Why bitcoin will fail a drug test
This will always be needed weather new coins are generated or not. Also, the computational load is directly related to the number of people mining the blocks. So as the number of people increase, the computational load will increase and hence the energy consumption. This is because each block is supposed to take roughly 10 mins to be mined and the "proof of work" problem is adjusted accordingly - i. You should really try and understand the system. It is a beautiful system except for where it wastes so much energy.
Mining a block makes transactions permanent. Difficulty changes to keep blocks solved in 10min. More transactions may mean more value per bitcoin, doesn't directly effect difficulty. However it encourages more miners, which does raise the difficulty. Bitcoin could run on a single raspberry pi, but it would be easy to hijack the system. With the world's most powerful computer fighting for bitcoin, any malfactor would have to try very hard to disrupt it.
Surely Quiggan understands that the marginal cost of production is only relevant for mining new coins. Once mined they can be reused thousands and thousands of times unlike physical currency. And as an economist, surely he knows that all "economic value" is subjective. Why they wish to have "money" or a "medium of exchange" instead of the goods in their possession is fundamentally about trust that the medium of exchange will operate as such when they wish to obtain goods or services from others or fulfill a debt obligation.
Without trust no medium of exchange is a medium of exchange by definition. So Quiggan hasn't really said anything here that doesn't apply to every medium of exchange or good and service offered in the market. The marginal cost is providing the computations to run a secure bitcoin transaction not to only to mine new coins, it should be applied to all bitcoin transactions.
The reward for providing the computations for a secure transaction is new bitcoins. Currently as the overheads of transactions become for complex they use more and more energy, last thing i read was it was that a bitcoin transaction currently at about times the energy cost of a visa transaction, electricity wise. LF, I don't think you are right about transaction costs. The overheads for transaction using existing bitcoins are trivial - the energy cost to run a computer for a fraction of a second.
Identical to the cost of a Visa transaction. The cost you are referring to includes some representation of the mining cost, which as pointed out is a one off. As a single bit coin can be used infinitely without ever degrading, the mining cost contributes nothing to the transaction cost.
The idea that all the bitcoins will be one day be mined is not necessarily correct. Each bitcoin will become more difficult to mine than the last but I don't think there is a theoretical limit. Much like gold or any other 'finite' resource. The practical limit is reached before the all is mined. If overheads of bitcoin transactions were trivial, then the bitcoin network would be insecure, i. It is precisely because of the immense computational demands on bitcoin transaction processing that bitcoin transactions are difficult to game.
The fee of a few cents is negligible compared with the block reward. But the cost of a transaction fall down as more transactions are executed by the network. If the number of transactions increase times, to a tenth of the VISA volume, then the cost of a transaction will be around 5 cents not much higher than the fees itself today.
With the VISA volume the costs of a transaction would fall to 0. What makes government assurance an intrinsic value? Bitcoins will work fine as long as people retain their trust in the system, and the system is not broken.
It's environmental effects are a completely different matter entirely. The way the author is trying to conflate the two and undermine trust in bitcoin just looks like a sad Luddite attempt to put the brakes on the future because they have no control over it. I thought the reason for the gfc was financial institutions creating wealth out of thin air, and you can bet its still going on.
So whats the difference? The problem was too much money lent to people to buy houses who couldn't pay it back and couldn't provide anything of the value of the loan. It was just the loss of loans that triggered the collapse. So the on selling of these loans based on non-existent future returns had nothing to do with it? Actually its partially correct. Fractional-reserve banking means that the banks do not actually have the money that they lend out. When a housing mortgage or any other loan for that matter is taken out money is created out of thin air as a multiple of the reserves that the bank is required to hold.
To quote the RBA of Australia "The creation of money is not directly regulated, though the Reserve Bank of Australia does influence it heavily through changes in the cash rate, which in turn, influences bank lending rates and the appetite for borrowing and the provision of deposits" Most of the "money" that is floating round our economy due to the housing boom has been created by the banks from thin air.
