If Bitcoin was worth $1 each in 2011, why are they worth $12,000 each now?

I think it goes a bit further than that. Bitcoin has enabled some crimes that just were not possible beforehand. I'm thinking of large scale desktop/laptop ransomware in particular. We've seen this kind of malware now routinely asks endusers for bitcoin to unlock their desktop once they've been caught by it. Police forces are unable to follow the money, a key route to catching malware authors up until now.

Yes but the point was made that bitcoin isnt being used to buy stuff, so what use is it?
If I received 1,000 BTC through a malware scam, happy that the cops cant trace me, what good is a 1,000 BTC (€14m) if I cant spend it?
Typically, I would imagine, I would sell all or part of it, putting downward pressure on price of BTC.
 
I think it goes a bit further than that. Bitcoin has enabled some crimes that just were not possible beforehand. I'm thinking of large scale desktop/laptop ransomware in particular. We've seen this kind of malware now routinely asks endusers for bitcoin to unlock their desktop once they've been caught by it. Police forces are unable to follow the money, a key route to catching malware authors up until now.
So what!? Technology can be used for good or bad. That doesn't create a justification to throw the baby out with the bathwater. Remember, the 'currency' that is most heavily used in crime and particularly organised crime such as the drugs business has always been the usd. Are you suggesting we should ban the usd or that usd has no other legitimate use?
Desktop/Laptop randsomware wouldn't be possible without the internet. Should we tar and feather the internet and then ban it? This is Daily Mail logic.

What of personal responsibility? People need to educate themselves and safeguard themselves against such scams. I got a spam email the other day saying that some nice person had gained access to my laptop. He claimed to have accessed the camera on the laptop during a time when I was supposedly surfing pornhub and reacting to the content on pornhub! The pitch was that I send him $500 in bitcoin and all would be fine. The chancer didn't see any funds from me but no doubt some fool sent him money.
 
@Duke : In recent times, the bitcoin network has struggled with the transaction volume resulting in two issues;

1. Delays in having transactions confirmed.
2. Additional costs in executing transactions - users end up paying much more in fees.

These factors fly in the face of what bitcoin was originally intended for i.e. as a means of payment/to act as a currency.

The implementation of Segwit helped the above somewhat. However, when 'lightening network' is eventually incorporated/activated, it will change all this. We will then be back to fast, inexpensive transactions - which will allow merchants to use btc again without any hangups.

Also, to answer your question ....the value of the coin increases when the difficulty of mining increases.
 
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This is the nub of the issue. No one needs Bitcoin to buy other legitimate stuff, they can do so with conventional currencies. So the demand is only for anonymous payment for black market stuff.
We are slowly moving towards a cashless society - with or without bitcoin. Do you have to be operating in the black market to want anonymity? Centralised forms of digital payment mean that someone somewhere knows everything about you - in terms of location and buying habits. If you decided to give money to Greenpeace, Amnesty International or a political group, whomever runs the regime in a country has access to this information. You may be comfortable with that scenario but I am not (and yet, I don't operate on the 'black market'). It's a case of civil liberties.
Secondly, why would I want to go through a centralised third party to achieve such a payment? Remember what happened when the US government strongarmed visa, mastercard and paypal in cutting off wikileaks? Over and above that, why involve a third (centralised) party when there's simply no need?
 
Yes but the point was made that bitcoin isnt being used to buy stuff, so what use is it?
If I received 1,000 BTC through a malware scam, happy that the cops cant trace me, what good is a 1,000 BTC (€14m) if I cant spend it?
Typically, I would imagine, I would sell all or part of it, putting downward pressure on price of BTC.

The point is that you can effect a transfer via bitcoin. If you can extort 1000 BTC, you can happily cash it in for € and spend away. The key point is that your BTC has been amassed without anyone knowing where or who it came from. This is fundamentally different to extorting money via other currency types. Credit Card payments would be trivial for police to follow. Cash transfer would be impractical for many reasons, in that your criminal needs to be physically available to collect (useless for worldwide distributed ransomware attacks).
 
So what!? Technology can be used for good or bad. That doesn't create a justification to throw the baby out with the bathwater. Remember, the 'currency' that is most heavily used in crime and particularly organised crime such as the drugs business has always been the usd. Are you suggesting we should ban the usd or that usd has no other legitimate use?
Desktop/Laptop randsomware wouldn't be possible without the internet. Should we tar and feather the internet and then ban it? This is Daily Mail logic.

