5 ms·

Is this a dangerous thing to put on ones website at all?

yebyen 14y ago
Dangerous? The only danger is that you might pay 1% fee when sending/converting your earnings back to USD. Also possible that the value of bitcoin tanks overnight, but there are historical charts that show this has not really happened but just once. What kind of danger are you thinking? The exchange could also go under and/or rob you. You should be careful about to whom you give your bank account numbers.
- tmh88j 14y ago
  >What kind of danger are you thinking? My guess is he's referring to one of the many "dealers" that were hacked and had bitcoins stolen.
  - yebyen 14y ago
    That would fall into the category of exchange going under. Similar risk to cash in the mail, except with cash in the mail there's nothing you can do to protect yourself (or prove that delivery was accepted.)
    - crygin 14y ago
      It's actually somewhat riskier than cash through the mail (which is shockingly reliable), and you have no recourse, unlike the US postal service which is more than happy to insure cash mailings (up to $25k through Registered Mail) and investigate and prosecute fraud.
      - yebyen 14y ago
        That was the first danger. How much is the insurance? We were talking about 1% at CoinBase, I think that MtGox was 0.65%, and that's only for buying and selling. Withdrawals are free. Bitcoin-to-bitcoin transfers are (still) free. If it's $20,000 cash in the mail, it weighs about 200g (100 $100's) and to mail it about an hour from here (1 hour 30 minutes by car) Rochester to Buffalo, registered mail with $25,000 insurance, flat rate priority mail envelope is $53. I guess that price is the same across country. OK, so it's actually cheaper to mail cash than to trade bank dollars for bitcoins. I'll get off my pulpit now. (PS: I'm pretty sure you actually have to pay taxes on that cash you received by mail, especially if it's registered and insured, now that it's yours, it's income. Bitcoins on the other hand are not cash. I am a newbie to taxes, but I don't think you would have to pay tax on bitcoin income unless you were actually cashing them out. Maybe capital gains. Any experts?)
        tedunangst 14y ago
        You owe tax on income regardless of the form. If your employer gives you stock, you owe tax based on the stock's value the day you get it. Capital gains (or losses) mostly only applies when you sell the stock, and only to the difference in value. Same deal for bitcoins. Hell, if you're caller #9 and you just won the two week cruise, you're getting a fat tax bill and cruises aren't cash either.
        yebyen 14y ago
        Ahm... but if you paid cash for the bitcoins, you don't owe any tax on it, right... until they appreciate in value, then it's capital gains? And then, only if you actually cashed out, right? If you leave them as bitcoins and the value drops below what you paid, now you've got a loss and maybe deduction instead... It would make sense that you should pay taxes on mining income (if they can find you).
        zargon 14y ago
        If you paid cash for the cash you received in the mail, it wouldn't be income either, would it? (though it makes little sense.) Most people earning income in bitcoin probably aren't doing it by mining, especially after ASIC arrives. Just to point out that mining is only one of many ways to earn bitcoin income.
        yebyen 14y ago
        Right, there's also arbitrage trading on markets which have fluctuating market rates, plus regular buying and selling over longer periods of times, transaction fees (both from mining and from trading), and simply accepting Bitcoin as payment for services. I am not so sure that ASIC will kill the small-time mining scene, the low-end ASIC miners are cheaper and less power hungry than video cards (though you can't play games on them), it will just mean that if you want to mine bitcoins, you'll have to get one (or more), and you can't rely on your video card anymore. So a lot of people will be pushed out.
    - Karunamon 14y ago
      > That would fall into the category of exchange going under. Bitcoin exchanges are not like Paypal, it's a terrifically bad idea to keep your coins in a wallet controlled by a third party for any length of time.
