Forgot your password?
typodupeerror
Bitcoin The Almighty Buck The Internet

Online-Only Currency BitCoin Reaches Dollar Parity 517

Posted by timothy
from the computationally-intensive dept.
IamTheRealMike writes "The BitCoin peer to peer currency briefly reached exchange parity with the US dollar today after a spike in demand for the coins pushed prices slightly above 1 USD:1 BTC. BitCoin was launched in early 2009, so in only two years this open source currency has gone from having no value at all to one with not only an open market of competing exchanges, but the ability to buy real goods and services like web hosting, gadgets, organic beauty products and even alpaca socks."
This discussion has been archived. No new comments can be posted.

Online-Only Currency BitCoin Reaches Dollar Parity

Comments Filter:
  • by Monkeedude1212 (1560403) on Thursday February 10, 2011 @03:01PM (#35164902) Journal

    The US Dollar will soon be worthless?

    *ducks*

    • Re: (Score:2, Insightful)

      by grnrckt94 (932158)
      Isn't the dollar already worthless?
      • If anything depends on pure faith more than anything else, it would be currency. Lots of people still have faith in the dollar, so no, it is not worthless yet.

        • Re:In other words (Score:5, Interesting)

          by cheezedawg (413482) on Thursday February 10, 2011 @04:02PM (#35165590) Journal

          It will never be worthless. The US Treasury Dept only accepts US dollars for tax payments, so we need to have dollars to pay our taxes, or we go to jail.

      • Re:In other words (Score:4, Insightful)

        by ErikZ (55491) * on Thursday February 10, 2011 @03:24PM (#35165174)

        The "Hard liners" in congress have proposed 100Bn in spending cuts, on a 1400Bn deficit.

        That is the biggest fix the US politicians could come up with, and half of them are whining about how it's too much.

        It's not worthless yet. But the US is going to hit a financial wall very soon, very hard.

      • by kellyb9 (954229)

        Isn't the dollar already worthless?

        Maybe... Maybe not. I can still go into any store in the US and buy something with good old-fashioned cash. If I went in their with my digital wallet of BitCoins, they'd probably laugh at me.

        On a side note, if they were real geeks, they would've called them credits.

        • by h4rm0ny (722443)

          On a side note, if they were real geeks, they would've called them credits.

          Bitcoin is not a credit-based money system. That's kind of the point.

        • by Teancum (67324)

          In theory, it is possible to print out a Bitcoin "note" on your home computer printer... or at least come up with a system where a physical piece of paper can be given some value of Bitcoins and used in a fashion similar to "old fashioned cash". The "official forums" of the Bitcoin website have several proposals, some of which have had some considerable thought put into them in terms of how that would be accomplished.

          The most promising proposal I've seen along those lines is to print out "Bitcoin notes" wi

      • by RingDev (879105) on Thursday February 10, 2011 @03:35PM (#35165298) Homepage Journal

        The dollar is weaker compared to other currencies than it has been in the past. It sounds like this is a bad thing, but really, it's not such a clear cut issue.

        For instance, I have a bunch of Canadian and European friends who are coming to the US this year to vacation. The weaker US dollar means their Canadian dollars and Euros will go much farther. And Tourism is awesome because it brings money from outside of the economy in.

        We are also seeing a slight uptick in exported goods as our prices are effectively lowered by the weak dollar. It creates a lower labor cost (relatively speaking) and allows us to create more jobs for exported goods manufacturing and services.

        And it also means that our debts, while still significant, are effectively smaller.

        There's a fair bit of not so go that goes a long with a weakening dollar as well, but it's not a wholly good/bad situation. There is some good, some bad, and some ehhh that accompanies any change in value of the US dollar.

        -Rick

        • Yup, take a look at Japan a couple of decades ago. Having a strong Yen caused them serious problems. They built up a large manufacturing base and, for a while, everything that you bought had 'Made in Japan' stamped on it. Japanese nationalism, however, meant that they were also heavily into the idea of buying local goods, so they weren't importing much. That meant that everyone was exchanging money for Japanese goods, and the Yen became very expensive. This drove up the price of Japanese-produced goods

    • Re:In other words (Score:5, Insightful)

      by Anonymous Coward on Thursday February 10, 2011 @03:16PM (#35165092)

      From the site,

      The total eventual circulation will be 21 million bitcoins. There will never be more coins than that. The coins are entering circulation gradually, at a steady pace over many years, to nodes supporting the network in proportion to the CPU time they contribute. With the current total CPU power on the network, most CPUs will usually take months between successfully generating 50 BTC.

