Then there is another type of crowdfunding ....equity crowdfunding. Instead of donation-based such as KickStarter, equity investing is where the contributors can earn profits if the project's revenues does more than just cover expenses.
Cyber-equity exchanges include BitFunder.com and BTCT.co.
One problem, however, is that there might be jurisdictions where this type of crowdfunding isn't allowed. In the U.S. the JOBS act signed by President Obama means offering this type of investment will be made legal when certain rules are followed (e.g., use of a crowdfunding portal). The type of anonymous investment occurring of BitFunder.com and others is not likely to be an acceptable method by the SEC with regard to their rules for the JOBS act.
If the rising dollar volume crossing the blockchain outpaces the rising exchange rate, then it is sustainable. The blockchain output cannot be estimated with certainty though so that will always be a best guesstimate.
But certainly the bulk of the value remains from speculative interest rather than organic demand for the coins for use in commerce.
"Autosell" is the term Mt. Gox uses as the name for the parameter in the shopping button API to sell immediately once the transaction has confirmed.
But that's the thing. Merchants are worried about the downside risk, and basically ignore that there is an upside gain possible as well. Sure, the merchant shouldn't be speculating with revenues that go to employee's salaries and inventory purchases, but if there's 10% profit, keeping 10% of revenues without converting that to USDs might be beneficial.
BitPay is a merchant processor that lets the merchant specify what percent of revenue to convert and remainder of bitcoins are paid out without conversion.
You bought them and sent them to your CoinBase wallet, or did you actually buy them from CoinBase? (I didn't think that had started selling coins themselves yet.)
Consumer-grade mining is a temporary phenomena. In a few months, the block reward will be dropping in half, and most people with GPUs will no longer be able to operate them profitably for mining. This is because FPGA mining hardware has been shipping in volume.
In addition, if ASIC hardware starts shipping, GPU is completely out of the game and FPGAs will be hard pressed to stay powered on.
GPU mining had a good run for nearly two years, but it is about to be obsoleted.
Miners are receiving nearly $100K USD per day but the share to the smaller operators is often just small amounts, oftentimes $20 or so per month. The cost for them to cash out using the bank system is often expensive. This provides an economic method to cash out small amounts without incurring high fees.
Let's say it takes a week between when a person buys bitcoin and when those coins are spent.
That mean about half a million dollars of currency is tied up for these users. That's about 50K BTC. That's less than one week's production from mining.
This marketplace has almost no impact on the exchange rate directly. What it might be doing is introducing a number of people to bitcoin. They might then speculate on the exchange rate (simply by buying more than they plan to use for purchases, in anticipation of the exchange rate rising), or use bitcoins for purchases or for person-to-person payments.
To be a proof-of-work based cryptocurrency, it would need to make it through the phase where it is vulnerable to external attack.
Bitcoin made it through because nobody knew that a proof-of-work based cryptocurrency would ever end up being worth several hundred million dollars or more.
Now that bitcoin exists, any competitor risks getting spanked down. Even bitcoin is at risk of getting spanked due to a 51% attack, except that it will cost more than $10 million in hardware to do that.
One alternative is using scrypt instead of sha256(), and thus GPUs aren't as effective and the one crypto currency doing that has avoided attack thus far. That currency is worth under half a million dollars of valuation at the current exchange rate and there are hardly any exchanges where it is traded so there's little financial gain from attacking it sooner rather than later. But it is still very vulnerable, in comparison to bitcoin.
Even though the exchange rate is just slightly up versus a year ago on this day, it is way down from the 2011 high yet ($32.40). That is more than 60% below the June 2011 high.
The rate will slow though, to 25 BTC per block (down from the current 50 BTC per block).
So it took 4 years from 0 - 10.5 million, then the next 4 years sees 5.25 milion minted, then 2.125 million in the 4 years after that, and so on for decades until all 21 million have been minted.
Tell that to the people who bought at $15 or $32 even.
The thing is, the first users didn't get all the first ones.
Bitcoin was in Slashdot more than two years ago. It is open source, anyone could download the software and mine on their CPU.
Mt. Gox has been open for even longer. Anyone, anywhere in the world could and still can buy on the exchanges. There's no members-only trading.
If you bought after Slashdot you would have paid around a dime or less. But Slashdot readers called it a ponzi scam and didn't take it seriously.
You could have bought thousands of bitcoins at a dollar when Steve Gibson talked about it in February 2011. But Leo poo-pooh'd it "Not government issued" he balked.
Then again, you could have bought bitcoins at $30 after the July 2011 bubble, and today be down by 66% yet and still be bitter.
That's the nature of speculation. Nobody knows if bitcoin will increase or decrease in value. But it definitely isn't a ponzi. Ponzi means paying dividends to early investors, using funds from later investors. Everyone who held bitcoins yesterday when they were $9.20 could have sold today at $11. Everyone, not just the early miners.
Today, just like a year ago, mining will generate bitcoins at a little more than the cost of electricity to generate them. If you want bitcoins, then mine, buy, or stand on the sidelines.
Then there is another type of crowdfunding ....equity crowdfunding. Instead of donation-based such as KickStarter, equity investing is where the contributors can earn profits if the project's revenues does more than just cover expenses.
Cyber-equity exchanges include BitFunder.com and BTCT.co.
One problem, however, is that there might be jurisdictions where this type of crowdfunding isn't allowed. In the U.S. the JOBS act signed by President Obama means offering this type of investment will be made legal when certain rules are followed (e.g., use of a crowdfunding portal). The type of anonymous investment occurring of BitFunder.com and others is not likely to be an acceptable method by the SEC with regard to their rules for the JOBS act.