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BitCoin, the Most Dangerous Project Ever?
Jamie found a followup to the bitcoin story we've been following awhile. The article talks about the untraceable, un-hackable nature of BitCoin. They can't be locked down like PayPal, and the article predicts that governments will start banning them in the next 18 months.
What a badly written sensationalist story. It's like something from the Daily Mail
TFA reads more like an advertisement for BitCoins than an news article.
Each owner transfers the coin to the next by digitally signing a hash of the previous transaction and the public key of the next owner and adding these to the end of the coin. A payee can verify the signatures to verify the chain of ownership.
Then it says:
Of course, since bitcoin transactions are untraceable, you would have zero recourse if you sent a dozen bitcoins to someone for a couple of tabs of LSD. Just like you might lose your $10 if you gave it to a kid in the school yard for a dime bag and he never came back.
Well, which is it?
... computational complexity? They serve absolutely no purpose with no possible side usages (like gold). The only purpose they serve is being a resource in contention. So what happens when people just decide to stop contending for it?
I first read about BitCoins on Slashdot a while ago and what intuition I have seems to wager there's a lot of Catch-22s with this pseudo-fiat currency. I mean the value is derived from scarcity but is also tied to what
I think that the title of this article being "BitCoin, the Most Dangerous Project Ever?" is a crude attempt at a self fulfilling prophecy as it's no danger unless people start to use it and actually value the BitCoins at their trading rate. I liked the section titled "BitCoins in Real Life" that says:
In the next year you’ll hear about people in casinos in Vegas buying and sell bitcoins for cash and casino chips.
Riiiiight. I somehow doubt that.
I think this amounts to some very smart people engaging in a cute little experiment that will experience initial success as those with GPU farms get some of this novel currency. But it can never grow very large because you need a pretty expensive infrastructure even to handle BitCoins and the only interests it serves will be those industries that want easy untraceable ways to exchange value for illegal products or to avoid taxation. And once that's exhausted, I suspect it will flounder.
Does anyone honestly think the promise of protection from inflation will cause people to ask for their paycheck in BitCoins?
My work here is dung.
And how is the world economy going to function with a currency that maxes out at 21 million?
And that 21 million won't be reached for another 130 years. Bitcoin is some sort of retarded joke.
They absolutely DESTROYED their respective economies.
ABSOLUTE DESTRUCTION!!!!
aieeeeeee
Every client has a complete list of all transactions... how can they be called untraceable?
W..w..W - Willy Waterloo washes Warren Wiggins who is washing Waldo Woo.
Sounds like something Neil Stevenson might write.
"Bitcoin is a P2P currency that could topple governments, destabilize economies and create uncontrollable global bazaars for contraband."
I hate to tell you this, but this has already happened with regular-government issued legal tender.
Look at druglord Mexico, most 3rd-world countries, and the US with its billion-dollar Wall Street bailouts and ponzi schemes. Bitcoin would be a little late to the game.
He who knows best knows how little he knows. - Thomas Jefferson
I still have no clue what this 'bitcons' are. Can anyone give an explanation not stepped in sensationalism?
"Our goal each year should be to increase the number of goals we set for ourselves!"
BitCoin should be banned because we want our currency to be as safe and stable as the U.S. dollar.
It's not untraceable, at least not easily. As I understand it, every user has a copy of the the complete history of every bitcoin. Every coin is explicitly traceable - much more so than cash. The only way in which it is untraceable is that you don't know which bitcoin identities correspond to which real-life identities. Unless you happen to run an exchange, or carry out transactions with known people.
The way around it is by using the http://bitcoinlaundry.com/ which jumbles up the coins, but then you have to trust that they aren't actually run by the FBI/whatever.
I think the banning prediction is right though (although maybe not 18 months). If this becomes popular there's no way it will stay legal. The government will be able to stop it fairly effectively by shutting down exchanges.
I could only read that article with the late night salesguy's "These collector coins can only go up in value!" voice, but the content of the article was all about how it's clearly a scam and the author is obviously in on it.
I read the internet for the articles.
This just means more people will start buying bitcoins, and my reserve will keep increasing in value. And I'm sure the author of this article reasoned the exact same way...