      So basically, this is like "collector items", not currency. A very scare "resource", if you can call it that. You get 50 BTC after few months, meaning that basically you've just spent $50 in electricity to get your "free" money.

      Anyway, this virtual "currency" is bad for so many reasons, it's not even funny. Fist, the purpose of currency is not to hoard it - it is to spend it for goods/services. Currency is IOU notes that devalue over time. It is not a hard asset, like coal or copper or shares of MegaAssInc. FIAT currency tends to be *backed* by something, like an economy, like USA or European Union or even China. What is this backed by?

      Anyway, another fad "currency". Might as well collect "ISK in eveonline" or "gold nuggets in WoW" - same thing.

      • Re:In other words (Score:4, Insightful)

        by icebraining (1313345) on Thursday February 10, 2011 @03:23PM (#35165170) Homepage

        You get 50 BTC after few months, meaning that basically you've just spent $50 in electricity to get your "free" money.

        No, you get 50 BTC by selling something or some service, just like any other currency.
        The money "generations" isn't a way to earn it, it's just to produce them initially.

      • by loufoque (1400831)

        So basically, this is like "collector items", not currency. A very scare "resource", if you can call it that.

        Any finite resource can be a currency. Scarce yet widely spread resources work best (gold, for example).

        What is this backed by?

        Computing power, which is derived from energy.

        • Re:In other words (Score:5, Insightful)

          by SETIGuy (33768) on Thursday February 10, 2011 @05:38PM (#35167104) Homepage

          Scarce yet widely spread resources work best (gold, for example).

          Supply is too scarce and industrial demand for gold are too variable for it to be a good currency any more. Even in the 1700s and 1800s inflation and deflation often hit 20% or more, which killed a lot of economic growth. Yes, that's inflation and deflation of a currency consisting primarily of gold coins. And the government wasn't capable of stopping it. You won't hear that from anyone claiming all of our economic woes are because we went off the gold standard. Inflation has generally been lower and more stable than it was on the gold standard, and deflation has been rare. That doesn't mean it's not a good store of value (i.e. the price of gold won't drop to zero. It could drop 80%, though) or a hedge against high inflation. It just means that it isn't a good currency.

          • Re: (Score:3, Insightful)

            by GNT (319794)

            categorically false. a silver or gold dollar from 1789 to 1917 essentially had a constant value except in gold rush or silver rush towns. since 1917 the unitary dollar has lost 98% of its value. or in words the poster can understand, inflation of the dollar over the last ninety years was 50 fold.

            • by SETIGuy (33768)

              categorically false. a silver or gold dollar from 1789 to 1917 essentially had a constant value

              You can call it "categorically false," but that just makes you someone who hasn't looked into it or a liar. I'll assume the former for now.

              That the value was essentially the same in 1789 and 1917 doesn't mean that there were no cycles of inflation and deflation in between. Have a look at page 6 of this presentation [oregonstate.edu]. In it I see annual inflation of up to 20% and annual deflation of up to 19% in that time period. Then compare it to the relatively lower (absolute value) inflation after 1917.

              Sorry if it

      • by Xunker (6905)

        "FIAT currency tends to be.."

        I believe you mean 'fiat', not "FIAT". Fiat currency is legal tender that has value backed by decree of a policymaker; The FIAT Currency is the new hatchback from the Italian automaker.

      • Re: (Score:3, Informative)

        by nhaehnle (1844580)

        Currency is IOU notes that devalue over time.

        Absolutely. This is the one thing that "goldies" never seem to get right. Money is all about you owing me and vice versa. Moreover, all money in existence is ultimately a debt of the government, which is why the current political obsession with austerity is so ridiculous. Government debt is simply the mirror image of private wealth.

        FIAT currency tends to be *backed* by something, like an economy, like USA or European Union or even China.

        More concretely, modern fiat money is backed by the power of taxation. A large part of the value of money comes from ultimately circular reasoning, i.e. you can pay your grocerie

      • The total eventual circulation will be 21 million bitcoins. There will never be more coins than that.

        So basically, this is like "collector items", not currency. A very scare "resource", if you can call it that.

        Are you implying that the limited quantity is a bad thing? That's a good thing, because it means its value won't drop over time due to diluation, as happens with fiat currencies with no limit on how much is issued.

        Anyway, this virtual "currency" is bad for so many reasons, it's not even funny. Fist

        • by Lehk228 (705449)
          the value of gold certainly has not been stable for centuries, as uses and demand change so does the price.

          basing currency on a random metal from the ground is completely asinine. rather than monetary policy set by experts, or politicians, or even corrupt businesses, it's set by whoever happens to find deposits of gold or own the land those deposits are on. since gold production and demand do not scale to population sizes the end result of a global gold based currency would be prices in miniscule portion
        • "Good money does not lose its value over time."