This is why some banks failed when the GFC hit, people asked for their money that simply wasn't there, and the assets used to secure the loan were not worth the value of the loan and no one wanted them either. As others have said money only works because people want it to. This article has so much one-sidedness I dont even have time to address all the inaccuracies you have thrown up all over this article.
Further you probably wouldn't even post it if I did, so why even waste my time. So why did you waste our time by telling the ABC to stop wasting yours? My first reaction on reading the article is this can't be true, that the mining of bitcoins can't really use up large amounts of energy but indeed it does and is using a lot more now than 5 years ago as bitcoin is deliberately designed to be harder the more coins are mined much like a seam of gold.
This feature is to ensure that bitcoins don't reduce in value due to endless bitcoin creation. So if indeed there are inaccuracies in Quiggans article, then perhaps you might take the time to explore one, rather than wasting your own time telling us nothing.
There is a hard-coded limit of 21 million which can not be overridden. If it is coded It can also be hacked and stolen as has been shown many times already.
You are correct that it COULD be changed, however because it's a distributed system it is very, very difficult to change. There is no central company or group that controls bitcoin that could change this.
Everyone involved in the bitcoin system would have to change the code they're running, which would never happen because that would destroy one of the things giving bitcoin value scarcity. I think you overestimate the difficulties.
Some not changing their systems wouldn't stop a change but there would be transition issues. Those that didn't update would not be able to validate transactions using the larger bitcoins. They would eventually fall by the wayside as users migrate to those who support all their coins.
Convincing people to devalue their own wealth seems like it would be pretty difficult to me. The reason goes to the effectiveness of a modern monetary system. The currency in this case bitcoins must devalue over time. If it doesn't you get deflation and people start hoarding their currency; it will be worth more tomorrow. That kills it as a medium of exchange - everyone rushes for the exits making it suddenly valueless.
At the moment bitcoin is young and is unstable - as was gold when it first began being used in very ancient times. A currency that remains extremely unstable will not last. Stability is provided by constant expansion of monetary supply making it a losers game to hoard the currency and maintaining liquidity. The same reason the gold standard was abandoned will be the reason that bitcoin's cap will be abandoned - if it lasts. Then again, many of bitcoin's supporters believe the gold standard has no issues so maybe not.
Complex things are difficult to predict and bitcoin doesn't have any real precedents that resemble it completely. The limit is artificial. There is no theoretical mathematical limit. It is perfectly feasible to change and almost certainly will if bitcoin survives long enough. If it doesn't, I bitcoin wont survive. Just like physical resource mining, there will eventually be a cost-benefit assessment made on the mining of bitcoins.
When the cost of mining new coins exceeds the market value of the coins, mining will slow or cease, and trade will only be conducted in previously mined coins. And there is no such thing as "endless bitcoin creation".
There are a finite number of bitcoins. Professor, Whilst your lack of tangible and comprehensive research is clear, your point is not. Cryptocurrency's proof-of-work removes the ability for governments and other financial institutions to print money. As a professor in this field, how can the benefits of that advantage alone have escaped your grasp?
If, as you say, your concerns are environmental, perhaps you should have considered crytocurrency in relation to its nearest rival, our current economic system.
What effect does mining fossil fuels have on the environment? Cryptocurrency's represent a tangible shift of power away from financial institutions that have led us to the greatest economic disparity the world has seen. As such, fear mongering of change, based on unresearched environmental claims is not needed, waranted, or productive in the consideration of alternative currencies.
So Sam are you saying that if we replaced the Mint, federal reserve, US treasury etc with bitcoin we would no longer need to mine in the real world? Even its greatest enthusiasts must find that a bit of a stretch.
