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[Putnam]

..But that only happened because people were holding money in an exchange.

[BurnedToast]

A side effect of the nature of bitcoin is that you can track every coin in existence.  A while back, some researchers did just that... and depending on who you ask, 64% - 78% of bitcoins have NEVER been spent and one single (unidentified) person owns ~25% of the total bitcoins ever mined (or did at the time of the study).

It's not a currency at all - It's a virtual trade good being stockpiled and speculated on.

It never will be a currency either - it's deflationary nature is a huge, impossible disadvantage. Why would anyone use a bitcoin to buy bread and milk when (by design) that bitcoin will be worth more tomorrow, and more the day after that, and so on forever?   Unless there's some good you can only buy with bitcoin there's no reason to ever spend them instead of cash money dollars.

At this point I half believe it was created as a very clever pump-and-dump scheme that succeeded beyond it's creator's wildest dreams.

[kaijyuu]

Supposedly some dude's bag was searched for bitcoins.

When he asked them what they thought a Bitcoin looked like, they allegedly said that it looked like a coin or a medallion.

[alway]

Supposedly some dude's bag was searched for bitcoins.

When he asked them what they thought a Bitcoin looked like, they allegedly said that it looked like a coin or a medallion.

To be fair, that's what basically every article about them uses for stock photos.
http://arstechnica.com/business/2014/02/having-lost-463-million-in-bitcoins-mtgox-files-for-bankruptcy-protection/
http://arstechnica.com/tech-policy/2014/02/federal-prosecutors-hit-mtgox-with-subpoena-as-ceo-tries-reassuring-public/
http://arstechnica.com/tech-policy/2014/02/illinois-man-files-class-action-lawsuit-against-bitcoin-exchange-mtgox/
http://arstechnica.com/tech-policy/2014/02/internet-guffaws-at-senators-quixotic-proposal-to-ban-bitcoin/
http://arstechnica.com/security/2014/02/new-silk-road-hit-with-2-6-million-heist-due-to-known-bitcoin-flaw/
http://www.bbc.com/news/technology-24986264
http://www.bbc.com/news/technology-25130261
http://www.bbc.com/news/technology-24384897

[misko27]

Supposedly some dude's bag was searched for bitcoins.

When he asked them what they thought a Bitcoin looked like, they allegedly said that it looked like a coin or a medallion.

To be fair, that's what basically every article about them uses for stock photos.
http://arstechnica.com/business/2014/02/having-lost-463-million-in-bitcoins-mtgox-files-for-bankruptcy-protection/
http://arstechnica.com/tech-policy/2014/02/federal-prosecutors-hit-mtgox-with-subpoena-as-ceo-tries-reassuring-public/
http://arstechnica.com/tech-policy/2014/02/illinois-man-files-class-action-lawsuit-against-bitcoin-exchange-mtgox/
http://arstechnica.com/tech-policy/2014/02/internet-guffaws-at-senators-quixotic-proposal-to-ban-bitcoin/
http://arstechnica.com/security/2014/02/new-silk-road-hit-with-2-6-million-heist-due-to-known-bitcoin-flaw/
http://www.bbc.com/news/technology-24986264
http://www.bbc.com/news/technology-25130261
http://www.bbc.com/news/technology-24384897

I was wondering about that. I mean I see those so often I thought it was some coin copy they show people, or a novelty item or something.

[alway]

Yeah, they're basically a novelty item. Idea being, you can print off or otherwise grab your private key (the thing you use to get at teh munees) or similar. So some folks came up with novelty items which either have the info written down on it physically, or it's just a glorified USB dongle holding it. [or at least, I'm pretty sure it's one of those two; I never really looked into it, but regardless, the general idea is this] Normal folks would simply write it down on paper or something.

[Reelya]

It never will be a currency either - it's deflationary nature is a huge, impossible disadvantage. Why would anyone use a bitcoin to buy bread and milk when (by design) that bitcoin will be worth more tomorrow, and more the day after that, and so on forever?   Unless there's some good you can only buy with bitcoin there's no reason to ever spend them instead of cash money dollars.

You can get the same effect by investing dollars though, each dollar you invest ends up being worth more with interest. You could ask the same question of why would anyone spend dollars now, when if you invested that same dollar, you'd get "more tomorrow, and more the day after that, and so on forever?" So, deflation by itself isn't going to render something useless as a currency, unless that deflation massively outpaces the interest you can get from a dollar-based investment, in which case investors will hoard the coins.

Lack of price stability will the primary deterrent to pricing anything in bitcoins.

[10ebbor10]

Well, not really. If you invest a dollar today, you can't use it tomorrow. If you just have to do nothing, there'll be way more people hoarding stuff.

[Sheb]

"Investing" actually means buying something (a stock, machinery for your company, gold, whatever). Aka, using the currency.

[Mictlantecuhtli]

I'd really wish bitcoin junkies weren't referred to as investors.

[alway]

I'd really wish bitcoin junkies weren't referred to as investors.

They aren't. It's called money market speculation.

[Reelya]

"Investing" actually means buying something (a stock, machinery for your company, gold, whatever). Aka, using the currency.

Well in the terms of the "nobody will spend bitcoins because of deflation" argument, "saving" would be a better term to make the point. You can save bitcoins or save dollars and have more money value later. That does not stop people also spending them.

[10ebbor10]

Well, not really. Dollars loose value over time, bitcoin, by the design, shouldn't.

[Sheb]

If you get a return on your savings at the bank, it's because the bank is investing them for you. Aka: your money only bring revenue if someone does something with it. In deflationary condition, you don't need to, you can just stash it under your bed and it'll increase in value.

[alway]

If you get a return on your savings at the bank, it's because the bank is investing them for you. Aka: your money only bring revenue if someone does something with it. In deflationary condition, you don't need to, you can just stash it under your bed and it'll increase in value.

This. It's really bad in economic terms, which becomes really obvious when you de-abstract things. A currency is supposed to be, in essence, a universal representation of resources. In a slightly inflationary scenario, 'saving' or 'investing' means Alice giving a shovel to Bob to dig a canal, with the understanding that Bob will then give back the shovel, plus some of the revenue when the canal opens. Whether you are investing or saving, it is all simply an abstraction of that sort of idea: using the resources you have to fuel economic activity. With deflationary scenarios, it's as if that shovel magically creates resources simply by sitting in the tool shed.

That's why you probably won't find Bitcoin Banks which give interest nor finance loans. There is pretty much zero credit availability in a deflationary environment, resulting in almost no upwards economic mobility (Bob can't dig his canal without a shovel). In the end, everyone loses.