          Wrong. Money gives you liquidity with zero rentability. As long as the world becomes more productive (by means of specialization and technical advancement) a given set of currency *must* dilute, or else you would be gaining wealth by just sitting on a pile of money.

          "thus discouraging saving money."

          That's a good thing. Saving money does absolutly nothing for anybody. Investing money does. Of course, your savings in a bank is not "real savings" (as in hiddin

        • Are you implying that the limited quantity is a bad thing? That's a good thing, because it means its value won't drop over time due to diluation, as happens with fiat currencies with no limit on how much is issued.

          A limited quantity is a very bad thing for a currency. The value is _supposed_ to drop over time. That is the entire reason it works as currency. The only point of currency is to encourage and enable trade. So you can trade your extra sheep for ducks without having to hunt down someone who needs sheep and has extra ducks and can make the exchange right now. In order to do that, currency needs to actually be used and traded. Currency that is under someones bed rather than in circulation is not doing its job.

      • Re:In other words (Score:5, Informative)

        by EllisDees (268037) on Thursday February 10, 2011 @05:44PM (#35167222)

        > Currency is IOU notes that devalue over time.

        No, currency is whatever we decide it is. You are speaking only of one small subset of currency known as fiat currency. There is nothing intrinsic about currency that says it has to devalue over time.

      • by TheCarp (96830)

        The biggest problem bitcoin seems to have is that people get way too caught up in those details. I did too.... but that's just about how its minted. Yes, you get 50 btc if you process a block (an amount which cuts in half roughly every 4 years until it goes below the 8 decimal minimum and becomes 0)

        However, nobody is going to make a lot of btc doing that,.... the network is already too big (a phenom II 6 core will process a block around every 125 days last I checked). The MAIN way to get btc is to trade for

      • by noz (253073)

        FIAT currency tends to be *backed* by something, like an economy, like USA or European Union or even China. What is this backed by?

        Wrong. An economy is not a backing. It does encourage confidence that the notes of debt may be exhanged of goods or services in the future, but a backing is a guarantee (e.g. hard assets) and an economy is not a guarantee.

        FIAT currency tends to be *backed* by something

        WRONG! Fiat currencies may or may not be backed by something: fiat means mandated by law. Coincidentally, fiat c

  • I had bitcoin generating nightly on my Dual-Quads at work (in their own VM, scripted to start nightly), and have about 300!!

    woohoo? :D

  • To reach "parity with the dollar" means nothing. A Yen may be worth $0.01, but that doesn't mean ANYTHING about the strength of the Yen.

    • To reach "parity with the dollar" means nothing. A Yen may be worth $0.01, but that doesn't mean ANYTHING about the strength of the Yen.

      True, but if you knew historical values of the Yen or Bitcoin vs. the Dollar (or any other currency) you might know something about it . . .

      And then there's this point from TFS: "BitCoin was launched in early 2009, so in only two years this open source currency has gone from having no value at all to one with not only an open market of competing exchanges, but the ability to buy real goods and services . . ." Actually, that's about 1/2 TFS, so it is short enough to read in its entirety. As is TFA . . .

    • by eugene2k (1213062)

      It's not meaningless. The point is not to say that bitcoin is as strong as a dollar - which it isn't (as the strength of a currency is defined by how many traders accept it), but to say that the adoption rate is growing and quite rapidly.

    • Re:meaningless (Score:4, Interesting)

      by harks (534599) on Thursday February 10, 2011 @04:05PM (#35165620)
      True. Dollar-parity is just a psychological milestone. What is meaningful is that Bitcoin has increased from about $.05 in September to $1 now.
    • It would mean something if the value of the bitcoins in circulation equaled the value of dollars in circulation. Managing a total value of $20M isn't peanuts though.
  • The real threshold (Score:5, Interesting)

    by Drakkenmensch (1255800) on Thursday February 10, 2011 @03:08PM (#35164980)
    You'll know that this currency has achieved official status once you can start renting escort services with it.
  • So basically the two people using BitCoin decided to exchange a dollar for a BitCoin?
  • Sorry (Score:3, Funny)

    by MrEricSir (398214) on Thursday February 10, 2011 @03:09PM (#35164992) Homepage

    ...but I only accept payments in Beenz or Flooz

    • Re: (Score:2, Funny)

      by Anonymous Coward

      But THIS time it's DIFFERENT! This time there's crypto-decentralized-cloud-p2p-trust-digitalness in it! It's more privatey! That makes it way better and more underground, so it's required that everyone on Slashdot will switch to it at once.

