Are Bitcoins Better Than Credit Cards?

More and more, the US is becoming a cashless society. Slowly over the years, as the number of people carrying cards and the number of merchants that accept cards has grown, it has become increasingly convenient to pay with everything from big purchases like Christmas presents to a candy bar on the way
home from work with a card.

The benefits of this are obvious: You never have to get to the bank to get money, you don’t have to worry about carrying around large sums of money, and in the event that your card is lost or stolen, you can have it canceled and have any illicit transactions removed from your bill. Why wouldn’t someone want to go cashless? The security and convenience are obvious.

Except that that isn’t the whole story. The credit and debit cards are being sold to people as being a replacement for cash – and in a lot of ways, they feel like that. The downsides are also pronounced:

  • You can’t just ‘earn’ a credit card – you have to apply for it, and you can be approved, declined, or offered a card with high rates and strict conditions. In the case of a debit card, you need to have a bank account.
  • In most cases, you will be paying a variety of fees in addition to the interest rate for carried balances.
  • The interest rate can jump based on your payment history or a variety of other factors.
  • They can and will charge you fees for a variety of infractions.
  • They have all your information, can lose your information, and identity theft is a difficult thing to recover from.
  • All your transactions can be tracked, analyzed, and sold. Ever wonder why the fliers coming to your house seem purposely designed for you? They may be.
  • Cards can refuse service. If I want to give money in support of some news site, charity, or cause that a credit card company or government doesn’t approve of, they can shut off the flow of money with a flick of a switch. In a free society, though, a corporation or government shouldn’t be able to dictate where I send my money without due process.
  • It might sound like paranoia, but when all your transactions are tracked, they can also be used against you in a court of law. It sound nice to say that you have nothing to fear if you have nothing to hide, but the fact of the matter is, in the hands of a police officer or prosecutor whose main goal is not justice, even innocuous transactions might be made to seen nefarious.

Bitcoin for its part has been roundly smeared in the press for being a tool to move money illegally, buy drugs, or even fund terrorism. As a financial tool, Bitcoin has no politics. All of these things can be true of Bitcoin, but are much truer of regular money. Given the difficulty of converting large amounts of bitcoins to regular money, it’s much safer for criminals, drug lords, and terrorists to use the tried and true methods of moving money that have been in effect for generations – usually aided and abetted by the big banks.

The biggest advantage Bitcoin has over any other as we move into a cashless society is that it removes the need for a middleman:

You won’t need a bank to keep your money safe for you – unless you want them to. It’s been decades since banks offered anything like a real return savings accounts. With Bitcoin, since people, with a little effort and know-how, will be able to keep their own bitcoins safe, banks will have to start offering competitive interest rates to get people to deposit.

You won’t need a checking account, debit card, or PayPal, or Western Union. With Bitcoin, you can send any amount of money, anywhere, to anyone, almost instantly, for a miniscule fee (paid to the mining network for keeping the system secure). No more monthly fees, overdraft charges, declined purchases, transfer fees, complicated terms of service, etc. It may be that because of added services or convenience you continue using the services or businesses listed above, but you won’t have to. It will be a matter of choice and those businesses will have to compete to find a way to convince you that it’s worth your bitcoins to let them perform that service for you.

You may need or want a credit card. The fact is, though, that most people don’t really want a credit card, but merely like having the convenience of using one to shop online – and then have gotten used to having one to tide them over if money gets tight. Credit cards will shift away from being the way people pay for most things all the time to a way for people to pay now with future earnings. With the option of paying with Bitcoin, and considering the rules and fees of credit cards, people will start thinking more carefully about their credit card use.

So in the final analysis, are bitcoins better than credit cards? Well, it depends on what you want. If you want something that will give you instant credit to tide you over, credit cards will serve you well. And for almost everything else, Bitcoin is the winner.

Found at Bitcoin Warrior.

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caleb chen says this

Read this HERE>

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Bitcoin, Gold, or Both?

Last year, when the price of Bitcoin in US Dollar terms surged, it coincided with the beginnings of a huge correction in the price of gold. Once the price of 1 Bitcoin surpassed the price of 1oz of gold there was an inevitable rash of articles comparing the two. Was Bitcoin the new gold? Would interest in the virtual currency spell the end for the yellow metal? Was it a sign that the end of the world was near? Subsequent events have proven that none of that was the case. Bitcoin and gold both continued to see price volatility, but both seem to have settled down this year, leaving open the question as to which those looking for an alternative to fiat currency should hold.