Did you mean that crypto urgency removes the need for government to print money? Because I am pretty sure they still have the ability to do it. Sam - While the article does significantly focus on only the environmental impacts of using a lot of electricity to do bitcoin mining calculations it's a short article remember, not a thesis , I think the author's point is very clear - bitcoins have no external value apart from the people who choose to use them, which is getting smaller and smaller now that some major banks such as nab that did accept them do not anymore.
If bitcoins were really that secure then bitcoin miners would trade them for other bitcoins rather than real dollars. Now before you respond with something like 'but bitcoins are meant to empower the people and remove control from governments', I think there is a better chance of worldwide pacifiscm before that happens.
Just as fast as bitcoins appeared, without backing by someone or something with significant power e. BTW, I don't work for a bank and I'm not some shareholder with a hidden agenda, but I would be very careful using real money to buy digital currency such as bitcoins because just as the economist said, 'their true economic value [is] zero'. The Sumerians had clay tokens.
Their use other than a medium of exchange was I'm afraid this statement falls in a heap with the oldest known currency in history, which unravels the rest of your argument. Bitcoin is a delusion? The same statement can be said about all currency. What's the value of my AUD in my bank account? Well, if the servers go down and don't come back up, the value is nothing. Money is a purely imaginary concept invented by humans, with no basis in objective reality. Even precious metals like gold and silver - yes they're shiny and they have other uses.
But you can't use a gold COIN for those things. Their value as a currency, is a human delusion. The value of bitcoins is what people are prepared to pay for them. Currently that's only slightly above their production cost as you might expect.
Once the space has been exhausted, you might expect their value to increase, as with the most basic economic law of supply and demand.
In the mean time, while the difficulty of generating new coins keeps going up, so does the available compute power per watt applicable to it, so the price may fluctuate. The mechanism for a collapse of the value of bitcoins is not suggested in this article, let alone well established. This sounds like an article written by a banker who has a vested interest in getting rid of BitCoin, which is effectively a competing bank.
Australian banks have started closing all bank accounts that have anything to do with a BitCoin business.
But overseas BitCoin is treated variously. Since all money is a virtual concept, it's not impossible that a world currency originates from the concept, or reality, of BitCoin.
Bitcoin generation has the same goal as other currency - to make it difficult to make your own counterfeit money. Where it differs is the practical cap on generation although such a cap also applies to many other forms of money, such as scarcity of precious metals. Supply of bitcoins are limited to 21 million - value can fluctuate freely. You could extend your argument against all forms of encryption as in many cases your argument of 'no value' is equally justifiable.
Perhaps you can use coins as a paper wieght? You suggest that exchanging for gold is useful however: Isn't that just 'its role as a medium of exchange'? Why is gold useful? It's value is largely based around it's use as a medium of exchange. The US dollar as you suggest is tied to the US government. There is a strong case that bitcoin could outlive any traditional fiat currency.
You have ommitted that bitcoin generation is limited, and rewards regularly drop. This practise is self limiting and as more coins are mined the value in mining more will be removed and the mining will stop or stop at the hard limit of 21 million coins.
I'm dissapointed because the main point that bitcoin has cause and continues to cause environment damage is correct, but the arguement presented here comes accross as misrepresenting what bitcoin is. Environmentalism and patriotism are the last refuges of a scoundrel. I would guess that he has none bitcoin, and feels ha can take a free kick at it. Best to omit meat first, which is obviously the moral and environmental disaster of our time, , and then cry about bitcoin which, unlike corpse-eating, actually does have at least one argument in favour of it.
Try selling your collectables and you quickly discover that others are not willing to pay you what you paid for it. Fortunately, it's unlikely that the digital currency will survive long enough to generate the environmental disaster that would arise if it became a major part of the financial system The digital currency Bitcoin has been seen by many as a source of threats, as potentially facilitating terrorism, money laundering, and drug dealing; undermining taxation systems; and rendering monetary policy unworkable.
How are banks "not working" exactly? Other than charging too much interest and paying too little they seem to be functioning fine. I'm not entirely sure how i would approach Bitcoin for a loan of working capital to run my business.