How does "cannot be tracked" come from something in which:
It's been a while since I did anything in crypto ... but if you can verify the signatures, and they're now attached to the coin ... can you just confirm the signatures without knowing who signed it? If it's been signed with my public key, don't you need my public key to verify it?
It seems like either it's traceable, because you can see everyone who has ever held a given set of coins ... or it's not trustworthy because all you have is a signature which you don't necessarily trust because you have no idea where it came from, but you trust the cyrpto.
This sounds like getting cash that has a record of everywhere it's ever been, but maybe I'm missing something here. Won't these 'coins' get large over time as they keep getting signed and passed on? (And the amount of verification needed would get quite long, no?)
I don't think I'm all that interested in a virtual currency whose major benefit is that I can buy escorts and drugs on-line without anybody being able to trace it ... it just seems like there's more motivation for fraud in a system like this. And, it seems like something which is going to start coming under a lot of scrutiny.
I'm just not getting what need this is intended to fill ... and I'm not sure I understand how it's simultaneously untraceable and secure.
Lost at C:>. Found at C.
TFA looks like a biased politically-motivated piece, likely written by someone who works for a bank. It talks all about how operating currency independently from the banks or government, who are there to protect you, is dangerous for you (only criminals would do something like this, right?) and risks toppling the government. Of course it will cause problems for banks; people using it might not have to deal with abuse, fees, or identity theft from a badly broken security model that is our financial system when they close their bank accounts for it. FUD aside, I suppose that in itself is reason for the governments to ban it, since the powers that be have something to lose. At least if they're in the pockets of CEOs like they seem to be as of late...
And how is the world economy going to function with a currency that maxes out at 21 million?
Let's pretend for a moment that no other digital currencies will be created - bitcoin will be it.
I'm not sure whether bitcoin will work out or not, but who cares what the absolute upper limit is to the currency? The software currently supports 2 decimals and the bitcoin themselves support division into "bitdust" of 1/100000000 bitcoin. So there are 2.1 quadrillion individual units. That ought to do us. There are perhaps 55 trillion "dollars" out there in the world. That's 1/4 of the economy so you need roughly 220 trillion dollars for the world economy. We use two decimal places with dollars, so the smallest unit is actually a penny. That's 22 quadrillion pennies to make the world go round.
W..w..W - Willy Waterloo washes Warren Wiggins who is washing Waldo Woo.
It maxes out at 21 million of them, but apparently it's dividable up to 8 digits. so there's 21*10^6 * 10^8 => 21 * 10^14 => 2.1 quadrillion units. at least that's what their FAQ says. consider the fact that bitcoins can be lost and it's easily less than that.
Creating a naturally deflating decentralized currency is just the first step in making the world a better place. Sure, it might end with Lenin's reanimated corpse ruling the world but at least it cuts out all this bullshit banking middleground that tricks most westerners into thinking they can afford a house & 5 SUVs...
Governments don't need to make Bitcoin illegal. They just need to make it unusably unstable. Ramp up the price, then make it crash. Over and Over. Nobody would use a currency system that swings wildly in value from day to day.
That said, I've already donated to XKCD www.xkcd.com/bitcoin ~S
In the majority of respects, Bitcoins are no different from cash, and that includes the anonymity and untraceability aspects -- anything that lets me get rid of Paypal and Visa shackles is undeniably a good thing! That said, maybe Bitcoins could be banned because with greater uptake (in the very distant future) they could undermine the US dollar as the reserve currency?
Traceable to an IP. Now, are you claiming an IP address = a person?
I thought they wanted to be funny but there was no punch line. If the article wasn't supposed to be funny, it must have been machine generated (like SCIgen). Statements like this give it away:
* Bitcoin is unstoppable without end-user prosecution.
What does that actually mean? Are standard coins and notes "stoppable" and "with end-user prosecution"? Could someone come up with a car analogy so I understand?
And it's electronic.. meaning a stray cosmic ray could 'break the bank' so to speak.. OTOH it could put a gazillion Zimbabwean dollars onto your card.. don't know which is worse..
