New Gold Payment Options: Bitcoin and Credit Card (blog.reddit.com)

{blog}

831 ups - 253 downs = 578 votes

286 comments submitted at 20:06:37 on Feb 14, 2013 by bsimpson

  • [-]
  • joeshmoe16
  • 82 Points
  • 20:08:40, 14 February

Is bitcoin still a thing?

  • [-]
  • The_Bravinator
  • 115 Points
  • 20:10:13, 14 February

Enough of a thing to buy internet strangers imaginary gold with because their words were worth more than meaningless click-points.

  • [-]
  • mchengl
  • -2 Points
  • 20:14:54, 14 February

but isn't it just valued because of the enthusiasts who use it? what would Reddit do, if Bitcoins was to fail? I guess they are just handing out e-products, they haven't really lost that much, except for getting real money.

  • [-]
  • argues_too_much
  • 35 Points
  • 20:19:16, 14 February

That's the same that can be said of anything that acts as a currency. Value is what people see in it. Bitcoin's value is in its use as a currency.

It's the same for any other currency. If the rest of the world refused to accept pounds or dollars then the "value", or buying power, of each individual unit would drop.

The more of them are created, the less the perceived value each one has. This is the real meaning of the word "inflation", not a rising in prices as is commonly thought. Rarity increases the relative value when an item has some demand.

  • [-]
  • mchengl
  • 6 Points
  • 20:22:13, 14 February

But the pound and dollar both have legitimate governments backing it up. Surely, something like this just seems extremely risky?

  • [-]
  • KaiserTom
  • 12 Points
  • 20:32:13, 14 February

They have governments backing it, but that doesn't make them anymore a currency than bitcoin because it all boils down to social acceptance. Almost every currency in the world is a Fiat currency, and is worth however much supply and demand say it is.

The USD was worth a lot at one time because there was a low supply of it and the entire world demanded it for trade or at least was willing to accept it.

Bitcoin in the end is non-inflationary, the miners have set a limit of 21 million bitcoins in circulation. This means that if bitcoin was accepted in just as many places as the USD, 1 bitcoin could be worth $140,000, and still rise in value because other currencies inflate and lose value.

  • [-]
  • stylepoints99
  • 3 Points
  • 20:44:00, 14 February

I'm a complete outsider, but you seem to understand something about bitcoins. I have a question. What exactly is the "mining" power used on. Say I set up a mining operation, what are those clients doing with all of my mining power? Thanks if you answer!

  • [-]
  • samuraipenguin6
  • 4 Points
  • 20:49:37, 14 February

This should help: http://codinginmysleep.com/bitcoin-mining-in-plain-english

  • [-]
  • kingbot
  • 1 Points
  • 20:49:10, 14 February

From what I know, many people's computers are sent very complex algorithms to solve. This is done primary via your GPU/graphics card. I believe the first few people to solve it, actually receive bit coins, where as the rest don't. It's sort of a race where who ever has the most powerful rigs is the winner.

  • [-]
  • joelthelion
  • 1 Points
  • 20:49:48, 14 February

They're solving crypto problems and using that to store transactions into the blockchain, which is the permanent record of all bitcoin transactions.

It sounds a little stupid but it's needed in order to have a secure and decentralized currency.

  • [-]
  • nofx1510
  • 2 Points
  • 20:51:25, 14 February

In the most basic of senses your computational power is being used to crack hashes and validate transactions. Mining is what generates the currency and is done so at a predictable rate because the market changes the difficultly at which you can mine bitcoin.

  • [-]
  • Lucretiel
  • 1 Points
  • 20:55:51, 14 February

Literally just churning away. Technically, they are attempting to find some number (which becomes the header of a "block") for which the SHA-256 hash is less than some value, called the target. Once such a number is found, it is introduced to the global bitcoin network, which confirms that it is a valid block.

The target is a floating value- it self-adjusts based on the current volume of miners, such that no matter how many there are, a new block will be found on average every 10 minutes.

The reason this works is that SHA-256 is a relatively expensive, non-reversible operation. It's easy to confirm whether a given number has the right hash value (just run SHA-256 on it), but there's no way, besides just hashing every number you can find, to find out which number is associated with which hash. When minining, you're just putting all of your computer's CPU toward hashing every number until you find a good one.