I invest on these platforms. Bitcoin is a solution looking for a problem that doesn't exist. But hey then again I don't want to buy guns or drugs on the black market either though Have you ever travelled internationally and felt you were getting rorted on the exchange rate?
Have you ever sent money internationally and been horrified with how large a chunk gets taken out by the middlemen? Has anyone, ever, anywhere, had their credit-card number stolen and mis-used on the internet?
Bitcoin can help with, or even completely fix, those three problems right there, and there are plenty more things it's good for A very interesting article. I'm not sure what the reasons for some earlier criticisms, these likely have no basis in monetary economics. While I'd heard of 'mining' Bitcoins I wasn't that familiar with how they worked. So I found this article very illuminating.
I engage in volunteer distributed computing projects like BOINC and Folding Home which use a decent amount of energy, but at least produce a useful outcome in terms of extending existing knowledge. Bitcoin, on the other hand, seems redundant, not to mention, disastrous for the environment.
Further, Bitcoin is sowing the seeds of its own destruction with people creating money, reducing their purchasing power. Ultimately, the usefulness of a currency as a medium of exchange relies on other people's willingness to accept it. Hopefully though, for the sake of the environment, this collective delusion ends soon.
Your purchasing power is only diminished if the supply of new coins outstrips demand. As Nathan says, there is also a supply limit which is inherent in the bitcoin equation, so, that being the case, given there is a finite number of bitcoins, isn't there more of a risk of the price sky rocketing, than them becoming redundant?
Trusting financial transactions to some unfathomable process run by unknown people because "corporations" i. It makes perfect sense as a money laundering system, which is why ransomware and online drug dealers use it. The entire design of bitcoin is to remove control from any person or group of people. It is a completely fathomable process that is publically defined.
It is a really interesting idea, I suggest you look into it before spreading your uninformed views. Perfectly fathomable, as is regular banking, if you are prepared to put in the time. Unfathomable if you intend to point and click, as again is the regular system. My point is not the differences in fathomability and trustworthiness, but the lack thereof. Both require either an amount of detailed investigation, or an amount of trust.
What exactly, other than: Some juvenile excitement in going outside "the system". You can also be in control of your own coins at all times, and with relatively little effort, can guarantee their safety to a degree that exceeds any banking system currently known. Might not seem like a big deal to you, but ask the greeks what they would prefer after having the government dip its hand into their back pocket and take money directly out of their bank accounts.
OK, I can see the back-pocket advantage. What stops the government simply taxing you in a regular currency, forcing you to sell your bitcoin to pay it? In Greece they went to the bank accounts because people were simply not paying the taxes. I see where you're coming from on the lack of fathomability for the average bloke who's never looked into, or cares how money is created. You're right on the tax thing, governments can take whatever they want, depending on how brutal they are prepared to be.
Credit cards were not made with the world wide web in mind. If you don't feel like paying any of banks fees for their services, you can do it yourself. When you work for your money, you should have the choice that your money goes directly to you, not a third party. The bank didn't do your work, why are they getting your salary? I'm all for banking services if you want them, but you should have the choice.
Interesting you didn't respond to the second comment. Why is Bitcoin the favoured medium of exchange of money launderers and drug dealers? Bitcoin does have legitimate uses but this issue is of concern. Sure one can use fiat currency for money laundering and drug dealing purposes but no-where near as easily as Bitcoin. If I wanted to use bitcoin to buy drugs or guns on the internet, I would first have to acquire bitcoins.
I would have to use my registered bank account, to sign up to an exchange and purchase coins. This transaction of my fiat currency for bitcoins would be recorded on the exchange. Then I would take my bitcoins, which are now associated with my bank account and transfer them to said gun or drug dealer.
I don't think its logical or helpful to demonize an entire technological accomplishment because one aspect of it doesn't exceed the current system, especially when almost every other characteristic is far superior.
