Bitcoin podcast with Erik Voorhees of BitInstant

Jim H
By Jim H on Mon, Mar 11, 2013 - 8:18am

 Very good discussion between Tom Woods (for Peter Schiff) and the founder of BitInstant Erik Voorhees.  Like many, Tom blew off Bitcoin for some time before learning more and gaining more respect for it as a movement/phenomenon.  Good coverage of the libertarian aspects of Bitcoin;

!

2 Comments

goes211's picture
goes211
Status: Diamond Member (Offline)
Joined: Aug 18 2008
Posts: 1114
Good podcast but...

The podcast made me interested enough to try and take a fresh look at bitcoins, just in case I have been too harsh in my earlier assessment.

Spending time looking at bitcoin charts and the mtgox live feed I found something that I feel needs some explaining.

It certainly looks like there is a lot of asymetry in the markets bid/ask sizes.  Notice how the offer is very steep and the right hand labels (offers) are nearly 2 orders of magnitude larger than those on the left (bids).  Unless I am missing something, it is telling me I can buy nearly $3 million worth of bitcoins in one massive buy transaction and only move the market up around $8.  However a sale of only $70K worth of bitcoins will move the market down that same $8.  Basically the offer is solid and the bids are very soft.  That looks to me like a market with very limited upside ( at least in the immediate future ) and a whole lot of downside.  It certainly does not look like a prescription for short term speculative profits for new market participants.

There are a lot of things to like about bitcoins but are just a few that I am having a real hard time accepting.  Bitcoins nebulous beginnings are just something that is going to keep me from deeply trusting in them for a long time, and basically this graph confirms one of my concerns.  If the author was known, maybe I could be more forgiving but it seems to me that bitcoins look like a market where the early adopters just have too great of advantage.  It would be like starting a gold standard, when very few people own gold.  Those that do, make out like bandits.

The strange thing is that maybe I would be more forgiving if the market was a little less opaque.  If a real person came up with an idea of a purely digital currency and made money off of it, I probably would feel that person was providing a service for which they deserve to be compensated.  But as it is, with the current distribution of bitcoins, I can't help but feeling that it has more similarities with a ponzi scheme than a gold standard.

Jim H's picture
Jim H
Status: Diamond Member (Offline)
Joined: Jun 8 2009
Posts: 2391
Bitcoin market structure..

Goes, that is a really interesting observation about the market structure.. if I understand correctly, it sounds like some entity, or entities, are holding a giant hoard of bitcoins out for sale above the market.. pulling it ahead of the market like bait.  There is a Bitcoin hedge fund started up in Malta.. so they may be playing games with their hoard, layering it out ahead of the market "for sale";

http://www.forbes.com/sites/jonmatonis/2013/03/08/first-bitcoin-hedge-fu...

Current assets under management in the Bitcoin Fund are $3.2 million (2.5€ million) and there is no performance-based fee. However, the fund charges an annual management fee o.5% of Net Share Value payable monthly in order to provide the sophisticated security and wallet management that one would expect with such large amounts at stake.

Nothing would surprise me...  this is still a relatively small market. 

I really don't get hung up on the origins of Bitcoin the way some others do... to me, it is just another outgrowth of the hacker culture;

 

http://en.wikipedia.org/wiki/Free_and_open_source_software

In 1983, Richard Stallman, longtime member of the hacker community at the MIT Artificial Intelligence Laboratory, announced the GNU project, saying that he had become frustrated with the effects of the change in culture of the computer industry and its users.[11] Software development for the GNU operating system began in January 1984, and the Free Software Foundation (FSF) was founded in October 1985. An article outlining the project and its goals was published in March 1985 titled the GNU Manifesto. The manifesto included significant explanation of the GNU philosophy, Free Software Definition and "copyleft" ideas.

The Linux kernel, started by Linus Torvalds, was released as freely modifiable source code in 1991. The first licence wasn't a free or open-source software licence. However, with version 0.12 in February 1992, he relicensed the project under the GNU General Public License, which was.[12] Much like Unix, Torvalds' kernel attracted the attention of volunteer programmers.

FreeBSD and NetBSD (both derived from 386BSD) were released as free software when the USL v. BSDi lawsuit was settled out of court in 1993. OpenBSD forked from NetBSD in 1995. Also in 1995, The Apache HTTP Server, commonly referred to as Apache, was released under the Apache License 1.0.

In 1997, Eric Raymond published The Cathedral and the Bazaar, a reflective analysis of the hacker community and free software principles. The paper received significant attention in early 1998, and was one factor in motivating Netscape Communications Corporation to release their popular Netscape Communicator Internet suite as free software. This code is today better known as Mozilla Firefox and Thunderbird.

Netscape's act prompted Raymond and others to look into how to bring the FSF's free software ideas and perceived benefits to the commercial software industry. They concluded that FSF's social activism was not appealing to companies like Netscape, and looked for a way to rebrand the free software movement to emphasize the business potential of sharing and collaborating on software source code. The new name they chose was "open source", and quickly Bruce Perens, publisher Tim O'Reilly, Linus Torvalds, and others signed on to the rebranding. The Open Source Initiative was founded in February 1998 to encourage use of the new term and evangelize open source principles.[13]

 

 

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