One exchange (out of several) experienced technical difficulties (related to being hacked) and suspended trading for a week. Other exchanges kept trading and held the exchange value between 14$-17$. It currently trades at 16.8$.
used to buy Alpaca wool socks and illegal drugs
There is a wide variety of goods&services that's growing daily that you can pay for with Bitcoins. Among them are PC-hardware, Coffee in NYC, IT Consulting, Programming, Webdesign, Web-Hosting and many more. Comparision to other "e-currencies" not thought trough
have been many attempts at creating online currencies — including Digicash, Flooz, and Beenz.
It isn't exactly relevant to compare Bitcoin to these currencies. Beenz and Flooz were value substitutes entirely controlled by a single party. They could only be exchanged by involving that party. Inevitably these parties fell on hard times at some point or another, and had to cease operating, at which point exchange became impossible. That makes them a bad comparision to Bitcoin which is guaranteed not to fall prey to central control and floundering businesses that'd make their exchange impossible. Digicash may have been somewhat similar to Bitcoin, but there are two key differences. Digicash may have been anonymous and somewhat decentralized in exchange, yet the minting of new coins and the client software itself were in the control of a single party. Inevitably when Digicash failed (to run a sound business) Digicash (the currency) became impossible to trade. Therefore the comparision of Bitcoin with these failed "e-currencies" is only insofar of interest as it provides ample evidence of what exactly Bitcoin did better, namely two things:
There is no central mint (central bank or what have you), new coins are minted by a collective effort
There is no central control that would make it infeasible to exchange bitcoins, therefore there is no central attack (like the one by CC companies) that could "kill" it just like that.
Small change is irrelevant to the discussion of Bitcoin
A historical look at currencies over the last 500 years reveals an interesting insight — a key limiting factor to adopting currencies has been the ability to make small change.
The smallest unit of bitcoins is 0.00000001 btc. (https://en.bitcoin.it/wiki/FAQ#How_divisible_are_Bitcoins?). At currently traded (16.8$/btc) that would be 0.000000168$. Bitcoin payments can be specified down to that smallest unit, and there does not have to be any "change". Therefore both the numeration and the precision of payment argument is not relevant. Marginal costs and benefits misconception
But they never caught on because their marginal costs to consumers and merchants exceeded their marginal benefits.
In order to understand the motivation behind bitcoin, it's important to understand the limitations (or costs) of CC and Paypal payment processors. The Paypal issues
Paypal payments in sum incur about 7.5% in transaction cost.
Paypal payments (especially to merchants) are often delayed, withheld or entirely nulled by Paypal. Merchants have no recourse in this.
The Paypal payment processor API is quite convoluted and integrating it is far from easy. Merchants are at the whim of Paypal, and Paypal often decides not to carry a merchant without any reason specified.
If Paypals system go down, or are unavailble, e-commerce built on top of Paypal stops.
The CC in general issues
CC payments are subject to fees ranging between 2-10% Merchant protection with CCs is better, but by no means flawless. The CC payment processors offered are not technically simple to integrate
CC Merchant fees can be substantial Lower fees are offered by third parties, but again (like Paypal) a Merchant is at the whim of these third-parties.
*What Bitcoin does better
Bitcoin does not have forced transaction fees. There is an optional transaction fee, whose sole purpose is to incentivize the faster processing of the transaction by the network. However payments involving no txfees are equally possible (and practised widely).
The Bitcoin API is supremely easy to talk to, and it is a pleasure to implement. It can be acomplished by any programmer in a couple of minutes. And you do not need to sign neither any contract nor ask any permission to do it.
Since bitcoins are not centrally controlled, a merchant is not at the whim of any second or third party.
Bitcoins have no cost (marginal or otherwise) but substantial benefits
CC/Paypal have substantial cost and substantial drawbacks
Repeated misleading allusions as to questionable legality
Is It Legal? as a way to pay anonymously for illegal drugs sold on Silk Road – is the one that has been referred to the U.S. Attorney General as a violation of money laundering statutes. Mann notes that Bitcoin’s ultimate ambition well might be illegal After all, he points out, there are federal statutes that make it illegal to produce a separate currency.
Two main thrusts are presented by you as to the legality of Bitcoins. First you question businesses that use them of being in violation of money laundering laws. Second you allude to the legality of alternative currencies. Both of these things are not issues for the following reasons:
Businesses that accept Bitcoins can easily be required to conform to existing money-laundering laws. The medium of exchange does not change the rules that businesses must play by.