I'm not casting a moral judgement on bitcoin, or suggesting its be made illegal. I'm simply saying that it has brought an innovation to criminal enterprise that did not exist before it. Extortion beforehand always had some weakness where the criminal needed to expose themselves at some stage to collect payment. Bitcoin has removed this risk. I can't think of any other asset, currency or protocol for value transfer that has achieved this so completely and effectively before.
 
The point is that you can effect a transfer via bitcoin. If you can extort 1000 BTC, you can happily cash it in for € and spend away. The key point is that your BTC has been amassed without anyone knowing where or who it came from. This is fundamentally different to extorting money via other currency types. Credit Card payments would be trivial for police to follow. Cash transfer would be impractical for many reasons, in that your criminal needs to be physically available to collect (useless for worldwide distributed ransomware attacks).

Just one point, if you've been infected with ransomware and it has put your data at risk, you had a security hole. You can blame the money but ultimately whether there is ransom or not that security hole still exists and your data is still threatened by it, anyone else could hack you and just delete your data indiscriminately anyway.
 
Criminals will use whatever technology is out there to suit their needs.
Cars, airplanes, the internet, smartphones, encryption, everything really.
 
I'm not casting a moral judgement on bitcoin, or suggesting its be made illegal. I'm simply saying that it has brought an innovation to criminal enterprise that did not exist before it. Extortion beforehand always had some weakness where the criminal needed to expose themselves at some stage to collect payment. Bitcoin has removed this risk. I can't think of any other asset, currency or protocol for value transfer that has achieved this so completely and effectively before.

I can make the same claim about credit cards, they require sensitive information to be hoarded in central databases which create a huge target (no pun intended) for hackers, and you get this happening: http://www.foxbusiness.com/markets/2017/05/24/target-to-pay-18-5m-to-settle-hacking-probe.html 40 million people having their sensitive payment details stolen. When I make a bitcoin payment no sensitive information is shared, the merchant never receives any details that they need to keep secret regarding the payment.
 
The point is that you can effect a transfer via bitcoin. If you can extort 1000 BTC, you can happily cash it in for € and spend away. The key point is that your BTC has been amassed without anyone knowing where or who it came from. This is fundamentally different to extorting money via other currency types. Credit Card payments would be trivial for police to follow. Cash transfer would be impractical for many reasons, in that your criminal needs to be physically available to collect (useless for worldwide distributed ransomware attacks).

I don't agree, but I think we are talking about two different things. The rapid increase in value in BTC has been, its alleged, in no small part to criminal activity. I'm merely questioning that view on the basis that I believe any criminal activity that uses BTC will in fact, put a downward pressure on the price of BTC.
If I buy 1,000 BTC it puts upward pressure on the price of bitcoin. If I cant spend it, it sits in my account, or wallet. If that 1,000 is stolen out of my wallet, for what purpose, if it cant be spent? The logical conclusion is that anyone (or most) criminal activity involving extortion or ransom or whatever is so that the criminal can sell the BTC into S € or £ or other fiat currency so as to spend the fiat currency. Is that a logical assumption? I would say it is. As such, criminal activity is more likely to put a downward pressure on the price of BTC rather than contribute to an upward price swing.

As for cash being impractical, that would depend on who the mules are;

https://www.theguardian.com/commentisfree/2015/feb/15/hsbc-has-form-mexico-laundered-drug-money
 
Just one point, if you've been infected with ransomware and it has put your data at risk, you had a security hole. You can blame the money but ultimately whether there is ransom or not that security hole still exists and your data is still threatened by it, anyone else could hack you and just delete your data indiscriminately anyway.

I'm not blaming the money. I would note though that all of us right now are using computers with active security vulnerabilities, which can and will be exploited, given time. So, I'm not blaming the victim of the crime either - there, but for chance and timing of OS updates, go I.

The case for Bitcoin is not lessened by the ignoble uses some put it to. Crime has not become rampant because of it, nor do I think it likely it will. The innovation it has made may well make law enforcement more difficult in future for crimes which suit it though. It is not like any other currency in this regard.
 
