Slashdot Mirror

On Monday we discussed news of a Supreme Court ruling which held that violent video games deserved free speech protection under the First Amendment. Now, frequent Slashdot contributor Bennett Haselton writes with this followup that questions the Court's consistency in such matters. "I'm glad the Supreme Court struck down the California law against selling violent video games to minors, but reading over the decision, I had the odd feeling that the arguments by the dissenters made more sense than the majority — mainly because of the hypocrisy of continuing to ban sexuality while giving violence a pass." Read on for the rest of Bennett's thoughts.

John Landis said, "R is when you bare a woman's breast, PG is when you cut it off." That is apparently now also the law of the land regarding video games, according to the Supreme Court's June 27th decision (PDF) overturning a California law that banned sales of violent video games to minors. I'm glad the Supreme Court struck down the law, but reading over the decision, I had the odd feeling that even though I agreed with the majority's conclusion, the actual arguments made by the dissenters made more sense, primarily because of the hypocrisy of the majority in treating sex as more taboo than violence.

The majority opinion, written by Scalia, has already been widely quoted as a ringing defense of free speech:

"Reading Dante is unquestionably more cultured and intellectually edifying than playing Mortal Kombat. But these cultural and intellectual differences are not constitutional ones. Crudely violent video games, tawdry TV shows, and cheap novels and magazines are no less forms of speech than The Divine Comedy, and restrictions upon them must survive strict scrutiny..."

But Scalia continues to believe that the government does have the right to ban the sale of nudity and sexuality to minors (as decided in the Supreme Court's 1968 Ginsberg v. New York decision), just not violence. So he kept qualifying statements like the one above by adding "except for pornography", like a judicial version of the fortune cookie "in bed" game:

"[A]s a general matter, . . . government has no power to restrict expression because of its message, its ideas, its subject matter, or its content... There are of course exceptions. These limited areas, such as obscenity... represent well-defined and narrowly limited classes of speech, the prevention and punishment of which have never been thought to raise any Constitutional problem."
...
"Speech that is neither obscene as to youths nor subject to some other legitimate proscription cannot be suppressed solely to protect the young from ideas or images that a legislative body thinks unsuitable for them."

So he's continuing the Supreme Court's tradition of carving out of a First Amendment exception for sex, but won't make one for gratuitous violence. I would be against banning either type of content, but if I were forced to ban one of the two, I would definitely pick violence. Wouldn't you?

As Steven Breyer wrote in his dissent:

"But what sense does it make to forbid selling to a 13-year-old boy a magazine with an image of a nude woman, while protecting a sale to that 13-year-old of an interactive video game in which he actively, but virtually, binds and gags the woman, then tortures and kills her? What kind of First Amendment would permit the government to protect children by restricting sales of that extremely violent video game only when the woman -- bound, gagged, tortured, and killed -- is also topless?"

Well, he's right, isn't he? Except he misses the point that perhaps the remedy is not to ban violent video games, but to overturn the precedent that photos of topless women are harmful.

Alito seemed to agree with Breyer, when he wrote in a decision joined by Roberts:

"Victims by the dozens are killed with every imaginable implement, including machine guns, shotguns, clubs, hammers, axes, swords, and chainsaws. Victims are dismembered, decapitated, disemboweled, set on fire, and chopped into little pieces. They cry out in agony and beg for mercy... The objective of one game is to rape a mother and her daughters; in another, the goal is to rape Native American women."

(Alito was technically not dissenting, because he agreed that the current law was impermissibly vague, but filed a separate opinion because he was at pains to emphasize that he thought some future law against violent video games might be constitutional.) The implication seems clear: "If we can ban some things for minors — like pornography — then good God, can't we ban this stuff too?"

Scalia, in his majority opinion, responds to Alito's description of game violence: "Justice Alito recounts all these disgusting video games in order to disgust us — but disgust is not a valid basis for restricting expression." But this is just hypocritical — because Scalia, throughout his own decision, kept deferring to the Ginsberg Supreme Court ruling, which said that the government could ban porn sales to minors if it depicted sex acts in way that the "average person" would consider "patently offensive with respect to what is suitable for minors" (along with some other criteria). In other words, if it causes disgust.

Breyer and Alito also made similar arguments to each other on another reasonable-sounding point — that industry self-regulation might not last long, now that the law has been struck down. As Alito wrote:

"The Court does not mention the fact that the industry adopted this system in response to the threat of federal regulation, Brief for Activision Blizzard, Inc., as Amicus Curiae 7-10, a threat that the Court's opinion may now be seen as largely eliminating. Nor does the Court acknowledge that compliance with this system at the time of the enactment of the California law left much to be desired — or that future enforcement may decline if the video-game industry perceives that any threat of government regulation has vanished."

Breyer agreed:

"And the industry could easily revert back to the substantial noncompliance that existed in 2004, particularly after today's broad ruling reduces the industry's incentive to police itself."

This sounds more realistic than Scalia's recitation of the video game industry party line:

"The video-game industry has in place a voluntary rating system designed to inform consumers about the content of games... This system does much to ensure that minors cannot purchase seriously violent games on their own, and that parents who care about the matter can readily evaluate the games their children bring home."

What do you want to bet that Breyer and Alito are right, and enforcement of the rating system will decline now?

Compare this with another case, when Communications Decency Act of 1996 (essentially banning the "seven dirty words" on the Internet) was struck down in 1997 at least in part because a "less restrictive means" existed for censoring content in the home — parental blocking software. I didn't like blocking software much, but as a statement of fact, it existed, and was a less restrictive means than the law. The crucial difference there was that parents who used blocking software, weren't using it in response to a government threat of legislation, they were using it because they wanted to, and didn't stop using it after the law was struck down. There's no reason to think the same is true for industry self-applied video game ratings.

Finally, Breyer (but not Alito) rejected the argument that the California law should be struck down for vagueness, arguing that it was no more vague than laws against selling pornography minors, which the court had upheld:

"Comparing the language of California's statute (set forth supra, at 1-2) with the language of New York's statute (set forth immediately above), it is difficult to find any vagueness-related difference. Why are the words "kill," "maim," and "dismember" any more difficult to understand than the word "nudity?" ... California only departed from the Miller formulation [the Supreme Court case that defined obscenity] in two significant respects: It substituted the word "deviant" for the words "prurient" and "shameful," and it three times added the words "for minors." The word "deviant" differs from "prurient" and "shameful," but it would seem no less suited to defining and narrowing the reach of the statute."

Well, I think he's right. They're all just words, and they don't have crystal clear boundaries, but you pretty much know what they mean, and there's no reason why one group of words is more vague than the other. (In fact, in a 2008 article I argued that you could measure scientifically the vagueness of a law — just show the law to different test subjects, along with some made-up scenarios, and ask whether those scenarios violated the law or not. I'm quite confident that if you applied that test to these two different laws, you would measure about the same level of "vagueness".)

Again, I don't accept the justices' premise that the government has any business banning the sale of either sexual or violent content. But if you're going to grant the premise that they can and should, then Alito and/or Breyer seem to have made better arguments than the majority on at least those three points: That violence probably deserves less constitutional protection than sex, that the industry isn't likely to keep regulating itself if they no longer think they have to, and there's no reason that "kill" and "maim" are any more vague than "nudity".

(By the way, when I say the "dissenters sounded more reasonable", I am not including Clarence Thomas, whose entire solo dissent was devoted to research showing that the Founding Fathers did not believe people under 18 had First Amendment rights at all. If Clarence Thomas thought really hard, could he think of any other category of people who were denied full civil rights in the 1700s, and hence why we wouldn't want to apply that standard today?)

Fortunately, the majority did get the most important point right, which is that studies do not show a causal relationship between video game playing and real-life acts of violence. As Scalia wrote:

"The State's evidence is not compelling. California relies primarily on the research of Dr. Craig Anderson and a few other research psychologists whose studies purport to show a connection between exposure to violent video games and harmful effects on children. These studies have been rejected by every court to consider them, and with good reason: They do not prove that violent video games cause minors to act aggressively (which would at least be a beginning). Instead, "[n]early all of the research is based on correlation, not evidence of causation, and most of the studies suffer from significant, admitted flaws in methodology." Video Software Dealers Assn. 556 F. 3d, at 964. They show at best some correlation between exposure to violent entertainment and minuscule real-world effects, such as children's feeling more aggressive or making louder noises in the few minutes after playing a violent game than after playing a nonviolent game."

Unfortunately, Scalia lacked the nerve to say that this point should have been the only point that mattered, in a society where freedom is the default unless there's a good reason to the contrary. Because the logical consequence of that, would have been that since the "evidence" for the harmful effects of pornography is even weaker, then the government has no business banning that, either.

The problem constraining all nine justices is that they felt bound by the prior Ginsberg ruling making it permissible to ban sales of pornography to minors, so their options were limited to (a) striking down the video game law while ignoring the hypocrisy of continuing to ban pornography, or (b) pointing out that violent video games are probably at least as distasteful. This ignores the possibility that they could have just (c) overturned their prior ruling, as they have done many times before.

If I were a justice writing for the majority, my whole opinion would be:

Well, we can only make an exception to the First Amendment if there's solid evidence of real harm, and there is no scientifically valid evidence of harm here, so the law violates the First Amendment and is struck down. Oh, and that goes for Ginsberg too, next time it comes up. How much did you guys pay for law school again?

Unfortunately, Obama has said that he's looking for Supreme Court candidates that display "empathy", and what I said would probably hurt the other justices' feelings, so don't hold your breath for my being nominated.

An anonymous reader writes "An editorial at Forbes calls for the dismantling of the TSA, pointing to recent headlines as the latest examples of 'security theater' at its worst. From the article: 'The problem isn't that the TSA is harassing the wrong people. The problem is that the TSA is harassing anyone. The TSA is encroaching on fundamental liberties and providing no discernable benefit. ... Naturally, the TSA responds to incidents like these by saying that the agents are highly trained and that they have followed proper procedure. This indicates a signal failing for the agency: if "doing it by the book" involves touching people in ways that would be considered sexual assault in virtually any other context or telling a 90-year old breast cancer survivor to remove her bra lest it contain explosives (as happened to a friend's grandmother), then the book needs to be shredded and rewritten. Better yet, it needs to be replaced with a competitive market for air travel in which the airports, the airways, and the airliners are in private hands. Some might object that private firms will have incentives to cut corners on safety. It is a legitimate concern, but competitive mechanisms tend to weed this out.'"

Following up on news from earlier this week that Valve made Team Fortress 2 free-to-play, we now get word that the Source engine SDK will be free to all as well. Quoting Rock, Paper, Shotgun: "The Source Software Development Kit, for those of you who've never clicked the Tools tab in Steam, contains everything you'd need to make a mod, except for personal ambition. It has everything from the infamous Valve Hammer Editor to Face Posers and Model Viewers. At the moment, to gain access to the Source SDK you have to purchase a Source based game such as Half Life 2, or as the official website states, Team Fortress 2. Which is of course now free. [Valve's Robin Walker said], 'We are in the process of getting it all done. It’s a bit messy because we have multiple versions of the SDK, and there’s some dependencies we need to shake out. But yes, the gist of it is that we’re just going to go ahead and make the Source SDK freely available.'"

rbrausse writes "Some time ago Slashdot covered the German police vulture training scheme; now it is time for a follow-up. BBC reports that the project has failed to take off. The trained vulture hasn't shown interest in working as a detective and confuses human with animal remains. Additionally the bird is shy and prefers to travel by foot."

CWmike writes "Microsoft has clarified the advice it gave users whose Windows PCs are infected with a new, sophisticated rootkit dubbed Popereb that buries itself on the hard drive's boot sector, noting Wednesday that a complete OS reinstall is not necessary. 'If your system is infected with Trojan:Win32/Popureb.E, we advise fixing the MBR using the Windows Recovery Console to return the MBR to a clean state,' MMPC engineer Chun Feng wrote in an updated blog entry. Feng provided links to instructions on how to use the Recovery Console for Windows XP, Vista and Windows 7. Once the MBR has been scrubbed, users can run antivirus software to scan the PC for additional malware for removal, Feng added. Several security researchers agreed with Microsoft's revisions, but a noted botnet expert doubted that the advice guaranteed a clean PC. But an internationally-known botnet expert disagrees. Joe Stewart, director of malware research at Dell SecureWorks, said, 'Once you're infected, the best advice is to [reinstall] Windows and start over ... [MBR rootkits] download any number of other malware. How much of that are you going to catch? This puts the user in a tough position.' MBR rootkit malware is among the most advanced of all threats."

itwbennett writes "Why should consumers care about the AT&T/T-mobile merger? Already, Verizon has dropped unlimited data plans and the US trails Japan, South Korea, and others in variety and performance of mobiles. Don't think for a second that those aren't the direct result this new monopoly, says blogger Tom Henderson. '...Those pesky State agencies that used to have regulatory authority has been usurped by the US Federal Government,' writes Henderson. 'This wasn't an accident. Who would you rather deal with, 43 different state regulatory authorities, or those convenient people on Capitol Hill?'"

itwbennett writes "Why should consumers care about the AT&T/T-mobile merger? Already, Verizon has dropped unlimited data plans and the US trails Japan, South Korea, and others in variety and performance of mobiles. Don't think for a second that those aren't the direct result this new monopoly, says blogger Tom Henderson. '...Those pesky State agencies that used to have regulatory authority has been usurped by the US Federal Government,' writes Henderson. 'This wasn't an accident. Who would you rather deal with, 43 different state regulatory authorities, or those convenient people on Capitol Hill?'"

ygslash writes "Among the many facilities shut down since Monday at Los Alamos National Laboratory due to the approaching wildfire is Cielo, one of the most powerful supercomputers in the world. The National Nuclear Security Administration's three national laboratories - Los Alamos, Sandia, and Lawrence Livermore - all share computing time on Cielo, according to Associated Press." Update: 06/30 14:48 GMT by S : As readers have pointed out, this article refers to the National Nuclear Security Administration, not the National Security Agency. Summary updated to reflect that.

snydeq writes "The fact that Oracle has handed over the keys to two major open source projects in recent weeks has some questioning the fate of other prominent open source projects Oracle took on in the wake of its 2010 acquisition of Sun. But while OpenOffice.org and Hudson provided little commercial opportunity for Oracle, it appears that Oracle has plans to keep rein on NetBeans, MySQL, and GlassFish contrary to expectations, analysts contend."

snydeq writes "The fact that Oracle has handed over the keys to two major open source projects in recent weeks has some questioning the fate of other prominent open source projects Oracle took on in the wake of its 2010 acquisition of Sun. But while OpenOffice.org and Hudson provided little commercial opportunity for Oracle, it appears that Oracle has plans to keep rein on NetBeans, MySQL, and GlassFish contrary to expectations, analysts contend."

MassDosage writes "Software Build Systems by Peter Smith is a well written, albeit rather lengthy book that covers the intricacies of systems used to build software. It tries to do this in a technology-neutral manner where possible but covers existing tools like Ant, Make and Scons as a means of illustrating the various concepts covered instead of just focusing on theory. The real world examples illustrate building Java, C/C++, C# and Python software and cover scaling up from small builds with tens of source files up to massive builds with tens of thousands. All of the technologies used are introduced in some depth which newcomers should find useful but experienced build developers may want to skim over." Read below for the rest of MassDosage's review. Software Build Systems: Principles and Experience author Peter Smith pages 583 publisher Addison Wesley rating 7/10 reviewer MassDosage ISBN 978-0-321-71728-3 summary Principles and Experience Software Build Systems weighs in at a hefty 580 odd pages and covers a lot of ground. It is targeted at developers, managers and build engineers and while there is definitely something for all of these groups, each of them will most likely find themselves skipping sections which are either not of interest to them or are too basic. It is also important to note that this book is not a hands-on tutorial of how to set up a build system from scratch but instead uses a variety of detailed examples to illustrate its concepts with pointers to external documentation for those wanting to actually implement a complete build system of their own.

The book is clearly divided into parts which move from "The Basics" to "The Build Tools" and then on to "Advanced Topics" and finally "Scaling Up". "The Basics" really is basic and most build engineers and developers worth their salt can probably skim read most of this. The fundamentals of C/C++, Java and C# are also covered illustrating a major theme in this book in that it tries to be programming language neutral and just use the different languages as examples to explain various concepts. While this is an inclusive, worthwhile aim it does mean that someone only interested in say, building Java software, will find large parts of the book irrelevant. This applies particularly to the chapters on the various build tools where Make, Ant, SCons, CMake and Eclipse are all covered in painstaking detail. The pros and cons of each of these tools are discussed in a non-biased manner using real world examples where possible. Anyone who has actually written a build system using one of these tools probably won't find much they don't already know but for a manager or someone new to any of these technologies the author provides a a good introduction with mentions of similar tools and pointers for finding out more about each of them.

"Advanced Topics" is where things start to get interesting as concepts like dependency graphs, change detection and version management that the build tools rely on to function are discussed in depth. A lot of the advice in these chapters feels like it comes from practical experience and the best parts are where tool-neutral tips are provided. There is a bit too much detail here as well as the odd digression which feels unnecessary in a book of this length. Do we really need to know the details of lex and yacc in order to create a build system? The author clearly has an understanding of open source development and competently discusses the wild world of building software that may run on a plethora of machines and platforms that the developers have little or no control over as well as software that is built in a more clinical manner for a limited set of environments.

Build systems for massive software projects are covered in "Scaling Up" and the author acknowledges that this probably isn't relevant for everyone. I however think that the first chapter in this section ("Reducing complexity for end users") is the best in the whole book and applies to all build systems, regardless of size or technology. A better title for this chapter would have been "Best practices for build systems" as it doles out plenty of good tips such as how to automatically detect dependencies, what not to keep in a source control system, when to abort a build (early), why to ensure there is always a way to clean up all build-generated artifacts and so on. The gist here is to try to reduce complexity wherever possible and the advice is all very well reasoned and practical. The book wraps up by covering methods for reducing the size of a build and ways to speed up and optimize builds.

Overall this is a very well written, edited and structured book but it does suffer from attempting to cover too much and going into detail on topics which aren't going to be of interest to everyone. A prime example of this is the section on packaging technologies where I doubt that someone concerned with creating Debian packages will find the information on the Nullsoft Scriptable Install System very useful, or vice versa. The same applies to the varying levels of technical detail in the book — a manager may find the introductions to concepts like compiled versus scripted languages enlightening but to most developers this will be old hat. Conversely the intricacies of how Make calculates its dependency graph is probably interesting to a build engineer but most managers will be out of their depth.

This isn't the kind of book most people will read from cover to cover. Instead I recommend skimming through the sections that aren't immediately applicable and just focusing on the parts that discuss the particular build technologies the reader is interested in as well as the more technology neutral parts towards the end. It is obvious that years (if not decades) of real world experience have been distilled in Software Build Systems. It is just a shame that this process wasn't a bit more focused as this could have been a great book, instead of just a good book with some great sections and some sections that most readers will find themselves skimming over.

I was given a copy of this book free of charge by the publisher for review purposes. They placed no restrictions on what I could say and left me to be as critical as I wanted so the above review is my own honest opinion.

You can purchase Software Build Systems: Principles and Experience from amazon.com. Slashdot welcomes readers' book reviews -- to see your own review here, read the book review guidelines, then visit the submission page.

MassDosage writes "Software Build Systems by Peter Smith is a well written, albeit rather lengthy book that covers the intricacies of systems used to build software. It tries to do this in a technology-neutral manner where possible but covers existing tools like Ant, Make and Scons as a means of illustrating the various concepts covered instead of just focusing on theory. The real world examples illustrate building Java, C/C++, C# and Python software and cover scaling up from small builds with tens of source files up to massive builds with tens of thousands. All of the technologies used are introduced in some depth which newcomers should find useful but experienced build developers may want to skim over." Read below for the rest of MassDosage's review. Software Build Systems: Principles and Experience author Peter Smith pages 583 publisher Addison Wesley rating 7/10 reviewer MassDosage ISBN 978-0-321-71728-3 summary Principles and Experience Software Build Systems weighs in at a hefty 580 odd pages and covers a lot of ground. It is targeted at developers, managers and build engineers and while there is definitely something for all of these groups, each of them will most likely find themselves skipping sections which are either not of interest to them or are too basic. It is also important to note that this book is not a hands-on tutorial of how to set up a build system from scratch but instead uses a variety of detailed examples to illustrate its concepts with pointers to external documentation for those wanting to actually implement a complete build system of their own.

The book is clearly divided into parts which move from "The Basics" to "The Build Tools" and then on to "Advanced Topics" and finally "Scaling Up". "The Basics" really is basic and most build engineers and developers worth their salt can probably skim read most of this. The fundamentals of C/C++, Java and C# are also covered illustrating a major theme in this book in that it tries to be programming language neutral and just use the different languages as examples to explain various concepts. While this is an inclusive, worthwhile aim it does mean that someone only interested in say, building Java software, will find large parts of the book irrelevant. This applies particularly to the chapters on the various build tools where Make, Ant, SCons, CMake and Eclipse are all covered in painstaking detail. The pros and cons of each of these tools are discussed in a non-biased manner using real world examples where possible. Anyone who has actually written a build system using one of these tools probably won't find much they don't already know but for a manager or someone new to any of these technologies the author provides a a good introduction with mentions of similar tools and pointers for finding out more about each of them.