      - gknoy 14y ago
        What do you do with them, then? I thought the point of Coinbase was to have a hosted wallet. I'm not sure I trust my security better than theirs. If the reply to that is that I should not be using Bitcoin, that's probably a sign of an issue that may limit widespread adoption.
        jlgreco 14y ago
        Treat your local bitcoin wallet like your bank account, and treat your hosted bitcoin wallet like your leather wallet in your pocket. Only keep what you need in the leather wallet / hosted wallet. Local wallets are easy to keep secure. Just keep it on a flashdrive, don't let it touch your harddrive, and don't use it on a pwnd computer. If you want, you can even keep that flashdrive in a real bank.
        mcherm 14y ago
        Evidence shows that the track record of hosted bitcoin accounts is a bit disappointing. But the evidence seems to show that the track record of bitcoin accounts kept by individuals is significantly worse. For instance, http://arstechnica.com/tech-policy/2012/10/78-percent-of-bitcoin-currency-stashed-under-digital-mattress-study-finds/ http://arstechnica.com/tech-policy/2012/10/78-percent-of-bit... and I think I am safe in concluding that a significant portion of those "non-circulating" bitcoins are actually lost. So my financial advice would be that you are better off trusting an exchange than trusting your own storage and backup procedures.
        yebyen 14y ago
        7 million bitcoins are "lost" because they haven't circulated in the last 3 months? Maybe you have found evidence of an elaborate ponzi scheme that we are all played by, but I don't buy your conclusion, and it's not the conclusion of the linked article. If only 90,000 bitcoins held by/moved through a small group is driving most of a total of 423,000,000 bitcoins transacted, then I'd say the rest of the owners of the 9mil bitcoins in existence owe those guys a debt for stress-testing the grid. You can use a cloud bitcoin wallet, like BitcoinSpinner, which is implemented on top of the BCCAPI. While I have not read the actual API, and I'm not sure this program is open source, I can tell you that it promises your bitcoins cannot be stolen from the cloud! If that's not good enough for you, and you don't trust your own safe box in your own house, then I'd suggest you run back to your FDIC insured bank, or better, start reading. It's shameful to hear Hacker News readers saying they don't trust their own data to stay safe.

Dangerous? The only danger is that you might pay 1% fee when sending/converting your earnings back to USD. Also possible that the value of bitcoin tanks overnight, but there are historical charts that show this has not really happened but just once. What kind of danger are you thinking? The exchange could also go under and/or rob you. You should be careful about to whom you give your bank account numbers.

tmh88j 14y ago
>What kind of danger are you thinking? My guess is he's referring to one of the many "dealers" that were hacked and had bitcoins stolen.
- yebyen 14y ago
  That would fall into the category of exchange going under. Similar risk to cash in the mail, except with cash in the mail there's nothing you can do to protect yourself (or prove that delivery was accepted.)
  - crygin 14y ago
    It's actually somewhat riskier than cash through the mail (which is shockingly reliable), and you have no recourse, unlike the US postal service which is more than happy to insure cash mailings (up to $25k through Registered Mail) and investigate and prosecute fraud.
    - yebyen 14y ago
      That was the first danger. How much is the insurance? We were talking about 1% at CoinBase, I think that MtGox was 0.65%, and that's only for buying and selling. Withdrawals are free. Bitcoin-to-bitcoin transfers are (still) free. If it's $20,000 cash in the mail, it weighs about 200g (100 $100's) and to mail it about an hour from here (1 hour 30 minutes by car) Rochester to Buffalo, registered mail with $25,000 insurance, flat rate priority mail envelope is $53. I guess that price is the same across country. OK, so it's actually cheaper to mail cash than to trade bank dollars for bitcoins. I'll get off my pulpit now. (PS: I'm pretty sure you actually have to pay taxes on that cash you received by mail, especially if it's registered and insured, now that it's yours, it's income. Bitcoins on the other hand are not cash. I am a newbie to taxes, but I don't think you would have to pay tax on bitcoin income unless you were actually cashing them out. Maybe capital gains. Any experts?)