Bitcoins are actually less anonymous then the USD. That is because every transaction of bitcoins is publicly accessible. That means that it is a whole lot easier to follow a money trail in Bitcoins then it is to follow it in USD.
Alternative currencies are not illegal under EU and US laws. After all the exchange of foreign currencies certainly is not. What is certainly illegal is to establish a currency pegged to the national currency such as to represent a stand-in. This would give rise to issues with the central mint of the national currency. The Bitcoin value is not in any way pegged or related to the USD (or any other national currency). It is determined by the exchanges that trade Bitcoins.
Even if by some heavy-handed lawmaking Bitcoins would be deemed illegal, it would prove hard indeed to stamp them out. They are a truly decentralized and international system. They cannot be centrally attacked, so there is no "mint to shutdown" or business to bankrupt etc.
Consumers and Merchants pickup
Unless consumers and merchants can be persuaded that adopting it will make them better off, it’s likely to go the way of other online currencies.
This is an astute observation and I applaud it for that. However as a system Bitcoins do not depend (financially) on that pickup, and the speculative part of the Bitcoin economy will be able to live quite a while entirely without it. That being said, there is some pickup of bitcoin in genuine e-commerce and other fields. Closing Bitcoin has many desirable qualities, from an organizational, economic and technical point of view. Your article is not a very good representation of Bitcoin as it is, nor of what it can be, or what it's core issues really are. I'd invite you to write a retraction and correction in your next article and consult a Bitcoin specialist for review and input. If against all "odds" Bitcoin should prove to be more successful then you thought, think of it as collateral for your journalistic integrity. You can read comments about this open letter on the reddit post about it: http://www.reddit.com/Bitcoin/comments/ic92x/open_letter_to_forbes_peter_cohan/ Kind Regards, Florian Bösch TL;DR Peter Cohan has a poor grasp of bitcoins and presents a number of fallacious arguments that are not relevant.
Peter has responded in his comments section to my letter. I'll briefly address these: Mt.Gox, that got hacked on June 19, is among the biggest bitcoin exchanges — no point in trivializing that. It's true that Mt.Gox is the biggest exchange. However this recent outage gave other exchanges a great opportunity to break into the market. At the end of the day, competition is good, and Mt.Gox has ... And by the time this episode aired, the market value of bitcoin had doubled. In the weeks that followed, it soared above US$19,000, then crashed back under US$10,000. This volatility, of course, should not have caught anybody by surprise, not even on Main Street. After all, the possibility that bitcoin demand is based upon unrealistic expectations also went mainstream in late 2017—when more ... “Bitcoin is a store of value, a distributed ledger. It’s a great place to put assets, especially in places like Argentina with 40 percent inflation, where $1 today is worth 60 cents in a year, and a government’s currency does not hold value. It’s also a good investment vehicle if you have an appetite for risk. But it won’t be a currency until volatility slows down.” Bitcoin — the online currency used to buy Alpaca wool socks and illegal drugs whose value dropped from $17.50 to "pennies" after a June 19, 2011 hack into its currency exchanger, Mt.Gox — has ... As a comparison, it’s worth reading Peter Cohan’s article in Forbes about the value of Bitcoin, called “Why bitcoin is worth 0, 20,000, 2M or infinity”. Peter Cohan argues that Bitcoin is worth “anywhere between $0 and infinity.” This is because people will pay for it as they are afraid of missing out and they feel that Bitcoin has the potential of making the world run more ...
Peter Schiff ADMITS Bitcoin Has Value & Wants To Own 1 Whole Bitcoin [New Podcast Audio]
🔴 Gold vs Bitcoin Debate: Peter Schiff vs Anthony Pompliano - Duration: 50:35. Peter Schiff 38,784 ... BLOCKCHAIN TECHNOLOGY AND BITCOINS VALUE EXPLAINED BY ROBERT KIYOSAKI - Duration: 58:47 ... Breaking: Peter Schiff Wants To Own 1 Whole Bitcoin. Tony Hawk admits to hodling Bitcoin for 6 years. Andrew Yang is on team crypto! Follow us on Twitter: ht... Many Bitcoin critics rely on the argument that Bitcoin does not fit the definition of a money, a unit of account, or that it cannot be a store of value and a currency at the same time. Lets talk about Bitcoin and what I THINK caused the recent jump in price - enjoy! Add me on Instagram: GPStephan The YouTube Creator Academy: Learn EXACTLY h... There are some important signals on a chart of bitcoin that very few people are watching right now. What does it mean for BTC? We explain in this video. For more on Bitcoin visit: https://www ...