"Advanced Topics" is where things start to get interesting as concepts like dependency graphs, change detection and version management that the build tools rely on to function are discussed in depth. A lot of the advice in these chapters feels like it comes from practical experience and the best parts are where tool-neutral tips are provided. There is a bit too much detail here as well as the odd digression which feels unnecessary in a book of this length. Do we really need to know the details of lex and yacc in order to create a build system? The author clearly has an understanding of open source development and competently discusses the wild world of building software that may run on a plethora of machines and platforms that the developers have little or no control over as well as software that is built in a more clinical manner for a limited set of environments.

Build systems for massive software projects are covered in "Scaling Up" and the author acknowledges that this probably isn't relevant for everyone. I however think that the first chapter in this section ("Reducing complexity for end users") is the best in the whole book and applies to all build systems, regardless of size or technology. A better title for this chapter would have been "Best practices for build systems" as it doles out plenty of good tips such as how to automatically detect dependencies, what not to keep in a source control system, when to abort a build (early), why to ensure there is always a way to clean up all build-generated artifacts and so on. The gist here is to try to reduce complexity wherever possible and the advice is all very well reasoned and practical. The book wraps up by covering methods for reducing the size of a build and ways to speed up and optimize builds.

Overall this is a very well written, edited and structured book but it does suffer from attempting to cover too much and going into detail on topics which aren't going to be of interest to everyone. A prime example of this is the section on packaging technologies where I doubt that someone concerned with creating Debian packages will find the information on the Nullsoft Scriptable Install System very useful, or vice versa. The same applies to the varying levels of technical detail in the book — a manager may find the introductions to concepts like compiled versus scripted languages enlightening but to most developers this will be old hat. Conversely the intricacies of how Make calculates its dependency graph is probably interesting to a build engineer but most managers will be out of their depth.

This isn't the kind of book most people will read from cover to cover. Instead I recommend skimming through the sections that aren't immediately applicable and just focusing on the parts that discuss the particular build technologies the reader is interested in as well as the more technology neutral parts towards the end. It is obvious that years (if not decades) of real world experience have been distilled in Software Build Systems. It is just a shame that this process wasn't a bit more focused as this could have been a great book, instead of just a good book with some great sections and some sections that most readers will find themselves skimming over.

I was given a copy of this book free of charge by the publisher for review purposes. They placed no restrictions on what I could say and left me to be as critical as I wanted so the above review is my own honest opinion.

You can purchase Software Build Systems: Principles and Experience from amazon.com. Slashdot welcomes readers' book reviews -- to see your own review here, read the book review guidelines, then visit the submission page.

An anonymous reader writes "Now that the big Linux kernel power regression has been solved it looks like Ubuntu 11.04 can compete with Microsoft Windows 7 in terms of overall power usage. New tests revealed by Phoronix show the power consumption of Ubuntu 11.04 vs. Windows 7 operating systems. On a range of different systems, the power consumption of the Linux OS was comparable to that of Windows except for a few select workloads and systems."

adeelarshad82 writes "Just like in Stephen Glass' fabricated feature where a lonely teenage hacker gets hired by a major software company, the 21 year old PlayStation 3 hacker, George "Geohot" Hotz, was offered a job at Facebook. Ironically Hotz wasn't the first school-aged hacker to be rewarded for his cyber-crime rather than a prison sentence. Turns out there are others who have managed (with one exception) to avoid jail time, and instead found themselves gainfully employed by some of Silicon Valley's most exclusive circles."

On Monday we discussed the U.S. Supreme Court's decision that a California law banning the sale or rental of violent video games to minors was in violation of the First Amendment's free speech protection. By now, both sides of the debate have had a chance to respond to the Court's ruling. Congressman Joe Baca and CA State Senator Leland Yee pledged to continue the fight for stricter controls on the distribution of violent games, while others cried, "think of the children." Game industry groups were unsurprisingly pleased with the decision, but warned that this won't be the end of it, and asked lawmakers to stop wasting time with such legislation in the future. An article at the NY Times points out how the ruling highlights the lack of clear evidence supporting either side of the debate, and Time notes the Supreme Court's double standard, asking, "Why does the court treat violent images and sexual images so differently?" Finally, an editorial at Gamasutra reminds us that even though most game developers are breathing a sigh of relief, many would like to see the industry shift toward something more creative and meaningful than violence.

itwbennett writes "LulzSec says they're retired, which may or may not be true. But one thing the world has learned from their 'frightening yet funny escapades is that 'the state of online security stinks,' writes blogger Tom Henderson. LulzSec (and Anonymous) have 'demonstrated that an awful lot of people are either asleep at the switch or believed in arcane security methods like security through obscurity.'" A related story at the Guardian suggests that governmental attempts to control the internet are spurring these activities.

CWmike writes "In a move with far-reaching privacy implications, the U.S. Supreme Court has decided to hear a case involving the government's authority to conduct prolonged GPS tracking of suspects in criminal cases without first obtaining a court warrant. The government has argued that it has the authority to conduct such searches; privacy advocates have argued that such tracking violates Fourth Amendment protections against unreasonable search and seizure. The Supreme Court's decision in the case will be pivotal because lesser courts around the U.S. have appeared split on the issue in recent years, with some upholding warrantless GPS tracking and others rejecting it. Last August, the U.S. Court of Appeals for the District of Columbia circuit sided with the subject of the Supreme Court hearing, Antoine Jones, a Washington, D.C. man who was convicted in 2008 on charges of possessing and conspiring to distribute more than 50 kilograms of cocaine, and rejected claims by the government that federal agents have the right to conduct around-the-clock warrantless GPS tracking of suspects."

CWmike writes "In a move with far-reaching privacy implications, the U.S. Supreme Court has decided to hear a case involving the government's authority to conduct prolonged GPS tracking of suspects in criminal cases without first obtaining a court warrant. The government has argued that it has the authority to conduct such searches; privacy advocates have argued that such tracking violates Fourth Amendment protections against unreasonable search and seizure. The Supreme Court's decision in the case will be pivotal because lesser courts around the U.S. have appeared split on the issue in recent years, with some upholding warrantless GPS tracking and others rejecting it. Last August, the U.S. Court of Appeals for the District of Columbia circuit sided with the subject of the Supreme Court hearing, Antoine Jones, a Washington, D.C. man who was convicted in 2008 on charges of possessing and conspiring to distribute more than 50 kilograms of cocaine, and rejected claims by the government that federal agents have the right to conduct around-the-clock warrantless GPS tracking of suspects."

There's been a lot of noise about Mozilla's new rapid release leading to conflict with Enterprise users. Kethinov found an Ars article that points out that "Now that Mozilla has released Firefox 5, version 4, just three months old, is no longer supported. Enterprise customers aren't very pleased with this decision, and are claiming it makes their testing burden impossible. We're not convinced: we think Mozilla's decision is the right one for the Web itself.'"

There's been a lot of noise about Mozilla's new rapid release leading to conflict with Enterprise users. Kethinov found an Ars article that points out that "Now that Mozilla has released Firefox 5, version 4, just three months old, is no longer supported. Enterprise customers aren't very pleased with this decision, and are claiming it makes their testing burden impossible. We're not convinced: we think Mozilla's decision is the right one for the Web itself.'"

astroengine writes "At around 1 p.m. EDT on Monday, asteroid 2011 MD narrowly missed Earth's atmosphere, passing well within the orbits of our GPS satellites. Scientists worked hard to track the space rock, and astronomers using the 2-meter Faulkes Telescope in Siding Spring, Australia, managed to image the asteroid. Also, Planetary Science Institute research scientist Pasquale Tricarico put together some pretty cool asteroid-eye-view animations of the event."

mattnyc99 writes "In the wake of the Best Buy 'geek' trademarking and Miss USA calling herself 'a huge history geek,' writer (and self-proclaimed geek) Eryn Green has an interesting piece for Esquire on how so-called 'geek chic' is pervading the culture so much that no one appreciates an actual geek anymore. From the article: 'The difference between brains and beauty is that you're more or less born into good looks — entitled, if you will. Intelligence? That takes work. If the hallmark of real geekiness — of America — is determination, then we seem too determined to have an entitlement problem.'"

adeelarshad82 writes "Building on last year's efforts, PCMag once again hit the road on a 6,000 mile trip to test out eight 3G and 4G networks to determine which ones were the fastest (and slowest) in 21 different cities. With 10 stops in each city for at least 15 minutes each, the team used custom speed test software on 16 different handsets which ran HTTP upload and download tests every 25 seconds to 3 minutes. The test results were broken down by city as well as region. As expected, Verizon's 4G led the pack. It performed the best in Dallas, where it averaged 15.75 Mbsp and also hit the highest download speed of 37.66 Mbsp. On the other hand, Sprint's 4G results were disappointing; in some cities even AT&T provided better download speeds. Beyond the 4G, T-Mobile's HSPA+ offered blazing fast speeds as well, going as high up as 15.93 Mbsp in Detroit while averaging the best in Dallas at 6.44 Mbps. Amongst the 3G networks, AT&T mostly outperformed all others."

smitty777 writes "An idea for acoustic stealth technology proposed in 2008 was finally put into practice. The abstract describes taking advantage of the 'transformation acoustics and linear coordinate transformations that result in shells which are homogeneous, broadband, and compact. The required material parameters are highly anisotropic; however, we show that they are easily achievable in practice in metamaterials made of perforated plastic plates.' It is thought this technology might be useful for shielding ships from sonar or creating soundproof rooms."

An anonymous reader writes "For the Linux kernel power regressions that were found a few months ago, and hit in Ubuntu 11.04, Phoronix has found the regression that's still present in the Linux 3.0 kernel. The power regression is caused by a change in ASPM, the Active-State Power Management, for PCI Express support."

An anonymous reader writes "Facebook's longest legal saga, which has lasted seven years so far, looked like it was finally closed, but that was just a false alarm. In a filing earlier this week with the federal court in San Francisco, Facebook CEO Mark Zuckerberg's former Harvard classmates Cameron Winklevoss and Tyler Winklevoss, who accuse him of stealing their idea for the social network, decided not to seek US Supreme Court review of the $65 million settlement made in 2008. Everyone thought this meant they had finally given up. It turns out that the twins have decided to keep fighting after all, just with a different lawsuit."

tsu doh nimh writes with an update on the previously mentioned crackdown on scammers peddling fake antivirus products, who were apparently taking advantage of the worm that just won't go away: "Police in Ukraine said the thieves fleeced unsuspecting consumers with the help of the infamous Conficker worm, although it remains unclear how big a role the fast-spreading worm played in this crime. Interestingly, the picture showing the stack of PCs confiscated by Ukrainian authorities (SBU) in this raid is identical to the one shown in an SBU press release last fall, when the SBU detained five individuals connected to high-profile ZeuS Trojan attacks."

tsu doh nimh writes with an update on the previously mentioned crackdown on scammers peddling fake antivirus products, who were apparently taking advantage of the worm that just won't go away: "Police in Ukraine said the thieves fleeced unsuspecting consumers with the help of the infamous Conficker worm, although it remains unclear how big a role the fast-spreading worm played in this crime. Interestingly, the picture showing the stack of PCs confiscated by Ukrainian authorities (SBU) in this raid is identical to the one shown in an SBU press release last fall, when the SBU detained five individuals connected to high-profile ZeuS Trojan attacks."

After the earlier report that some of Australia's largest telcos (and ISPs) were to start censoring internet traffic based on a blacklist, rdnetto writes with the news that "Telstra is now hesitating to deploy the internet filter it had previously promised to implement, fearing reprisals from online vigilantes." The linked article specifically names LulzSec as the source of such reprisals.

An anonymous reader writes "Most of us know the many problems with electronic voting systems. They are closed source and hackable, some have a default candidate checked, and many are unauditable (doing a recount is equivalent to hitting a browser's refresh button). But these issues only come to our attention around election time. Now is the time to think about open source voting, end-to-end auditable voting systems and open source governance. Not in November of 2012, when it will, once again, be far, far too late to do anything about it." It'll be interesting to see what e-voting oddities start cropping up in the current election cycle; Republican straw polls have already started, and the primaries kick off this winter.

An anonymous reader writes "Most of us know the many problems with electronic voting systems. They are closed source and hackable, some have a default candidate checked, and many are unauditable (doing a recount is equivalent to hitting a browser's refresh button). But these issues only come to our attention around election time. Now is the time to think about open source voting, end-to-end auditable voting systems and open source governance. Not in November of 2012, when it will, once again, be far, far too late to do anything about it." It'll be interesting to see what e-voting oddities start cropping up in the current election cycle; Republican straw polls have already started, and the primaries kick off this winter.

CWmike writes "A Microsoft executive late Thursday used the furor over Mozilla's decision to curtail support for Firefox 4 to plead the case for Internet Explorer in the enterprise. 'I think I speak for everyone on the IE team when I say we'd like the opportunity to win back your business,' Ari Bixhorn, director of IE at Microsoft, said in a post on his personal blog. 'We've got a great solution for corporate customers with both IE8 and IE9, and believe we could help you address the challenges you're currently facing.' Bixhorn addressed his open letter to the manager of workplace and mobility in the office of IBM's CIO, John Walicki, who, along with others, had voiced their displeasure with Mozilla's decision to retire Firefox 4 from security support. In a comment appended to a blog maintained by Michael Kaply, a consultant who specializes in customizing Firefox, Walicki called Mozilla's decision to end security support for Firefox 4 a 'kick in the stomach.'"

jfruhlinger writes "People are starting to comb through the details of the law enforcement documents made public by LulzSec. Blogger Kevin Fogarty noticed one interesting trend: The cops seem very anxious about iPhones, particularly apps that would allow encounters with police officers to be recorded. Ironically, the cops seem extremely concerned with protecting their own privacy, but the documents encourage police to examine iPhones during the course of interacting with the public to see what apps they have."

wiredmikey writes "Andrew Jaquith has written a great analysis of lessons learned from the recent RSA Cyber Attack, from a customer's perspective. According to Jaquith, in the security industry, 'trust' is a somewhat slippery concept, defined in terms ranging from the cryptographic to the contractual. Bob Blakley, a Gartner analyst and former chief scientist of Tivoli, once infamously wrote that 'Trust is for Suckers.' What he meant is that trust is an emotional thing, a fragile bond whose value transcends prime number multiplication, tokens, drug tests or signatures — and that it is foolish to rely too much on it. Jaquith observed three things about the RSA incident: (1) even the most trusted technologies fail; (2) the incident illustrates what 'risk management' is all about; and (3) customers should always come first."

Stoobalou writes "A lawsuit filed this week suggests that Sony sacked a group of employees from its network security division just two weeks before the company's servers were hacked and its customers' credit card details were leaked. The suit, which seeks class action status, is being brought by victims of the massive data breach that took place in April."

thecarchik writes "The future of driving, in major cities at least, is looking more and more likely to be done by high-tech computers rather than actual people, at least if the latest breakthroughs in self-driving vehicle technology mean anything. Internet search engine giant Google has logged some 140,000 miles with its self-driving Toyota Prius fleet and Audi has had similar success with its run of autonomous cars. Now, Volkswagen has presented its Temporary Auto Pilot technology. Monitored by a driver, the technology can allow a car to drive semi-automatically at speeds of up to 80 mph on highways."

heptapod writes "Valve has announced that Team Fortress 2 is now free to play. 'We've been toying with the idea of making Team Fortress free-to-play ever since the Mann-conomy update [in September 2010],' said Valve's Robin Walker. 'Team Fortress 2 would only be monetized by microtransaction payments. No advertising model will be pursued, Walker said. No premium subscription model will be used. No cynical "pay-to-win" options will be implemented, he assured.'"

DMiax writes "Nokia's controversial CEO Stephen Elop just revealed the prototype of the next WP7 handset. The CEO asked the journalists present to turn off the cameras because the new phone was 'super confidential.' Did he really expect them to comply? After all he must know that this has the potential to hurt the sales of the recently released N9, the last non-Windows Nokia smartphone. He would never want to do that, right?"

WrongSizeGlass writes "Daniel Spitler, a member of Goatse Security, pleaded guilty today to writing the code used to steal email addresses and personal information belonging to 120,000 Apple iPad subscribers from AT&T computer servers. Spitler, who surrendered to the authorities in January, pleaded guilty to one count of conspiracy to gain unauthorized access to computers connected to the Internet and one count of identity theft. Each charge carries a maximum sentence of five years in prison."

WrongSizeGlass writes "Daniel Spitler, a member of Goatse Security, pleaded guilty today to writing the code used to steal email addresses and personal information belonging to 120,000 Apple iPad subscribers from AT&T computer servers. Spitler, who surrendered to the authorities in January, pleaded guilty to one count of conspiracy to gain unauthorized access to computers connected to the Internet and one count of identity theft. Each charge carries a maximum sentence of five years in prison."

An anonymous reader writes "There's been a lot of talk recently about $0.99 Kindle eBooks, after publishers were accused of spamming the market with low-quality titles. Author Keir Thomas published two $0.99 computing books in March and has some figures for those who might want to have a go, as part of his Adventures in Publishing series of blog postings. Thomas says he loves the democratic nature of the Kindle Direct Publishing system, and points out one of his self-published books tops Amazon's Linux charts, besting titles by all the major publishers."

GillBates0 writes "The Bangalore Police have objected to the collection of data by Google's cars, which were criss-crossing Bangalore city taking high definition images to give users 360 degree views of streets. Talking about the security concerns in an earlier interview with CNN-IBN, Google India Product Head Vinay Goel said, 'We are only driving on public roads and taking publicly available imagery so what we are not doing is going into a specific installation and taking private pictures and obviously we are working with the authorities so if there are certain locations they don't want us to be there we won't go there, we are happy working with the authorities here.'"

An anonymous reader writes "Facebook CEO Mark Zuckerberg's former Harvard classmates Cameron Winklevoss and Tyler Winklevoss, who accuse him of stealing their idea for the social network, have decided not to appeal to the Supreme Court. In a filing today with the federal court in San Francisco, the duo said that after 'careful consideration,' they decided not to seek Supreme Court review of the $65 million settlement."

Last week, you asked questions (many rather pointed!) of Amir Taaki, co-founder of Bitcoin Consultancy, which develops Bitcoin related services, exchanges and Bitcoin itself. (They also own Britcoin.co.uk.) Says Taaki: "When creating video games I spent much time imagining tools to make artists lives easier, and how we could keep funding developers to write free software. One contribution of mine to the community was a site where developers could get funded for developing features and I'd love nothing more than to pay people to write free software." With regard to Bitcoin, similarly, "We need fulltime developers thinking about the problems and solutions needed to keep this system running. We aim to get all the creative thinkers from the community and provide a mechanism for enabling their work." Below find his answers to the questions readers raised.

Is the gold rush over?
by curunir

With BitCoin limited to a pre-determined amount and the difficulty of mining new BitCoins, it seems that this gives a huge advantage to people who got into BitCoin early and have already amassed a considerable amount of BitCoins. Is this true and, if so, do you think this disincentive will undermine BitCoin's ability to become more popular since the majority of the population will have to work so much harder to obtain the currency?

Amir Taaki: It is certainly true that early adopters have been rewarded. I do not think these inequities will be more shocking than those in the real world. Any guesses as to how this will play out is pontification. However, I don't think anyone has proposed a working model for a decentralized secure digital currency where such a thing would not happen. Overall, I believe the properties of this currency will significantly add to the wealth of all peoples, especially those less well off.

Crypto-Anarchism?
by conner_bw

I argue that bitcoin is interesting because it's a locked currency, with a known maximum, and a timeline for that maximum based on contemporary crypto math and radical ideas. There is clearly well thought out timeline for adoption and disruption. It's not just "Cool, new money!" Are you a crypto anarchist, or similar?

A.T.: Yes, I myself am a crypto anarchist. However, not everyone on my team has the same political ideologies and we do not try to push our ideologies on each other. In fact, we have all seen our ideologies change over time with the awareness of new knowledge and information. Ideologies should not be a point of contention, especially when we all see the immense prolific value of a more efficient means of commerce.

If not, then is this another Tulip craze [wikipedia.org] and all these news stories and bitcoin currency exchange services being hyped heavily the last month machinations for profiteering?

A.T.: I do not advocate that people speculate on bitcoins. In fact I actively advocate against that because those who are new to bitcoin might see it as just that, a 'craze.' I do however think that the properties of bitcoin are clearly advantageous over the current means of commerce. Although bitcoin is still underdeveloped, everything visible in the modern world can be adapted using bitcoins as a backbone. This will result in all the services of today's world (clearing houses, security, fraud protection, interest bearing accounts...) continuing to be offered, but with far less overhead.

Austrian Acceptance
by MyFirstNameIsPaul

I have found that the Austrians have a hard time accepting the idea of a digital currency. The core of their argument seems to be that digital currencies are not made up of something that had value before being a medium of exchange, such as gold and silver. When I counter to them that BitCoin is made up of code and people pay money for things like video games, they argue that the video game would have to be the thing valued, not the computer code. How do you deal with these kinds of objections?

A.T.: Gold is not a currency in my mind. It is a store of value. I would not want to go to buy bread from my local store and shave off some gold from a bullion and take out a scale and wait for an acid test to be performed. Gold is backed by real world properties.

