Bitcoin Christmas Rally in Full Effect

After spending a week in the $3.10 to $3.30 range, Bitcoin has made a strong 12% move to the upside on the Mt.Gox USD market, hitting $3.70 and threatening to take out the seven-week high of $3.82 previously hit on October 29th.

Chart courtesy of BitcoinCharts.com

The month-long bull market has been confirmed in a big way. Pay attention, stock markets, this is what a Christmas rally is supposed to look like.

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Bitcoin and Conventional Business do not Mix

It's time to be truly honest about what we're up against in terms of motivating the adoption of Bitcoin.

Imagine the best-case scenario where Bitcoin exchanges accept credit cards, directly. There is absolutely no way they will be able to drop a credit card deposit fee below a very generous 2%, and that's assuming that chargebacks won't happen, which they will.

Add the additional 0.5%, or so, that you would have to pay for actually buying the Bitcoins on the exchange, and you're looking at a minimum of 2.5% in fees from the get-go. That 2.5% already negates any savings that a merchant could offer for someone willing to pay with Bitcoin. Right there, we know it makes absolutely no sense to offer a product or service for Bitcoin when the same thing can already be acquired with credit cards or PayPal. Now you understand why Cheaper-in-Bitcoins made almost no sales whatsoever, and why you'll never see Amazon adopt Bitcoin.

We also talk a lot around here about charities or non-profits that accept Bitcoin donations. Again, no one is going to go out of their way to acquire Bitcoins in order to make a donation; it just adds an unnecessary extra step. Nor are people going to acquire Bitcoins to be able to buy indy-music, make micro-donations to blogs (too bad!), or pay for shareware. Independent artists, writers, and software developers should accept Bitcoin as a secondary source of income, but it will never make up more than a small percentage of their revenue. Bitcoins will eventually trickle into their pockets, but they won't spur the actual adoption of Bitcoin.

So, if conventional online businesses and charities are out the window as motivators for Bitcoin adoption, then what will actually do the trick?

1) Illegal markets. Where there is a desire to maintain as much anonymity as possible, Bitcoin will thrive. Silk Road is what put Bitcoin on the map, and it continues to operate successfully to this day. There is no denying that Bitcoin will become the preferred method of transacting in illegal markets, because it gives an obvious advantage to both clients and merchants.

2) Virtual markets. Virtual currencies could always be purchased with credit cards, but then the user was constrained to one platform. With Bitcoin, users can move their money between different virtual worlds, assuming they eventually support Bitcoin. This is a multi-billion dollar market that can be exploited.

3) International markets. There's never been an easier way to move money across borders. Any business that can take advantage of the agility of Bitcoin will do so.

4) Online gambling. The reason why online gambling and Bitcoin make a great match is because of the ability to easily withdraw Bitcoins from a casino. Until now, it's usually been a pain in the ass to retrieve your winnings. Being able to get your money out of a casino as quickly as you got it in is sufficient motivation to go out to the bank and wire some money to an exchange.

5) Investing. If 1, 2, 3, and 4 begin to catch on, then Bitcoin will continue to be a viable investment for those looking to move their money out of fiat currencies and maybe diversify their precious metal portfolios. Given the ever-worsening sovereign debt crises, Bitcoin will become an even more attractive investment.

Between these five motivators, we're still looking at the possibility of a multi-billion dollar Bitcoin economy. Therefore, at the end of the day, we shouldn't get too worked up about whether or not Amazon or Wikipedia will eventually accept Bitcoin. Bitcoin's strength is not in the conventional.

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BC Casino is a Fraud

(Edit: I have been contacted by the owner of BC-Casino in response to this post. While this assessment of his software is not off the mark, he assures me that he wishes to stick around for the long-run and that all players will have a fair and enjoyable gaming experience.)

"If it looks too good to be true, it probably is."
-Some smart guy.

BC-Casino.com is a fraud.