For justice, we must go to Don Corleone
Anything with such features will be banned by governments.
Trivial!
Maybe Computers will never be as intelligent as Humans.
For sure they won't ever become so stupid. [VR-1988]
The software currently supports 2 decimals and the bitcoin themselves support division into "bitdust" of 1/100000000 bitcoin. So there are 2.1 quadrillion individual units. That ought to do us.
Okay, so a unit is roughly how much in other currencies?
There are perhaps 55 trillion "dollars" out there in the world. That's 1/4 of the economy so you need roughly 220 trillion dollars for the world economy. We use two decimal places with dollars, so the smallest unit is actually a penny. That's 22 quadrillion pennies to make the world go round.
Even my limited mathematical skills can see that 22 quadrillion is roughly 10 times 2.1 quadrillion. So...
This isn't one of those areas that is a gray area either where congress is finding something else and expanding upon it to expand authority. The Constitution is real explicit in section 8 that congress shall have the power "To coin Money, regulate the Value thereof, and of foreign Coin."
One of the powers congress is clearly granted is control of the currency in the US. Now congress could likely permit other entities to coin money if they wanted to. The language is just that congress has authority over it, not that only the federal government must do it. So I suppose if congress liked bitcoins they could declare them legal tender. However it does mean that if congress doesn't like it, they are the ones with the final say.
That's actually a very good example of a "pseudo-currency".
(Lawn)
I once bought a pizza from Papa Ginos with two Sengir Vampires. (The register guy agreed to repay the pizza out of his own pocket.)
(/Lawn)
The fascinating thing there is how Wizards "tricked itself" by misreading how certain cards form gamebreaker combos. So then they embarked on an elaborate "currency value adjustment" program, aka Type 2. (With all the spinoffs etc. In my areas "1.5" and "Legacy" and so on were never very popular.)
By being relegated to "Type 1" All those power cards were effectively cordoned off into a backwater, and lost most of their effective value. Then as the years rolled on, once cards left Type 2, they also dropped in value like a stone.
What's to keep the BitCoin administration (does that make sense?) from "adjusting" it later to suit some agenda?
My first Journal Entry ever, in 8 years! http://slashdot.org/journal/365947/aphelion-scifi-fantasy-horror-poetry-webzine
Transactions are verified by means of public/private key pairs, which are not directly tied to an identity, especially if you create a new key pair for every transaction. So it's not like there is a list of who owns what in the BitCoin system. It might be possible to analyse the graph of transactions starting at some known public/private key pairs to deduce this, but it's certainly not trivial.
You are right though, claiming that being untraceable is an advantage of BitCoin is misleading.
Unbelievable.
Steven
Weird. I was just thinking about how one could steal a lot of money from Mark Zuckerberg in the vein of the opening scene of "Sneakers". After all, a guy with that big an ego needs to be given a healthy dose of humility. With a system like this, in theory all you'd need to do is hack his bank account and buy a ton of bit-coins and then transfer them around the net to various accounts and such which would subsequently get deleted.
As for this sort of thing being illegal, that only pertains if the whole thing is running in the U.S. All you need is a private island. IIRC, Neal Stephenson touched on these subjects in Cryptonomicon.
There isn't any reason for bitcoin to replace other currencies, just provide an alternative currency for people who prefer volatility to inflation. That said, I'd agree the 21 million limit appears way too low.
As I understand it, bitcoins exist to facilitate internet commerce, not as some hyper-volatile speculative investment vehicle. If too many people treat them as investments, then bitcoins might become very valuable, making the currency useless for the ordinary internet transactions for which it was designed, maybe even harming liquidity.
If that happens, there might need to be some decision to inflate the currency by "printing more", effectively agreeing to modify the protocol to allow more bitcoins, i.e. one big nasty open source fork war that directly impacts people's bank accounts.
The Christian religion has been and still is the principal enemy of moral progress in the world. -- Bertrand Russell
http://techland.time.com/2011/04/16/online-cash-bitcoin-could-challenge-governments/
That article made a lot more sense to me and had significantly less amounts of fanaticism.
Do we really need penny resolution? Bitcoins are effectively limited to "dimes".