    • by Tharsman (1364603)
      Darn, I wont be able to do business with you, I only carry Facebook Credits on me.
    • by oodaloop (1229816)
      What about Linden Dollars? Those are still worth something, right? Right?
  • Because I've got a shitload I need to get rid of.

  • does this online money have any bank backing? or is some thing that they can say the eula says we don't have to pay out any thing.
    what about tax?

    • Why do you want yet another currency backed by banksters?
    • by ribuck (943217)

      ... or is some thing that they can say the eula says we don't have to pay out any thing ...

      There is no EULA. It's completely peer-to-peer. You don't register, you just run the open source client.

  • by makubesu (1910402) on Thursday February 10, 2011 @03:13PM (#35165052)
    until I realized starting up a system like this isn't really any different than what banks do with fractional reserve banking.
    • by ect5150 (700619)
      Mod parent up due to truth!
    • by Kludge (13653)

      So now you know you can call it a con.

    • by JesseMcDonald (536341) on Thursday February 10, 2011 @04:02PM (#35165582) Homepage

      ... this isn't really any different than what banks do with fractional reserve banking.

      Aside, of course, from the complete lack of anything resembling deposits, loans, or reserves (fractional or otherwise). In other words, no real similarity at all. It's not a con or scam either, of course—merely a protocol for indirect exchange in which certain hard-to-find patterns of bits take the place of scarce physical commodities. As a virtual currency it has many of the attributes which make precious metals so eminently suitable as physical currencies: scarcity, durability, divisibility, and fungibility, to name a few. The protocol may not be perfect, but it is the best I've seen thus far. The limitations mainly relate to scalability and maintaining a consistent state between many decentralized peers—technical issues, not economic ones.

  • So the EFF will accept BitCoin-based donations. I'm sure their staff will be ecstatic to be paid in this "currency" rather than old-fashioned euros (or dollars or yen).

    Seriously - this seems no more useful than money earned in Second Life or Monopoly money.

    • Re:O-key (Score:4, Interesting)

      by sturle (1165695) on Thursday February 10, 2011 @03:54PM (#35165504)
      I've sold a lot of bitcoins (in the past when the value was lower than 1/4 of it's current value) for normal money in the bank, and I have bought coffee, gadgets, a month of VPS and more for bitcoins. My main use of bitcoins now is to transfer money to a foreign account without paying outrageous fees to my bank. (The foreign account is for paying expenses in that country, not for tax evasion or anything illegal.) I buy bitcoins in my currency and sell in the other. Often with a profit as well. Can't do that with monopoly money.
  • by skine (1524819) on Thursday February 10, 2011 @03:15PM (#35165074)

    Do alpacas really wear socks?

  • by DNS-and-BIND (461968) on Thursday February 10, 2011 @03:16PM (#35165096) Homepage

    In other news, my new currency will trade at 100USD to 1. Therefore, it is much better and we can all ooh and ahh over how obsolete national currencies are. That's the whole story here, right?

    "Working directly with the owners of this small family farm in Massachusetts, we are offering selected Alpaca products for Bitcoins."
    Yeah, so I suppose this is someone's father or something. Real great customer there. The Eco-shop online linked from the article has 5 of 7 categories listing no products. You know I love buying from those sorts of stores! Either the owner never finished the site or it's been abandoned for some time, there's no way to know. The best part is giving my CC info to some shop with tumbleweeds and cockroaches wandering about.

  • by Anonymous Coward

    ...in the post-apocalyptic world. That's why I'm saving bottle caps.

  • I won't take any new currency seriously unless it's denominated in credits. Or possibly quatloos.

  • BitCoin credits? BitCoin credits are no good out here. I need something more real.

    I don't have anything else...but BitCoin credits will do fine.

  • I'd invest in penny stocks before I invested in this.

  • by JackOfAllGeeks (1034454) on Thursday February 10, 2011 @03:34PM (#35165286)

    and even alpaca socks.

    They have finally arrived.

  • BitCoin enthusiasts seem to fall into the same category as gold standard promoters. You can't run a modern global economy with financial instruments based on a rare commodity. Only 21 million BitCoins will be generated, which will cause deflation once that limit is reached. The only way a government could use BitCoins is the same way they used to use gold, ie. buy up enough of it to have reserves that can be used to pump money into the economy when it needs it. BitCoins won't be more stable than modern

    • Once that limit is reached neither deflation nor inflation will occur. Any price fluctuations in a currency with stable supply will be the result of supply and demand fluctuations.