Bitcoin is backed by the fact that is has unique properties as well:

• Decentralized
• No bank holidays
• International
• No concept of borders
• Divisible
• True micro-transactions possible (new markets feasible)
• New privacy model
• Private identity yet transparent
• Secure
• You do not have to trust merchant sites (Sony - Playstation) to protect your data
• Fast Transactions
• No Charge backs

Useful Calculations?
by Bodhammer

Is there any way to make the calculations more useful (i.e. Boinc) and still maintain the same level of difficulty in the computations? It just seems so wasteful to run Bitcoin at this time.

A.T.: Our world's current infrastructure depends on paying employees, building large buildings, paying for heat, electricity, transportation, lawyers, courts, judges, policemen, government bureaucracies, armies and much more. Doesn't it seem wasteful to rely on tedious and sometimes ambiguous real world laws with a lot of overhead instead of mathematical laws?

When merchants started accepting bitcoins, verifiers (because miners is a misnomer) started to see that their generated coins were worth something. They became competitive and found ways to do the same calculations cheaper which provided security for the network and verified the transactions. Verifiers found out that running these hashing algorithms on one's GPU was far more energy efficient than running them on one's CPU. Specialized software was later constructed for these purposes. Some keep their machines under dry ice. In the not so distant future, hardware FPGAs will be specially designed for this verification process.

The advantages of bitcoin exist because it is an inherently more efficient and less wasteful system. The reward for minting a block, provides a healthy competition that causes the energy cost to be driven down.

Additional privacy layers and smartphones?
by DriedClexler

Is there any serious development underway to make the privacy more robust? There has been talk of "Bitcoin laundry," where large pools swap their coins around between each other to make it harder to connect a coin/address with an owner. But for this to seriously work, it needs a lot more people to be involved in it, and it has to be integrated in a way that's secure (against someone just keeping coins in the middle of a shuffle) and transparent to the user (so they don't have to think about the new addresses they generate, or which coins are optimal to send where for the maximum shuffle). How soon can we expect something like this? Also, how soon will smartphones be able to handle this with the same ease as desktops and notebooks?

A.T.: A bitcoin laundry already exists. The volume on it is very low, but if demand increases in the future then such a service is trivial to setup. A mixing service (as they're called) requires a large volume and therefore a persistent demand.

Smartphones can already use bitcoin :) An Android version of the command line Bitcoin was compiled. Additionally one can use an online wallet service (or a bitcoin exchange) to store their bitcoins.

Lost/forgotten bitcoins?
by algorimancer

One thing that concerns me is the fixed maximum number of bitcoins. Lets say people acquire bitcoins, but the amount isn't enough to worry about, so they never use them, or perhaps their computer crashes and they don't have a backup. My understanding is that these bitcoins are permanently lost from the economy of bitcoins. Over time, the total supply would begin to dwindle, presumably pushing up the value of those that remain, until people become frustrated at the small supply and are motivated to move to a new system, then bitcoin is abandoned. In the real world this happens with dollar bills, but the government can compensate for this by creating more. Is this issue addressed in some fashion?

A.T.: The supply of bitcoins is 21 million. The supply of money is infinite. A bitcoin can currently be divided to 8 decimal places. The loss of bitcoins in the future may lead to some deflation however I expect it to be insignificant. In the very long term, even if there was only 1 bitcoin theoretically in circulation, running the world economy would not be a problem. There exists only 6 MBTC in circulation at this moment.

Extreme instability of Bitcoin vs. USD
by Limerent Oil

Why would any merchant IN THEIR RIGHT MIND want to deal with Bitcoin? With the insane USD-to-Bitcoin exchange-rate gyrations happening lately, why would any serious retailer even bother, when the value of Bitcoin vs. USD could change by 50% or more in just a few hours?

A.T.: As liquidity increases transaction costs decrease. If there was already an appropriate clearing house in place, a merchant would be able to automatically accept bitcoins and liquidate them to dollars. In the same way that people who use the internet are not all cognizant of the communication protocols they are using, I foresee the possibility of merchants offering their products in USD, EUR, GBP, and customers purchasing those products in their local currency. And the underlying mechanism which facilitates this transfer is the bitcoin. Bitcoin would provide these same services that payment services, credit cards or banks do but with much less cost to the merchant and customer.

What about the lack of inflation?
by Cyberax

It's long known that economic growth is severely stunted without some measure of inflation. Adopting bitcoins for the global economy would mean that policymakers lose control on money supply, and while there are advantages in this, disadvantages far outweigh them. Additionally, adopting a global currency standard will deny governments ability to influence currency rates robbing them of yet another way to control the economy. Is there any plan to solve this? Maybe a system of independent bitcoin 'roots' operated by governments would help?

A.T.: Ben Friedman has released a lot of work on E money and how it will affect the future and how governments will adapt. The truth is that the government will still have monopolies on much of the operations of the economy such as fractional reserve banking and the issuing of licenses which allow banks to lend money.

Aspirations
by slim

What are your aspirations for the currency? Do you hope for it to be near-ubiquitous — used by corner shops and mainstream merchants like Amazon? Or are you happy to see a parallel economy grow, as a niche thing? Or something else?

A.T.: I have lofty dreams of a world where people can send money abroad without having to pay 20+% in many cases to rip offs like western union. Where people can raise funds through services like paypal but not have their accounts arbitrarily frozen. Where citizens in developing nations who already oppose their government do not have to pay for wars of genocide out of their own pockets as was the case in ex-Yugoslavia where authoritarian control over the money supply helped finance a terrible war and bring about the worst hyper-inflation in Europe since WWII.

Bitcoin in some form is going to be adopted whether it is used as a unique currency, a payment system or as a clearing house. Our aspiration for bitcoin is to provide competition to the current system making everything cheaper for all. It's about cutting the middleman, democratising money and handing back power to people.

Will governments let it survive?
by merdaccia

We live in a world where the supply and movement of money are controlled by governments, central banks, money laundering laws, and financial institutions. How can BitCoin survive in this world? Middle men like banks stand to lose a fortune in fees and exchange rates, governments stand to lose a fortune in taxes if they can't track money movement, and the black market stands to gain a silent way to move value. For BitCoin to gain adoption, some major retailers need to start supporting it, but given the above risks, what stops a government from telling companies in its jurisdiction that they can't accept it?

A.T.: The US is not the world. If their government forces everyone to continue to use typewriters in lieu of computers and pay through the nose, they can. New and better technology, especially when it is revolutionary, does threaten archaic models and practices. Hopefully there will not be contention. My team is already in contact with SWIFT which has operated for 30 years and is the backbone of international money transfer for over 9000 banks. Many forward thinkers see the advantages of bitcoins but it is easy to understand how those perhaps well-intentioned but not well-versed in what bitcoin is can promote FUD.

Regulatory compliance?
by molo

For those of us interested in developing financial services using bitcoin, how have you dealt with regulatory issues? It seems like the SEC and FINRA in the US would not be keen on unregistered broker-dealers and agents and owners not having the legally required Series 7 and Series 24 certifications. Have you sought the UK equivalent certifications? The requirements of lawyers, accountants, certifications etc. seem to put a very high capital cost on starting a legitimate business offering services in this space.

A.T.: As well as being a developer, I own and operate www.Britcoin.co.uk (the UK exchange site). My team has been in negotiations for a long time now with lawyers and regulators. There is no regulatory process or restrictions now on the running of such services. Non-regulated sectors rarely seek out regulation. However, when it comes to bitcoins, I believe the sooner they are regulated the better. If their regulation is pushed by those who understand what bitcoins are then we may be able to regulate them in the best way possible and show the world they were not created for illegal practices. The sooner they are regulated, the sooner users can have legal assurances that merchants are liable for their operations. The negligence seen at MTGox would never have happened in a regulated market.

Although the FSA have not made any official statement about bitcoins. We at www.britcoin.co.uk are hoping that we can show to the proper authorities that indeed we have recorded our history of transactions. That all the money in our users accounts is accounted for. This process would dispel the FUD surrounding bitcoins and allow the people of the world to enjoy the freedoms and wealth of bitcoins that much sooner.

Tax avoidance and illicit trading
by slim

Some "benefits" of Bitcoin, from one perspective, appear to be that its cash-like properties lend themselves to tax avoidance (making transactions without declaring them), illicit trading (e.g. drugs or prostitution) and money laundering. Do you view this as a positive, a negative, or neutral? If you view it as a problem, how can the problem be mitigated?

A.T.: Most new technologies can be used for good and bad. Of course I do not condone or agree with the use of Bitcoins for illegal purposes.

However, I really want people to understand one thing. The criminalization of Bitcoin would not stop the illegal activity that surrounds it. In fact, it would help those who use it as a means of engaging in illegal activity by not regulating the purchasing and selling of bitcoins. Criminalization would only stop people from enjoying the tremendous and fruitful benefits of such a system, it would hinder the social good. Regulation would allow the proper authorities to find and charge those who use bitcoins for illegal activities.

Britcoin.co.uk has kept a clear record of the exchanges which have gone on. Every single transaction is recorded and we are happy to open our books to the proper authorities. We are aggressively advocating and promoting the legalization and regulation of the exchanges.

Bitcoins offer massive potential for positive social change. It would be a sad thing to see Bitcoins outlawed due to ignorance or reactionary feelings. If you outlaw Bitcoin then the illicit trades will still continue, perhaps even proliferate, but the good would disappear.

Kings used to raise capital in order to wage wars. They required popular support before they were able to fund their wars. A common tool in modern day authoritarian regimes is currency manipulation in order to fund their wars of genocide (e.g Milosevic in the 90s). Bitcoin democratises governments.

Quantum Computing?
by SanityInAnarchy

Are there plans to deal with quantum computing, or with any of the algorithms used being compromised?

A.T.: If SHA256 or ECDSA was ever cracked, we'd have far bigger problems to worry about than bitcoin being destroyed. I suspect that there won't be any overnight switch, giving everybody enough time in order to adjust the current system to any changes.

The internet wasn't built perfect. But years of reshaping/patching/incremental design have shaped it into a workable network. Bitcoin will too undergo this transformation with time as it ages.

(More from the call for questions:)

is there ever going to be a bitcoin bank? ... The idea that if you lose or destroy or whatever your computer and lose all your money isn't going to make the general public accept this.

A.T.: Bitcoin now stands at its early stages. It's the kernel of the software stack that will eventually exist for this financial system. Other services and software utilising Bitcoin will exist. A common view is where Bitcoin acts as an automated clearing house between all these user facing services in the future.

Bitcoin's protocol itself will need to be extended in order for it to grow. As the network expands, block sizes could become impossible large once it rivals the transaction volume of a comparable service like VISA or Paypal. To have lightweight clients that don't need to process these large GB sized blocks new protocol commands like a txmatch regex would need to be introduced in order that clients don't need to process the entire block data.

The point to Bitcoin is that you can choose your own level of trust in an external service. One of our group's members, Patrick Strateman, came up with a scheme whereby a wallet could be recovered algorithmically using an email and a password. In the future I expect savings accounts where retrieving the money is an arduous proccess. Then we can go further to where a person has all their funds in a trusted service like with email today- how many people run their own mail servers?

What markets do you think will be the first to most aggressively adopt bitcoins as their currency?

What insights can you offer as to why the US government is having a hostile reaction to bitcoins?"

What kinds of competing P2P currencies are in development, and how will their deployment affect the valuation of bitcoins?

A.T.: Immediately as liquidity improves in exchanges, the best use for Bitcoins will be individuals transferring funds between countries without fees. Our group has a lot of interest from mobile sectors because of the potential as a micropayment system. Currently now in Africa, people use mobile credit as a form of currency to transfer funds across borders, but that's usually less than ideal.

The US government isn't a homogenous entity, and one senator (possibly funded by bankers) made a false claim on Bitcoin- calling it a scheme for drug trafficking networks. It may simply be due to reactionary misunderstanding like the people in Yahoo Finance calling Bitcoin a Ponzi scheme invented by bankers. That's why our group is aggressively pursuing press in order to dispel these myths.

Terminology

If we eventually use Bitcoin in everyday life, say, in the supermarket, how will we deal with prices in fractions of a Bitcoin? What terminology might we use for something priced at 0.00000005 Bitcoins?

A.T.: The accepted 'standard' is to use SI prefixes. 0.005 BC would be 5 mBC.

Here come the regulators ...

How will your business change when countries regulate exchanges? How do you ensure your exchange isn't being used for illicit purposes (to avoid being shut down by government authorities)?

A.T.: It is our goal (and has been for months) to get legal legitimisation. Our organisation has been aggressively seeking FSA regulation here in the UK for Britcoin. Our hope is that when governments do come to look at Bitcoin, they will see a long running, honest, legal exchange with open books. By having something in the law books about Bitcoin, it sets a positive legal precedent in the future and puts us as the policy makers rather than a bunch of old 60 year banker types.

Our exchange complies with the UK Know Your Customer laws which ensures it's not being used for illicit activity. We keep detailed transaction records and run regular audit logs to look for missing funds.

But eventually, one would want to use BitCoins to pay for legal services. My question is; how do you get to that point? Why would a legitimate business accept a currency that is used almost exclusively for illegal means? What is the strategy to convince mainstream businesses that BitCoins have a purpose in the main web, as well?

A.T.: The illicit markets are a very small part of Bitcoin yet the most sensationalist. I can see how one would think Bitcoin is purely for illegal trade if I didn't know better.

Check out the list of merchants.

Full and open disclosure: how many bitcoins do you currently own?

A.T.: 32 BC. At one point I had 6000, but I'm a bad hoarder. Everytime Bitcoins would double (and I'd have $2k), I'd donate half my wealth to other free software developers. Then recently I was going to wait until I had $4k, but the price went down and I'm very bad at holding onto cash :)

But that doesn't bother me at all. We have our group of free software developers developing Bitcoin itself and other related projects. Funds are coming in and we're growing. The goal is to this as a sustainable operation paying developers working on Bitcoin fulltime.

What are the advantages of bitcoin?

One problem I see with bitcoin is it offers very little over what we currently have. If I want to perform an online transaction using my computer, unless I am buying something illegal, then there are already companies which offer products for me to use. If I want to make an anonymous purchase in person, I would easily use cash.

Bitcoin seems to suffer from a lack of portability, which makes me wonder, what "need" is bitcoin catering to? What do I do in my day-to-day life that bitcoin will help me do such that as some point, bitcoin becomes irreplaceable and achieves de facto permanency?

A.T.: Sending funds abroad is time consuming, expensive and difficult. Recently I tried sending funds to a Polish bank from the UK- the bank was closed and I waited until Monday. Requiring me to be in person at the bank, the woman was unable to enter the Polish L looking character into her terminal. I had to aquire an internet banking code to do it online. Waited 3 days, logged in and the internet banking form didn't work. In the end, I ended using a friend to aquire Bitcoins and use the Polish exchange bitomat (we never use Britcoin ourself).

I wanted to donate funds to the excellent Symphony of Science musician. I went to fill in the Paypal form, spent 10 mins signing up to an account, entering all my very personal details and my card was rejected. In the end I got him to accept Bitcoins and donated directly without paying fees to Paypal.

Sony recently was hacked. Millions of accounts were leaked. If they were using Bitcoins then the addresses people donated to would be known to the attacker. Not my private keys which enable said attacker to spend my cash.

With commerce, everything becomes cheaper. Bitcoin vastly reduces the overhead needed for fees. We no longer require staff sitting inside banks pressing numbers on a keyboard since the system is automatically backed by mathematics and cryptography, not laws and people.

Last week, you asked questions (many rather pointed!) of Amir Taaki, co-founder of Bitcoin Consultancy, which develops Bitcoin related services, exchanges and Bitcoin itself. (They also own Britcoin.co.uk.) Says Taaki: "When creating video games I spent much time imagining tools to make artists lives easier, and how we could keep funding developers to write free software. One contribution of mine to the community was a site where developers could get funded for developing features and I'd love nothing more than to pay people to write free software." With regard to Bitcoin, similarly, "We need fulltime developers thinking about the problems and solutions needed to keep this system running. We aim to get all the creative thinkers from the community and provide a mechanism for enabling their work." Below find his answers to the questions readers raised.

Is the gold rush over?
by curunir

With BitCoin limited to a pre-determined amount and the difficulty of mining new BitCoins, it seems that this gives a huge advantage to people who got into BitCoin early and have already amassed a considerable amount of BitCoins. Is this true and, if so, do you think this disincentive will undermine BitCoin's ability to become more popular since the majority of the population will have to work so much harder to obtain the currency?

Amir Taaki: It is certainly true that early adopters have been rewarded. I do not think these inequities will be more shocking than those in the real world. Any guesses as to how this will play out is pontification. However, I don't think anyone has proposed a working model for a decentralized secure digital currency where such a thing would not happen. Overall, I believe the properties of this currency will significantly add to the wealth of all peoples, especially those less well off.

Crypto-Anarchism?
by conner_bw

I argue that bitcoin is interesting because it's a locked currency, with a known maximum, and a timeline for that maximum based on contemporary crypto math and radical ideas. There is clearly well thought out timeline for adoption and disruption. It's not just "Cool, new money!" Are you a crypto anarchist, or similar?

A.T.: Yes, I myself am a crypto anarchist. However, not everyone on my team has the same political ideologies and we do not try to push our ideologies on each other. In fact, we have all seen our ideologies change over time with the awareness of new knowledge and information. Ideologies should not be a point of contention, especially when we all see the immense prolific value of a more efficient means of commerce.

If not, then is this another Tulip craze [wikipedia.org] and all these news stories and bitcoin currency exchange services being hyped heavily the last month machinations for profiteering?

A.T.: I do not advocate that people speculate on bitcoins. In fact I actively advocate against that because those who are new to bitcoin might see it as just that, a 'craze.' I do however think that the properties of bitcoin are clearly advantageous over the current means of commerce. Although bitcoin is still underdeveloped, everything visible in the modern world can be adapted using bitcoins as a backbone. This will result in all the services of today's world (clearing houses, security, fraud protection, interest bearing accounts...) continuing to be offered, but with far less overhead.

Austrian Acceptance
by MyFirstNameIsPaul

I have found that the Austrians have a hard time accepting the idea of a digital currency. The core of their argument seems to be that digital currencies are not made up of something that had value before being a medium of exchange, such as gold and silver. When I counter to them that BitCoin is made up of code and people pay money for things like video games, they argue that the video game would have to be the thing valued, not the computer code. How do you deal with these kinds of objections?

A.T.: Gold is not a currency in my mind. It is a store of value. I would not want to go to buy bread from my local store and shave off some gold from a bullion and take out a scale and wait for an acid test to be performed. Gold is backed by real world properties.

Bitcoin is backed by the fact that is has unique properties as well:

• Decentralized
• No bank holidays
• International
• No concept of borders
• Divisible
• True micro-transactions possible (new markets feasible)
• New privacy model
• Private identity yet transparent
• Secure
• You do not have to trust merchant sites (Sony - Playstation) to protect your data
• Fast Transactions
• No Charge backs

Useful Calculations?
by Bodhammer

Is there any way to make the calculations more useful (i.e. Boinc) and still maintain the same level of difficulty in the computations? It just seems so wasteful to run Bitcoin at this time.

A.T.: Our world's current infrastructure depends on paying employees, building large buildings, paying for heat, electricity, transportation, lawyers, courts, judges, policemen, government bureaucracies, armies and much more. Doesn't it seem wasteful to rely on tedious and sometimes ambiguous real world laws with a lot of overhead instead of mathematical laws?

When merchants started accepting bitcoins, verifiers (because miners is a misnomer) started to see that their generated coins were worth something. They became competitive and found ways to do the same calculations cheaper which provided security for the network and verified the transactions. Verifiers found out that running these hashing algorithms on one's GPU was far more energy efficient than running them on one's CPU. Specialized software was later constructed for these purposes. Some keep their machines under dry ice. In the not so distant future, hardware FPGAs will be specially designed for this verification process.

The advantages of bitcoin exist because it is an inherently more efficient and less wasteful system. The reward for minting a block, provides a healthy competition that causes the energy cost to be driven down.

Additional privacy layers and smartphones?
by DriedClexler

Is there any serious development underway to make the privacy more robust? There has been talk of "Bitcoin laundry," where large pools swap their coins around between each other to make it harder to connect a coin/address with an owner. But for this to seriously work, it needs a lot more people to be involved in it, and it has to be integrated in a way that's secure (against someone just keeping coins in the middle of a shuffle) and transparent to the user (so they don't have to think about the new addresses they generate, or which coins are optimal to send where for the maximum shuffle). How soon can we expect something like this? Also, how soon will smartphones be able to handle this with the same ease as desktops and notebooks?

A.T.: A bitcoin laundry already exists. The volume on it is very low, but if demand increases in the future then such a service is trivial to setup. A mixing service (as they're called) requires a large volume and therefore a persistent demand.

Smartphones can already use bitcoin :) An Android version of the command line Bitcoin was compiled. Additionally one can use an online wallet service (or a bitcoin exchange) to store their bitcoins.