W..w..W - Willy Waterloo washes Warren Wiggins who is washing Waldo Woo.
When it comes to investigations the courts may or may not accept that an IP points to a unique individual, it generally tends to point to no more than a very small group of people (typically a single household), and thus can still be a very useful clue for discovering further evidence.
The Bitcoin proponents seem to think this is some really amazing idea that is like Cryptonomicron come to life and think everyone else should get on board. The rest of the world thinks bitcoins are retarded and doesn't use them.
To me this seems like just more hype, but trying to go at it from a scare part: "Oh these things are so amazing and dangerous that the government will ban them!" Trying to play on people's love for things forbidden.
Of course it is also rife with problems, one of the biggest being the whole deflation thing. Deflation is something that strangles an economy badly. People want to spend as little as possible, since you get more for the same money in the future, which of course means there is little spending and little spending means little trade which means the economy goes to shit.
Anyone who is in love the idea of deflation because "My money will be worth more," need to go retake ECON 201 and learn what money really is and why we have it.
Any current that has built in deflation is a really. really, bad idea.
Bitcoin is a P2P currency that could topple governments, destabilize economies and create uncontrollable global bazaars for contraband.
I don't want to rain on the guy's parade (or do I?), but governments don't combat "uncontrollable... bazaars for contraband" by eliminating the currency used in said bazaars, they do it by sending heavily-armed soldiers to break up the party.
Karma: Poor (Mostly affected by lame karma-joke sigs)
Nobody has really messed with that kind of thing since let's be real: Nobody gives a fuck about bitcoins (other than some wannabe-anarchist geeks). However the scenario you propose seems quite realistic. Perhaps not quite that simple, but I would bet determined people could find a way to duplicate these. Would they get noticed? Probably, but so long as they got what they wanted they are happy. If the anonymity feature of the system really works as promised then they can keep doing shit like this, just hiding under different identities and so on.
I'm curious how many bitcoins the author purchased before releasing the article. I'm going to watch the market at mtgox for the next few days. I suspect a new spike in its valuation to come from this fresh attention. Since bitcoin is a relatively new, fairly unstable currency, just a bit of media attention is enough to drive the purchase price up pretty quickly. A savvy investor would happily plant a sensationalized article, anticipating that their newly purchased coins will rise quickly, then sell before it dwindles again. A fairly safe way to play this market.
You would have to violate human rights to forbid to using it.
Loans?
I read TFA and all I got was this lousy cookie
People are saying it's untraceable because you can generate new public keys whenever you want. In this way, you can use a different key for each person/vendor you interact with, or you can use a new key for each transaction if so desired. Whether going to these extremes makes it completely untraceable or not, I cannot say, but it does make it a heck of a lot harder if you do go to such extremes.
Among other things, the article makes two claims about Bitcoin: one, that the coins are untraceable, and two, that because each transaction is cryptographically signed, you can verify the chain of ownership of any Bitcoins you are given.
Doesn't the second point contradict the first?
Why is it that every explanation of bit coin, including your attempt, is incoherent. Given it can't be explained I think it's a scam.
I have many questions in part because the basic schema is not clear. I've watched the videos and read the sites. But there just is no explanation that makes a whole coherent sum and there are contradictions when you piece the various explanations together.
1) On a torrent network, not every node knows where all the slices are. Not all nodes are in communication. Thus what happens if I sent 30 bit coins to Amy and then I sent the exact digital copy of those coins to Brad who is on a network remote from Amy. It sounds like Amy will query the local network to see if I own the coins and so will Brad. But because those queries never intersect on the same node both appear to be valid when in fact I just copied the money. Later on perhaps the system can't reconcile two people owning the same coins but by then I'm gone.
2) Suppose I send money to Alice. then a fraction of a second later Alice tries to send the same Money to Bob. How does Bob determine that Amy owns the coins? No node on BoB's network can validate my transfer to Alice.
3) the description has this trail of signed hashes being appended. Does this grow forever and can it be inverted to follow the money?
4) is each coin signed? or is it transactions?