I can make the same claim about credit cards, they require sensitive information to be hoarded in central databases which create a huge target (no pun intended) for hackers, and you get this happening: http://www.foxbusiness.com/markets/2017/05/24/target-to-pay-18-5m-to-settle-hacking-probe.html 40 million people having their sensitive payment details stolen. When I make a bitcoin payment no sensitive information is shared, the merchant never receives any details that they need to keep secret regarding the payment.

If you are claiming that Credit Cards created opportunities for new ways of doing crimes, I'm with you 100%.
 
If you are claiming that Credit Cards created opportunities for new ways of doing crimes, I'm with you 100%.

While also true, that's not my point. My point is that if I buy something from target and pay with credit card, now my identity and credit card information are dependent on their security not mine. It's no longer under my control. If I pay with bitcoin the security of my remaining bitcoin is still 100% in my control, and as an added bonus since paying with bitcoin doesn't require identity to validate the payment the merchant doesn't need to gather and/or store as much personal information about me.
 
While also true, that's not my point. My point is that if I buy something from target and pay with credit card, now my identity and credit card information are dependent on their security not mine. It's no longer under my control.

No, you are not entirely dependant on the merchant's security - you have the protection of the bank, who guarantee not to hold you responsible for fraudulent use of your card. They in turn are insured against loss, and build the cost of this into the cost of the card (which of course they pass indirectly to you). You don't need this protection with bitcoin, as your remaining balance cannot be tampered with. The downside is accidental loss of your remaining balance is not insured against - either via your online wallet provider or if you've kept it on a local device and lost it.
 
The downside is accidental loss of your remaining balance is not insured against - either via your online wallet provider or if you've kept it on a local device and lost it.
People don't keep all their bitcoin on a mobile app. Significant amounts are kept in cold storage via paper wallets or devices such as trezor. You only keep a small proportion of funds on a mobile app - for day to day use.
You never keep significant amounts on a bitcoin exchange - other than for a small window of time when you have no other choice i.e. when you are about to buy or sell. Even then, you could reduce your exposure by breaking up trades into smaller amounts.
 
People don't keep all their bitcoin on a mobile app. Significant amounts are kept in cold storage via paper wallets or devices such as trezor. You only keep a small proportion of funds on a mobile app - for day to day use.
You never keep significant amounts on a bitcoin exchange - other than for a small window of time when you have no other choice i.e. when you are about to buy or sell. Even then, you could reduce your exposure by breaking up trades into smaller amounts.
Do you have a source for this ? - I would believe the majority of people (not the majority amount of Bitcoins though) who are holding Bitcoins are doing it in a online wallet.
Only because enthusiasts are doing this (offline wallet) I have doubt that the housewife or taxidriver who bought bitcoins because it is in the papers are doing the same.
 
Criminal usage is being overplayed. While it is being used in particular as the payment method of choice of cyber criminals based in countries whose governments tolerate or even sponsor their activities, tools now exist that can trace bitcoin transactions. These have already been used to secure convictions involving the online drugs trade.
 
Do you have a source for this ? - I would believe the majority of people (not the majority amount of Bitcoins though) who are holding Bitcoins are doing it in a online wallet.
Only because enthusiasts are doing this (offline wallet) I have doubt that the housewife or taxidriver who bought bitcoins because it is in the papers are doing the same.
A source - in terms of stats and the percentage that store their bitcoin in various ways? No - I don't have any such source. However, it's basic common sense. If you only have a fraction of a bitcoin, then perhaps it doesn't matter. However, if you have a substantial amount of bitcoin, only a moron would walk around with it - on a mobile wallet.

At the end of the day, it's down to personal responsibility. Lets use the cash analogy. Lets say you have 100k. Do you walk around all day every day with that 100k in your pocket? Of course not. You carry around what you need in your wallet and you secure the balance elsewhere - be that a bank, a safe deposit box, or whatever.

Bitcoin has been lost - no doubt. However, so has cash. I'd imagine more bitcoin has been lost - particularly early on - when people would have been more blazé about it....they didn't give it the respect it deserved as it wasn't worth much. Otherwise, it's true to say that BTC is unforgiving and requires personal responsibility. That's a learning curve that people can quickly overcome. Other than that, cash can just as easily be lost or stolen. Any stats on the amount of cash that's MIO?
 
I claim then that enough people behave without common sense - by buying bitcoins in order to sell them later with a profit and by holding significant amounts in online wallets.
 
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