      - tedunangst 14y ago
        You owe tax on income regardless of the form. If your employer gives you stock, you owe tax based on the stock's value the day you get it. Capital gains (or losses) mostly only applies when you sell the stock, and only to the difference in value. Same deal for bitcoins. Hell, if you're caller #9 and you just won the two week cruise, you're getting a fat tax bill and cruises aren't cash either.
        yebyen 14y ago
        Ahm... but if you paid cash for the bitcoins, you don't owe any tax on it, right... until they appreciate in value, then it's capital gains? And then, only if you actually cashed out, right? If you leave them as bitcoins and the value drops below what you paid, now you've got a loss and maybe deduction instead... It would make sense that you should pay taxes on mining income (if they can find you).
        zargon 14y ago
        If you paid cash for the cash you received in the mail, it wouldn't be income either, would it? (though it makes little sense.) Most people earning income in bitcoin probably aren't doing it by mining, especially after ASIC arrives. Just to point out that mining is only one of many ways to earn bitcoin income.
        yebyen 14y ago
        Right, there's also arbitrage trading on markets which have fluctuating market rates, plus regular buying and selling over longer periods of times, transaction fees (both from mining and from trading), and simply accepting Bitcoin as payment for services. I am not so sure that ASIC will kill the small-time mining scene, the low-end ASIC miners are cheaper and less power hungry than video cards (though you can't play games on them), it will just mean that if you want to mine bitcoins, you'll have to get one (or more), and you can't rely on your video card anymore. So a lot of people will be pushed out.
  - Karunamon 14y ago
    > That would fall into the category of exchange going under. Bitcoin exchanges are not like Paypal, it's a terrifically bad idea to keep your coins in a wallet controlled by a third party for any length of time.
    - gknoy 14y ago
      What do you do with them, then? I thought the point of Coinbase was to have a hosted wallet. I'm not sure I trust my security better than theirs. If the reply to that is that I should not be using Bitcoin, that's probably a sign of an issue that may limit widespread adoption.
      - jlgreco 14y ago
        Treat your local bitcoin wallet like your bank account, and treat your hosted bitcoin wallet like your leather wallet in your pocket. Only keep what you need in the leather wallet / hosted wallet. Local wallets are easy to keep secure. Just keep it on a flashdrive, don't let it touch your harddrive, and don't use it on a pwnd computer. If you want, you can even keep that flashdrive in a real bank.
        mcherm 14y ago
        Evidence shows that the track record of hosted bitcoin accounts is a bit disappointing. But the evidence seems to show that the track record of bitcoin accounts kept by individuals is significantly worse. For instance, http://arstechnica.com/tech-policy/2012/10/78-percent-of-bitcoin-currency-stashed-under-digital-mattress-study-finds/ http://arstechnica.com/tech-policy/2012/10/78-percent-of-bit... and I think I am safe in concluding that a significant portion of those "non-circulating" bitcoins are actually lost. So my financial advice would be that you are better off trusting an exchange than trusting your own storage and backup procedures.
        yebyen 14y ago
        7 million bitcoins are "lost" because they haven't circulated in the last 3 months? Maybe you have found evidence of an elaborate ponzi scheme that we are all played by, but I don't buy your conclusion, and it's not the conclusion of the linked article. If only 90,000 bitcoins held by/moved through a small group is driving most of a total of 423,000,000 bitcoins transacted, then I'd say the rest of the owners of the 9mil bitcoins in existence owe those guys a debt for stress-testing the grid. You can use a cloud bitcoin wallet, like BitcoinSpinner, which is implemented on top of the BCCAPI. While I have not read the actual API, and I'm not sure this program is open source, I can tell you that it promises your bitcoins cannot be stolen from the cloud! If that's not good enough for you, and you don't trust your own safe box in your own house, then I'd suggest you run back to your FDIC insured bank, or better, start reading. It's shameful to hear Hacker News readers saying they don't trust their own data to stay safe.