As usual in matters Bitcoin, that particular argument last year included a lot of exaggerated claims by adherents and misinformed statements by detractors. It quickly degenerated into a war of words in which, as is the way of any war, truth was the first casualty. Of course, as is also usual in matters Bitcoin, in reality not that many people were aware of the debate and even less cared. Those who were suspicious or distrustful of fiat currencies argued it out amongst themselves, while the rest of us got on with making and spending government issued pieces of paper.

That there was a minor storm in a teacup, however, should not obscure the fact that the debate raised some important points; there are many similarities, but also many differences, between gold and Bitcoin. The similarities are often intentional and it is no surprise that a digital currency should, at least in some ways, be modeled on a commodity that has been a store of value for centuries.

Like gold, Bitcoin is inherently deflationary as a limited supply (21 Million) exists, or rather has the potential to be mined, and, over time, as mining becomes more difficult, the rate of supply will decrease. This is cited by some as a big negative for Bitcoin, but that deflationary nature and limited supply doesn’t really seem to have hurt gold too much. If Bitcoin were to completely replace fiat currencies as a method of payment for transactions globally I can see how the inbuilt inability to expand supply to keep up with global growth could be a problem, but only the most fanatical proponents of peer-to-peer currency can truly imagine such a situation. The rest of us see Bitcoin as an add-on to, rather than a replacement for, conventional currency; again, much like gold is today.

A more cogent argument against virtual currencies is the much simpler one of “Why bother?” If gold already acts as an alternative, deflationary store of value with limited supply and has done so for a few thousand years, why create another one at all? The answer, a common one in the digital age, is convenience. Physical gold is heavy and bulky and, despite its history, difficult to transact; payment for goods and services almost always involves the holder converting back to fiat currency. Aside from the physical properties, you could say the same about Bitcoin, but there are a couple of fundamental differences that make it more convenient.

Firstly, in an increasing number of cases, the merchant that you are dealing with will take Bitcoin directly as payment. The fact that they will, in the current scenario, then immediately exchange the digital asset that represents Bitcoin for one that represents a fiat currency is of little concern to the user. For the holder, spending gold directly is at best inconvenient if not actually impossible, which brings us to the second difference… speed.

Analyzing, verifying and weighing gold takes time whereas digital transactions can be processed almost immediately. That this process is done within the peer-to-peer network and between computers results in another benefit that Bitcoin users are well aware of: reduced cost. If you keep some of your wealth in gold, then spending it often leads to you paying fees to the financial institutions twice; first on the gold to fiat currency transaction, then on the buyer to seller transaction in that currency. Little wonder then that the world’s major banks are all in the gold business but very few have embraced digital currency.

These benefits alone are enough to convince me that, as we move forward, Bitcoin represents a more practical solution than gold for those who wish to hold at least some of their wealth in something other than government-issued currency. That doesn’t mean, however that it will replace gold any time soon; people will always place value in something that they can see and hold. Those who fear inflation don’t have to choose between the two, they can just hold both.

Found HERE.

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WIKILEAKS’ JULIAN ASSANGE MAY HAVE SAVED BITCOIN

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bitcoin fantasy sports

Read all of this HERE.

 

Why Wall Street has yet to enter Bitcoin

2014 was supposed to be the Year of Wall Street

It was supposed to be the cypherpunks, followed by the anarcho-capitalists, then onto the VCs, and this year, Wall Street and Institutional Investors.

2014 hasn’t quite played out that way.

As such, I took a trip to my old stomping grounds to try and figure out why Wall Street has been quieter than many expected at the beginning of the year.

The good news is I feel a lot more informed after visiting with former colleagues at bulge bracket investment banks, former clients of mine at some of the world’s largest Hedge Funds, Pension Funds, and Private Equity funds, and I had a chance to speak with a couple Family Offices as well.

The bad news is I don’t think Wall Street money is really the next phase for Bitcoin.

I preface the below by noting that I only spoke with a couple dozen people and therefore would not deem any of my observations as absolute.

An Opening Surprise

Back in my old grounds, I was shocked that the immediate reaction I received was to the tune of ‘What? You are involved in Bitcoin now? I didn’t know it was that bad. Let me try to find you a job in Q1 2015’.Practically speaking, I didn’t rule out warming to that possibility but nonetheless I was quite surprised at their first reaction. A junior guy that I had mentored in the past who just started trading Gov Bonds even said to me ‘Dude. Stop chasing bubbles. Find a real job. I can send you some stories of Beanie Baby traders if you need a reality check’. Rough.

Truth is I wasn’t so concerned by these folks nor others who thought Bitcoin was a bubble or had only heard of Silk Road and Mt Gox. I wanted to speak to people that knew Bitcoin decently well and get their reasoning for why Wall Street had not gotten in. Fortunately, I found a few.