5) if someone invents a way to make coins cheaply does this doom the system? What regulates the produciton rate? does this work if I have 1 million different user identities? if there is a central signing authority for this then what keeps this from getting cracked or printing their own money to flood the system?
6) what happens if botnets start mining?
how does this actually work, end to end, technically not operationally?
Some drink at the fountain of knowledge. Others just gargle.
Why should bitcoin be labelled as the most dangerous project ever, especially by someone as normally even-headed as Taco?
Here is a brief list of far more dangerous projects, where the danger is either to political stability or human life, in no particular order:
1. nuclear weaponry (two smallish bombs caused the unconditional surrender of a decent sized country, and has caused the rest of the world to spend trillions upon trillions of dollars to maintain parity since then)
2. biological weaponry (the appropriate dispersal of appropriate agents, like smallpox or Spanish Influenza, could decimate the world population)
3. chemical weaponry (the appropriate dispersal of appropriate agents could kill an entire city, and thus easily lead to the collapse of a government)
4. rockets (a basis for nearly all modern warfare)
5. inertial guidance systems (ditto)
6. GPS (ditto)
7. hydrocarbon-fueled turbine engines (ditto)
Notice a pattern there? They're all implements of warfare. Those are dangerous things. Those are things that kill people.
That said, I've read a number of pundits who are now suggesting that the large WikiLeaks document release ultimately triggered the pan-Arab unrest we are currently seeing. That's a heapload of powerful mojo.
Put my fist through my alarm clock with its ding-dong death inside my ear. - The Blackjacks.
While I don't believe BitCoin will ever be accepted widely enough to make this happen, there are dangers if it were universally accepted.
I will admit that this is an oversimplification, but in an economic collapse, either the value of the currency falls or wages fall. Austrian school economists don't see a problem with that, but as anybody who's ever bought a more than one tank of gas in the US can attest to: prices are SLOW to respond to the reduction in the price of the inputs. Wages could fall much faster than the prices of things like food... Eventually, there will be surplus goods, causing prices to fall, but that's going to take a while. People need to eat more often than that. The logical response by producers would be to produce less, thereby employing fewer people, leading to further reduction in wages. Lather, rinse, repeat.
On the other hand, if a government can devalue its currency in one fairly dramatic step, you create a situation where goods are temporarily cheap, causing people to consume more. Eventually, the prices of the inputs will go up, and the goods will become more scarce, but if you can borrow consumption from the future, you can head off the feedback loop. This has been used to good effect in the past.
If everybody were paid in BitCoins, devaluing a national currency would be ineffective at heading off a recession, leaving few tools in the toolbox.
Can we use BitConis on FarmVille. I understand many gaming sites also provide their own forms of currency how does that work? Does the congress allow that ?
Alt Currency is just that. It may work for some people in a non formal agreement of value, but otherwise it is worthless. Unless there is a convent way to transfer it, it will remain worthless. Just like casino coins from Vegas would have little more then curio value in Malindi, Kenya (unlike the US dollar or Euro which you can buy food or lodging with) (bonus tip- go to the last resort North of town past the bend in the road, about 2 km, there are bungalows on the beach and a pool if you don't want to swim in shark infested waters). If you can't buy food or gas with it at the corner station it's not money.
They come in the dark, only in the darkest.
A small and widely dispersed group of people in a population valuing something is enough to make it valuable. If enough geeks value it (will give wealth to get the currency) that's enough. Let me give you an example: you probably have little use for an unused transmission from a 1949 Jaguar XK120. Only a guy working with classic cars would want it.
But if you had such an item you wouldn't give it away would you? Even though you personally will never use it. You would find a car trading community and sell it. Just the knowledge that someone would probably buy it from you in a currency you can use is enough. Now how many classic car repairmen are there? Surely there are more geeks in the world.
As long as certain people want this currency it is valuable. It's becoming more, not less, widely desired and accepted and even if it continued to be a geek thing that would give it a stable value.