Did they break up, did other groups get more mining power, or do they still have enough control to theoretically fake any transaction on the blockchain they want? I think that's the fundamental problem with the bitcoin-is-distributed-therefore-no-central-control argument - large companies are much better at acquiring large chunks of computing power than individuals.
If the problem is too many carbon emissions from coal-fired power plants, then isn't the solution to shut down the coal plants and replace them with a carbon neutral alternative like solar, wind or nuclear? Professor John appears not to know what he's writing about. Fiat currency also has no value in an age when nations have no compunction in printing more money to shore up sluggish economies.
Rule number one in economics is the law of supply and demand - the more currency there is in circulation, the less each unit is worth inflation , which means all currency under central bank control is ultimately worthless. As long as the central banks control the money supply, currency is just a goverment's promise to pay.
And we all know what government promises are worth. The cost of energy required to produce anything is now highly political, which means it is also being centrally manipulated.
This pretty much makes the point of this OP moot. Rejecting a non-fiat currency like Bitcoin on the basis that it is environmentally unsustainabile is clearly a red herring.
The writer would of course know this. The question is, why is the good professor trying to obfuscate? It's easier to understand why the establishment fears Bitcoin and others like it don't forget the others, when one looks at the basis of their expertise and reputations. The foundations of established economics expertise are built on the concept of 'national' wealth - e.
Adam Smith's 'Wealth of Nations'. These foundations more or less crumble if a trading currency is independent of national collateral. If these free market, non-fiat currencies succeed, much of the exonomics of nationhood will become irrelevant, and the concept of 'nationhood' and its accompanying taxation rights will have to change.
Political and geographical borders will have no economic basis any more. No wonder it frightens the establishment. In a perishing world, nationhood is the principal defence against global tyranny. The smart money is on Bitcoin and the others over the long term. The danger is not in the energy cost of production but in the social and political cost of decoupling taxation from trade.
It's enough to spook even the most committed puppet-statist. Gold and silver only have value because they have limited supply and are popularly perceived as valuable. Are not Bitcoin just the new gold and silver? This article is a joke, 0 research was done. In the introduction of 'Bitcoin: A Peer-to-Peer Electronic Cash System' by Satoshi Nakamoto guy who created bitcoin , the rationale for bitcoin is stated as 'an electronic payment system based on cryptographic proof instead of trust, allowing any two willing parties to transact directly with each other without the need for a trusted third party.
He does not see the benefits to bitcoin - a programmable currency that has unlimited potential, if you have listened to Andreas Antonopoulos, or anyone with a working knowledge talk about the possibilities eg. In summation this article reads like it was created by a high school student who has heard a few things about bitcoin, it is ridiculous that the title of professor is next to the authors name because there is nothing scholarly about this article.
Satoshi Nakamoto is a genius! I am positive he has a bank account in a brick and mortar bank with millions and millions of dollars in it thanks to people buying and transacting Bitcoin.
Jane, please do some research on what bitcoin actually is, and how it works before making such assumptions. Satoshi Nakamoto doesn't take any kind of transaction payment; that's not how the network works.
As Lachan said above, it's a cryptographic scheme where two people can transfer bitcoin without a trusted third party. Nakamoto would be a 'trusted third party' if he was running transactions. If he made money out of bitcoin, it was entirely due to owning the first several bitcoins back when mining was trivial, then having the value of bitcoin go up when people got in. He's anonymous, incidentally - nobody actually knows who he is.
Your lack of knowledge about Bitcoin is as terrible as your lack of foresight. Please refrain from writing opinion pieces about topics you have not taken the time to qualify yourself to provide an opinion about. You'd hope a professor would possess more intellectual rigour. I kept reading expecting to see a punchline that never came. This article has to be a new low for the ABC. Surely someone with some standards should have seen it before publication and cringed and hit the delete key. Heh, really enjoying the bitcoin nuts harping on about fiat currency here.