Lost/forgotten bitcoins?
by algorimancer

One thing that concerns me is the fixed maximum number of bitcoins. Lets say people acquire bitcoins, but the amount isn't enough to worry about, so they never use them, or perhaps their computer crashes and they don't have a backup. My understanding is that these bitcoins are permanently lost from the economy of bitcoins. Over time, the total supply would begin to dwindle, presumably pushing up the value of those that remain, until people become frustrated at the small supply and are motivated to move to a new system, then bitcoin is abandoned. In the real world this happens with dollar bills, but the government can compensate for this by creating more. Is this issue addressed in some fashion?

A.T.: The supply of bitcoins is 21 million. The supply of money is infinite. A bitcoin can currently be divided to 8 decimal places. The loss of bitcoins in the future may lead to some deflation however I expect it to be insignificant. In the very long term, even if there was only 1 bitcoin theoretically in circulation, running the world economy would not be a problem. There exists only 6 MBTC in circulation at this moment.

Extreme instability of Bitcoin vs. USD
by Limerent Oil

Why would any merchant IN THEIR RIGHT MIND want to deal with Bitcoin? With the insane USD-to-Bitcoin exchange-rate gyrations happening lately, why would any serious retailer even bother, when the value of Bitcoin vs. USD could change by 50% or more in just a few hours?

A.T.: As liquidity increases transaction costs decrease. If there was already an appropriate clearing house in place, a merchant would be able to automatically accept bitcoins and liquidate them to dollars. In the same way that people who use the internet are not all cognizant of the communication protocols they are using, I foresee the possibility of merchants offering their products in USD, EUR, GBP, and customers purchasing those products in their local currency. And the underlying mechanism which facilitates this transfer is the bitcoin. Bitcoin would provide these same services that payment services, credit cards or banks do but with much less cost to the merchant and customer.

What about the lack of inflation?
by Cyberax

It's long known that economic growth is severely stunted without some measure of inflation. Adopting bitcoins for the global economy would mean that policymakers lose control on money supply, and while there are advantages in this, disadvantages far outweigh them. Additionally, adopting a global currency standard will deny governments ability to influence currency rates robbing them of yet another way to control the economy. Is there any plan to solve this? Maybe a system of independent bitcoin 'roots' operated by governments would help?

A.T.: Ben Friedman has released a lot of work on E money and how it will affect the future and how governments will adapt. The truth is that the government will still have monopolies on much of the operations of the economy such as fractional reserve banking and the issuing of licenses which allow banks to lend money.

Aspirations
by slim

What are your aspirations for the currency? Do you hope for it to be near-ubiquitous — used by corner shops and mainstream merchants like Amazon? Or are you happy to see a parallel economy grow, as a niche thing? Or something else?

A.T.: I have lofty dreams of a world where people can send money abroad without having to pay 20+% in many cases to rip offs like western union. Where people can raise funds through services like paypal but not have their accounts arbitrarily frozen. Where citizens in developing nations who already oppose their government do not have to pay for wars of genocide out of their own pockets as was the case in ex-Yugoslavia where authoritarian control over the money supply helped finance a terrible war and bring about the worst hyper-inflation in Europe since WWII.

Bitcoin in some form is going to be adopted whether it is used as a unique currency, a payment system or as a clearing house. Our aspiration for bitcoin is to provide competition to the current system making everything cheaper for all. It's about cutting the middleman, democratising money and handing back power to people.

Will governments let it survive?
by merdaccia

We live in a world where the supply and movement of money are controlled by governments, central banks, money laundering laws, and financial institutions. How can BitCoin survive in this world? Middle men like banks stand to lose a fortune in fees and exchange rates, governments stand to lose a fortune in taxes if they can't track money movement, and the black market stands to gain a silent way to move value. For BitCoin to gain adoption, some major retailers need to start supporting it, but given the above risks, what stops a government from telling companies in its jurisdiction that they can't accept it?

A.T.: The US is not the world. If their government forces everyone to continue to use typewriters in lieu of computers and pay through the nose, they can. New and better technology, especially when it is revolutionary, does threaten archaic models and practices. Hopefully there will not be contention. My team is already in contact with SWIFT which has operated for 30 years and is the backbone of international money transfer for over 9000 banks. Many forward thinkers see the advantages of bitcoins but it is easy to understand how those perhaps well-intentioned but not well-versed in what bitcoin is can promote FUD.

Regulatory compliance?
by molo

For those of us interested in developing financial services using bitcoin, how have you dealt with regulatory issues? It seems like the SEC and FINRA in the US would not be keen on unregistered broker-dealers and agents and owners not having the legally required Series 7 and Series 24 certifications. Have you sought the UK equivalent certifications? The requirements of lawyers, accountants, certifications etc. seem to put a very high capital cost on starting a legitimate business offering services in this space.

A.T.: As well as being a developer, I own and operate www.Britcoin.co.uk (the UK exchange site). My team has been in negotiations for a long time now with lawyers and regulators. There is no regulatory process or restrictions now on the running of such services. Non-regulated sectors rarely seek out regulation. However, when it comes to bitcoins, I believe the sooner they are regulated the better. If their regulation is pushed by those who understand what bitcoins are then we may be able to regulate them in the best way possible and show the world they were not created for illegal practices. The sooner they are regulated, the sooner users can have legal assurances that merchants are liable for their operations. The negligence seen at MTGox would never have happened in a regulated market.

Although the FSA have not made any official statement about bitcoins. We at www.britcoin.co.uk are hoping that we can show to the proper authorities that indeed we have recorded our history of transactions. That all the money in our users accounts is accounted for. This process would dispel the FUD surrounding bitcoins and allow the people of the world to enjoy the freedoms and wealth of bitcoins that much sooner.

Tax avoidance and illicit trading
by slim

Some "benefits" of Bitcoin, from one perspective, appear to be that its cash-like properties lend themselves to tax avoidance (making transactions without declaring them), illicit trading (e.g. drugs or prostitution) and money laundering. Do you view this as a positive, a negative, or neutral? If you view it as a problem, how can the problem be mitigated?

A.T.: Most new technologies can be used for good and bad. Of course I do not condone or agree with the use of Bitcoins for illegal purposes.

However, I really want people to understand one thing. The criminalization of Bitcoin would not stop the illegal activity that surrounds it. In fact, it would help those who use it as a means of engaging in illegal activity by not regulating the purchasing and selling of bitcoins. Criminalization would only stop people from enjoying the tremendous and fruitful benefits of such a system, it would hinder the social good. Regulation would allow the proper authorities to find and charge those who use bitcoins for illegal activities.

Britcoin.co.uk has kept a clear record of the exchanges which have gone on. Every single transaction is recorded and we are happy to open our books to the proper authorities. We are aggressively advocating and promoting the legalization and regulation of the exchanges.

Bitcoins offer massive potential for positive social change. It would be a sad thing to see Bitcoins outlawed due to ignorance or reactionary feelings. If you outlaw Bitcoin then the illicit trades will still continue, perhaps even proliferate, but the good would disappear.

Kings used to raise capital in order to wage wars. They required popular support before they were able to fund their wars. A common tool in modern day authoritarian regimes is currency manipulation in order to fund their wars of genocide (e.g Milosevic in the 90s). Bitcoin democratises governments.

Quantum Computing?
by SanityInAnarchy

Are there plans to deal with quantum computing, or with any of the algorithms used being compromised?

A.T.: If SHA256 or ECDSA was ever cracked, we'd have far bigger problems to worry about than bitcoin being destroyed. I suspect that there won't be any overnight switch, giving everybody enough time in order to adjust the current system to any changes.

The internet wasn't built perfect. But years of reshaping/patching/incremental design have shaped it into a workable network. Bitcoin will too undergo this transformation with time as it ages.

(More from the call for questions:)

is there ever going to be a bitcoin bank? ... The idea that if you lose or destroy or whatever your computer and lose all your money isn't going to make the general public accept this.

A.T.: Bitcoin now stands at its early stages. It's the kernel of the software stack that will eventually exist for this financial system. Other services and software utilising Bitcoin will exist. A common view is where Bitcoin acts as an automated clearing house between all these user facing services in the future.

Bitcoin's protocol itself will need to be extended in order for it to grow. As the network expands, block sizes could become impossible large once it rivals the transaction volume of a comparable service like VISA or Paypal. To have lightweight clients that don't need to process these large GB sized blocks new protocol commands like a txmatch regex would need to be introduced in order that clients don't need to process the entire block data.

The point to Bitcoin is that you can choose your own level of trust in an external service. One of our group's members, Patrick Strateman, came up with a scheme whereby a wallet could be recovered algorithmically using an email and a password. In the future I expect savings accounts where retrieving the money is an arduous proccess. Then we can go further to where a person has all their funds in a trusted service like with email today- how many people run their own mail servers?

What markets do you think will be the first to most aggressively adopt bitcoins as their currency?

What insights can you offer as to why the US government is having a hostile reaction to bitcoins?"

What kinds of competing P2P currencies are in development, and how will their deployment affect the valuation of bitcoins?

A.T.: Immediately as liquidity improves in exchanges, the best use for Bitcoins will be individuals transferring funds between countries without fees. Our group has a lot of interest from mobile sectors because of the potential as a micropayment system. Currently now in Africa, people use mobile credit as a form of currency to transfer funds across borders, but that's usually less than ideal.

The US government isn't a homogenous entity, and one senator (possibly funded by bankers) made a false claim on Bitcoin- calling it a scheme for drug trafficking networks. It may simply be due to reactionary misunderstanding like the people in Yahoo Finance calling Bitcoin a Ponzi scheme invented by bankers. That's why our group is aggressively pursuing press in order to dispel these myths.

Terminology

If we eventually use Bitcoin in everyday life, say, in the supermarket, how will we deal with prices in fractions of a Bitcoin? What terminology might we use for something priced at 0.00000005 Bitcoins?

A.T.: The accepted 'standard' is to use SI prefixes. 0.005 BC would be 5 mBC.

Here come the regulators ...

How will your business change when countries regulate exchanges? How do you ensure your exchange isn't being used for illicit purposes (to avoid being shut down by government authorities)?

A.T.: It is our goal (and has been for months) to get legal legitimisation. Our organisation has been aggressively seeking FSA regulation here in the UK for Britcoin. Our hope is that when governments do come to look at Bitcoin, they will see a long running, honest, legal exchange with open books. By having something in the law books about Bitcoin, it sets a positive legal precedent in the future and puts us as the policy makers rather than a bunch of old 60 year banker types.

Our exchange complies with the UK Know Your Customer laws which ensures it's not being used for illicit activity. We keep detailed transaction records and run regular audit logs to look for missing funds.

But eventually, one would want to use BitCoins to pay for legal services. My question is; how do you get to that point? Why would a legitimate business accept a currency that is used almost exclusively for illegal means? What is the strategy to convince mainstream businesses that BitCoins have a purpose in the main web, as well?

A.T.: The illicit markets are a very small part of Bitcoin yet the most sensationalist. I can see how one would think Bitcoin is purely for illegal trade if I didn't know better.

Check out the list of merchants.

Full and open disclosure: how many bitcoins do you currently own?

A.T.: 32 BC. At one point I had 6000, but I'm a bad hoarder. Everytime Bitcoins would double (and I'd have $2k), I'd donate half my wealth to other free software developers. Then recently I was going to wait until I had $4k, but the price went down and I'm very bad at holding onto cash :)

But that doesn't bother me at all. We have our group of free software developers developing Bitcoin itself and other related projects. Funds are coming in and we're growing. The goal is to this as a sustainable operation paying developers working on Bitcoin fulltime.

What are the advantages of bitcoin?

One problem I see with bitcoin is it offers very little over what we currently have. If I want to perform an online transaction using my computer, unless I am buying something illegal, then there are already companies which offer products for me to use. If I want to make an anonymous purchase in person, I would easily use cash.

Bitcoin seems to suffer from a lack of portability, which makes me wonder, what "need" is bitcoin catering to? What do I do in my day-to-day life that bitcoin will help me do such that as some point, bitcoin becomes irreplaceable and achieves de facto permanency?

A.T.: Sending funds abroad is time consuming, expensive and difficult. Recently I tried sending funds to a Polish bank from the UK- the bank was closed and I waited until Monday. Requiring me to be in person at the bank, the woman was unable to enter the Polish L looking character into her terminal. I had to aquire an internet banking code to do it online. Waited 3 days, logged in and the internet banking form didn't work. In the end, I ended using a friend to aquire Bitcoins and use the Polish exchange bitomat (we never use Britcoin ourself).

I wanted to donate funds to the excellent Symphony of Science musician. I went to fill in the Paypal form, spent 10 mins signing up to an account, entering all my very personal details and my card was rejected. In the end I got him to accept Bitcoins and donated directly without paying fees to Paypal.

Sony recently was hacked. Millions of accounts were leaked. If they were using Bitcoins then the addresses people donated to would be known to the attacker. Not my private keys which enable said attacker to spend my cash.

With commerce, everything becomes cheaper. Bitcoin vastly reduces the overhead needed for fees. We no longer require staff sitting inside banks pressing numbers on a keyboard since the system is automatically backed by mathematics and cryptography, not laws and people.

Last week, you asked questions (many rather pointed!) of Amir Taaki, co-founder of Bitcoin Consultancy, which develops Bitcoin related services, exchanges and Bitcoin itself. (They also own Britcoin.co.uk.) Says Taaki: "When creating video games I spent much time imagining tools to make artists lives easier, and how we could keep funding developers to write free software. One contribution of mine to the community was a site where developers could get funded for developing features and I'd love nothing more than to pay people to write free software." With regard to Bitcoin, similarly, "We need fulltime developers thinking about the problems and solutions needed to keep this system running. We aim to get all the creative thinkers from the community and provide a mechanism for enabling their work." Below find his answers to the questions readers raised.

Is the gold rush over?
by curunir

With BitCoin limited to a pre-determined amount and the difficulty of mining new BitCoins, it seems that this gives a huge advantage to people who got into BitCoin early and have already amassed a considerable amount of BitCoins. Is this true and, if so, do you think this disincentive will undermine BitCoin's ability to become more popular since the majority of the population will have to work so much harder to obtain the currency?

Amir Taaki: It is certainly true that early adopters have been rewarded. I do not think these inequities will be more shocking than those in the real world. Any guesses as to how this will play out is pontification. However, I don't think anyone has proposed a working model for a decentralized secure digital currency where such a thing would not happen. Overall, I believe the properties of this currency will significantly add to the wealth of all peoples, especially those less well off.

Crypto-Anarchism?
by conner_bw

I argue that bitcoin is interesting because it's a locked currency, with a known maximum, and a timeline for that maximum based on contemporary crypto math and radical ideas. There is clearly well thought out timeline for adoption and disruption. It's not just "Cool, new money!" Are you a crypto anarchist, or similar?

A.T.: Yes, I myself am a crypto anarchist. However, not everyone on my team has the same political ideologies and we do not try to push our ideologies on each other. In fact, we have all seen our ideologies change over time with the awareness of new knowledge and information. Ideologies should not be a point of contention, especially when we all see the immense prolific value of a more efficient means of commerce.

If not, then is this another Tulip craze [wikipedia.org] and all these news stories and bitcoin currency exchange services being hyped heavily the last month machinations for profiteering?

A.T.: I do not advocate that people speculate on bitcoins. In fact I actively advocate against that because those who are new to bitcoin might see it as just that, a 'craze.' I do however think that the properties of bitcoin are clearly advantageous over the current means of commerce. Although bitcoin is still underdeveloped, everything visible in the modern world can be adapted using bitcoins as a backbone. This will result in all the services of today's world (clearing houses, security, fraud protection, interest bearing accounts...) continuing to be offered, but with far less overhead.

Austrian Acceptance
by MyFirstNameIsPaul

I have found that the Austrians have a hard time accepting the idea of a digital currency. The core of their argument seems to be that digital currencies are not made up of something that had value before being a medium of exchange, such as gold and silver. When I counter to them that BitCoin is made up of code and people pay money for things like video games, they argue that the video game would have to be the thing valued, not the computer code. How do you deal with these kinds of objections?

A.T.: Gold is not a currency in my mind. It is a store of value. I would not want to go to buy bread from my local store and shave off some gold from a bullion and take out a scale and wait for an acid test to be performed. Gold is backed by real world properties.

Bitcoin is backed by the fact that is has unique properties as well:

• Decentralized
• No bank holidays
• International
• No concept of borders
• Divisible
• True micro-transactions possible (new markets feasible)
• New privacy model
• Private identity yet transparent
• Secure
• You do not have to trust merchant sites (Sony - Playstation) to protect your data
• Fast Transactions
• No Charge backs

Useful Calculations?
by Bodhammer

Is there any way to make the calculations more useful (i.e. Boinc) and still maintain the same level of difficulty in the computations? It just seems so wasteful to run Bitcoin at this time.

A.T.: Our world's current infrastructure depends on paying employees, building large buildings, paying for heat, electricity, transportation, lawyers, courts, judges, policemen, government bureaucracies, armies and much more. Doesn't it seem wasteful to rely on tedious and sometimes ambiguous real world laws with a lot of overhead instead of mathematical laws?

When merchants started accepting bitcoins, verifiers (because miners is a misnomer) started to see that their generated coins were worth something. They became competitive and found ways to do the same calculations cheaper which provided security for the network and verified the transactions. Verifiers found out that running these hashing algorithms on one's GPU was far more energy efficient than running them on one's CPU. Specialized software was later constructed for these purposes. Some keep their machines under dry ice. In the not so distant future, hardware FPGAs will be specially designed for this verification process.

The advantages of bitcoin exist because it is an inherently more efficient and less wasteful system. The reward for minting a block, provides a healthy competition that causes the energy cost to be driven down.

Additional privacy layers and smartphones?
by DriedClexler

Is there any serious development underway to make the privacy more robust? There has been talk of "Bitcoin laundry," where large pools swap their coins around between each other to make it harder to connect a coin/address with an owner. But for this to seriously work, it needs a lot more people to be involved in it, and it has to be integrated in a way that's secure (against someone just keeping coins in the middle of a shuffle) and transparent to the user (so they don't have to think about the new addresses they generate, or which coins are optimal to send where for the maximum shuffle). How soon can we expect something like this? Also, how soon will smartphones be able to handle this with the same ease as desktops and notebooks?

A.T.: A bitcoin laundry already exists. The volume on it is very low, but if demand increases in the future then such a service is trivial to setup. A mixing service (as they're called) requires a large volume and therefore a persistent demand.

Smartphones can already use bitcoin :) An Android version of the command line Bitcoin was compiled. Additionally one can use an online wallet service (or a bitcoin exchange) to store their bitcoins.

Lost/forgotten bitcoins?
by algorimancer

One thing that concerns me is the fixed maximum number of bitcoins. Lets say people acquire bitcoins, but the amount isn't enough to worry about, so they never use them, or perhaps their computer crashes and they don't have a backup. My understanding is that these bitcoins are permanently lost from the economy of bitcoins. Over time, the total supply would begin to dwindle, presumably pushing up the value of those that remain, until people become frustrated at the small supply and are motivated to move to a new system, then bitcoin is abandoned. In the real world this happens with dollar bills, but the government can compensate for this by creating more. Is this issue addressed in some fashion?

A.T.: The supply of bitcoins is 21 million. The supply of money is infinite. A bitcoin can currently be divided to 8 decimal places. The loss of bitcoins in the future may lead to some deflation however I expect it to be insignificant. In the very long term, even if there was only 1 bitcoin theoretically in circulation, running the world economy would not be a problem. There exists only 6 MBTC in circulation at this moment.

Extreme instability of Bitcoin vs. USD
by Limerent Oil

Why would any merchant IN THEIR RIGHT MIND want to deal with Bitcoin? With the insane USD-to-Bitcoin exchange-rate gyrations happening lately, why would any serious retailer even bother, when the value of Bitcoin vs. USD could change by 50% or more in just a few hours?

A.T.: As liquidity increases transaction costs decrease. If there was already an appropriate clearing house in place, a merchant would be able to automatically accept bitcoins and liquidate them to dollars. In the same way that people who use the internet are not all cognizant of the communication protocols they are using, I foresee the possibility of merchants offering their products in USD, EUR, GBP, and customers purchasing those products in their local currency. And the underlying mechanism which facilitates this transfer is the bitcoin. Bitcoin would provide these same services that payment services, credit cards or banks do but with much less cost to the merchant and customer.

What about the lack of inflation?
by Cyberax

It's long known that economic growth is severely stunted without some measure of inflation. Adopting bitcoins for the global economy would mean that policymakers lose control on money supply, and while there are advantages in this, disadvantages far outweigh them. Additionally, adopting a global currency standard will deny governments ability to influence currency rates robbing them of yet another way to control the economy. Is there any plan to solve this? Maybe a system of independent bitcoin 'roots' operated by governments would help?

A.T.: Ben Friedman has released a lot of work on E money and how it will affect the future and how governments will adapt. The truth is that the government will still have monopolies on much of the operations of the economy such as fractional reserve banking and the issuing of licenses which allow banks to lend money.

Aspirations
by slim

What are your aspirations for the currency? Do you hope for it to be near-ubiquitous — used by corner shops and mainstream merchants like Amazon? Or are you happy to see a parallel economy grow, as a niche thing? Or something else?