See https://en.bitcoin.it/wiki/Mining for more details.

  • [-]
  • joelthelion
  • 17 Points
  • 20:26:10, 14 February

Investing heavily in bitcoin is risky. Using it to exchange goods and services over the internet isn't, since you don't need to hold a large amount of bitcoins.

On a side note, "legitimate" governments profit a lot from controlling their currencies which causes a good deal of inflation. Bitcoin is engineered with controlled inflation, and no one can control or abuse the currency.

  • [-]
  • peacegnome
  • -1 Points
  • 20:43:25, 14 February

>On a side note, "legitimate" governments profit a lot from controlling their currencies which causes a good deal of inflation. Bitcoin is engineered with controlled inflation, and no one can control or abuse the currency.

you should change '"legitimate" governments' to '"legitimate" governments, and the banks that control their currency'

  • [-]
  • drc500free
  • 2 Points
  • 20:40:41, 14 February

The government backing the currency might not be that relevant.

Currencies are a way of speculating in a community's shared values. You use a dollar or a pound because you have similar values to other people who use them - you all agree that "good A" is worth a certain number of "good B" for basically all possible goods. A currency is sustainable if the community that uses it could work as a closed system.

The danger of bitcoins is that the community that uses them isn't a sustainable closed system. Most troubling is the lack of primary producers - the people who turn raw materials into products in the first place.

That being said, bitcoins are over-valued by exactly the kinds of people that reddit may want to buy services from. They don't really need bread, milk, or steel, but they do need software and content.

  • [-]
  • Puupsfred
  • 1 Points
  • 20:57:18, 14 February

No government is "backing" any fiat currency. They cannot just increase the value of their currencies to avoid high inflation. But they can devalue it with ease and thats just what they do all the time.

  • [-]
  • stinkytaco
  • 1 Points
  • 20:29:39, 14 February

And what are those legitimate governments going to back it up with? In the case of the dollar, nothing. Having a legitimate government backing it up just means that the scarcity and quality is controlled. Bitcoin controls scarcity with math.

EDIT: I'm really not sure why I'm being downvoted. The dollar and the pound are fiat currencies. They have value because people have decided they have value and because their scarcity is controlled. Bitcoin has value for the same reason.

  • [-]
  • Thethoughtful1
  • 1 Points
  • 20:37:03, 14 February

The dollar is good for paying taxes.

  • [-]
  • stinkytaco
  • 1 Points
  • 20:47:15, 14 February

Gold's not good for paying taxes, but people pay out the nose for that, far more than its actual value.

  • [-]
  • argues_too_much
  • 1 Points
  • 20:56:21, 14 February

>scarcity and quantity is controlled

For varying values of controlled.

Both currencies real buying power has dropped significantly over the years. Compare the price of a litre/gallon of fuel/milk now vs 20 years ago.

  • [-]
  • LazyRetiredGuy
  • 1 Points
  • 20:43:20, 14 February

I think I hear the sound of fear squashing opportunity.

The desire for safety stands against every great and noble enterprise. - Tacitus

  • [-]
  • r3m0t
  • 1 Points
  • 20:54:50, 14 February

Inflation means a reduction in the purchasing power of a currency. This is related to, but not the same as, an increase in the money supply.

  • [-]
  • Krackor
  • 44 Points
  • 20:16:15, 14 February

And gold (the metal kind) is just valued because of the enthusiasts who use it. That's how currency works.

  • [-]
  • shma_
  • 9 Points
  • 20:38:26, 14 February

The difference is that the "enthusiasts" who use the US dollar number in the hundreds of millions, and include every business in the United States, while almost no one accepts bitcoins.

  • [-]
  • Thorbinator
  • -2 Points
  • 20:46:21, 14 February

Yep, nobody accepts bitcoins.

  • [-]
  • SirCowMan
  • 7 Points
  • 20:51:33, 14 February

shma_ said "ALMOST no one accepts bitcoin." If that list contains the only businesses that accept bitcoins, then compared to the rest of the businesses in the world, yeah, almost no one accepts bit coins.