Indications that something is amiss:

- The rampant grammar errors on the front page. No one puts that much money into a website without hiring someone to check their English;

- There is no Playtech logo or 'Powered by Playtech' which is on all legit sites;

- There is no licensing around the contact info;

- The name they list, "Global Entertainment Services Limited," is close to the name of a Kahnawake commission permit holder, but not the same entity;

- Not the normal login field, in the Flash or the download version;

- The installer is not the one Playtech uses. Playtech uses a branded installer with the logo from the casino, and not a standard installer like BC-Casino uses;

- The number keypad where you have to type your username and password is not from Playtech;

- If you look at this slotgame preview, the video is hosted on Class1casino, not BC-Casino.com. This means Class1casino (recently closed) silently opened a new outfit, or they sold the sourcecode. It is also possible that BC-Casino ripped off the code and forgot to change the domain name to their own.

Be cautious if you decide to deposit money to this site - you may never see it again. Playtech has been contacted for further investigation.

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Meshnet, Bitcoin, and BitSyncom: Creating the New Internet

As the SOPA debate rages on in Congress, the brightest minds of the Internet are already taking decisive steps toward building a new, alternative Internet which would remain untouchable by the corporations currently threatening to tear apart the fabric and soul of the Internet we know and love. For more on SOPA and the threat it represents, have a read of one of my older articles, here.

This new, decentralized (sound familiar?) Internet would not rely on corporate-controlled Internet Service Providers or be subject to the whims of increasingly undemocratic US government regulation, but would depend on its worldwide userbase for maintaining its infrastructure.

The key to the implementation of the so-called "Meshnet" is the establishment of a sufficiently powerful network of nodes. While a completely voluntary system would be ideal, the costs associated with the construction and operation of these nodes would be non-trivial; an incentivized system would be far more effective.

Enter Bitcoin and BitSyncom.

BitSyncom announced yesterday that it has launched the "BitSyncom Initiative," consisting of Bitcoin-enabled tablet computers that would connect to the Meshnet through super-node towers that act as hosted Bitcoin wallets. Tablets (or any other Bitcoin-enabled device) would pay for access using Bitcoin, but the Meshnet would also pay other users Bitcoin for supplying bandwidth to the network. The end result, a peer-to-peer, user-driven, incentivized Internet, free from biased corporate-controlled and undemocratic government regulation, or centrally controlled payment processors.

Given the current atmosphere of global financial uncertainty, the ever-growing library of freedom-reducing legislation being passed by governments, and the increasing momentum behind the Occupy movement, this is definitely an idea whose time has come - one that is very, very exciting. The last thing we need is another country with the ability to shut down all private communications, Iran-style. The quicker the Meshnet is implemented, the better.

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An Ode to Satoshi Nakamoto

This is not my work, but the work of a poetic genius named "coretechs" who posted this poem on the Bitcointalk forums.

To honor the anniversary of Satoshi Nakamoto's last post on the forums, December 12th has been declared "Satoshi Nakamoto Day." To commemorate this day, I present to you, "An Ode to Satoshi Nakamoto."

In the year of the bailouts, 2008,
The bankers were printing more debt for the state
The dollar grew weaker, the big picture clear
As they fed the hangover more Keynesian beer


World leaders debated, directing the blame
But with no real solutions, just more of the same
Regulation, mark-to-market, housing costs for the poor
Or maybe just our pure desire for more


Who's to blame, is this caused by desire for wealth?
When perhaps the real problem is money itself!
The idea isn't new, maybe everything's tanking
'Cause society is built on fractional reserve banking


And so called "investment" and attempted control
May soon spiral fiat into a death roll
As elected officials looked dumber and dumber
Others started to put their faith into numbers...


On one cold winter day, a crypto-genius arrived
With some rock solid code, picked up by the hive
Audited and improved, then released to the wild
Bitcoin had been born, Satoshi's brain-child


One day bankers and fascists may look back with scorn
On the day when the genesis block was born
Like a clock set in motion, with springs that are wound
By the hackers who joined, mining blocks to be found


Securing transactions of those who believe
That middle-men shouldn't be there to receive
More than a small fee to perform a transaction
Or invade privacy of those taking the action


This idea is fantastic and easy to spread
Through incentives devised in the crypto-man's head
The ball started rolling, but Satoshi grew quiet
Soon thereafter began the first speculative riot


Had he lost faith, become scared, or retired?
Maybe he was a banker himself but got fired?
AI from the future or a corporate plot?
Or was "he" a "them", or had he been shot?