A.T.: I have lofty dreams of a world where people can send money abroad without having to pay 20+% in many cases to rip offs like western union. Where people can raise funds through services like paypal but not have their accounts arbitrarily frozen. Where citizens in developing nations who already oppose their government do not have to pay for wars of genocide out of their own pockets as was the case in ex-Yugoslavia where authoritarian control over the money supply helped finance a terrible war and bring about the worst hyper-inflation in Europe since WWII.

Bitcoin in some form is going to be adopted whether it is used as a unique currency, a payment system or as a clearing house. Our aspiration for bitcoin is to provide competition to the current system making everything cheaper for all. It's about cutting the middleman, democratising money and handing back power to people.

Will governments let it survive?
by merdaccia

We live in a world where the supply and movement of money are controlled by governments, central banks, money laundering laws, and financial institutions. How can BitCoin survive in this world? Middle men like banks stand to lose a fortune in fees and exchange rates, governments stand to lose a fortune in taxes if they can't track money movement, and the black market stands to gain a silent way to move value. For BitCoin to gain adoption, some major retailers need to start supporting it, but given the above risks, what stops a government from telling companies in its jurisdiction that they can't accept it?

A.T.: The US is not the world. If their government forces everyone to continue to use typewriters in lieu of computers and pay through the nose, they can. New and better technology, especially when it is revolutionary, does threaten archaic models and practices. Hopefully there will not be contention. My team is already in contact with SWIFT which has operated for 30 years and is the backbone of international money transfer for over 9000 banks. Many forward thinkers see the advantages of bitcoins but it is easy to understand how those perhaps well-intentioned but not well-versed in what bitcoin is can promote FUD.

Regulatory compliance?
by molo

For those of us interested in developing financial services using bitcoin, how have you dealt with regulatory issues? It seems like the SEC and FINRA in the US would not be keen on unregistered broker-dealers and agents and owners not having the legally required Series 7 and Series 24 certifications. Have you sought the UK equivalent certifications? The requirements of lawyers, accountants, certifications etc. seem to put a very high capital cost on starting a legitimate business offering services in this space.

A.T.: As well as being a developer, I own and operate www.Britcoin.co.uk (the UK exchange site). My team has been in negotiations for a long time now with lawyers and regulators. There is no regulatory process or restrictions now on the running of such services. Non-regulated sectors rarely seek out regulation. However, when it comes to bitcoins, I believe the sooner they are regulated the better. If their regulation is pushed by those who understand what bitcoins are then we may be able to regulate them in the best way possible and show the world they were not created for illegal practices. The sooner they are regulated, the sooner users can have legal assurances that merchants are liable for their operations. The negligence seen at MTGox would never have happened in a regulated market.

Although the FSA have not made any official statement about bitcoins. We at www.britcoin.co.uk are hoping that we can show to the proper authorities that indeed we have recorded our history of transactions. That all the money in our users accounts is accounted for. This process would dispel the FUD surrounding bitcoins and allow the people of the world to enjoy the freedoms and wealth of bitcoins that much sooner.

Tax avoidance and illicit trading
by slim

Some "benefits" of Bitcoin, from one perspective, appear to be that its cash-like properties lend themselves to tax avoidance (making transactions without declaring them), illicit trading (e.g. drugs or prostitution) and money laundering. Do you view this as a positive, a negative, or neutral? If you view it as a problem, how can the problem be mitigated?

A.T.: Most new technologies can be used for good and bad. Of course I do not condone or agree with the use of Bitcoins for illegal purposes.

However, I really want people to understand one thing. The criminalization of Bitcoin would not stop the illegal activity that surrounds it. In fact, it would help those who use it as a means of engaging in illegal activity by not regulating the purchasing and selling of bitcoins. Criminalization would only stop people from enjoying the tremendous and fruitful benefits of such a system, it would hinder the social good. Regulation would allow the proper authorities to find and charge those who use bitcoins for illegal activities.

Britcoin.co.uk has kept a clear record of the exchanges which have gone on. Every single transaction is recorded and we are happy to open our books to the proper authorities. We are aggressively advocating and promoting the legalization and regulation of the exchanges.

Bitcoins offer massive potential for positive social change. It would be a sad thing to see Bitcoins outlawed due to ignorance or reactionary feelings. If you outlaw Bitcoin then the illicit trades will still continue, perhaps even proliferate, but the good would disappear.

Kings used to raise capital in order to wage wars. They required popular support before they were able to fund their wars. A common tool in modern day authoritarian regimes is currency manipulation in order to fund their wars of genocide (e.g Milosevic in the 90s). Bitcoin democratises governments.

Quantum Computing?
by SanityInAnarchy

Are there plans to deal with quantum computing, or with any of the algorithms used being compromised?

A.T.: If SHA256 or ECDSA was ever cracked, we'd have far bigger problems to worry about than bitcoin being destroyed. I suspect that there won't be any overnight switch, giving everybody enough time in order to adjust the current system to any changes.

The internet wasn't built perfect. But years of reshaping/patching/incremental design have shaped it into a workable network. Bitcoin will too undergo this transformation with time as it ages.

(More from the call for questions:)

is there ever going to be a bitcoin bank? ... The idea that if you lose or destroy or whatever your computer and lose all your money isn't going to make the general public accept this.

A.T.: Bitcoin now stands at its early stages. It's the kernel of the software stack that will eventually exist for this financial system. Other services and software utilising Bitcoin will exist. A common view is where Bitcoin acts as an automated clearing house between all these user facing services in the future.

Bitcoin's protocol itself will need to be extended in order for it to grow. As the network expands, block sizes could become impossible large once it rivals the transaction volume of a comparable service like VISA or Paypal. To have lightweight clients that don't need to process these large GB sized blocks new protocol commands like a txmatch regex would need to be introduced in order that clients don't need to process the entire block data.

The point to Bitcoin is that you can choose your own level of trust in an external service. One of our group's members, Patrick Strateman, came up with a scheme whereby a wallet could be recovered algorithmically using an email and a password. In the future I expect savings accounts where retrieving the money is an arduous proccess. Then we can go further to where a person has all their funds in a trusted service like with email today- how many people run their own mail servers?

What markets do you think will be the first to most aggressively adopt bitcoins as their currency?

What insights can you offer as to why the US government is having a hostile reaction to bitcoins?"

What kinds of competing P2P currencies are in development, and how will their deployment affect the valuation of bitcoins?

A.T.: Immediately as liquidity improves in exchanges, the best use for Bitcoins will be individuals transferring funds between countries without fees. Our group has a lot of interest from mobile sectors because of the potential as a micropayment system. Currently now in Africa, people use mobile credit as a form of currency to transfer funds across borders, but that's usually less than ideal.

The US government isn't a homogenous entity, and one senator (possibly funded by bankers) made a false claim on Bitcoin- calling it a scheme for drug trafficking networks. It may simply be due to reactionary misunderstanding like the people in Yahoo Finance calling Bitcoin a Ponzi scheme invented by bankers. That's why our group is aggressively pursuing press in order to dispel these myths.

Terminology

If we eventually use Bitcoin in everyday life, say, in the supermarket, how will we deal with prices in fractions of a Bitcoin? What terminology might we use for something priced at 0.00000005 Bitcoins?

A.T.: The accepted 'standard' is to use SI prefixes. 0.005 BC would be 5 mBC.

Here come the regulators ...

How will your business change when countries regulate exchanges? How do you ensure your exchange isn't being used for illicit purposes (to avoid being shut down by government authorities)?

A.T.: It is our goal (and has been for months) to get legal legitimisation. Our organisation has been aggressively seeking FSA regulation here in the UK for Britcoin. Our hope is that when governments do come to look at Bitcoin, they will see a long running, honest, legal exchange with open books. By having something in the law books about Bitcoin, it sets a positive legal precedent in the future and puts us as the policy makers rather than a bunch of old 60 year banker types.

Our exchange complies with the UK Know Your Customer laws which ensures it's not being used for illicit activity. We keep detailed transaction records and run regular audit logs to look for missing funds.

But eventually, one would want to use BitCoins to pay for legal services. My question is; how do you get to that point? Why would a legitimate business accept a currency that is used almost exclusively for illegal means? What is the strategy to convince mainstream businesses that BitCoins have a purpose in the main web, as well?

A.T.: The illicit markets are a very small part of Bitcoin yet the most sensationalist. I can see how one would think Bitcoin is purely for illegal trade if I didn't know better.

Check out the list of merchants.

Full and open disclosure: how many bitcoins do you currently own?

A.T.: 32 BC. At one point I had 6000, but I'm a bad hoarder. Everytime Bitcoins would double (and I'd have $2k), I'd donate half my wealth to other free software developers. Then recently I was going to wait until I had $4k, but the price went down and I'm very bad at holding onto cash :)

But that doesn't bother me at all. We have our group of free software developers developing Bitcoin itself and other related projects. Funds are coming in and we're growing. The goal is to this as a sustainable operation paying developers working on Bitcoin fulltime.

What are the advantages of bitcoin?

One problem I see with bitcoin is it offers very little over what we currently have. If I want to perform an online transaction using my computer, unless I am buying something illegal, then there are already companies which offer products for me to use. If I want to make an anonymous purchase in person, I would easily use cash.

Bitcoin seems to suffer from a lack of portability, which makes me wonder, what "need" is bitcoin catering to? What do I do in my day-to-day life that bitcoin will help me do such that as some point, bitcoin becomes irreplaceable and achieves de facto permanency?

A.T.: Sending funds abroad is time consuming, expensive and difficult. Recently I tried sending funds to a Polish bank from the UK- the bank was closed and I waited until Monday. Requiring me to be in person at the bank, the woman was unable to enter the Polish L looking character into her terminal. I had to aquire an internet banking code to do it online. Waited 3 days, logged in and the internet banking form didn't work. In the end, I ended using a friend to aquire Bitcoins and use the Polish exchange bitomat (we never use Britcoin ourself).

I wanted to donate funds to the excellent Symphony of Science musician. I went to fill in the Paypal form, spent 10 mins signing up to an account, entering all my very personal details and my card was rejected. In the end I got him to accept Bitcoins and donated directly without paying fees to Paypal.

Sony recently was hacked. Millions of accounts were leaked. If they were using Bitcoins then the addresses people donated to would be known to the attacker. Not my private keys which enable said attacker to spend my cash.

With commerce, everything becomes cheaper. Bitcoin vastly reduces the overhead needed for fees. We no longer require staff sitting inside banks pressing numbers on a keyboard since the system is automatically backed by mathematics and cryptography, not laws and people.

Last week, you asked questions (many rather pointed!) of Amir Taaki, co-founder of Bitcoin Consultancy, which develops Bitcoin related services, exchanges and Bitcoin itself. (They also own Britcoin.co.uk.) Says Taaki: "When creating video games I spent much time imagining tools to make artists lives easier, and how we could keep funding developers to write free software. One contribution of mine to the community was a site where developers could get funded for developing features and I'd love nothing more than to pay people to write free software." With regard to Bitcoin, similarly, "We need fulltime developers thinking about the problems and solutions needed to keep this system running. We aim to get all the creative thinkers from the community and provide a mechanism for enabling their work." Below find his answers to the questions readers raised.

Is the gold rush over?
by curunir

With BitCoin limited to a pre-determined amount and the difficulty of mining new BitCoins, it seems that this gives a huge advantage to people who got into BitCoin early and have already amassed a considerable amount of BitCoins. Is this true and, if so, do you think this disincentive will undermine BitCoin's ability to become more popular since the majority of the population will have to work so much harder to obtain the currency?

Amir Taaki: It is certainly true that early adopters have been rewarded. I do not think these inequities will be more shocking than those in the real world. Any guesses as to how this will play out is pontification. However, I don't think anyone has proposed a working model for a decentralized secure digital currency where such a thing would not happen. Overall, I believe the properties of this currency will significantly add to the wealth of all peoples, especially those less well off.

Crypto-Anarchism?
by conner_bw

I argue that bitcoin is interesting because it's a locked currency, with a known maximum, and a timeline for that maximum based on contemporary crypto math and radical ideas. There is clearly well thought out timeline for adoption and disruption. It's not just "Cool, new money!" Are you a crypto anarchist, or similar?

A.T.: Yes, I myself am a crypto anarchist. However, not everyone on my team has the same political ideologies and we do not try to push our ideologies on each other. In fact, we have all seen our ideologies change over time with the awareness of new knowledge and information. Ideologies should not be a point of contention, especially when we all see the immense prolific value of a more efficient means of commerce.

If not, then is this another Tulip craze [wikipedia.org] and all these news stories and bitcoin currency exchange services being hyped heavily the last month machinations for profiteering?

A.T.: I do not advocate that people speculate on bitcoins. In fact I actively advocate against that because those who are new to bitcoin might see it as just that, a 'craze.' I do however think that the properties of bitcoin are clearly advantageous over the current means of commerce. Although bitcoin is still underdeveloped, everything visible in the modern world can be adapted using bitcoins as a backbone. This will result in all the services of today's world (clearing houses, security, fraud protection, interest bearing accounts...) continuing to be offered, but with far less overhead.

Austrian Acceptance
by MyFirstNameIsPaul

I have found that the Austrians have a hard time accepting the idea of a digital currency. The core of their argument seems to be that digital currencies are not made up of something that had value before being a medium of exchange, such as gold and silver. When I counter to them that BitCoin is made up of code and people pay money for things like video games, they argue that the video game would have to be the thing valued, not the computer code. How do you deal with these kinds of objections?

A.T.: Gold is not a currency in my mind. It is a store of value. I would not want to go to buy bread from my local store and shave off some gold from a bullion and take out a scale and wait for an acid test to be performed. Gold is backed by real world properties.

Bitcoin is backed by the fact that is has unique properties as well:

• Decentralized
• No bank holidays
• International
• No concept of borders
• Divisible
• True micro-transactions possible (new markets feasible)
• New privacy model
• Private identity yet transparent
• Secure
• You do not have to trust merchant sites (Sony - Playstation) to protect your data
• Fast Transactions
• No Charge backs

Useful Calculations?
by Bodhammer

Is there any way to make the calculations more useful (i.e. Boinc) and still maintain the same level of difficulty in the computations? It just seems so wasteful to run Bitcoin at this time.

A.T.: Our world's current infrastructure depends on paying employees, building large buildings, paying for heat, electricity, transportation, lawyers, courts, judges, policemen, government bureaucracies, armies and much more. Doesn't it seem wasteful to rely on tedious and sometimes ambiguous real world laws with a lot of overhead instead of mathematical laws?

When merchants started accepting bitcoins, verifiers (because miners is a misnomer) started to see that their generated coins were worth something. They became competitive and found ways to do the same calculations cheaper which provided security for the network and verified the transactions. Verifiers found out that running these hashing algorithms on one's GPU was far more energy efficient than running them on one's CPU. Specialized software was later constructed for these purposes. Some keep their machines under dry ice. In the not so distant future, hardware FPGAs will be specially designed for this verification process.

The advantages of bitcoin exist because it is an inherently more efficient and less wasteful system. The reward for minting a block, provides a healthy competition that causes the energy cost to be driven down.

Additional privacy layers and smartphones?
by DriedClexler

Is there any serious development underway to make the privacy more robust? There has been talk of "Bitcoin laundry," where large pools swap their coins around between each other to make it harder to connect a coin/address with an owner. But for this to seriously work, it needs a lot more people to be involved in it, and it has to be integrated in a way that's secure (against someone just keeping coins in the middle of a shuffle) and transparent to the user (so they don't have to think about the new addresses they generate, or which coins are optimal to send where for the maximum shuffle). How soon can we expect something like this? Also, how soon will smartphones be able to handle this with the same ease as desktops and notebooks?

A.T.: A bitcoin laundry already exists. The volume on it is very low, but if demand increases in the future then such a service is trivial to setup. A mixing service (as they're called) requires a large volume and therefore a persistent demand.

Smartphones can already use bitcoin :) An Android version of the command line Bitcoin was compiled. Additionally one can use an online wallet service (or a bitcoin exchange) to store their bitcoins.

Lost/forgotten bitcoins?
by algorimancer

One thing that concerns me is the fixed maximum number of bitcoins. Lets say people acquire bitcoins, but the amount isn't enough to worry about, so they never use them, or perhaps their computer crashes and they don't have a backup. My understanding is that these bitcoins are permanently lost from the economy of bitcoins. Over time, the total supply would begin to dwindle, presumably pushing up the value of those that remain, until people become frustrated at the small supply and are motivated to move to a new system, then bitcoin is abandoned. In the real world this happens with dollar bills, but the government can compensate for this by creating more. Is this issue addressed in some fashion?

A.T.: The supply of bitcoins is 21 million. The supply of money is infinite. A bitcoin can currently be divided to 8 decimal places. The loss of bitcoins in the future may lead to some deflation however I expect it to be insignificant. In the very long term, even if there was only 1 bitcoin theoretically in circulation, running the world economy would not be a problem. There exists only 6 MBTC in circulation at this moment.

Extreme instability of Bitcoin vs. USD
by Limerent Oil

Why would any merchant IN THEIR RIGHT MIND want to deal with Bitcoin? With the insane USD-to-Bitcoin exchange-rate gyrations happening lately, why would any serious retailer even bother, when the value of Bitcoin vs. USD could change by 50% or more in just a few hours?

A.T.: As liquidity increases transaction costs decrease. If there was already an appropriate clearing house in place, a merchant would be able to automatically accept bitcoins and liquidate them to dollars. In the same way that people who use the internet are not all cognizant of the communication protocols they are using, I foresee the possibility of merchants offering their products in USD, EUR, GBP, and customers purchasing those products in their local currency. And the underlying mechanism which facilitates this transfer is the bitcoin. Bitcoin would provide these same services that payment services, credit cards or banks do but with much less cost to the merchant and customer.

What about the lack of inflation?
by Cyberax

It's long known that economic growth is severely stunted without some measure of inflation. Adopting bitcoins for the global economy would mean that policymakers lose control on money supply, and while there are advantages in this, disadvantages far outweigh them. Additionally, adopting a global currency standard will deny governments ability to influence currency rates robbing them of yet another way to control the economy. Is there any plan to solve this? Maybe a system of independent bitcoin 'roots' operated by governments would help?

A.T.: Ben Friedman has released a lot of work on E money and how it will affect the future and how governments will adapt. The truth is that the government will still have monopolies on much of the operations of the economy such as fractional reserve banking and the issuing of licenses which allow banks to lend money.

Aspirations
by slim

What are your aspirations for the currency? Do you hope for it to be near-ubiquitous — used by corner shops and mainstream merchants like Amazon? Or are you happy to see a parallel economy grow, as a niche thing? Or something else?

A.T.: I have lofty dreams of a world where people can send money abroad without having to pay 20+% in many cases to rip offs like western union. Where people can raise funds through services like paypal but not have their accounts arbitrarily frozen. Where citizens in developing nations who already oppose their government do not have to pay for wars of genocide out of their own pockets as was the case in ex-Yugoslavia where authoritarian control over the money supply helped finance a terrible war and bring about the worst hyper-inflation in Europe since WWII.

Bitcoin in some form is going to be adopted whether it is used as a unique currency, a payment system or as a clearing house. Our aspiration for bitcoin is to provide competition to the current system making everything cheaper for all. It's about cutting the middleman, democratising money and handing back power to people.

Will governments let it survive?
by merdaccia

We live in a world where the supply and movement of money are controlled by governments, central banks, money laundering laws, and financial institutions. How can BitCoin survive in this world? Middle men like banks stand to lose a fortune in fees and exchange rates, governments stand to lose a fortune in taxes if they can't track money movement, and the black market stands to gain a silent way to move value. For BitCoin to gain adoption, some major retailers need to start supporting it, but given the above risks, what stops a government from telling companies in its jurisdiction that they can't accept it?

A.T.: The US is not the world. If their government forces everyone to continue to use typewriters in lieu of computers and pay through the nose, they can. New and better technology, especially when it is revolutionary, does threaten archaic models and practices. Hopefully there will not be contention. My team is already in contact with SWIFT which has operated for 30 years and is the backbone of international money transfer for over 9000 banks. Many forward thinkers see the advantages of bitcoins but it is easy to understand how those perhaps well-intentioned but not well-versed in what bitcoin is can promote FUD.

Regulatory compliance?
by molo

For those of us interested in developing financial services using bitcoin, how have you dealt with regulatory issues? It seems like the SEC and FINRA in the US would not be keen on unregistered broker-dealers and agents and owners not having the legally required Series 7 and Series 24 certifications. Have you sought the UK equivalent certifications? The requirements of lawyers, accountants, certifications etc. seem to put a very high capital cost on starting a legitimate business offering services in this space.

A.T.: As well as being a developer, I own and operate www.Britcoin.co.uk (the UK exchange site). My team has been in negotiations for a long time now with lawyers and regulators. There is no regulatory process or restrictions now on the running of such services. Non-regulated sectors rarely seek out regulation. However, when it comes to bitcoins, I believe the sooner they are regulated the better. If their regulation is pushed by those who understand what bitcoins are then we may be able to regulate them in the best way possible and show the world they were not created for illegal practices. The sooner they are regulated, the sooner users can have legal assurances that merchants are liable for their operations. The negligence seen at MTGox would never have happened in a regulated market.

