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O.B.'s Bitcoin ATM

O.B.'s Bitcoin ATM

On Thursday, October 8, what's billed as the first Bitcoin ATM in the region comes to Ocean Beach. The first transactions will begin taking place at a launch party late that afternoon at 4796 Niagara Avenue. The Bitcoin ATM is owned by Coinsource.

Beware. This is online, digital currency — called cryptocurrency — hence is subject to hacking. Some speculate with Bitcoins, and the price can be volatile. For many, Bitcoins are a gambling mechanism, not a store of value. You can carry millions' worth of Bitcoins in your pocket, but if you lose it, it's not like having your credit card filched or copied and used for a big purchase by an identity thief. In such cases, you can often get your money back. That's not true with Bitcoins.

There is a black market for Bitcoins, and they can be used for tax-evasion purposes. They are often used for drug sales because they are difficult to trace. There is always the question of whether a merchant will accept them. Scammers sell fake Bitcoins.

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Fred Williams Oct. 7, 2015 @ 12:48 a.m.

Hi Don,

I have to correct you, slightly. First, it's misleading to say there are counterfeit coins in a block chain. Bitcoin is simply a public ledger. Coins do not exist by themselves. The ledger is a collections of agreements that each address in the system owns some number of coins. The resources to counterfeit this would have to be enormous, and would be very quickly detected.

Second, all systems that allow user account access, such as your online bank account, are hackable. That is not unique to bitcoin.

Using public key cryptography, digital signatures, and cryptographic hashing, along with peer-to-peer networking and Merkle trees, the advantage of block chain technology is that everyone can trace every single transaction forever and there is no way that any of the data can ever be changed once it is committed into the record. The "chain" cannot be broken. This is not true of traditional banking databases.

Additionally, from the macro-economic perspective, a currency independent of central bankers provides protection from governmental currency manipulation. A risk you didn't mention. Instead the rules for the expansion of any block chain dependent money supply are transparent. (Not the same as stable, which is why I own no bitcoins.)

There's potential application of this technology into many fields beyond currency. Think of land registries and other kinds of ownership assertion currently under governmental monopoly.

Because of their newness, novelty, and media-darling/devil status, the fledgling block chain based currencies are indeed highly risky...but not because of the underlying technology, which is based on better models than what we have in banks today.

With the promise of greater transparency, drastically reduced transaction costs, and freedom from politically-based manipulation, there is potential for block chains (not just Bitcoin or digital currencies of the month) to be revolutionary in the creation, tracking, and maintenance of important records, including those for the notion of storing value as "money".

Yes, your account can be compromised. As with all such systems. And I'll add extra emphasis on your important point that there's as of today no reliable recovery mechanism. You don't even mention some other risks. Yet Bitcoin, as the most prominent representative of an applied block chain, ought not be so blithely dismissed. Yes, it's today more a gambling mechanism than a mature currency. But a warning to beware, without mentioning the very interesting and compelling reasons this could be the future of transparent, but private, government independent record keeping for objects/stores of value...makes your brief post incomplete.




Don Bauder Oct. 7, 2015 @ 9:14 a.m.

Fred: Yours is an interesting post. The fact that bitcoin is more a gambling mechanism than a store of value is quite important, I believe. Sure, speculators gamble on the dollar and other currencies, but the values are not as volatile.

Does freedom from governmental and central bank manipulation justify a dependence on speculators? Not in my mind, but I won't argue with those who feel otherwise. Best, Don Bauder


BTCVega Oct. 8, 2015 @ 6:23 a.m.

As an investment proposition, bitcoin certainly is more of a gamble than a prudent investment. As a technology, online payment mechanism, and economic-political philosophy, bitcoin is, if anything, more conservative than any fiat currency. It is incorruptible, uncounterfeitable, irreversible, uninflatable, has a fixed global supply, is completely decentralized beyond the whims of any central bank, and beyond the confiscatory powers of say Cyprus or asset forfeiture.

It is truly democratic in that a fully open-source, peer-to-peer network both relays transactions and confirms their integrity using the block-chain mechanism. You do not need a banker's permission to use bitcoin - just a computer or a phone with an internet connection.


Don Bauder Oct. 8, 2015 @ 9:31 a.m.