Quiggin is correct; the production of new Bitcoins is an environmental disaster, but as the currency has no long term future it's not likely to be a lasting problem.
Yep, I think all the bitcoin users are whipping themselves into a lather about an article written by someone who is clearly more intelligent. If they think that bitcoin won't go the way of other pseudo currencies they deserve to lose their money or bitcoins. I assume they still use the money the rest of us use. It may go, it may stay.
But it will not do either for the reasons presented in the original post. I believe that is the source of the negative comments. Claiming a new system that is in competition with other existing systems is an "environmental disaster" without also presenting a comparative analysis of the competition and a thorough justification of the underlying assumptions is not an argument.
The author assumes that over time the hardware used will continue to use the same amount of electricity as it does today. This is counter to all IT trends for the last 70 years. The author implies that the alternative existing systems don't consume any electricity at any time. For some systems such as geothermal the cost over the life of the power plant is actually significantly less. Politically more difficult, higher initial cost, but cheaper over the lifetime of the power station.
A professor should have known better. Mr Quiggin is way off the mark. The Blockchain and it's token the bitcoin is coming, it's unstoppable. What Mr Quiggin's piece is about is that the financial institutions have recognized its importance as a technology, a killer app, and the banks etc, are desperate to maintain their social and financial relevance and therefore their profitability.
The Blockchain is a Community project, to provide the Market with services that the Market currently doesn't supply. It's relatively 'distributed' and to continue to make a motza of profit the financial sector need to centralize the technology. They may succeed, but it's more likely they won't, as their centralized principle will have a very expensive time to match the hashing power of the distributed bitcoin network.
Give your hashing power to the bitcoin Blockchain, screw the banks. To learn bitcoin and the Blockchain is a useful personal literacy project. It's a kindergarten for learning about encryption and privacy, both skills everyone will need to navigate with over the next decade and onwards. The Blockchain and it's emerging 'ecology' of technologies will replace more than just the "credit " card.
Perhaps the coin's limited supply will be its strength and so worth the initial cost of electricity. Preventing its manipulation and resulting inflationary tendencies may well be a value with the knowledge that it can't be manipulated and rob people of value via the money printing fractional banking system.
I absolutely agree with every single point brought up in this article. When I first heard of the existence of Bitcoin in , I remember trying to think of one single way that such a "currency" could be of any value to humanity in any way. I'm still yet to come up with or be convinced of a single way. It's a shame that there are so many jokers out there who would prefer to increase their own material wealth by burning precious energy, wasting huge quantities of semi-conducting devices that cold be used for serious computing i.
I frankly don't care how much Bitcoin "protects freedom of speech", if you don't feel comfortable with having an online transaction being able to be tracked back to you by the police, perhaps you should reconsider said purchase. The benefit is that its supply is dictated by an algorithm that cannot be manipulated to reduce its value by a government or central bank.
It is also good for making anonymous, instantaneous, cash-like transactions over the internet with low fees. Is it truly any different than the current money system? I go months on end without touching a paper bill. In that case, what happens when the power goes out??
Can I go to an ATM? Everything is play money now. You can bury the private keys printed on paper or etched on metal. You can transact with no power the same way you do with no cash during a blackout. You agree to even things up when the power comes back on. The US Dollar has value because every believes it has value. Read up on how Brazil launched their new currency and stopped the crazy inflation of the old Real. Nothing changed, except public perception.
The old dollar is bad. Not unfixable, but breathtaking. Brian, maybe Amazon is too volatile for you too? Amazon stock is a commodity. Comparing the two only undermines your argument that Bitcoin is a currency. What I think Greg is saying is that generally a currency should be a 1 medium of exchange and 2 a store of value. That value is obviously not a constant, but we expect still our currency to be more dependable predictable? I see where he is coming from.
Nice job of distancing yourself from the caper. Great research you did on this article! And thumbs up for supporting archive. But I think you miss one point here: The more complicated it is, the more likely it will happen. I have implemented online payment methods into online shops myself and I know from experience, both in my own work and from other developers.