Although the FSA have not made any official statement about bitcoins. We at www.britcoin.co.uk are hoping that we can show to the proper authorities that indeed we have recorded our history of transactions. That all the money in our users accounts is accounted for. This process would dispel the FUD surrounding bitcoins and allow the people of the world to enjoy the freedoms and wealth of bitcoins that much sooner.

Tax avoidance and illicit trading
by slim

Some "benefits" of Bitcoin, from one perspective, appear to be that its cash-like properties lend themselves to tax avoidance (making transactions without declaring them), illicit trading (e.g. drugs or prostitution) and money laundering. Do you view this as a positive, a negative, or neutral? If you view it as a problem, how can the problem be mitigated?

A.T.: Most new technologies can be used for good and bad. Of course I do not condone or agree with the use of Bitcoins for illegal purposes.

However, I really want people to understand one thing. The criminalization of Bitcoin would not stop the illegal activity that surrounds it. In fact, it would help those who use it as a means of engaging in illegal activity by not regulating the purchasing and selling of bitcoins. Criminalization would only stop people from enjoying the tremendous and fruitful benefits of such a system, it would hinder the social good. Regulation would allow the proper authorities to find and charge those who use bitcoins for illegal activities.

Britcoin.co.uk has kept a clear record of the exchanges which have gone on. Every single transaction is recorded and we are happy to open our books to the proper authorities. We are aggressively advocating and promoting the legalization and regulation of the exchanges.

Bitcoins offer massive potential for positive social change. It would be a sad thing to see Bitcoins outlawed due to ignorance or reactionary feelings. If you outlaw Bitcoin then the illicit trades will still continue, perhaps even proliferate, but the good would disappear.

Kings used to raise capital in order to wage wars. They required popular support before they were able to fund their wars. A common tool in modern day authoritarian regimes is currency manipulation in order to fund their wars of genocide (e.g Milosevic in the 90s). Bitcoin democratises governments.

Quantum Computing?
by SanityInAnarchy

Are there plans to deal with quantum computing, or with any of the algorithms used being compromised?

A.T.: If SHA256 or ECDSA was ever cracked, we'd have far bigger problems to worry about than bitcoin being destroyed. I suspect that there won't be any overnight switch, giving everybody enough time in order to adjust the current system to any changes.

The internet wasn't built perfect. But years of reshaping/patching/incremental design have shaped it into a workable network. Bitcoin will too undergo this transformation with time as it ages.

(More from the call for questions:)

is there ever going to be a bitcoin bank? ... The idea that if you lose or destroy or whatever your computer and lose all your money isn't going to make the general public accept this.

A.T.: Bitcoin now stands at its early stages. It's the kernel of the software stack that will eventually exist for this financial system. Other services and software utilising Bitcoin will exist. A common view is where Bitcoin acts as an automated clearing house between all these user facing services in the future.

Bitcoin's protocol itself will need to be extended in order for it to grow. As the network expands, block sizes could become impossible large once it rivals the transaction volume of a comparable service like VISA or Paypal. To have lightweight clients that don't need to process these large GB sized blocks new protocol commands like a txmatch regex would need to be introduced in order that clients don't need to process the entire block data.

The point to Bitcoin is that you can choose your own level of trust in an external service. One of our group's members, Patrick Strateman, came up with a scheme whereby a wallet could be recovered algorithmically using an email and a password. In the future I expect savings accounts where retrieving the money is an arduous proccess. Then we can go further to where a person has all their funds in a trusted service like with email today- how many people run their own mail servers?

What markets do you think will be the first to most aggressively adopt bitcoins as their currency?

What insights can you offer as to why the US government is having a hostile reaction to bitcoins?"

What kinds of competing P2P currencies are in development, and how will their deployment affect the valuation of bitcoins?

A.T.: Immediately as liquidity improves in exchanges, the best use for Bitcoins will be individuals transferring funds between countries without fees. Our group has a lot of interest from mobile sectors because of the potential as a micropayment system. Currently now in Africa, people use mobile credit as a form of currency to transfer funds across borders, but that's usually less than ideal.

The US government isn't a homogenous entity, and one senator (possibly funded by bankers) made a false claim on Bitcoin- calling it a scheme for drug trafficking networks. It may simply be due to reactionary misunderstanding like the people in Yahoo Finance calling Bitcoin a Ponzi scheme invented by bankers. That's why our group is aggressively pursuing press in order to dispel these myths.

Terminology

If we eventually use Bitcoin in everyday life, say, in the supermarket, how will we deal with prices in fractions of a Bitcoin? What terminology might we use for something priced at 0.00000005 Bitcoins?

A.T.: The accepted 'standard' is to use SI prefixes. 0.005 BC would be 5 mBC.

Here come the regulators ...

How will your business change when countries regulate exchanges? How do you ensure your exchange isn't being used for illicit purposes (to avoid being shut down by government authorities)?

A.T.: It is our goal (and has been for months) to get legal legitimisation. Our organisation has been aggressively seeking FSA regulation here in the UK for Britcoin. Our hope is that when governments do come to look at Bitcoin, they will see a long running, honest, legal exchange with open books. By having something in the law books about Bitcoin, it sets a positive legal precedent in the future and puts us as the policy makers rather than a bunch of old 60 year banker types.

Our exchange complies with the UK Know Your Customer laws which ensures it's not being used for illicit activity. We keep detailed transaction records and run regular audit logs to look for missing funds.

But eventually, one would want to use BitCoins to pay for legal services. My question is; how do you get to that point? Why would a legitimate business accept a currency that is used almost exclusively for illegal means? What is the strategy to convince mainstream businesses that BitCoins have a purpose in the main web, as well?

A.T.: The illicit markets are a very small part of Bitcoin yet the most sensationalist. I can see how one would think Bitcoin is purely for illegal trade if I didn't know better.

Check out the list of merchants.

Full and open disclosure: how many bitcoins do you currently own?

A.T.: 32 BC. At one point I had 6000, but I'm a bad hoarder. Everytime Bitcoins would double (and I'd have $2k), I'd donate half my wealth to other free software developers. Then recently I was going to wait until I had $4k, but the price went down and I'm very bad at holding onto cash :)

But that doesn't bother me at all. We have our group of free software developers developing Bitcoin itself and other related projects. Funds are coming in and we're growing. The goal is to this as a sustainable operation paying developers working on Bitcoin fulltime.

What are the advantages of bitcoin?

One problem I see with bitcoin is it offers very little over what we currently have. If I want to perform an online transaction using my computer, unless I am buying something illegal, then there are already companies which offer products for me to use. If I want to make an anonymous purchase in person, I would easily use cash.

Bitcoin seems to suffer from a lack of portability, which makes me wonder, what "need" is bitcoin catering to? What do I do in my day-to-day life that bitcoin will help me do such that as some point, bitcoin becomes irreplaceable and achieves de facto permanency?

A.T.: Sending funds abroad is time consuming, expensive and difficult. Recently I tried sending funds to a Polish bank from the UK- the bank was closed and I waited until Monday. Requiring me to be in person at the bank, the woman was unable to enter the Polish L looking character into her terminal. I had to aquire an internet banking code to do it online. Waited 3 days, logged in and the internet banking form didn't work. In the end, I ended using a friend to aquire Bitcoins and use the Polish exchange bitomat (we never use Britcoin ourself).

I wanted to donate funds to the excellent Symphony of Science musician. I went to fill in the Paypal form, spent 10 mins signing up to an account, entering all my very personal details and my card was rejected. In the end I got him to accept Bitcoins and donated directly without paying fees to Paypal.

Sony recently was hacked. Millions of accounts were leaked. If they were using Bitcoins then the addresses people donated to would be known to the attacker. Not my private keys which enable said attacker to spend my cash.

With commerce, everything becomes cheaper. Bitcoin vastly reduces the overhead needed for fees. We no longer require staff sitting inside banks pressing numbers on a keyboard since the system is automatically backed by mathematics and cryptography, not laws and people.

Last week, you asked questions (many rather pointed!) of Amir Taaki, co-founder of Bitcoin Consultancy, which develops Bitcoin related services, exchanges and Bitcoin itself. (They also own Britcoin.co.uk.) Says Taaki: "When creating video games I spent much time imagining tools to make artists lives easier, and how we could keep funding developers to write free software. One contribution of mine to the community was a site where developers could get funded for developing features and I'd love nothing more than to pay people to write free software." With regard to Bitcoin, similarly, "We need fulltime developers thinking about the problems and solutions needed to keep this system running. We aim to get all the creative thinkers from the community and provide a mechanism for enabling their work." Below find his answers to the questions readers raised.

Is the gold rush over?
by curunir

With BitCoin limited to a pre-determined amount and the difficulty of mining new BitCoins, it seems that this gives a huge advantage to people who got into BitCoin early and have already amassed a considerable amount of BitCoins. Is this true and, if so, do you think this disincentive will undermine BitCoin's ability to become more popular since the majority of the population will have to work so much harder to obtain the currency?

Amir Taaki: It is certainly true that early adopters have been rewarded. I do not think these inequities will be more shocking than those in the real world. Any guesses as to how this will play out is pontification. However, I don't think anyone has proposed a working model for a decentralized secure digital currency where such a thing would not happen. Overall, I believe the properties of this currency will significantly add to the wealth of all peoples, especially those less well off.

Crypto-Anarchism?
by conner_bw

I argue that bitcoin is interesting because it's a locked currency, with a known maximum, and a timeline for that maximum based on contemporary crypto math and radical ideas. There is clearly well thought out timeline for adoption and disruption. It's not just "Cool, new money!" Are you a crypto anarchist, or similar?

A.T.: Yes, I myself am a crypto anarchist. However, not everyone on my team has the same political ideologies and we do not try to push our ideologies on each other. In fact, we have all seen our ideologies change over time with the awareness of new knowledge and information. Ideologies should not be a point of contention, especially when we all see the immense prolific value of a more efficient means of commerce.

If not, then is this another Tulip craze [wikipedia.org] and all these news stories and bitcoin currency exchange services being hyped heavily the last month machinations for profiteering?

A.T.: I do not advocate that people speculate on bitcoins. In fact I actively advocate against that because those who are new to bitcoin might see it as just that, a 'craze.' I do however think that the properties of bitcoin are clearly advantageous over the current means of commerce. Although bitcoin is still underdeveloped, everything visible in the modern world can be adapted using bitcoins as a backbone. This will result in all the services of today's world (clearing houses, security, fraud protection, interest bearing accounts...) continuing to be offered, but with far less overhead.

Austrian Acceptance
by MyFirstNameIsPaul

I have found that the Austrians have a hard time accepting the idea of a digital currency. The core of their argument seems to be that digital currencies are not made up of something that had value before being a medium of exchange, such as gold and silver. When I counter to them that BitCoin is made up of code and people pay money for things like video games, they argue that the video game would have to be the thing valued, not the computer code. How do you deal with these kinds of objections?

A.T.: Gold is not a currency in my mind. It is a store of value. I would not want to go to buy bread from my local store and shave off some gold from a bullion and take out a scale and wait for an acid test to be performed. Gold is backed by real world properties.

Bitcoin is backed by the fact that is has unique properties as well:

• Decentralized
• No bank holidays
• International
• No concept of borders
• Divisible
• True micro-transactions possible (new markets feasible)
• New privacy model
• Private identity yet transparent
• Secure
• You do not have to trust merchant sites (Sony - Playstation) to protect your data
• Fast Transactions
• No Charge backs

Useful Calculations?
by Bodhammer

Is there any way to make the calculations more useful (i.e. Boinc) and still maintain the same level of difficulty in the computations? It just seems so wasteful to run Bitcoin at this time.

A.T.: Our world's current infrastructure depends on paying employees, building large buildings, paying for heat, electricity, transportation, lawyers, courts, judges, policemen, government bureaucracies, armies and much more. Doesn't it seem wasteful to rely on tedious and sometimes ambiguous real world laws with a lot of overhead instead of mathematical laws?

When merchants started accepting bitcoins, verifiers (because miners is a misnomer) started to see that their generated coins were worth something. They became competitive and found ways to do the same calculations cheaper which provided security for the network and verified the transactions. Verifiers found out that running these hashing algorithms on one's GPU was far more energy efficient than running them on one's CPU. Specialized software was later constructed for these purposes. Some keep their machines under dry ice. In the not so distant future, hardware FPGAs will be specially designed for this verification process.

The advantages of bitcoin exist because it is an inherently more efficient and less wasteful system. The reward for minting a block, provides a healthy competition that causes the energy cost to be driven down.

Additional privacy layers and smartphones?
by DriedClexler

Is there any serious development underway to make the privacy more robust? There has been talk of "Bitcoin laundry," where large pools swap their coins around between each other to make it harder to connect a coin/address with an owner. But for this to seriously work, it needs a lot more people to be involved in it, and it has to be integrated in a way that's secure (against someone just keeping coins in the middle of a shuffle) and transparent to the user (so they don't have to think about the new addresses they generate, or which coins are optimal to send where for the maximum shuffle). How soon can we expect something like this? Also, how soon will smartphones be able to handle this with the same ease as desktops and notebooks?

A.T.: A bitcoin laundry already exists. The volume on it is very low, but if demand increases in the future then such a service is trivial to setup. A mixing service (as they're called) requires a large volume and therefore a persistent demand.

Smartphones can already use bitcoin :) An Android version of the command line Bitcoin was compiled. Additionally one can use an online wallet service (or a bitcoin exchange) to store their bitcoins.

Lost/forgotten bitcoins?
by algorimancer

One thing that concerns me is the fixed maximum number of bitcoins. Lets say people acquire bitcoins, but the amount isn't enough to worry about, so they never use them, or perhaps their computer crashes and they don't have a backup. My understanding is that these bitcoins are permanently lost from the economy of bitcoins. Over time, the total supply would begin to dwindle, presumably pushing up the value of those that remain, until people become frustrated at the small supply and are motivated to move to a new system, then bitcoin is abandoned. In the real world this happens with dollar bills, but the government can compensate for this by creating more. Is this issue addressed in some fashion?

A.T.: The supply of bitcoins is 21 million. The supply of money is infinite. A bitcoin can currently be divided to 8 decimal places. The loss of bitcoins in the future may lead to some deflation however I expect it to be insignificant. In the very long term, even if there was only 1 bitcoin theoretically in circulation, running the world economy would not be a problem. There exists only 6 MBTC in circulation at this moment.

Extreme instability of Bitcoin vs. USD
by Limerent Oil

Why would any merchant IN THEIR RIGHT MIND want to deal with Bitcoin? With the insane USD-to-Bitcoin exchange-rate gyrations happening lately, why would any serious retailer even bother, when the value of Bitcoin vs. USD could change by 50% or more in just a few hours?

A.T.: As liquidity increases transaction costs decrease. If there was already an appropriate clearing house in place, a merchant would be able to automatically accept bitcoins and liquidate them to dollars. In the same way that people who use the internet are not all cognizant of the communication protocols they are using, I foresee the possibility of merchants offering their products in USD, EUR, GBP, and customers purchasing those products in their local currency. And the underlying mechanism which facilitates this transfer is the bitcoin. Bitcoin would provide these same services that payment services, credit cards or banks do but with much less cost to the merchant and customer.

What about the lack of inflation?
by Cyberax

It's long known that economic growth is severely stunted without some measure of inflation. Adopting bitcoins for the global economy would mean that policymakers lose control on money supply, and while there are advantages in this, disadvantages far outweigh them. Additionally, adopting a global currency standard will deny governments ability to influence currency rates robbing them of yet another way to control the economy. Is there any plan to solve this? Maybe a system of independent bitcoin 'roots' operated by governments would help?

A.T.: Ben Friedman has released a lot of work on E money and how it will affect the future and how governments will adapt. The truth is that the government will still have monopolies on much of the operations of the economy such as fractional reserve banking and the issuing of licenses which allow banks to lend money.

Aspirations
by slim

What are your aspirations for the currency? Do you hope for it to be near-ubiquitous — used by corner shops and mainstream merchants like Amazon? Or are you happy to see a parallel economy grow, as a niche thing? Or something else?

A.T.: I have lofty dreams of a world where people can send money abroad without having to pay 20+% in many cases to rip offs like western union. Where people can raise funds through services like paypal but not have their accounts arbitrarily frozen. Where citizens in developing nations who already oppose their government do not have to pay for wars of genocide out of their own pockets as was the case in ex-Yugoslavia where authoritarian control over the money supply helped finance a terrible war and bring about the worst hyper-inflation in Europe since WWII.

Bitcoin in some form is going to be adopted whether it is used as a unique currency, a payment system or as a clearing house. Our aspiration for bitcoin is to provide competition to the current system making everything cheaper for all. It's about cutting the middleman, democratising money and handing back power to people.

Will governments let it survive?
by merdaccia

We live in a world where the supply and movement of money are controlled by governments, central banks, money laundering laws, and financial institutions. How can BitCoin survive in this world? Middle men like banks stand to lose a fortune in fees and exchange rates, governments stand to lose a fortune in taxes if they can't track money movement, and the black market stands to gain a silent way to move value. For BitCoin to gain adoption, some major retailers need to start supporting it, but given the above risks, what stops a government from telling companies in its jurisdiction that they can't accept it?

A.T.: The US is not the world. If their government forces everyone to continue to use typewriters in lieu of computers and pay through the nose, they can. New and better technology, especially when it is revolutionary, does threaten archaic models and practices. Hopefully there will not be contention. My team is already in contact with SWIFT which has operated for 30 years and is the backbone of international money transfer for over 9000 banks. Many forward thinkers see the advantages of bitcoins but it is easy to understand how those perhaps well-intentioned but not well-versed in what bitcoin is can promote FUD.

Regulatory compliance?
by molo

For those of us interested in developing financial services using bitcoin, how have you dealt with regulatory issues? It seems like the SEC and FINRA in the US would not be keen on unregistered broker-dealers and agents and owners not having the legally required Series 7 and Series 24 certifications. Have you sought the UK equivalent certifications? The requirements of lawyers, accountants, certifications etc. seem to put a very high capital cost on starting a legitimate business offering services in this space.

A.T.: As well as being a developer, I own and operate www.Britcoin.co.uk (the UK exchange site). My team has been in negotiations for a long time now with lawyers and regulators. There is no regulatory process or restrictions now on the running of such services. Non-regulated sectors rarely seek out regulation. However, when it comes to bitcoins, I believe the sooner they are regulated the better. If their regulation is pushed by those who understand what bitcoins are then we may be able to regulate them in the best way possible and show the world they were not created for illegal practices. The sooner they are regulated, the sooner users can have legal assurances that merchants are liable for their operations. The negligence seen at MTGox would never have happened in a regulated market.

Although the FSA have not made any official statement about bitcoins. We at www.britcoin.co.uk are hoping that we can show to the proper authorities that indeed we have recorded our history of transactions. That all the money in our users accounts is accounted for. This process would dispel the FUD surrounding bitcoins and allow the people of the world to enjoy the freedoms and wealth of bitcoins that much sooner.

Tax avoidance and illicit trading
by slim

Some "benefits" of Bitcoin, from one perspective, appear to be that its cash-like properties lend themselves to tax avoidance (making transactions without declaring them), illicit trading (e.g. drugs or prostitution) and money laundering. Do you view this as a positive, a negative, or neutral? If you view it as a problem, how can the problem be mitigated?

A.T.: Most new technologies can be used for good and bad. Of course I do not condone or agree with the use of Bitcoins for illegal purposes.

However, I really want people to understand one thing. The criminalization of Bitcoin would not stop the illegal activity that surrounds it. In fact, it would help those who use it as a means of engaging in illegal activity by not regulating the purchasing and selling of bitcoins. Criminalization would only stop people from enjoying the tremendous and fruitful benefits of such a system, it would hinder the social good. Regulation would allow the proper authorities to find and charge those who use bitcoins for illegal activities.

Britcoin.co.uk has kept a clear record of the exchanges which have gone on. Every single transaction is recorded and we are happy to open our books to the proper authorities. We are aggressively advocating and promoting the legalization and regulation of the exchanges.

Bitcoins offer massive potential for positive social change. It would be a sad thing to see Bitcoins outlawed due to ignorance or reactionary feelings. If you outlaw Bitcoin then the illicit trades will still continue, perhaps even proliferate, but the good would disappear.

Kings used to raise capital in order to wage wars. They required popular support before they were able to fund their wars. A common tool in modern day authoritarian regimes is currency manipulation in order to fund their wars of genocide (e.g Milosevic in the 90s). Bitcoin democratises governments.

Quantum Computing?
by SanityInAnarchy

Are there plans to deal with quantum computing, or with any of the algorithms used being compromised?

A.T.: If SHA256 or ECDSA was ever cracked, we'd have far bigger problems to worry about than bitcoin being destroyed. I suspect that there won't be any overnight switch, giving everybody enough time in order to adjust the current system to any changes.

The internet wasn't built perfect. But years of reshaping/patching/incremental design have shaped it into a workable network. Bitcoin will too undergo this transformation with time as it ages.

(More from the call for questions:)

is there ever going to be a bitcoin bank? ... The idea that if you lose or destroy or whatever your computer and lose all your money isn't going to make the general public accept this.