The people I spoke to were Portfolio Managers, Traders and Salespeople dealing across Private Co’s, Commodities, Equities, and FX.

I was reminded very quickly by these folks that asking Wall Street to ‘adopt’ Bitcoin in the form of buying the coins themselves was just incredibly foreign to the way they operated. At the same time, most Bitcoin startups haven’t even made it to Series B and so investing in the companies also didn’t seem appropriate.

The way Wall Street operates

The motto for Wall Street has always been to find an edge – an arbitrage model, a high frequency algo, a long/short pair trade, credit vs. equity, offsetting risk to retail investors, fundamental analysis, event-driven plays etc – and then to lever up and trade on that edge. Rinse and repeat.

What’s wrong with buying Bitcoins for Wall Street 

Everything they knew and everything I was able to explain about Bitcoin didn’t fit that mode of operations at all. The proposition sounded like Wall Street was supposed to buy coins next because they were sophisticated enough to understand Bitcoin and its potential and had the capital at hand to speculate on it.

…And they were supposed to do that with 100% cash on no leverage, and then just park the bitcoins and bank on the next wave of adoption and investors to come. There’s really no trading out of a position as the reality is on some days, exchange volumes for BTC are only a couple million USD.

That unfortunately is not appealing and not feasible for the Wall Street guys I talked to. Nowhere in that picture does it give them something to do everyday, and it was too capital intensive given the lack of access to leverage and arbitrage opportunities. There was no easy way to price it using their traditional methods. There’s a common phrase termed ‘career-risk’ that goes around Wall Street – meaning if you’re not long the S&P500 – you might be out of a job. However, there just is no ‘career risk’ for not getting into Bitcoin in 2014. It’s quite the opposite. One guy at one of the world’s largest pension funds said to me ‘I don’t think it’s at a point where I can have that conversation with the Board’.

When will ‘Wall Street’ show up? 

The high-frequency guys are actually excited to trade Bitcoin when the market cap is significant enough that market making on the exchanges using algos can generate a few million dollars in profits. Private bankers are interested in issuing retail notes when there is demand. The ETF guys are excited about arbitraging the NAV premium on COIN between the ETF shares and the physical coins.

In essence, Wall Street will be there when Bitcoin is big enough for them to take their cut or ‘edge’ on the daily trading volumes. They will be there to provide liquidity and offer various investment vehicles. They are not going to be a pawn in the Bitcoin enthusiasts’ plan – as a source of significant speculative capital to pump Bitcoin up another 10x.

What does that mean for Bitcoin?

Perhaps caught in all the speculative enthusiasm of 2013, we as a community looked in the wrong direction for the drivers of the next wave. We were looking for the next group of people – ‘Wall Street ‘- to step in and continue speculating. There is no doubt that multi-sig and various security advancements have been significant and have set up the infrastructure in place for exchanges, broker-dealers, investment firms to hold and trade in Bitcoin. While these are necessary requirements for institutional investors, taken in isolation, they are not drivers of fresh buying.

What we should have been looking for and what we need to look for now are fundamental use cases for Bitcoin. Speculative capital can come and go. The people that need to use Bitcoin for their online gambling, their remittances, their adult content, their micropayments, etc – these are the people that will stay and uphold the fundamentals of the currency.

If we shift our focus from finding the next group of speculators to finding the next killer use case, the future will undoubtedly be bright for Bitcoin. And after a few waves higher for the market cap, who knows, we just might find Wall Street all around.

From Jack C. Liu.

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Bitcoin as Money?

Abstract:
The spectacular rise late last year in the price of bitcoin, the dominant virtual currency, has attracted
much public attention as well as scholarly interest. This policy brief discusses how some features of
bitcoin, as designed and executed to date, have hampered its ability to perform the functions required of
a fiat money––as a medium of exchange, unit of account, and store of value. Furthermore, we document
how various forms of intermediaries have emerged and evolved within the Bitcoin network, particularly
noting the convergence toward concentrated processing, both on and off the blockchain. We argue that
much of this process would have been predicted by established theories of financial intermediation, and
we consider the theories’ implication for the future evolution of intermediaries serving users of bitcoin or
alternative virtual currencies. We then compare Bitcoin with other innovations to facilitate payment
services, from competing alternative digital currencies to electronic payment protocols. We conclude with
a broad consideration of the major factors that will likely shape the future development of Bitcoin versus
other alternative payment systems. We predict that Bitcoin’s lasting legacy will be the innovations it has
spurred to payment technology, although the payment system will remain dominated by large processors
because of economies of scale.