BTCVega: When I wrote this, I knew I would get a lot of commentary from those fanatically attached to bitcoins. And I got such comment. Best, Don Bauder


AlexClarke Oct. 7, 2015 @ 5:50 a.m.

Bitcoin may have some future benefit but only and complete idiot would use them now.


Don Bauder Oct. 7, 2015 @ 9:21 a.m.

AlexClarke: Disagree. I deplore gambling but I wouldn't call a bitcoin speculator a complete idiot. Drug dealers and assorted money launderers -- heavy users of bitcoins -- are vile but they aren't complete idiots. It would be nice if they were. Best, Don Bauder


Don Bauder Oct. 8, 2015 @ 9:32 a.m.

AlexClarke: It would be easier to catch them if they were idiots. Best, Don Bauder


BTCVega Oct. 8, 2015 @ 7:19 a.m.

Here are some major online retailers using bitcoin:






Starbucks, through FoldApp

Gyft, which sells discounted gift cards usable at Amazon, Walmart, Target, CVS, Home Depot and others.


Don Bauder Oct. 8, 2015 @ 9:35 a.m.

BTCVega: I don't believe the list is yet inclusive enough. But there are a lot of people, as witnessed here, who passionately believe in bitcoin. Best, Don Bauder


wtron Oct. 7, 2015 @ 11:43 p.m.

Hi Alex and Don, i would argue against your point, most Bitcoin users are highly educated engineers, there are traders of course but the majority of users are just "Nerds" or people who really need it for different reasons.

in order to understand why we/they find it so fascinating you can make a very interesting parallel with the internet:

The internet is like an instant programmable worldwide postal service, where you can send any kind of message (letters, boxes ) from one side of the world to the other in a matter of seconds and initially the internet was a place where you could do nothing crawling with Software engineers and other technical people, they used it even if it was still very hard to use, they build it and over a relatively short period made it an essential part of our society this is because of what i mention before, its instant, worldwide but the most important PROGRAMMABLE, this means that the limits of the internet are the imagination and creativity of its users and they are the ones who made it into what it is today.

Bitcoin is pretty much the same, its instant, worldwide and a programmable for of ASSET or anything that must be written down and never deleted (deeds, wills, laws, constitutions, medical procedures its really up to imagination).

i hope this is informative for you.



Don Bauder Oct. 8, 2015 @ 9:38 a.m.

wtron: So there are more nerds than crooks using bitcoins? That is an intriguing question. I haven't seen any statistics on that. Best, Don Bauder


MURPHYJUNK Oct. 7, 2015 @ 9:06 a.m.

favorite currency of illegal transactors, right ?


Don Bauder Oct. 7, 2015 @ 9:24 a.m.

Murphyjunk: I don't know that bitcoins have achieved the status of FAVORITE currency of illegal transactors, but they are getting up there. Best, Don Bauder


justinoconnell Oct. 7, 2015 @ 1:11 p.m.

Yes only about trillions and trillions behind the US Dollar.


Don Bauder Oct. 7, 2015 @ 1:46 p.m.

justinoconnell: The world is flooded with dollars, but not bitcoins. Best, Don Bauder


Twister Oct. 7, 2015 @ 9:39 a.m.

Fred, I hope you'll respond.

Good to have you back!



Don Bauder Oct. 7, 2015 @ 9:43 a.m.

Twister: Yes, it is good to have Fred back. I believe he is still in Hungary. Best, Don Bauder


Fred Williams Oct. 12, 2015 @ 1:57 a.m.

Hi Twister and Don.

I'm actually in Prague, Czech Republic.

Sorry to have set off some abusive commenters heaping calumny on your innocent head, Don. Forgive them, for they know not of what they speak.

To all those who jumped on Don:

Please know that he's one of the best informed and most thoughtful writers on issues of economics. We're lucky to have such a man write for us.

That doesn't mean that Don is always right. But unlike most thin-skinned so-called journalists, he's willing and able to admit when he's wrong, and he's eager to participate in discussions with commenters. I would never waste my time correcting most journalists...they'll just resent it.

Don Bauder is different. He's great. I really admire him. So knock off the insults.