A.T.: Bitcoin now stands at its early stages. It's the kernel of the software stack that will eventually exist for this financial system. Other services and software utilising Bitcoin will exist. A common view is where Bitcoin acts as an automated clearing house between all these user facing services in the future.

Bitcoin's protocol itself will need to be extended in order for it to grow. As the network expands, block sizes could become impossible large once it rivals the transaction volume of a comparable service like VISA or Paypal. To have lightweight clients that don't need to process these large GB sized blocks new protocol commands like a txmatch regex would need to be introduced in order that clients don't need to process the entire block data.

The point to Bitcoin is that you can choose your own level of trust in an external service. One of our group's members, Patrick Strateman, came up with a scheme whereby a wallet could be recovered algorithmically using an email and a password. In the future I expect savings accounts where retrieving the money is an arduous proccess. Then we can go further to where a person has all their funds in a trusted service like with email today- how many people run their own mail servers?

What markets do you think will be the first to most aggressively adopt bitcoins as their currency?

What insights can you offer as to why the US government is having a hostile reaction to bitcoins?"

What kinds of competing P2P currencies are in development, and how will their deployment affect the valuation of bitcoins?

A.T.: Immediately as liquidity improves in exchanges, the best use for Bitcoins will be individuals transferring funds between countries without fees. Our group has a lot of interest from mobile sectors because of the potential as a micropayment system. Currently now in Africa, people use mobile credit as a form of currency to transfer funds across borders, but that's usually less than ideal.

The US government isn't a homogenous entity, and one senator (possibly funded by bankers) made a false claim on Bitcoin- calling it a scheme for drug trafficking networks. It may simply be due to reactionary misunderstanding like the people in Yahoo Finance calling Bitcoin a Ponzi scheme invented by bankers. That's why our group is aggressively pursuing press in order to dispel these myths.

Terminology

If we eventually use Bitcoin in everyday life, say, in the supermarket, how will we deal with prices in fractions of a Bitcoin? What terminology might we use for something priced at 0.00000005 Bitcoins?

A.T.: The accepted 'standard' is to use SI prefixes. 0.005 BC would be 5 mBC.

Here come the regulators ...

How will your business change when countries regulate exchanges? How do you ensure your exchange isn't being used for illicit purposes (to avoid being shut down by government authorities)?

A.T.: It is our goal (and has been for months) to get legal legitimisation. Our organisation has been aggressively seeking FSA regulation here in the UK for Britcoin. Our hope is that when governments do come to look at Bitcoin, they will see a long running, honest, legal exchange with open books. By having something in the law books about Bitcoin, it sets a positive legal precedent in the future and puts us as the policy makers rather than a bunch of old 60 year banker types.

Our exchange complies with the UK Know Your Customer laws which ensures it's not being used for illicit activity. We keep detailed transaction records and run regular audit logs to look for missing funds.

But eventually, one would want to use BitCoins to pay for legal services. My question is; how do you get to that point? Why would a legitimate business accept a currency that is used almost exclusively for illegal means? What is the strategy to convince mainstream businesses that BitCoins have a purpose in the main web, as well?

A.T.: The illicit markets are a very small part of Bitcoin yet the most sensationalist. I can see how one would think Bitcoin is purely for illegal trade if I didn't know better.

Check out the list of merchants.

Full and open disclosure: how many bitcoins do you currently own?

A.T.: 32 BC. At one point I had 6000, but I'm a bad hoarder. Everytime Bitcoins would double (and I'd have $2k), I'd donate half my wealth to other free software developers. Then recently I was going to wait until I had $4k, but the price went down and I'm very bad at holding onto cash :)

But that doesn't bother me at all. We have our group of free software developers developing Bitcoin itself and other related projects. Funds are coming in and we're growing. The goal is to this as a sustainable operation paying developers working on Bitcoin fulltime.

What are the advantages of bitcoin?

One problem I see with bitcoin is it offers very little over what we currently have. If I want to perform an online transaction using my computer, unless I am buying something illegal, then there are already companies which offer products for me to use. If I want to make an anonymous purchase in person, I would easily use cash.

Bitcoin seems to suffer from a lack of portability, which makes me wonder, what "need" is bitcoin catering to? What do I do in my day-to-day life that bitcoin will help me do such that as some point, bitcoin becomes irreplaceable and achieves de facto permanency?

A.T.: Sending funds abroad is time consuming, expensive and difficult. Recently I tried sending funds to a Polish bank from the UK- the bank was closed and I waited until Monday. Requiring me to be in person at the bank, the woman was unable to enter the Polish L looking character into her terminal. I had to aquire an internet banking code to do it online. Waited 3 days, logged in and the internet banking form didn't work. In the end, I ended using a friend to aquire Bitcoins and use the Polish exchange bitomat (we never use Britcoin ourself).

I wanted to donate funds to the excellent Symphony of Science musician. I went to fill in the Paypal form, spent 10 mins signing up to an account, entering all my very personal details and my card was rejected. In the end I got him to accept Bitcoins and donated directly without paying fees to Paypal.

Sony recently was hacked. Millions of accounts were leaked. If they were using Bitcoins then the addresses people donated to would be known to the attacker. Not my private keys which enable said attacker to spend my cash.

With commerce, everything becomes cheaper. Bitcoin vastly reduces the overhead needed for fees. We no longer require staff sitting inside banks pressing numbers on a keyboard since the system is automatically backed by mathematics and cryptography, not laws and people.

Last week, you asked questions (many rather pointed!) of Amir Taaki, co-founder of Bitcoin Consultancy, which develops Bitcoin related services, exchanges and Bitcoin itself. (They also own Britcoin.co.uk.) Says Taaki: "When creating video games I spent much time imagining tools to make artists lives easier, and how we could keep funding developers to write free software. One contribution of mine to the community was a site where developers could get funded for developing features and I'd love nothing more than to pay people to write free software." With regard to Bitcoin, similarly, "We need fulltime developers thinking about the problems and solutions needed to keep this system running. We aim to get all the creative thinkers from the community and provide a mechanism for enabling their work." Below find his answers to the questions readers raised.

Is the gold rush over?
by curunir

With BitCoin limited to a pre-determined amount and the difficulty of mining new BitCoins, it seems that this gives a huge advantage to people who got into BitCoin early and have already amassed a considerable amount of BitCoins. Is this true and, if so, do you think this disincentive will undermine BitCoin's ability to become more popular since the majority of the population will have to work so much harder to obtain the currency?

Amir Taaki: It is certainly true that early adopters have been rewarded. I do not think these inequities will be more shocking than those in the real world. Any guesses as to how this will play out is pontification. However, I don't think anyone has proposed a working model for a decentralized secure digital currency where such a thing would not happen. Overall, I believe the properties of this currency will significantly add to the wealth of all peoples, especially those less well off.

Crypto-Anarchism?
by conner_bw

I argue that bitcoin is interesting because it's a locked currency, with a known maximum, and a timeline for that maximum based on contemporary crypto math and radical ideas. There is clearly well thought out timeline for adoption and disruption. It's not just "Cool, new money!" Are you a crypto anarchist, or similar?

A.T.: Yes, I myself am a crypto anarchist. However, not everyone on my team has the same political ideologies and we do not try to push our ideologies on each other. In fact, we have all seen our ideologies change over time with the awareness of new knowledge and information. Ideologies should not be a point of contention, especially when we all see the immense prolific value of a more efficient means of commerce.

If not, then is this another Tulip craze [wikipedia.org] and all these news stories and bitcoin currency exchange services being hyped heavily the last month machinations for profiteering?

A.T.: I do not advocate that people speculate on bitcoins. In fact I actively advocate against that because those who are new to bitcoin might see it as just that, a 'craze.' I do however think that the properties of bitcoin are clearly advantageous over the current means of commerce. Although bitcoin is still underdeveloped, everything visible in the modern world can be adapted using bitcoins as a backbone. This will result in all the services of today's world (clearing houses, security, fraud protection, interest bearing accounts...) continuing to be offered, but with far less overhead.

Austrian Acceptance
by MyFirstNameIsPaul

I have found that the Austrians have a hard time accepting the idea of a digital currency. The core of their argument seems to be that digital currencies are not made up of something that had value before being a medium of exchange, such as gold and silver. When I counter to them that BitCoin is made up of code and people pay money for things like video games, they argue that the video game would have to be the thing valued, not the computer code. How do you deal with these kinds of objections?

A.T.: Gold is not a currency in my mind. It is a store of value. I would not want to go to buy bread from my local store and shave off some gold from a bullion and take out a scale and wait for an acid test to be performed. Gold is backed by real world properties.

Bitcoin is backed by the fact that is has unique properties as well:

• Decentralized
• No bank holidays
• International
• No concept of borders
• Divisible
• True micro-transactions possible (new markets feasible)
• New privacy model
• Private identity yet transparent
• Secure
• You do not have to trust merchant sites (Sony - Playstation) to protect your data
• Fast Transactions
• No Charge backs

Useful Calculations?
by Bodhammer

Is there any way to make the calculations more useful (i.e. Boinc) and still maintain the same level of difficulty in the computations? It just seems so wasteful to run Bitcoin at this time.

A.T.: Our world's current infrastructure depends on paying employees, building large buildings, paying for heat, electricity, transportation, lawyers, courts, judges, policemen, government bureaucracies, armies and much more. Doesn't it seem wasteful to rely on tedious and sometimes ambiguous real world laws with a lot of overhead instead of mathematical laws?

When merchants started accepting bitcoins, verifiers (because miners is a misnomer) started to see that their generated coins were worth something. They became competitive and found ways to do the same calculations cheaper which provided security for the network and verified the transactions. Verifiers found out that running these hashing algorithms on one's GPU was far more energy efficient than running them on one's CPU. Specialized software was later constructed for these purposes. Some keep their machines under dry ice. In the not so distant future, hardware FPGAs will be specially designed for this verification process.

The advantages of bitcoin exist because it is an inherently more efficient and less wasteful system. The reward for minting a block, provides a healthy competition that causes the energy cost to be driven down.

Additional privacy layers and smartphones?
by DriedClexler

Is there any serious development underway to make the privacy more robust? There has been talk of "Bitcoin laundry," where large pools swap their coins around between each other to make it harder to connect a coin/address with an owner. But for this to seriously work, it needs a lot more people to be involved in it, and it has to be integrated in a way that's secure (against someone just keeping coins in the middle of a shuffle) and transparent to the user (so they don't have to think about the new addresses they generate, or which coins are optimal to send where for the maximum shuffle). How soon can we expect something like this? Also, how soon will smartphones be able to handle this with the same ease as desktops and notebooks?

A.T.: A bitcoin laundry already exists. The volume on it is very low, but if demand increases in the future then such a service is trivial to setup. A mixing service (as they're called) requires a large volume and therefore a persistent demand.

Smartphones can already use bitcoin :) An Android version of the command line Bitcoin was compiled. Additionally one can use an online wallet service (or a bitcoin exchange) to store their bitcoins.

Lost/forgotten bitcoins?
by algorimancer

One thing that concerns me is the fixed maximum number of bitcoins. Lets say people acquire bitcoins, but the amount isn't enough to worry about, so they never use them, or perhaps their computer crashes and they don't have a backup. My understanding is that these bitcoins are permanently lost from the economy of bitcoins. Over time, the total supply would begin to dwindle, presumably pushing up the value of those that remain, until people become frustrated at the small supply and are motivated to move to a new system, then bitcoin is abandoned. In the real world this happens with dollar bills, but the government can compensate for this by creating more. Is this issue addressed in some fashion?

A.T.: The supply of bitcoins is 21 million. The supply of money is infinite. A bitcoin can currently be divided to 8 decimal places. The loss of bitcoins in the future may lead to some deflation however I expect it to be insignificant. In the very long term, even if there was only 1 bitcoin theoretically in circulation, running the world economy would not be a problem. There exists only 6 MBTC in circulation at this moment.

Extreme instability of Bitcoin vs. USD
by Limerent Oil

Why would any merchant IN THEIR RIGHT MIND want to deal with Bitcoin? With the insane USD-to-Bitcoin exchange-rate gyrations happening lately, why would any serious retailer even bother, when the value of Bitcoin vs. USD could change by 50% or more in just a few hours?

A.T.: As liquidity increases transaction costs decrease. If there was already an appropriate clearing house in place, a merchant would be able to automatically accept bitcoins and liquidate them to dollars. In the same way that people who use the internet are not all cognizant of the communication protocols they are using, I foresee the possibility of merchants offering their products in USD, EUR, GBP, and customers purchasing those products in their local currency. And the underlying mechanism which facilitates this transfer is the bitcoin. Bitcoin would provide these same services that payment services, credit cards or banks do but with much less cost to the merchant and customer.

What about the lack of inflation?
by Cyberax

It's long known that economic growth is severely stunted without some measure of inflation. Adopting bitcoins for the global economy would mean that policymakers lose control on money supply, and while there are advantages in this, disadvantages far outweigh them. Additionally, adopting a global currency standard will deny governments ability to influence currency rates robbing them of yet another way to control the economy. Is there any plan to solve this? Maybe a system of independent bitcoin 'roots' operated by governments would help?

A.T.: Ben Friedman has released a lot of work on E money and how it will affect the future and how governments will adapt. The truth is that the government will still have monopolies on much of the operations of the economy such as fractional reserve banking and the issuing of licenses which allow banks to lend money.

Aspirations
by slim

What are your aspirations for the currency? Do you hope for it to be near-ubiquitous — used by corner shops and mainstream merchants like Amazon? Or are you happy to see a parallel economy grow, as a niche thing? Or something else?

A.T.: I have lofty dreams of a world where people can send money abroad without having to pay 20+% in many cases to rip offs like western union. Where people can raise funds through services like paypal but not have their accounts arbitrarily frozen. Where citizens in developing nations who already oppose their government do not have to pay for wars of genocide out of their own pockets as was the case in ex-Yugoslavia where authoritarian control over the money supply helped finance a terrible war and bring about the worst hyper-inflation in Europe since WWII.

Bitcoin in some form is going to be adopted whether it is used as a unique currency, a payment system or as a clearing house. Our aspiration for bitcoin is to provide competition to the current system making everything cheaper for all. It's about cutting the middleman, democratising money and handing back power to people.

Will governments let it survive?
by merdaccia

We live in a world where the supply and movement of money are controlled by governments, central banks, money laundering laws, and financial institutions. How can BitCoin survive in this world? Middle men like banks stand to lose a fortune in fees and exchange rates, governments stand to lose a fortune in taxes if they can't track money movement, and the black market stands to gain a silent way to move value. For BitCoin to gain adoption, some major retailers need to start supporting it, but given the above risks, what stops a government from telling companies in its jurisdiction that they can't accept it?

A.T.: The US is not the world. If their government forces everyone to continue to use typewriters in lieu of computers and pay through the nose, they can. New and better technology, especially when it is revolutionary, does threaten archaic models and practices. Hopefully there will not be contention. My team is already in contact with SWIFT which has operated for 30 years and is the backbone of international money transfer for over 9000 banks. Many forward thinkers see the advantages of bitcoins but it is easy to understand how those perhaps well-intentioned but not well-versed in what bitcoin is can promote FUD.

Regulatory compliance?
by molo

For those of us interested in developing financial services using bitcoin, how have you dealt with regulatory issues? It seems like the SEC and FINRA in the US would not be keen on unregistered broker-dealers and agents and owners not having the legally required Series 7 and Series 24 certifications. Have you sought the UK equivalent certifications? The requirements of lawyers, accountants, certifications etc. seem to put a very high capital cost on starting a legitimate business offering services in this space.

A.T.: As well as being a developer, I own and operate www.Britcoin.co.uk (the UK exchange site). My team has been in negotiations for a long time now with lawyers and regulators. There is no regulatory process or restrictions now on the running of such services. Non-regulated sectors rarely seek out regulation. However, when it comes to bitcoins, I believe the sooner they are regulated the better. If their regulation is pushed by those who understand what bitcoins are then we may be able to regulate them in the best way possible and show the world they were not created for illegal practices. The sooner they are regulated, the sooner users can have legal assurances that merchants are liable for their operations. The negligence seen at MTGox would never have happened in a regulated market.

Although the FSA have not made any official statement about bitcoins. We at www.britcoin.co.uk are hoping that we can show to the proper authorities that indeed we have recorded our history of transactions. That all the money in our users accounts is accounted for. This process would dispel the FUD surrounding bitcoins and allow the people of the world to enjoy the freedoms and wealth of bitcoins that much sooner.

Tax avoidance and illicit trading
by slim

Some "benefits" of Bitcoin, from one perspective, appear to be that its cash-like properties lend themselves to tax avoidance (making transactions without declaring them), illicit trading (e.g. drugs or prostitution) and money laundering. Do you view this as a positive, a negative, or neutral? If you view it as a problem, how can the problem be mitigated?

A.T.: Most new technologies can be used for good and bad. Of course I do not condone or agree with the use of Bitcoins for illegal purposes.

However, I really want people to understand one thing. The criminalization of Bitcoin would not stop the illegal activity that surrounds it. In fact, it would help those who use it as a means of engaging in illegal activity by not regulating the purchasing and selling of bitcoins. Criminalization would only stop people from enjoying the tremendous and fruitful benefits of such a system, it would hinder the social good. Regulation would allow the proper authorities to find and charge those who use bitcoins for illegal activities.

Britcoin.co.uk has kept a clear record of the exchanges which have gone on. Every single transaction is recorded and we are happy to open our books to the proper authorities. We are aggressively advocating and promoting the legalization and regulation of the exchanges.

Bitcoins offer massive potential for positive social change. It would be a sad thing to see Bitcoins outlawed due to ignorance or reactionary feelings. If you outlaw Bitcoin then the illicit trades will still continue, perhaps even proliferate, but the good would disappear.

Kings used to raise capital in order to wage wars. They required popular support before they were able to fund their wars. A common tool in modern day authoritarian regimes is currency manipulation in order to fund their wars of genocide (e.g Milosevic in the 90s). Bitcoin democratises governments.

Quantum Computing?
by SanityInAnarchy

Are there plans to deal with quantum computing, or with any of the algorithms used being compromised?

A.T.: If SHA256 or ECDSA was ever cracked, we'd have far bigger problems to worry about than bitcoin being destroyed. I suspect that there won't be any overnight switch, giving everybody enough time in order to adjust the current system to any changes.

The internet wasn't built perfect. But years of reshaping/patching/incremental design have shaped it into a workable network. Bitcoin will too undergo this transformation with time as it ages.

(More from the call for questions:)

is there ever going to be a bitcoin bank? ... The idea that if you lose or destroy or whatever your computer and lose all your money isn't going to make the general public accept this.

A.T.: Bitcoin now stands at its early stages. It's the kernel of the software stack that will eventually exist for this financial system. Other services and software utilising Bitcoin will exist. A common view is where Bitcoin acts as an automated clearing house between all these user facing services in the future.

Bitcoin's protocol itself will need to be extended in order for it to grow. As the network expands, block sizes could become impossible large once it rivals the transaction volume of a comparable service like VISA or Paypal. To have lightweight clients that don't need to process these large GB sized blocks new protocol commands like a txmatch regex would need to be introduced in order that clients don't need to process the entire block data.

The point to Bitcoin is that you can choose your own level of trust in an external service. One of our group's members, Patrick Strateman, came up with a scheme whereby a wallet could be recovered algorithmically using an email and a password. In the future I expect savings accounts where retrieving the money is an arduous proccess. Then we can go further to where a person has all their funds in a trusted service like with email today- how many people run their own mail servers?

What markets do you think will be the first to most aggressively adopt bitcoins as their currency?

What insights can you offer as to why the US government is having a hostile reaction to bitcoins?"

What kinds of competing P2P currencies are in development, and how will their deployment affect the valuation of bitcoins?

A.T.: Immediately as liquidity improves in exchanges, the best use for Bitcoins will be individuals transferring funds between countries without fees. Our group has a lot of interest from mobile sectors because of the potential as a micropayment system. Currently now in Africa, people use mobile credit as a form of currency to transfer funds across borders, but that's usually less than ideal.

The US government isn't a homogenous entity, and one senator (possibly funded by bankers) made a false claim on Bitcoin- calling it a scheme for drug trafficking networks. It may simply be due to reactionary misunderstanding like the people in Yahoo Finance calling Bitcoin a Ponzi scheme invented by bankers. That's why our group is aggressively pursuing press in order to dispel these myths.

Terminology

If we eventually use Bitcoin in everyday life, say, in the supermarket, how will we deal with prices in fractions of a Bitcoin? What terminology might we use for something priced at 0.00000005 Bitcoins?

A.T.: The accepted 'standard' is to use SI prefixes. 0.005 BC would be 5 mBC.

Here come the regulators ...

How will your business change when countries regulate exchanges? How do you ensure your exchange isn't being used for illicit purposes (to avoid being shut down by government authorities)?

A.T.: It is our goal (and has been for months) to get legal legitimisation. Our organisation has been aggressively seeking FSA regulation here in the UK for Britcoin. Our hope is that when governments do come to look at Bitcoin, they will see a long running, honest, legal exchange with open books. By having something in the law books about Bitcoin, it sets a positive legal precedent in the future and puts us as the policy makers rather than a bunch of old 60 year banker types.

Our exchange complies with the UK Know Your Customer laws which ensures it's not being used for illicit activity. We keep detailed transaction records and run regular audit logs to look for missing funds.