  • [-]
  • njstein
  • -2 Points
  • 20:53:53, 14 February

Want to send money across the world at a fraction of the costs it would be to bank wire/western union? Bitcoin is where it is at. Also I heard whispers that amazon is to start using bitcoins.

  • [-]
  • shma_
  • 4 Points
  • 20:55:06, 14 February

al·most (ôlmst, ôl-mst) adv. Slightly short of; not quite;

There were 7.4 million US businesses by the end of 2010. That would make your list roughly 0.01% of businesses in the US. Or almost no one.

  • [-]
  • mchengl
  • 0 Points
  • 20:19:38, 14 February

Except gold also has practical uses, whilst Bitcoins don't exist physically.

  • [-]
  • joelthelion
  • 58 Points
  • 20:21:28, 14 February

If gold was valued according to its practical uses, it would be much cheaper.

  • [-]
  • lackofbrain
  • 16 Points
  • 20:31:57, 14 February

And mostly worthless for much of history - the uses in electronics are fine and dandy nowadays, but other than that it looks pretty, has a low melting point and is fairly soft

  • [-]
  • Slowhand09
  • 1 Points
  • 20:35:37, 14 February

As am I! Or William Shatner.

  • [-]
  • atimholt
  • 0 Points
  • 20:28:49, 14 February

Hence the idea behind asteroid mining.

  • [-]
  • vuce
  • 5 Points
  • 20:34:28, 14 February

It could actually have quite a few practical applications, free, non-centralized document timestamping (http://people.scs.carleton.ca/~clark/papers/2012_fc.pdf) for one...

  • [-]
  • drc500free
  • 4 Points
  • 20:34:53, 14 February

The purpose of currency is to have speculative value. Intrinsic consumptive value diminishes something's appropriateness as currency.

  • [-]
  • shadowed_stranger
  • 2 Points
  • 20:50:16, 14 February

Actually bitcoin, the protocol, was invented for it's practical use as a proof of work algorithm. It has even been modified to create a distributed DNS that cannot be seized by government. No practical uses you say?

  • [-]
  • Yorn2
  • 2 Points
  • 20:37:04, 14 February

Bitcoin (specifically the blockchain) has some practical uses too: Smart Property, Agents, Contracts

Please note: Technical understanding behind how the blockchain works is required to understand most of the information contained in those wiki posts.

  • [-]
  • cha0s
  • 3 Points
  • 20:32:27, 14 February

if they have no practical use and don't exist physically just generate a bunch of your own? Should be easy right? And no cryptographical significance to them right? Go on, good luck! \^\^

  • [-]
  • mrpopenfresh
  • -1 Points
  • 20:35:40, 14 February

As one economist put it "Why gold? Why not 1972 bordeaux?".

  • [-]
  • Squidfist
  • 0 Points
  • 20:36:29, 14 February

FALSE! Gold is highly practical due to having low melting point, not tarnishing, and conducting electricity quite well. That's why processors for computers use gold pins.

The more you know--- SWOOOSH!

  • [-]
  • peacegnome
  • 6 Points
  • 20:41:19, 14 February

>FALSE! Gold is highly practical due to having low melting point, not tarnishing, and conducting electricity quite well. That's why processors for computers use gold pins.

Gold is actually not that great of a conductor, silver is much, much better. The reason gold plate is used on pins/contacts, is that it doesn't oxidize (you kinda said that, but called it tarnishing) and so it will usually make a good contact.

The low melting point, and the softness were great a long time ago for jewelry and stuff, but it is not important anymore.

  • [-]
  • SimpleSimulation
  • 1 Points
  • 20:49:51, 14 February

I like your answer better than squidfists.

  • [-]
  • Squidfist
  • 1 Points
  • 20:58:07, 14 February

Oxidization is tarnish. And due to gold still conducting enough electricity for the purpose of a processor, the resistance to tarnish does make it more practical in that application than silver.

Sure there are metals better suited for this and that, gold isn't great in every single respect. But gold has a combination of qualities that makes it effective for use in a variety of components.

  • [-]
  • insertAlias
  • 1 Points
  • 20:58:10, 14 February

Gold wasn't historically valued for it's conductivity, because that's a relatively recent use. If gold were to be valued based purely on its practical applications, it would be worth much less.