If video games influenced behavior the Pac Man generation would be eating pills and running away from their problems.
but for investigative purposes, guys knocking on your door, absolutely
they will ask you who was using that ip on such-and-such a date. if you have an open wifi, they will ask you nicely if they can bug your base and hang around and triangulate where the guy with the pringle can is. if you refuse, they will look at you with a new sort of interest
oh, you thought "ip!=person so nobody is going to investigate crimes anymore"?
intellectual property law is philosophically incoherent. it is your moral duty to ignore it or sabotage it
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Comment removed based on user account deletion
This is not to say that all Libertarians are ignorant, but that Bitcoin appeals to Libertarian ideals and requires ignorance of how money works to be sold. Bitcoin has no in-built velocity. Taxing authorities won't accept them and having a fixed amount of them means that they don't have a debt-based life-cycle as does the money most of us claim ownership to. Also, even if Bitcoin were to take off, as demand for it increased, it would create its own valuation bubble where it becomes more valuable to hold the money than it does to invest it. Nobody would be able to borrow in Bitcoins at a reasonable rate of interest, real demand drops, then speculators are left holding a bunch of worthless digital currency. If you think that Bitcoin is a good idea, you are likely in need of an education in economics and accounting and need to lay off of the conspiracy theories.
To return (sigh) to the case in point:
I fail to see why (or how) Bitcoin is any more reprehensible than any other kind of barter system. Our current taxation systems are primarily geared towards funding government wastage (at best) or blatant pork-barrelling (at worst).
An exchange system that directly benefits the individual parties concerned gets my stamp of approval. Our governments get to piss enough of our money against the wall as it is, and anything we can do to bypass that is just fine by me. The world is ready for anarchy.
Bitcoins might also be considered to NOT be currency, but a tangible asset such as a bar of gold or silver. In that case transactions involving bitcoins are actually barter. While US citizens are not allowed to own gold (or is this no longer true) except for gold coins and makers of jewelry, items made of gold could be owned and bartered. Airline mile credits are a similar tangible asset.
bitcoin is designed to have "diminishing returns" in terms of bitcoin generation. ie: the longer the project goes on, the fewer new bitcoins will be generated. This ignores that the longer the project goes on, especially if it is successful, the fewer bitcoins will usefully exist. ie: not just a counter that says how many bitcoins exist, but the number of bitcoins which are valid and usable, as opposed to being lost due to lost keys, etc.
-- 'The' Lord and Master Bitman On High, Master Of All
Bitcoin is designed to deflate when more currency is needed.
Tell me why i should use bitcoins instead of real gold. I find the idea of some currency that has an artificially imposed (vs reality imposed) limit to supply a tad... wrong. Why should we burn cpu power to generate bitcoins when that could be put to better use solving actual problems?
I run: Windows, OS X, Linux, FreeBSD. Just because you have a hammer, doesn't mean everything is a nail.
Reading TFA, it sounds like a Chris Morris satirical piece.
What's the executive summary? WoW gold that can be traded for real life hookers and blow?
If you were blocking sigs, you wouldn't have to read this.
http://en.wikipedia.org/wiki/Tulip_mania
I love Jesus, except for his foreign policy.
There are many people who would argue that we'd be better off going to half or even a tenth of that resolution (nickel or dime resolution, respectively). I think it might cause some issues when doing transactions that involve multiplying a unit price across many units, e.g., imagine a data connection priced in kB or MB, but you could always do the computation at some higher resolution and then round using a standard algorithm to nickels or dimes for payment. We already do that at the gas pump (where the price is calculated to the tenth of a cent but rounded to the nearest cent for payment) so it wouldn't be that much of a stretch.
Only argument against this tends to be that retailers would do shady things with the rounding if the amount became even remotely significant. You could probably fix that legislatively, though.
"Ladies and gentlemen, my killbot features Lotus Notes and a machine gun. It is the finest available."
As long as I don't have to bail anybody out when their pseudo-currency fails I couldn't care less what two parties choose to use as their medium of exchange. It could be bitcoins, de-circulated $1000 bills, precious metals, livestock or hand-carved wooden nickels. As long as they both see value to it, it doesn't (and hasn't thru all of history) matter.
There is a small problem that all those "dollars" aren't held in vaults until their owners retire, they're simply lent back out by the banks that hold them for people. In other words, you shouldn't hoard your bitcoins in your wallet, you should lend them to a bitcoin bank.