But eventually, one would want to use BitCoins to pay for legal services. My question is; how do you get to that point? Why would a legitimate business accept a currency that is used almost exclusively for illegal means? What is the strategy to convince mainstream businesses that BitCoins have a purpose in the main web, as well?

A.T.: The illicit markets are a very small part of Bitcoin yet the most sensationalist. I can see how one would think Bitcoin is purely for illegal trade if I didn't know better.

Check out the list of merchants.

Full and open disclosure: how many bitcoins do you currently own?

A.T.: 32 BC. At one point I had 6000, but I'm a bad hoarder. Everytime Bitcoins would double (and I'd have $2k), I'd donate half my wealth to other free software developers. Then recently I was going to wait until I had $4k, but the price went down and I'm very bad at holding onto cash :)

But that doesn't bother me at all. We have our group of free software developers developing Bitcoin itself and other related projects. Funds are coming in and we're growing. The goal is to this as a sustainable operation paying developers working on Bitcoin fulltime.

What are the advantages of bitcoin?

One problem I see with bitcoin is it offers very little over what we currently have. If I want to perform an online transaction using my computer, unless I am buying something illegal, then there are already companies which offer products for me to use. If I want to make an anonymous purchase in person, I would easily use cash.

Bitcoin seems to suffer from a lack of portability, which makes me wonder, what "need" is bitcoin catering to? What do I do in my day-to-day life that bitcoin will help me do such that as some point, bitcoin becomes irreplaceable and achieves de facto permanency?

A.T.: Sending funds abroad is time consuming, expensive and difficult. Recently I tried sending funds to a Polish bank from the UK- the bank was closed and I waited until Monday. Requiring me to be in person at the bank, the woman was unable to enter the Polish L looking character into her terminal. I had to aquire an internet banking code to do it online. Waited 3 days, logged in and the internet banking form didn't work. In the end, I ended using a friend to aquire Bitcoins and use the Polish exchange bitomat (we never use Britcoin ourself).

I wanted to donate funds to the excellent Symphony of Science musician. I went to fill in the Paypal form, spent 10 mins signing up to an account, entering all my very personal details and my card was rejected. In the end I got him to accept Bitcoins and donated directly without paying fees to Paypal.

Sony recently was hacked. Millions of accounts were leaked. If they were using Bitcoins then the addresses people donated to would be known to the attacker. Not my private keys which enable said attacker to spend my cash.

With commerce, everything becomes cheaper. Bitcoin vastly reduces the overhead needed for fees. We no longer require staff sitting inside banks pressing numbers on a keyboard since the system is automatically backed by mathematics and cryptography, not laws and people.

Last week, you asked questions (many rather pointed!) of Amir Taaki, co-founder of Bitcoin Consultancy, which develops Bitcoin related services, exchanges and Bitcoin itself. (They also own Britcoin.co.uk.) Says Taaki: "When creating video games I spent much time imagining tools to make artists lives easier, and how we could keep funding developers to write free software. One contribution of mine to the community was a site where developers could get funded for developing features and I'd love nothing more than to pay people to write free software." With regard to Bitcoin, similarly, "We need fulltime developers thinking about the problems and solutions needed to keep this system running. We aim to get all the creative thinkers from the community and provide a mechanism for enabling their work." Below find his answers to the questions readers raised.

Is the gold rush over?
by curunir

With BitCoin limited to a pre-determined amount and the difficulty of mining new BitCoins, it seems that this gives a huge advantage to people who got into BitCoin early and have already amassed a considerable amount of BitCoins. Is this true and, if so, do you think this disincentive will undermine BitCoin's ability to become more popular since the majority of the population will have to work so much harder to obtain the currency?

Amir Taaki: It is certainly true that early adopters have been rewarded. I do not think these inequities will be more shocking than those in the real world. Any guesses as to how this will play out is pontification. However, I don't think anyone has proposed a working model for a decentralized secure digital currency where such a thing would not happen. Overall, I believe the properties of this currency will significantly add to the wealth of all peoples, especially those less well off.

Crypto-Anarchism?
by conner_bw

I argue that bitcoin is interesting because it's a locked currency, with a known maximum, and a timeline for that maximum based on contemporary crypto math and radical ideas. There is clearly well thought out timeline for adoption and disruption. It's not just "Cool, new money!" Are you a crypto anarchist, or similar?

A.T.: Yes, I myself am a crypto anarchist. However, not everyone on my team has the same political ideologies and we do not try to push our ideologies on each other. In fact, we have all seen our ideologies change over time with the awareness of new knowledge and information. Ideologies should not be a point of contention, especially when we all see the immense prolific value of a more efficient means of commerce.

If not, then is this another Tulip craze [wikipedia.org] and all these news stories and bitcoin currency exchange services being hyped heavily the last month machinations for profiteering?

A.T.: I do not advocate that people speculate on bitcoins. In fact I actively advocate against that because those who are new to bitcoin might see it as just that, a 'craze.' I do however think that the properties of bitcoin are clearly advantageous over the current means of commerce. Although bitcoin is still underdeveloped, everything visible in the modern world can be adapted using bitcoins as a backbone. This will result in all the services of today's world (clearing houses, security, fraud protection, interest bearing accounts...) continuing to be offered, but with far less overhead.

Austrian Acceptance
by MyFirstNameIsPaul

I have found that the Austrians have a hard time accepting the idea of a digital currency. The core of their argument seems to be that digital currencies are not made up of something that had value before being a medium of exchange, such as gold and silver. When I counter to them that BitCoin is made up of code and people pay money for things like video games, they argue that the video game would have to be the thing valued, not the computer code. How do you deal with these kinds of objections?

A.T.: Gold is not a currency in my mind. It is a store of value. I would not want to go to buy bread from my local store and shave off some gold from a bullion and take out a scale and wait for an acid test to be performed. Gold is backed by real world properties.

Bitcoin is backed by the fact that is has unique properties as well:

• Decentralized
• No bank holidays
• International
• No concept of borders
• Divisible
• True micro-transactions possible (new markets feasible)
• New privacy model
• Private identity yet transparent
• Secure
• You do not have to trust merchant sites (Sony - Playstation) to protect your data
• Fast Transactions
• No Charge backs

Useful Calculations?
by Bodhammer

Is there any way to make the calculations more useful (i.e. Boinc) and still maintain the same level of difficulty in the computations? It just seems so wasteful to run Bitcoin at this time.

A.T.: Our world's current infrastructure depends on paying employees, building large buildings, paying for heat, electricity, transportation, lawyers, courts, judges, policemen, government bureaucracies, armies and much more. Doesn't it seem wasteful to rely on tedious and sometimes ambiguous real world laws with a lot of overhead instead of mathematical laws?

When merchants started accepting bitcoins, verifiers (because miners is a misnomer) started to see that their generated coins were worth something. They became competitive and found ways to do the same calculations cheaper which provided security for the network and verified the transactions. Verifiers found out that running these hashing algorithms on one's GPU was far more energy efficient than running them on one's CPU. Specialized software was later constructed for these purposes. Some keep their machines under dry ice. In the not so distant future, hardware FPGAs will be specially designed for this verification process.

The advantages of bitcoin exist because it is an inherently more efficient and less wasteful system. The reward for minting a block, provides a healthy competition that causes the energy cost to be driven down.

Additional privacy layers and smartphones?
by DriedClexler

Is there any serious development underway to make the privacy more robust? There has been talk of "Bitcoin laundry," where large pools swap their coins around between each other to make it harder to connect a coin/address with an owner. But for this to seriously work, it needs a lot more people to be involved in it, and it has to be integrated in a way that's secure (against someone just keeping coins in the middle of a shuffle) and transparent to the user (so they don't have to think about the new addresses they generate, or which coins are optimal to send where for the maximum shuffle). How soon can we expect something like this? Also, how soon will smartphones be able to handle this with the same ease as desktops and notebooks?

A.T.: A bitcoin laundry already exists. The volume on it is very low, but if demand increases in the future then such a service is trivial to setup. A mixing service (as they're called) requires a large volume and therefore a persistent demand.

Smartphones can already use bitcoin :) An Android version of the command line Bitcoin was compiled. Additionally one can use an online wallet service (or a bitcoin exchange) to store their bitcoins.

Lost/forgotten bitcoins?
by algorimancer

One thing that concerns me is the fixed maximum number of bitcoins. Lets say people acquire bitcoins, but the amount isn't enough to worry about, so they never use them, or perhaps their computer crashes and they don't have a backup. My understanding is that these bitcoins are permanently lost from the economy of bitcoins. Over time, the total supply would begin to dwindle, presumably pushing up the value of those that remain, until people become frustrated at the small supply and are motivated to move to a new system, then bitcoin is abandoned. In the real world this happens with dollar bills, but the government can compensate for this by creating more. Is this issue addressed in some fashion?

A.T.: The supply of bitcoins is 21 million. The supply of money is infinite. A bitcoin can currently be divided to 8 decimal places. The loss of bitcoins in the future may lead to some deflation however I expect it to be insignificant. In the very long term, even if there was only 1 bitcoin theoretically in circulation, running the world economy would not be a problem. There exists only 6 MBTC in circulation at this moment.

Extreme instability of Bitcoin vs. USD
by Limerent Oil

Why would any merchant IN THEIR RIGHT MIND want to deal with Bitcoin? With the insane USD-to-Bitcoin exchange-rate gyrations happening lately, why would any serious retailer even bother, when the value of Bitcoin vs. USD could change by 50% or more in just a few hours?

A.T.: As liquidity increases transaction costs decrease. If there was already an appropriate clearing house in place, a merchant would be able to automatically accept bitcoins and liquidate them to dollars. In the same way that people who use the internet are not all cognizant of the communication protocols they are using, I foresee the possibility of merchants offering their products in USD, EUR, GBP, and customers purchasing those products in their local currency. And the underlying mechanism which facilitates this transfer is the bitcoin. Bitcoin would provide these same services that payment services, credit cards or banks do but with much less cost to the merchant and customer.

What about the lack of inflation?
by Cyberax

It's long known that economic growth is severely stunted without some measure of inflation. Adopting bitcoins for the global economy would mean that policymakers lose control on money supply, and while there are advantages in this, disadvantages far outweigh them. Additionally, adopting a global currency standard will deny governments ability to influence currency rates robbing them of yet another way to control the economy. Is there any plan to solve this? Maybe a system of independent bitcoin 'roots' operated by governments would help?

A.T.: Ben Friedman has released a lot of work on E money and how it will affect the future and how governments will adapt. The truth is that the government will still have monopolies on much of the operations of the economy such as fractional reserve banking and the issuing of licenses which allow banks to lend money.

Aspirations
by slim

What are your aspirations for the currency? Do you hope for it to be near-ubiquitous — used by corner shops and mainstream merchants like Amazon? Or are you happy to see a parallel economy grow, as a niche thing? Or something else?

A.T.: I have lofty dreams of a world where people can send money abroad without having to pay 20+% in many cases to rip offs like western union. Where people can raise funds through services like paypal but not have their accounts arbitrarily frozen. Where citizens in developing nations who already oppose their government do not have to pay for wars of genocide out of their own pockets as was the case in ex-Yugoslavia where authoritarian control over the money supply helped finance a terrible war and bring about the worst hyper-inflation in Europe since WWII.

Bitcoin in some form is going to be adopted whether it is used as a unique currency, a payment system or as a clearing house. Our aspiration for bitcoin is to provide competition to the current system making everything cheaper for all. It's about cutting the middleman, democratising money and handing back power to people.

Will governments let it survive?
by merdaccia

We live in a world where the supply and movement of money are controlled by governments, central banks, money laundering laws, and financial institutions. How can BitCoin survive in this world? Middle men like banks stand to lose a fortune in fees and exchange rates, governments stand to lose a fortune in taxes if they can't track money movement, and the black market stands to gain a silent way to move value. For BitCoin to gain adoption, some major retailers need to start supporting it, but given the above risks, what stops a government from telling companies in its jurisdiction that they can't accept it?

A.T.: The US is not the world. If their government forces everyone to continue to use typewriters in lieu of computers and pay through the nose, they can. New and better technology, especially when it is revolutionary, does threaten archaic models and practices. Hopefully there will not be contention. My team is already in contact with SWIFT which has operated for 30 years and is the backbone of international money transfer for over 9000 banks. Many forward thinkers see the advantages of bitcoins but it is easy to understand how those perhaps well-intentioned but not well-versed in what bitcoin is can promote FUD.

Regulatory compliance?
by molo

For those of us interested in developing financial services using bitcoin, how have you dealt with regulatory issues? It seems like the SEC and FINRA in the US would not be keen on unregistered broker-dealers and agents and owners not having the legally required Series 7 and Series 24 certifications. Have you sought the UK equivalent certifications? The requirements of lawyers, accountants, certifications etc. seem to put a very high capital cost on starting a legitimate business offering services in this space.

A.T.: As well as being a developer, I own and operate www.Britcoin.co.uk (the UK exchange site). My team has been in negotiations for a long time now with lawyers and regulators. There is no regulatory process or restrictions now on the running of such services. Non-regulated sectors rarely seek out regulation. However, when it comes to bitcoins, I believe the sooner they are regulated the better. If their regulation is pushed by those who understand what bitcoins are then we may be able to regulate them in the best way possible and show the world they were not created for illegal practices. The sooner they are regulated, the sooner users can have legal assurances that merchants are liable for their operations. The negligence seen at MTGox would never have happened in a regulated market.

Although the FSA have not made any official statement about bitcoins. We at www.britcoin.co.uk are hoping that we can show to the proper authorities that indeed we have recorded our history of transactions. That all the money in our users accounts is accounted for. This process would dispel the FUD surrounding bitcoins and allow the people of the world to enjoy the freedoms and wealth of bitcoins that much sooner.

Tax avoidance and illicit trading
by slim

Some "benefits" of Bitcoin, from one perspective, appear to be that its cash-like properties lend themselves to tax avoidance (making transactions without declaring them), illicit trading (e.g. drugs or prostitution) and money laundering. Do you view this as a positive, a negative, or neutral? If you view it as a problem, how can the problem be mitigated?

A.T.: Most new technologies can be used for good and bad. Of course I do not condone or agree with the use of Bitcoins for illegal purposes.

However, I really want people to understand one thing. The criminalization of Bitcoin would not stop the illegal activity that surrounds it. In fact, it would help those who use it as a means of engaging in illegal activity by not regulating the purchasing and selling of bitcoins. Criminalization would only stop people from enjoying the tremendous and fruitful benefits of such a system, it would hinder the social good. Regulation would allow the proper authorities to find and charge those who use bitcoins for illegal activities.

Britcoin.co.uk has kept a clear record of the exchanges which have gone on. Every single transaction is recorded and we are happy to open our books to the proper authorities. We are aggressively advocating and promoting the legalization and regulation of the exchanges.

Bitcoins offer massive potential for positive social change. It would be a sad thing to see Bitcoins outlawed due to ignorance or reactionary feelings. If you outlaw Bitcoin then the illicit trades will still continue, perhaps even proliferate, but the good would disappear.

Kings used to raise capital in order to wage wars. They required popular support before they were able to fund their wars. A common tool in modern day authoritarian regimes is currency manipulation in order to fund their wars of genocide (e.g Milosevic in the 90s). Bitcoin democratises governments.

Quantum Computing?
by SanityInAnarchy

Are there plans to deal with quantum computing, or with any of the algorithms used being compromised?

A.T.: If SHA256 or ECDSA was ever cracked, we'd have far bigger problems to worry about than bitcoin being destroyed. I suspect that there won't be any overnight switch, giving everybody enough time in order to adjust the current system to any changes.

The internet wasn't built perfect. But years of reshaping/patching/incremental design have shaped it into a workable network. Bitcoin will too undergo this transformation with time as it ages.

(More from the call for questions:)

is there ever going to be a bitcoin bank? ... The idea that if you lose or destroy or whatever your computer and lose all your money isn't going to make the general public accept this.

A.T.: Bitcoin now stands at its early stages. It's the kernel of the software stack that will eventually exist for this financial system. Other services and software utilising Bitcoin will exist. A common view is where Bitcoin acts as an automated clearing house between all these user facing services in the future.

Bitcoin's protocol itself will need to be extended in order for it to grow. As the network expands, block sizes could become impossible large once it rivals the transaction volume of a comparable service like VISA or Paypal. To have lightweight clients that don't need to process these large GB sized blocks new protocol commands like a txmatch regex would need to be introduced in order that clients don't need to process the entire block data.

The point to Bitcoin is that you can choose your own level of trust in an external service. One of our group's members, Patrick Strateman, came up with a scheme whereby a wallet could be recovered algorithmically using an email and a password. In the future I expect savings accounts where retrieving the money is an arduous proccess. Then we can go further to where a person has all their funds in a trusted service like with email today- how many people run their own mail servers?

What markets do you think will be the first to most aggressively adopt bitcoins as their currency?

What insights can you offer as to why the US government is having a hostile reaction to bitcoins?"

What kinds of competing P2P currencies are in development, and how will their deployment affect the valuation of bitcoins?

A.T.: Immediately as liquidity improves in exchanges, the best use for Bitcoins will be individuals transferring funds between countries without fees. Our group has a lot of interest from mobile sectors because of the potential as a micropayment system. Currently now in Africa, people use mobile credit as a form of currency to transfer funds across borders, but that's usually less than ideal.

The US government isn't a homogenous entity, and one senator (possibly funded by bankers) made a false claim on Bitcoin- calling it a scheme for drug trafficking networks. It may simply be due to reactionary misunderstanding like the people in Yahoo Finance calling Bitcoin a Ponzi scheme invented by bankers. That's why our group is aggressively pursuing press in order to dispel these myths.

Terminology

If we eventually use Bitcoin in everyday life, say, in the supermarket, how will we deal with prices in fractions of a Bitcoin? What terminology might we use for something priced at 0.00000005 Bitcoins?

A.T.: The accepted 'standard' is to use SI prefixes. 0.005 BC would be 5 mBC.

Here come the regulators ...

How will your business change when countries regulate exchanges? How do you ensure your exchange isn't being used for illicit purposes (to avoid being shut down by government authorities)?

A.T.: It is our goal (and has been for months) to get legal legitimisation. Our organisation has been aggressively seeking FSA regulation here in the UK for Britcoin. Our hope is that when governments do come to look at Bitcoin, they will see a long running, honest, legal exchange with open books. By having something in the law books about Bitcoin, it sets a positive legal precedent in the future and puts us as the policy makers rather than a bunch of old 60 year banker types.

Our exchange complies with the UK Know Your Customer laws which ensures it's not being used for illicit activity. We keep detailed transaction records and run regular audit logs to look for missing funds.

But eventually, one would want to use BitCoins to pay for legal services. My question is; how do you get to that point? Why would a legitimate business accept a currency that is used almost exclusively for illegal means? What is the strategy to convince mainstream businesses that BitCoins have a purpose in the main web, as well?

A.T.: The illicit markets are a very small part of Bitcoin yet the most sensationalist. I can see how one would think Bitcoin is purely for illegal trade if I didn't know better.

Check out the list of merchants.

Full and open disclosure: how many bitcoins do you currently own?

A.T.: 32 BC. At one point I had 6000, but I'm a bad hoarder. Everytime Bitcoins would double (and I'd have $2k), I'd donate half my wealth to other free software developers. Then recently I was going to wait until I had $4k, but the price went down and I'm very bad at holding onto cash :)

But that doesn't bother me at all. We have our group of free software developers developing Bitcoin itself and other related projects. Funds are coming in and we're growing. The goal is to this as a sustainable operation paying developers working on Bitcoin fulltime.

What are the advantages of bitcoin?

One problem I see with bitcoin is it offers very little over what we currently have. If I want to perform an online transaction using my computer, unless I am buying something illegal, then there are already companies which offer products for me to use. If I want to make an anonymous purchase in person, I would easily use cash.

Bitcoin seems to suffer from a lack of portability, which makes me wonder, what "need" is bitcoin catering to? What do I do in my day-to-day life that bitcoin will help me do such that as some point, bitcoin becomes irreplaceable and achieves de facto permanency?

A.T.: Sending funds abroad is time consuming, expensive and difficult. Recently I tried sending funds to a Polish bank from the UK- the bank was closed and I waited until Monday. Requiring me to be in person at the bank, the woman was unable to enter the Polish L looking character into her terminal. I had to aquire an internet banking code to do it online. Waited 3 days, logged in and the internet banking form didn't work. In the end, I ended using a friend to aquire Bitcoins and use the Polish exchange bitomat (we never use Britcoin ourself).

I wanted to donate funds to the excellent Symphony of Science musician. I went to fill in the Paypal form, spent 10 mins signing up to an account, entering all my very personal details and my card was rejected. In the end I got him to accept Bitcoins and donated directly without paying fees to Paypal.

Sony recently was hacked. Millions of accounts were leaked. If they were using Bitcoins then the addresses people donated to would be known to the attacker. Not my private keys which enable said attacker to spend my cash.

With commerce, everything becomes cheaper. Bitcoin vastly reduces the overhead needed for fees. We no longer require staff sitting inside banks pressing numbers on a keyboard since the system is automatically backed by mathematics and cryptography, not laws and people.