  • [-]
  • joelthelion
  • 7 Points
  • 20:30:12, 14 February

>what would Reddit do, if Bitcoins was to fail? I guess they are just handing out e-products, they haven't really lost that much, except for getting real money.

Coinbase probably pays Reddit in dollars, so the deal is transparent for reddit.

You don't have to trust bitcoin is going to have a great future to use it. Just buy a few, and start using them as a means of exchanging goods and services over the internet.

  • [-]
  • wub_wub
  • 7 Points
  • 20:28:22, 14 February

>what would Reddit do, if Bitcoins was to fail?

Stop accepting it, I assume.

> I guess they are just handing out e-products, they haven't really lost that much, except for getting real money.

They could be converting bitcoin to real money instantly if they wanted to. Or maybe on a weekly basis.

So even if bitcoin were to suddenly fail and they didn't convert it to "cash" right away I doubt they would lose a lot of money.

  • [-]
  • Quarterpast2
  • 2 Points
  • 20:44:47, 14 February

Not to mention reddit accepting bitcoins will actually do a lot for the stability of bitcoin value.

Now, you can ALWAYS buy something with bitcoin. You don't have to go a state over or have something shipped. Bitcoin will be heavily influenced by the price of reddit gold.

Bitcoin will essentially become reddit gold if all else fails with the use of bitcoin. People can buy bitcoin as a roundabout way to get reddit gold, and to get bitcoin, the only supplier would end up being reddit(since none else is using it), or someone that purchased bitcoin through reddit.

It's like plex/isk/USD in EVE. PLEX's only true value is in getting a month of EVE gametime, but it can be transferred in(and illegaly out) of game. In the worst case scenario, Bitcoins become Reddits PLEX...though they already have the gold system, so it does become redundant.

  • [-]
  • weezer3989
  • 14 Points
  • 20:17:14, 14 February

There are also largish circles that use it for untraceability purposes, aka buying drugs.

  • [-]
  • apetersson
  • 7 Points
  • 20:24:06, 14 February

like feeding their reddit addiction, maybe?

  • [-]
  • cold_toast
  • 4 Points
  • 20:29:32, 14 February

I can quit anytime I want!

  • [-]
  • andytuba
  • 3 Points
  • 20:38:36, 14 February

but you can never leaaaaave

  • [-]
  • GalacticNaga
  • 0 Points
  • 20:26:53, 14 February

This is why I dislike Bitcoin, I see people defending it like it's their first-born child, and I'm thinking "Why? So you can buy some crack off of Silk Road?".

  • [-]
  • weezer3989
  • 10 Points
  • 20:30:44, 14 February

It does have uses, and having a purely online currency with no backing and no central administration is simply fucking cool from a CS and economics standpoint, but yeah, it's very overrated and will never replace conventional currencies. There's also no reason to ever buy and keep bitcoin, buy just what you need to get what you want, that way you aren't at the mercy of a volatile market that's still small enough that minor investors (say 3 million or so) can really manipulate the prices.

  • [-]
  • BabyAteMyPitbull
  • 2 Points
  • 20:49:24, 14 February

I don't mind the fact that bitcoin exists, it just floors me that a small segment of their users seem to believe it is completely immune to inflationary bubbles that hit all commodities.

  • [-]
  • weezer3989
  • 1 Points
  • 20:51:55, 14 February

To be fair, there has been very little (if any) inflation wrt bitcoins, it all seems to be deflation. Of course, deflation is almost always worse than inflation, but people tend to ignore that, largely due to how rare it is nowadays.

  • [-]
  • BabyAteMyPitbull
  • 1 Points
  • 20:59:35, 14 February

Agreed, but a currency without a central bank, especially a finite currency, is not a stable setup for a currency. If this actually catches on keeping any sizable sum in bitcoins will be gambling not investing.

  • [-]
  • TamerzIsMe
  • 15 Points
  • 20:29:45, 14 February

Like those people who use that crazy "cash" stuff to buy drugs anonymously.