Again, the bit chain is quite interesting. Don, like 99% of the world, doesn't understand all the mechanics behind it, and is wary of promoting it. This is a perfectly reasonable stance. The instances of fraud and theft and manipulation that have been reported, even if eliding the difficult bits of the story, cannot be ignored. Bit coin, like any new currency, is inherently risky. It's still a gamble. That's indisputable.

I only corrected some technical aspects of Don's article. I agree wholeheartedly with Don's conclusions and recommendation to stay away unless you are willing to gamble.

But again, this isn't due to the underlying technology...it's the current implementation that can be improved (and WILL improve). Articles like this are actually a sign of the interest the technology is generating. So when Don Bauder takes notice, even if he gets some of it wrong, you might take away the message that this will only get bigger, and hopefully much better.

As for the political aspects...yes, there's a strong anti-government/libertarian following for alternative currencies. Again, this doesn't automatically make it suspect (or perfect) it's just the reality of the world we live in. You could have similarly criticized the 17th century development of stock markets as reactionary in the face of royal manipulations of currencies and contracts...and that also would have done nothing to stop its progression.

Don, one other point I might make...the company with the bitcoin ATM is actually performing a vital service that could ameliorate your complaints. By acting as a counter-party to bit coin transactions, they actually reduce the risk of holding bit coins as a currency. Now you can exchange the bit coins for cash. That strengthens the long term security of the fledgling currency rather than weakening it.

So I still urge you to read some more about the math behind bit coins, and consider its potentially disruptive nature. Having an ATM to trade bit coins for cash isn't an invitation for the unwary to be robbed. It's an expression of confidence and evidence of the real world value of this new way of storing value.




Voluntaryist Oct. 7, 2015 @ 6:49 p.m.

LOL. Either the author is ignorant or this is a pathetic "hit piece". A 30-second google search will see that there is more to the one-sided representation put forth here.

In my view. It's nice to have a free-market alternative to the debt-based (18 trillion!), inflation-ridden, toxic U.S. dollar. The dollar needs competition and bitcoins are a "tyranny-resistant" option. Fortunately, no one is forced to use or accept them - they are purely voluntary.

Bitcoins are for grown-ups who are mature enough to manage their own money and who prefer privacy in their personal finances. If you need the "nanny state" to bless it for you first, then it is best to stay away from bitcoin.


Don Bauder Oct. 8, 2015 @ 9:48 a.m.

voluntaryist: There seems to be a pattern in the responses here, although they admittedly do not represent a scientific sample. It seems clear that the bitcoin users are greatly right wing, anti-government people who don't trust the world's central banks to manage currency intelligently.

There is certainly a lot of evidence to support such a point of view. In fact, I have been writing about incompetent central banks for many decades.

But is bitcoin, or any electronic cryptocurrency, the answer? It certainly is for money launderers and drug dealers. For all their faults, I would rather have the backing of major central banks, especially the U.S. Federal Reserve. I am very glad that this has generated so much controversy. Best, Don Bauder


Don Bauder Oct. 8, 2015 @ 9:54 a.m.

Kenneth Williams: I can assure you that I did not invent the kind of journalism you accuse me of. I knew when I wrote this item that it would generate lots of commentary from those who are fanatically attached to bitcoins, and filled with contempt for governments and the world's central banks.

FYI: That's what these blogs are for: to generate discussion.

Rather than shoot me with invective darts, why don't you offer an intelligent argument against my points, as Fred Williams has? Best, Don Bauder


Don Bauder Oct. 8, 2015 @ 9:56 a.m.

Zeke: It sounds like you will be at Niagara Ave. this afternoon. Best, Don Bauder


Don Bauder Oct. 8, 2015 @ 9:57 a.m.

Rob McEwen: The editor hasn't fired me yet, although it is early in the day. Best, Don Bauder


Don Bauder Oct. 8, 2015 @ 10 a.m.

George Riffle: Do people discuss bitcoins at coffee shops? I haven't overheard such a conversation but I seldom go to such places. Best, Don Bauder


CasualBystander Oct. 9, 2015 @ 1:02 p.m.