Read this from the Federal Reserve Bank of Boston.

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inputs and outputs

Read it all HERE.

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United Way Accepts Bitcoin Donations

The United Way, the world’s largest privately held nonprofit organization, has announced it will accept Bitcoin donations.

The organization said they came to the conclusion after realizing it would make it easier for donors to help support the causes in which they believed most strongly.

“Achieving United Way’s vision for the world – where all individuals and families achieve their human potential – requires innovation powered by new technology and outreach methods,” United Way CEO Brian A. Gallagher said. “United Way seeks to lead the way for others by taking bolds teps to grow our organization, and we are delighted to do so again today.”

United Way will be processing their donations using Coinbase.

The Charity Holy Grail

There are several organizations bitcoiners would love to see adopting Bitcoin. Amazon is an often-cited one, owing to their status as the largest online retailer worldwide. Amazon, however, has said they have no plans to begin accepting Bitcoin.

Another is PayPal, one of the largest merchant processors online. That dream actually did come true just last week, shortly after a video teasing Bitcoiners with unknown possibilities.

Google, certainly one of the biggest organizations on the planet, would be a great boon to the Bitcoin infrastructure if they came onboard. The list is endless.

Somehow, the United Way was never talked about very often. Perhaps it’s because of the organization’s charitable status. Rather than being able to buy computers, cars, or vacations, the United Way is simply accepting donations.

Regardless, though, having the world’s largest charitable organization on our side is a momentous occasion for Bitcoin. If the world’s largest charity joins the Bitcoin ship, anything can happen.

To donate your bitcoins to the United Way, visit their donation page.

Found HERE.

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Does Bitcoin’s Price Affect Business?

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EXPLAIN A BITCOIN HASH TO ME LIKE I’M FIVE…

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What can actually kill Bitcoin?

Amid the turmoil of today’s news regarding Russia “banning bitcoin“… again. It seems a good time to sit back and ask ourselves just what kind of threats cryptocurrencies face both internally and externally.

The obvious starter to this conversation is of course, government regulation. As entrenched oligarchies feel their stranglehold of the money supply loosening we can expect a whole range of tactics to be employed by various regulatory bodies across the globe. In fact, my think tank has been ominously calling the end game of this development “World War C”, as governments realize they cannot stop cryptocurrencies without eventually resorting to violence and outright totalitarian control.

Doomsday scenario’s aside, world governments should really be thanking their lucky stars Bitcoin currently holds the top spot in the cryptocurrency space. As there are a myriad of trickier currencies (some with full on anarchistic leanings) already waiting in the wings. For any world government, it will be best to embrace cryptocurrency in it’s current form or not only will you fall behind the rest of the world technologically as competing markets become more and more efficient but you will also be kicking a hornets nest that will involve some of the brightest minds in the community finding ways to completely subvert or work around your fiat system (something that has arguably already happened with inventions like MarineCoin floating around).

For my part I am less concerned about global regulation than I am about internal threats such as a bug that goes unnoticed for a long period of time or the full on centralization of mining. In fact it was the latter problem that prompted me to explore this issue further as the Beijing, Qingdao and Hangzhou based mine called “Discus Fish” recently surpassed GHash.IO as the largest mining operation in existence.

Whereas just a few months ago GHash.IO was catching flack for it’s ever expanding share of the network now “Discus Fish” seems poised to snatch the top spot and never let go with a dangerously impressive 24% of all blocks mined.

Continue reading HERE.

 

Why Bitcoins and Apple Pay Can’t Kill Off Cash

Cash is dirty and flimsy. It comes with no official rebate or reward programs. Worst of all, you can’t stuff it into a smartphone or laptop to pay for something online.

Yet there are no real substitutes for cold hard cash. Despite predictions of a cashless society, the Bureau of Engraving and Printing and the U.S. Mint churn out more currency and coins every year. The average American still uses cash for dozens of transaction each month, despite the wealth of alternatives, from good old plastic to virtual currencies to “point and pay” apps like the upcoming Apple Pay service.

Cash has advantages these high-tech replacements can’t match. It won’t run out of battery power, for one thing. It’s anonymous — invisible to the IRS, law enforcement and hackers, as well as to irritating marketers and data brokers. As Cass Sunstein notes, paying only in cash can also be a great way to monitor spending and stick to a budget.

The average person pays with cash about 23 times a month, according to an analysis by the San Francisco Federal Reserve Bank. While credit card use has doubled since 2000 and debit card use is up fivefold, cash is still used more often than either option. It’s most often used for transactions under $25, even by those who claim to prefer credit or debit cards overall. And 40 percent of 18- to 24-year-olds say cash is their preferred form of payment.

