoins - In fact I don't think any stores will in this city of more than 16 million (Sao Paulo) where I live does. My "store card" is actually issued by a bank I happen to use, and the annual fee is less than they charge on their own credit card. (I have some US cards that don't charge any fee, but all in Brazil do. If I pay with them, I'm charged 1% of the transaction for converting the dollars to Real at a less than favorable rate than I can get on the "grey market." (Certainly not "black" as exchange places are common, well known, operating at same locations for the 20 years I have lived here.) I get a bill once per month and store does give up to 12% discount on a few items in mid week if you pay with their card when their business would other wise be slower.

The other main reason bitcoin will never be a currency (in addition to very few places accepting it as currency) is the fact that you buy them and lose interest you could have been earning. That is why I said they had a "negative advantage" compared to a check (or even a credit card from the buyer's POV.)

As you said: Bitcoins are a "commodity." - I agree - the only one I know of with absolutely zero intrinsic value. I. e. are a Ponzi scheme, pure and simple with 100% of their value built on the "greater fool" coming along who will buy yours or give you some goods / services for them and accept the risk that they collapse before he can convert them into cash, with a government guarantee it is legal tender.

 

Stryder,

Huh? I couldn't decipher your statement. I think you don't know how new blocks are created. A new block is created when a solution is found to a complex math puzzle, essentially it's like cracking the combination lock of a vault, except the code has special mathematical properties that are hard to create but easy to verify. The creation of a new block allows 25 new coins to come into existence. The number of coins per block is halved every 4 years, started off at 50. The rate of block creation needs to be around 6 per hour, or an average 1 every 10 minutes. The rate is determined by a combination of the total hashing power of all the mining machines plus the computation difficulty modifier. If more machines join in then the difficulty increases to maintain the block creation rate and all miners receive a smaller share of the mined coins. If miners drop out and total hashing power goes down then the difficulty will also be adjusted downwards appropriately.

Coins are created as a result of actual computational work. To provide that work requires significant investment in equipment. For example I have 96 ASIC Chip processors. If I choose to upgrade in the next month or so I will be looking at a further $2K, $6K or $10K per box, and I'd likely need multiples of those to achieve reasonable revenue. So it isn't a matter of passively joining in - it's a real investment. And I am really tiny in comparison to the many giant rigs currently hashing for bitcoin.

Ponzi scheme. I keep seeing this accusation and I'm having real trouble trying to grasp how it applies to Bitcoin. Ponzi schemes are based on an empty promise and investors are paid interest from the donations from the other investors, yet there is no underlying asset or commodity. Bitcoins actually exist in strictly controlled amounts. How people choose to place value on these items is entirely based on mutual consent. Compare Bitcoins with USD. The USD is not based on anything physical just like BTC, and USD are now just numbers, and the US government can create more of these or delete some of them. The value of the USD is again entirely based on mutual consent of those that want to use that currency. If Bitcoin is a Ponzi scheme then so is USD.

But really the Ponzi claim doesn't apply.

 

Cris Sell mining computer and bit coins you have while you can. This Ponzi is coming undone. Do it now as the number of new "greater fools" coming in to support this Ponzi, a "commodity" as you said, built on zero intrinsic value data, are getting scares and far between.

As even common hackers can steal, even drug dealers will be getting out as they know what the NSA and its computers can do to the bitcoin "secrecy."

 

Billy,

LOL. Unfortunately BTC price didn't react to this relatively minor news item, and not entirely unexpected. Pity - price went up 20% yesterday - currently looking for a dip on some actual bad news as a buying opportunity. The flushing out of these insecure sites is good news and necessary for Bitcoin. Newer more professional and regulated exchanges are in the process of being staged and introduced. As the saying goes - what doesn't kill us will make us stronger.

Bitcoin isn't going away anytime soon.

As for Flexcoin - As early as two years ago, Flexcoin was singled out as a service that many argued would not be able to protect consumer investments due to limitations in its design.

On another note - Overstock.com just passed $1M in sales via bitcoin payments this past month. http://blog.coinbase.com/post/78558321110/coinbase-and-overstock-com-the-results-are-in

And the UK government formerly recognized Bitcoin as a legitimate currency and has chosen not to tax it - http://www.wired.co.uk/news/archive/2014-03/03/hmrc-cryptocurrencies

And if you want advcie on where best to but bitcoin while prices are so low then let me know - will be glad to advise.

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As for me - I have so far only used my January allocation of play money for my Bitcoin assessment. I might get serious soon - all credible signs for Bitcoin look very promising.

 

1,000,000 /666 is 1,500 bit coins spent (or less as value of bit coin has declined from peak) You sais there were to be 21 million but lets say 15 million now exist. 1,500 /15,000,000 = 0.0001 or that is at least 0.01% being used as currency, not speculation at that one store. So long as speculation is the dominate use, it is a Ponzi depending on new "greater fools" to buy and drive price up.