  • [-]
  • AcornPancake
  • 7 Points
  • 20:33:22, 14 February

That's like saying you dislike BitTorrent because people use it to pirate. It has all kinds of neat applications beyond that.

  • [-]
  • Yorn2
  • 4 Points
  • 20:41:23, 14 February

A very fungible, divisible, pseudonymous, and decentralized currency is going to attract the black market pretty much no matter what. There are other people attracted to it for other reasons, as well. In the present tumultuous fiscal currency environment, some of us do value it as a store of wealth. That said, I would never recommend anyone put all their eggs in one basket. Especially as of late with the price seemingly going gangbusters over speculation on ASIC mining.

  • [-]
  • Quarterpast2
  • 3 Points
  • 20:35:57, 14 February

The majority of bit coin enthusiasts aren't wanting it for drugs though, they're mostly just techies that like the idea, and possibly setup or participated in some sort of bitcoin farm.

I'm of that party. I like the idea of a secure digital currency and participated in a bitcoin farm. Bitcoin is a very valid, interesting way to implement a currency that isn't regulated by a government.

  • [-]
  • goonsack
  • 3 Points
  • 20:37:28, 14 February

Way more drug deals are denominated in US dollars than in bitcoins.

  • [-]
  • ieatdots
  • 3 Points
  • 20:35:22, 14 February

Bitcoin has a huge legitimate marketplace and is ripe to grow even bigger. It can be used anywhere in the world, even countries that can't get credit cards or use paypal.

All currencies can be used for illegal funding.

People defend it because it's a way cool technology, and is constantly under attack by ignorant people.

  • [-]
  • ImaPiratelol
  • 1 Points
  • 20:28:45, 14 February

Well I mean the silk road has more than just harder drugs. Can buy a ton of tons or acid.

  • [-]
  • NicholasCajun
  • 8 Points
  • 20:24:03, 14 February

You can use it on the silk road. A lot of redditors do drugs.

  • [-]
  • Slowhand09
  • 2 Points
  • 20:37:19, 14 February

Do $1000 bitcoins all have cocaine residue on them?

  • [-]
  • boetbra1
  • 1 Points
  • 20:54:32, 14 February

*bitcocaine residue

  • [-]
  • BluShine
  • 3 Points
  • 20:24:38, 14 February

Dollars are valued because of the people who use it. What would reddit do if the US economy suddenly collapsed?

Yeah, bitcoins are a much less stable currency than, say, USD. I doubt reddit is hanging on to a big bang of bitcoins, they likely exchange them for another currency as soon as possible.

  • [-]
  • KaiserTom
  • 1 Points
  • 20:34:08, 14 February

Bitcoin could very well become the goto currency if only for the fact it doesn't lose value to the "mysterious" phenomenon known as inflation, and in fact deflates instead.

  • [-]
  • ieatdots
  • 2 Points
  • 20:28:28, 14 February

>what would Reddit do, if Bitcoins was to fail?

Vendors assign goods a bitcoin value based on the current exchange rate.

There are services such as BitPay that will instantly sell your bitcoins for USD for you at the current exchange rate.

If reddit elects to hold onto bitcoins and not immediately sell them for USD/Euros/hosting, then yes, they are taking a risk and speculating. Otherwise there really isn't much of a chance to get too badly burned, even if bitcoin rates completely tanked.

  • [-]
  • DrAwesomeClaws
  • 2 Points
  • 20:36:38, 14 February

Reddit could also be exchanging it for USD at regular intervals. There's no reason that they would have to keep all the bitcoins.

  • [-]
  • BabyAteMyPitbull
  • 1 Points
  • 20:47:34, 14 February

I'm guessing Reddit is immediately cashing out their bitcoins for "real" money.

  • [-]
  • shadowed_stranger
  • 1 Points
  • 20:56:32, 14 February

Reddit is most likely instantly converting the Bitcoins to USD with coinbase, like wordpress does (but with a different merchant services provider.) There is no risk to them, as reddit sees US Dollars just like any other payment. Really, there is no reason for them NOT to accept bitcoins.

  • [-]
  • Pyrolytic
  • -2 Points
  • 20:38:42, 14 February

They're never going to let you live on reddit island where the main currencies are bitcoin and beardrage.