The answers to these, may never be known
So we'll make it a feast, so that you can be shown
How thankful we are for what you have built
As we sew our transactions on this open-source quilt


And we hope that you're lurking, with smile and a glow
As your world-changing software continues to grow
If you need some advice on this day, what to do?
Please dump some some of your coins, I have buy orders at $2

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"[insert anything here] is a Ponzi Scheme"

First, the definition:

"A Ponzi scheme is a fraudulent investment operation that pays returns to its investors from their own money or the money paid by subsequent investors, rather than from any actual profit earned by the individual or organization running the operation."

Just for fun, I ran a Google search for "is a Ponzi scheme." Let's take a look at the results, for science:

1) "Social Security" is a Ponzi scheme.
2) "Facebook" is a Ponzi scheme.
3) "Suburban Sprawl" is a Ponzi scheme.
4) "Medicare" is a Ponzi scheme.
5) "Full Tilt Poker" is a Ponzi scheme.
6) "The American Dream" is a Ponzi scheme.
7) "The US" is a Ponzi scheme.
8) "Gold" is a Ponzi scheme.
9) "Real-Estate" is a Ponzi scheme.
10) "Greek Bonds" [are] a Ponzi scheme.

In short, the definition of a Ponzi scheme has grown to become "anything that acquires value only through the participation and acceptance of many," which covers basically everything except food, water, air, sunlight, and the company of others (except mothers-in-law).

All monetary systems, by definition, require the participation and acceptance of many, yet we need monetary systems to have a functioning economy. Bitcoin is just a more efficient and fair monetary system. Using this new, looser, definition of Ponzi scheme, yes Bitcoin is a Ponzi scheme, but this looser definition is neither incriminating nor offensive.

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Bitcoin is Approaching the Mainstream

On December 12th, the Internet Archive announced they would be accepting Bitcoin donations. For starters, the Internet Archive is ranked 224th among all websites in the US and 213th worldwide. Let that sink in for a second.

In the two days that the site has been accepting donations, they've received over $1,000 in Bitcoins. Bitcoin users came through in a way that guarantees that other sites, possibly even bigger sites, will take notice that accepting Bitcoins is an extremely easy and effective method of collecting donations.

A comment from "apeterson", on Reddit, summed it up best:

"If you already have Bitcoins, the necessary steps are:

1) Copy the address;
2) Paste it to your wallet;
3) Enter amount; and
4) Press send.

(editor's note: two of these steps will go away when the URI scheme is implemented)

If you already have a credit card the necessary steps are:

1) Choose from one amount in the options (25, 50, 100, 250, 1000 or other);
2) Select additional options and optionally sign the donation with your name;
3) Add to basket;
4) Review your basket, and untick the hidden option to donate an extra $2.00 to justgive;
5) Proceed to checkout;
6) Login as donor, either by your existing account or by creating a new account;
7) Create an account;
8) Enter email, first name, last name, birth year (chose between 4 options: 1979 or later, 1965-1978, 1946-1964, 1945 and earlier), gender, and how you heard about the site;
9) Untick "I would like to get spam";
10) Enter billing info (full address);
11) Enter credit card info; and...
12) [this is where apeterson surrendered]

The pain alone to complete [these steps hurts more than just giving them] the 5 BTC I sent them."

One other turn of events that will push Bitcoin closer to the mainstream is that you can now sell your Bitcoins on either Mt.Gox or Tradehill and withdraw your cash to PayPal. The significance of this should not be understated.

You now have some serious ammunition to help you convince someone that Bitcoins are actually worth something. Many an argument about the legitimacy of Bitcoin can be put to bed simply by telling someone they can sell their Bitcoins, right now, and withdraw the cash to their PayPal account, right now. You could even offer someone Bitcoins in lieu of cash and not feel like an eccentric Internet geek; the divide between Bitcoin and fiat currency has grown smaller.

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