Do you think the total used for purchases each month is 1000 times greater than used at Overstock.com in last 6 or so months? Is there a convent list of stores accepting 100 or more bitcoins / month? Or if that type of information is not available, is there a list of stores whose bitcoin sales are even 1% of the total?

I bet currently not one major store gets paid in bitcoin even 1/3 as much as it does in checks.

 

Billy,

Bitcoin is in its infancy. New merchants need to sign up in much larger numbers for some time yet for Bitcoin to change from commodity to true currency.

You are attempting to dis it as if it is a mature system. Your comparisons and assesments make no sense. It is evolving at a rapid rate and it is quite impossible to predict quite how or what will happen next at a detailed level. It is a unique phenomena as the UK government noted and typical assessments are not likely to apply.

I really don't know if it will survive or die. Right now it is simply totally fascinating to watch something so new being born and watch it struggle to live. Why not keep an open mind and consider how it might develop rather than live in the world of pesimism and negativity all the time?

 

Overstock.com is the very first and currently only major retail store on the planet to accept Bitcoin. And they don't accept checks as a payment method.

 

Mainly because If it were to become a currency, that would hurt the governments who make about 97% on ever new dollar (or other currency) they add to the money supply. I.e. If Bitcoin became used in commerce, the need for expansion of the money supply decrease as does than revnue stream so government will make using it illegal, as China has already done, I think.

Also as it has no intrinsic value, its value like any Ponzi offering, depends on greater fools coming in to buy. If they are aware of that, and still want to speculate, fine, but I try to counter act promotions of bitcoin which hid the facts that it is not a new currency but a speculation that only goes up in value if more come in to buy.

 

Cris, an airplane is incredibly simple. There is this big metal bird, that flies through the air. What is so complicated about it? If you don't get the analogy, there is no point in explaining it to you.

People's eyes glaze over when you start to explain them how bitcoin works, just try it. Or read Reddit...

And it is in its infancy, so when is it going to grow up? It has been in beta phase for 5 years, the thing is getting old. They should really fix 51% attack, time jacking, malleability and other issues. And have a Release Candidate version 1.0 finally...

 

Syzygys,

So don't explain how it works. Why is this an issue? Most users of cell phones have no idea how they work either, does that mean they shouldn't be in use? And very few would use cell phones if they were very hard to use and expensive. Just separate the entirely different issues of how and why and any validity of your objection vanishes. Similarly with your airplane analogy.

The current round of early developers of functions and features know quite well there is an urgent need for improvements and enhancements. If you can keep pace with the Bitcoin news you should be able to see the current headlong rush to offer new features, wallets, pos, ATMs, services, etc, etc. And a whole host of things we didn't think we needed, and very likely some we won't need or want.

And space flight is also in its infancy and has been for the past 50 years, we are only just now moving to the potential of commercial flights. Somehow I don't think people are going to ever give up on moving space flight forward. The duration of adoption of something very new does not provide any indication of its eventual success or failure. You don't have a relevant point here.

 

Why explain bitcoins' technical issues? Because people ask. Why they ask? Because they want to know what is so special about it and why nobody has thought about it before. So you do have to get technical, and that's when the eye glazing starts...

People like to understand what they get involved, when it is serious money. Or at least, they should...

Personally I don't care for space flights, there are way more important things on earth here, satellites can do the work what we want them to do. But anyway, it took only 60 years between the Wright bothers first flight and going to the Moon. That was HUGE development speed. Freaking Bitcoin doesn't even have a version 1.0 after 5 years....

 

It is not, if Barnum was correct: I. e. "There is a sucker born every minute." Yes best not to ask how it all works. For example never ask:

Who will verify bitcoin transactions when there are no longer any bitcoins to create profitably?

I.e. when opportunity cost of funds tied up the latest bitcoin discovery computers Plus the cost of electricity to run them is more than the value of the coins mined.

Does the whole bitcoin scheme come to a grinding halt without "verifications"?

Perhaps hidden in the code, to self activate then, is the 5% "verification tax" on all bitcoin transactions? I.e. Geeks with new high powered computer designed for the mining / verification task, have new jobs that mine the tax simple Joes pay to actually use bitcoin as a currency.

 

Transactions go up. Also when most people abandon mining, it becomes profitable again... it is a self regulating thingy...

 

um checks are dead. and for a retailer the size of overstock.com do you understand how small 1 million dollars is? that's less than .1% of their revenue. its a statistical blip to them insignifigant.

the bitcoin will never amount to anything.

 

I have a co-worker who's hubby is into this 'bitcoin' thing, designs or creates them according to her. She is very apprehensive about the whole matter.

Interesting reading this thread. I have enough concerns about the existing forms of currency and no desire to dabble in this new venue.

(Cheques are still accepted by many small businesses when dealing with established customers and/or mail order.)