MSE Blog: The day I bought a beer with virtual currency Bitcoin

Former_MSE_Helen

Hi all, this is a thread to discuss the MSE blog:
The day I bought a beer with virtual currency Bitcoin


"A virtual currency might sound like the stuff of computer games, but the growth of online money such as Bitcoin is something we increasingly hear about in the mainstream media..."


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AmberGambler

As low as £19? Not true, bitcoin has been worth less than £1. And the volatility is somewhat overstated, fluctuations of +-20% aren't uncommon, and in any case it's usual for the value to be updated continuously based on the current exchange rate (i.e. the vendor wants £4 for his beer, so the btc price fluctuates based on the £-btc exchange rate). It's not so much that the beer increases/decreases in price, but the bitcoin that you hold that does. Beer is a known quantity, with a fairly standardised value (somewhere between £2.50 and £4 in a pub, in the United Kingdom). The bitcoin doesn't really have a fair price, it's largely speculative, so what can happen is that you buy bitcoin (using real money of course) intending to purchase something, and then the value of the bitcoin changes substantially after you do so.

Also bitcoin's value is basically backed by online drugs sales. That's a big point. Without that, there isn't really a market. It's pointless to buy beer using bitcoin, because cash is much easier to obtain, but it's useful to buy drugs (because they are illegal and bitcoin anonymity facilitates that).

cocodude

I would argue that Bitcoin really comes into its own when it comes to international payments and there are many genuinely useful instances this is used. Transferring money between countries can often be quite difficult, especially if there are laws stopping trade (e.g. trade with people in Cuba via American banks/payment procssors). Transferring Bitcoins is a good way around it, and the seller of goods could at any point choose to convert the Bitcoins into their own currency.

I agree that a significant part of the market is about buying drugs, but there are genuine other uses and I don't think that makes Bitcoins bad per se (I run a legit company that accepts Bitcoins for instance). Banks can make life hard for some people, so having a real peer-to-peer monetary system levels the playing field.

graingert

The 64-digit codes are created through a process called “Bitcoin mining”

that's not how Bitcoin mining works, and where did you get the 64 digit value from?

cocodude

graingert wrote: »

that's not how Bitcoin mining works, and where did you get the 64 digit value from?

My understanding is that he's right if he's talking about 64 hexadecimal digits, and that being the hash of the block header.

The SHA-256 algorithm outputs 64 hexadecimal digits and if a miner manages to get a hash conforming to the current network target then he has found a solution.

Li0nhead

Something that has not been told to us is: how do we get bitcoins?

cocodude

Li0nhead wrote: »

Something that has not been told to us is: how do we get bitcoins?

In the UK, check out Bittylicious, BitBargain and LocalBitcoins.

Habbakuk

I've singed up to Bittylicious then it asks me for a 'Bitcoin address'. There's no help at all on their web page from what I can see. Can somebody help me regarding what my 'Bitcoin address' should be?

cocodude

Habbakuk wrote: »

I've singed up to Bittylicious then it asks me for a 'Bitcoin address'. There's no help at all on their web page from what I can see. Can somebody help me regarding what my 'Bitcoin address' should be?

There is a help guide at https://bittylicious.com/help/index.php/Bitcoin_buying_guide which might help you.

zenseeker

Bitcoin is something I've been meaning to try, but still manage to get a little confuzzled about. I guess if more mainstream companies start accepting them I might take the leap.

Unfortunately it's been held back a little owing to it's association with the darker side of the webs on sites such as the recently shut down "Silk Road"

cocodude

zenseeker wrote: »

Unfortunately it's been held back a little owing to it's association with the darker side of the webs on sites such as the recently shut down "Silk Road"

Agreed. My opinion is that this is changing now that SR has gone and the Bitcoin price keeps on rising, proving that there are so many other, legitimate uses of Bitcoins.