Hilariously sensationalist and uninformed. How about a movie short entitled "BITCOIN MANIA" After you`ve completed the documentary: "THE INTERNET" USED BY TERRORISTS, PEDOPHILES, CROOKS SCAMMERS, PORN MERCHANTS ILLEGAL ARMS SELLERS, GAMBLERS .... and little old me. Is it the answer or should we revert back to pen, paper and telephone? Perhaps you should try a more measured premise, a modicum of research and/or in fact talk to one of the many thousands of computer scientists, cryptographers, software developers, economists, venture capitalists, bankers, entrepreneurs, academics, "nerds" and indeed members of the general populous involved in Bitcoin. Parochial, patronising piece of pig poo...

Yours graciously


Don Bauder Oct. 9, 2015 @ 8:27 p.m.

CasualBystander: "Parochial, patronizing piece of pig poo." All alliteration --always, all ways. Best, Don Bauder


Don Bauder Oct. 9, 2015 @ 8:31 p.m.

Marcello Grasso: You folks think I have never done any studying. I did get through six years of grade school without flunking out. Best, Don Bauder


Don Bauder Oct. 9, 2015 @ 8:33 p.m.

John M. Baxter: But the Reader does not represent mainstream media. Best, Don Bauder


Don Bauder Oct. 11, 2015 @ 6:38 p.m.

Tim Tayshun: If bitcoin collapses ignominiously, you better get out of Africa in a hurry. Best, Don Bauder


TimTayshun Oct. 14, 2015 @ 12:29 p.m.

Don, Thanks for the reply. The Bitcoin network is distributed amongst well over 100,000 decentralized computers running "full nodes," which manage the accounting and transactions for the whole system. In other words, there is no central point of failure, due to no centralization, and bitcoin "collapsing" is a rather unlikely scenario (though, or course, possible in the long term).

Interestingly, according to the mainstream media, "Bitcoin is DEAD/ Dying/ 'nail-in-the-coffin" at least 77 times since 2012. SOURCE: https://99bitcoins.com/bitcoinobituaries/

This is comical when you look at its history. The "collapse" following its high in December 2014, and crash of Mt. Gox (Exchange/ insecure "bank") was, in fact, NOT the largest percentage collapse bitcoin had seen in its short 7 year history.

As concerns Africa (and other merchants and countries acceting the cryptocurrency), service solutions, such as Coinapult, CoinJar, and BitReserve enable users to "lock-in" their values in bitcoin into local fiat, in order to altogether avoid market fluctuations. These services use arbitrage, short sales, and other leveraging techniques in order to protect their business models, while providing value added options to their wallet users.

"Bitcoin" may not be the have-all, end-all and final solution to a decentralized economy, free of all banking controls and regulations. However, there is no question that cryptocurrency is here to stay, and the evolution towards open-source and decentralized systems is a technological breakthrough in this space that is simply NOT going to go away.


Twister Oct. 11, 2015 @ 10:35 p.m.

I wanna go back to barter with no middleperson, virtual or not. What if they printed cash and nobody used it?


Don Bauder Oct. 12, 2015 @ 7:43 a.m.

Twister: Post-World War I Germany is somewhat of an example of what you are talking about. So much cash was printed that people piled it in wheelbarrows to make a modestly-priced purchase. Best, Don Bauder


jnojr Oct. 12, 2015 @ 11:08 a.m.

This drivel isn't even worthy of the term "article", or even "opinion piece"... it's a cheap hack job that looks like it was written by an eight grader with either a baseless, uninformed opinion or who had a bad experience with bitcoins. Don, this garbage is completely beneath you, and you should be ashamed of yourself. You're capable of much more. Please do some real research into bitcoins, what they are, how they work, why they exist, etc. then write an article... IF you can write as an impartial observer. Fred Williams wrote a pretty good summary, but you just casually dismissed it.

FWIW, I am not a "bitcoin nerd", I don't have any, never tried mining, and in general I think it's a flawed experiment. Not using them is the right choice for me. But I won't tell anyone else to stay far, far away simply because I see no value in them... I'll just tell them to keep their eyes, ears, and mind open and to educate themselves before participating.


TimTayshun Oct. 14, 2015 @ 12:35 p.m.

I think many of us are looking forward to a "follow-up piece," with a little more non-partisan and more well-informed presentation on what bitcoin and "Bitcoin" actually is, as a currency, network and distributed system.


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