I remember when MasterCard secure code was introduced a few years ago and online shops started adapting it: What happend was the purchase was completed and marked as paid. The item was sent to me, even though I never paid for it.
Bitcoin may be groundbreaking as an idea, but the current implementation has been proven completely unfit as an everyday payment method. There will most definitely be a crypto currency or multiple currencies that will replace PayPal and credit cards for online payments, but it has to be different to Bitcoin in a way that is yet to be found.
Bitcoin is one of the few that actually has real engineering and coding talent behind it. Bcash is a patch job run by a criminal. Support of that trash was the first mistake. And they are real scalable solutions. The volatility is natural and healthy at this stage. The laws are clear about how they wish to treat it, at least right now.
The major difference being your responsible for securing your money or pay someone to do it for you. The real test will be when government inevitably pushes for their own controlled cryptocurrency. Will people refuse and fight back in the centralization of power and lack of freedom that entails or roll iver thinking.
Most people learned how to use debit cards for online payments simply by intuition. Good luck trying to explain the problem of unspent outputs with a paper wallet to 10 random people you meet on the street!
If you think that Bitcoin or any crypto currency can replace credit cards if you just solve the scalability issues, it is wishful thinking. The idea behind Bitcoin is great, but the revolution has just begun. The guy who runs Bitcoin cash is a criminal? You continue with only wishful thinking, or simply utter dreams. Already another one replied to you on that too.. Crypto will remain but bitcoin is doomed already.
Bitcoin Cash, Ethereum , Monero and countless others have already surpassed it! Nice article on a very timely issue. Everyone has interest in the bitcoin world right now. Thanks for adding this angle. Brian keeps on proving to be one of the best investigative journalists in the world — IMO!! Lol lol at the person who said Bitcoin is typically just acquired by people who are selling drugs.
Bitcoin is an investment millions of people, companies, investors, and even banks are staked in. The donation to archive. You comment was unnecessary and irrelevant. Feel free to ask archive. Because of those tricky and still muddy regulatory requirements, Robocoin doesn't actually run its kiosks.
Their first customers set up shop in Canada, where Bitcoin trading regulations are more lax--the machine doesn't need identification verification to take or dispense cash. Handlebar was where we ended up buying our Bitcoin, and where I spent the next few days hanging out to try to get it give our money back.
It happened like you saw in the video--I had to create an account with the Bitcoin Agents through the Robocoin machine, giving it my telephone number for SMS verification , creating a PIN, scanning my palm, letting it take my photo, and then also scan a copy of my driver's license. That's a whole lot of personal information, which in retrospect was pretty stupid of me. Bitcoin Agents holds on to that identification data to comply with government anti-money laundering laws, but there's no promise that they can't be hacked or won't use that information for suspect ventures in the future.
Anecdotally, my identity hasn't be stolen yet, but I have received on average one strange telemarketing call a week since signing up for Robocoin--the first of which was from an adult chat service just hours after giving the Robocoin machine my phone number. Robocoin operators make money from these fees, which they charge for both buying and selling of Bitcoins.
These fees are just one of the sources of controversy regarding Bitcoin ATMs; in Vancouver, the Robocoin operator had to hire a part-time chaperone to watch over the kiosk and prevent other traders from intercepting customers with the promise of lower-cost or free transactions. The biggest hassle was in trying to get our money out from the Robocoin machine, selling the Bitcoin back to Bitcoin Agents.
The process here was incredibly convoluted and opaque. After logging back into the machine with my phone number, PIN, and palmprint, the kiosk spit out a receipt with a QR code representing the wallet address of Bitcoin Agents. The idea was that I would use my wallet to send the Bitcoin value to the operator, with the promise that after receipt, the machine would dispense the equivalent in cash--minus the transaction fee. My mistake was in not paying a "miner's fee" after sending the Bitcoin to the operator.