      Which is the point of having a price system in the first place, conveying that information as accurately as possible.

  • by Omnifarious (11933) * <eric-slash&omnifarious,org> on Thursday February 10, 2011 @04:02PM (#35165580) Homepage Journal

    First, a fixed number of bitcoins will not actually work. The smallest unit of value people will want to exchange is not one 21 millionth of all the units of value in the world. It will be significantly smaller than that. As the total size of the economy expands, the total value people will want to exchange as a fraction of the size of the economy will become smaller and smaller.

    Secondly, the way the system works affords no transaction anonymity. And for a currency to be 'real' this is a big deal.

    I have long felt that in order for any currency to work, it must be able to be 'stolen'. In other words, you must be able to use it to engage in transactions that are not legally sanctioned.

    Of course, the identity behind any given public key in the bitcoin network is something of a mystery. But it's not that hard to trace, especially since it's possible to compile a complete and unbroken history of all transactions any bitcoin has been involved in.

    This is an interesting experiment, but I don't think it's a replacement for currency.

    • by MozeeToby (1163751) on Thursday February 10, 2011 @04:09PM (#35165656)

      The smallest transferable unit is not a single BitCoin. It is in fact .00000001 BitCoin, making for plenty of transferable units.

    • by harks (534599)
      Bitcoins can be divided up into units as small as .00000001 The software currently only supports 2 decimal points, but this can be increased in later versions.
    • Point #1: The coins are divisible to 8 decimal places. 21 million coins is 21 bilion milliBitcoins, or whatever you want to 1/1000th of a Bitcoin, and it divides much further. Point #2: masking the origin of a payment should be quite simple. You could, for example, send a sum to some currency exchange and send a different sum to a different Bitcoin address. Having a completely untraceable wallet should not be too difficult.
    • The smallest unit of value people will want to exchange is not one 21 millionth of all the units of value in the world.

      That shouldn't be a problem; the protocol allows each BitCoin to be divided by up to six decimal places, so the limit is one 21-trillionth of the world-wide value, not one 21-millionth. The official client only allows two decimal places for now, for practical reasons, but that would be trivial to change.

      Secondly, the way the system works affords no transaction anonymity.

      This is more of a problem. The system is designed to allow anonymous spenders and recipients, but some simple traffic analysis can show connections between various accounts (some of which may be linked to re

    • by AP31R0N (723649)

      There are 47,619,047,619,047,619 units in the total pool (when the system has run its course). Seems like quite a few. Enough for 14 B people to have 3,401,360 each.

      For a currency to work people need only to accept it as a medium of value exchange.

      i think it is not meant as a replacement for national currencies, but as a supplement.

  • It works this way : (Score:5, Informative)

    by unity100 (970058) on Thursday February 10, 2011 @04:24PM (#35165846) Homepage Journal
    you join the network with your computer. the network is a cloud that lives on its own, without noone being able to control it. so, it doesnt have any central point of failure. it also awards you some amount of bitcoins for running the client, because you are contributing to the running of the system. but this is inversely proportional to the amount of computational power the cloud has at that moment - back when bitcoin was small, much more coins were awarded for joining clients. now, the network is nearing seti etc in computational power. it is impossible to generate even a single bitcoin over months with an ordinary computer now. and so on.

    system assumes two things :

    cost of electricity

    computational power.

    it is based on the computational power of the network. if the computational power increases, the system arranges bitcoins accordingly. so, even if you join with a huge server farm, you just up the computational power of the network, and the amount of coins you can earn from your participation decreases. hence, you cannot beat the network.

    also, the cost of electricity is a factor. if you do the above, you will get hit by a huge cost in electricity.

    only way to beat the system, is to be able to have zero cost for the electricity you spend, and then join it with mega server farms.

    but, the system says that, at a point where zero cost for electricity is a practical reality anywhere on the planet, there will be no need for money, since cost of producing anything will approximate zero. (and that's right).

    ..........

    the system is also anonymous. noone but you and the person you exchange with, know who sent them what. but, this knowledge is only in the form of awareness of a complex encrypted key existing on the other side - nothing else. it may have been done from china over a netbook, or a mobile device flying somewhere on atlantic ocean.

    that is both good, and also a drawback - if you lose the encrypted keys you store on your hard drive, you lose the 'wallet' that contains your cash.

    but thats no different in the real world either.
    • by knarf (34928)

      only way to beat the system, is to be able to have zero cost for the electricity you spend, and then join it with mega server farms.

      And thus the next generation of botnets found its purpose...

"Say yur prayers, yuh flea-pickin' varmint!" -- Yosemite Sam

Working...