Some $1.2 trillion in cash circulates outside of banks — 15,000 tons worth. That’s up 20 percent since 2011, and is the equivalent of $3,836 squeezed under the mattresses of every U.S. man, woman and child.

The location of all these “Benjamins” — it’s mostly in $100 bills — is a puzzle to economists and currency experts. When asked how much money they kept in their wallet or house, the average U.S. respondent said a little more than $40 in the wallet and $100 in the house, according to a 2013 Tufts University study.

Some of the money may be overseas. Less than a quarter of U.S. currency resides abroad, estimatesUniversity of Wisconsin economist Edgar Feige. Where’s the rest? Legitimate business owners and those without bank accounts rely heavily on cash. And some is hidden away by the real-life equivalents of Breaking Bad’s Walter White in an underground “cash only” economy. The U.S. may lose more than $100 billion a year in taxes on unreported income of over $400 billion, according to the Tufts study and others.

Using cash can help people carefully track their own spending, as Sunstein says. But one of its most convenient features is that it keeps everyone else in the dark.

From Bloomberg.

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The 5 Most Popular European Countries for Bitcoin

This article is a continuation of our previous analysis of the most popular US states for bitcoin using data from CoinDesk’s bitcoin ATM map.

popular-european-countries-for-bitcoin-630x365

As public interest in digital currencies grows, bitcoin ATMs have proven to be critical for bridging the gap between casual onlookers and active bitcoin owners.

To identify the areas where bitcoin ATMs are particularly popular, we analyzed data from CoinDesk’s bitcoin ATM map and calculated the countries in Europe with the most machines per capita.

Of course, the term ‘popular’ is subjective by nature and there are countless ways to measure it, but for the purpose of this report, popularity is defined by the number of bitcoin ATMs per capita in each European country.

Data analysis

Our data for Europe include a total of 64 bitcoin ATMs distributed across 20 countries. The UK and Netherlands are home to more than 30% of Europe’s bitcoin ATMs with 10 machines in each country.

When adjusting for each country’s population, the UK ranks only eleventh most popular in Europe for the digital currency machines. Other countries with multiple bitcoin ATMs that missed the top five include the Czech Republic, ranked sixth with six ATMs; Switzerland, ranked seventh with three ATMs; and Italy, ranked 14th with four ATMs.

Here are the top five most popular European countries for bitcoin, ranked by the number of bitcoin ATMs per capita:

Now go and finish reading this HERE>

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Bitcoin HeliosCard

Protect Your Money: HeliosCard is an easy-to-use, true secure chip card Bitcoin wallet in a sleek credit card form factor that you manage with a smartphone app. Built using the same secure chip as your MasterCard or Visa Chip Card and physically and logically resistant to attacks, HeliosCard signs transactions while keeping your private keys safe on the card.

From Helios Card.

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10 Physical Bitcoins: the Good, the Bad and the Ugly

Physical bitcoins have been around for years, but they are anything but mainstream and there are very few companies involved in this fledgling industry. Some try to appeal to consumers through quality and the use of precious metals, others offer good designs at relatively low prices, while some offer neither.

The market for physical coins is limited and this is a niche for collectors and diehard enthusiasts. Rather than being truly practical, physical bitcoins are usually marketed as conversation pieces, limited series collectibles or ‘geek gifts’.

The limited size of the industry is a problem, as a number of firms have already gone out of business while others never even started shipping their products. Many physical bitcoins are limited series affairs, so after a few hundred are produced and sold they simply vanish from the market. If beauty is in the eye of the beholder, then while there are some truly spectacular designs, others may not impress most users.

Fraud is another concern, as cases of fake coin sales on online auction sites have been reported in the past, so please exercise caution and conduct extensive research before placing an order.

Below are 10 physical bitcoins on the market.

1. Casascius

casascius-coins

We will start with a familiar face and a familiar coin: Mike Caldwell and his Casascius coin. Caldwell started minting his coins a couple of years ago, but late last year he was banned from selling pre-funded coins.

The Financial Crimes Enforcement Network (FinCEN) classified his activities as “money transmitting” and Caldwell was forced to start selling empty coins. Salesresumed earlier this year and Casascius is currently listing three coins, along with a gold-plated savings bar. However, none of them are priced and it is unclear whether or not Casascius simply ran out of stock or stopped selling them directly altogether.

In addition to these silver, brass and gold plated products, Casascius also sells aluminium promo coins. A bag of 500 costs 0.39 BTC.

Much more and of course the next 9 coins found HERE>