There is also the issue that speculative price spikes, like the current $7 one, retard their development as a practical currency, however high & long the speculators build the bubble, that's how far it must return and how long it'll take to do so.
The Christian religion has been and still is the principal enemy of moral progress in the world. -- Bertrand Russell
Wait... that's exactly what they did.
Deleted
That's a good deal. If he wanted your Serra Angels you'd have to get soda and an extra topping.
Agreed. Bitcoins is a real danger to the otherwise rational people who seem to be taking it seriously. To the rest of us, it's just vaguely amusing in an "awww, baby is smearing his poop on his face!" kind of way.
BitCoins are no good out here. I need something more real.
I read the article and felt like the author was full of doom and gloom but it seemed exciting to think that bitcoin is a way to hire prostitutes in Vegas. I'm buying my bitcoins now and losing my virginity as soon as the cyber-black market opens!!!!!
The transaction itself is not even traceable to an IP. If you visit a website and make a purchase and they give you a wallet ID to send money to, then they might have an IP that is tangentially related to the transaction.
However, if you publish a wallet ID in a newspaper or perhaps put up a billboard or communicate the wallet ID by some method that is untraceable, and someone decides to send money to that wallet ID, you will have no idea what IP, person, thing, etc... sent the funds and no way to get that information.
I was under the impression that the main reason why people hate physical pennies is the cost of minting vs. their value. Don't bitcoins not have a direct cost of minting? And rounding everything off to the nearest 10 just sounds onerous.
Unity? Screw that: XFCE. Slashdot Beta? Screw that: SoylentNews. Australis? Screw that: Pale Moon. UX developers DIAF
Your post says what bit-coins are only in terms of their attributes or *what* they do (e.g. "Binary search trees are ways of efficiently searching"). I think the GP was asking for what they are in terms of their essence or *how* they do (e.g. "Binary search trees are binary trees sorted by their in-order traversal").
After all, if the GP doesn't trust the "sensationalism", then how is he to trust the attributes you ascribe to bit-coins? Your post says what bit-coins do not how they do it. How is the GP to trust that they actually do what you say if he doesn't know how they do it?
I was under the impression that the main reason why people hate physical pennies is the cost of minting vs. their value.
I just think it's too small of a value to be worth my time. When I do my taxes, I round to the nearest dollar (and the IRS encourages this). I regularly dump pennies when I get them in the donation bin at whatever store I'm at, and I give them to my daughter to throw into the local pond/fountain.
And rounding everything off to the nearest 10 just sounds onerous.
Gasoline is often priced to three decimals and we round to the nearest hundredth all the time, so I don't see why the same couldn't be done with hundredths being rounded to the nearest tenth. 99% of the time the hundredth digit is a 9 anyway: 9.99, 12.49, etc.
W..w..W - Willy Waterloo washes Warren Wiggins who is washing Waldo Woo.
"A month ago I heard folks talking online about a virtual currency called bitcoin that is untraceable and un-hackable."
"A payee can verify the signatures to verify the chain of ownership."
If you can verify a chain of ownership then they are by definition traceable.
Is the author missing something? If so what?
I find being offended by me offensive.
I agree with the trust of your post. But if you are counting virtual currencies, you are off by over an order of magnitude. Synthetic treasuries (which generally cancel each other out) are probably around 5x that amount that amount by themselves.
Its peer to peer you can't change the rules ever. You can create a new currency with new rules.
Yeah, but through people choosing other currencies for their transactions.
The Christian religion has been and still is the principal enemy of moral progress in the world. -- Bertrand Russell
There is a small problem that all those "dollars" aren't held in vaults until their owners retire, they're simply lent back out by the banks that hold them for people. In other words, you shouldn't hoard your bitcoins in your wallet, you should lend them to a bitcoin bank.
Yeah, I agree. Money is best used as a convenient stand-in for barter, not as an investment itself. And definitely not something to stuff in the sofa.
There is also the issue that speculative price spikes, like the current $7 one, retard their development as a practical currency, however high & long the speculators build the bubble, that's how far it must return and how long it'll take to do so.
It's impossible to say whether it is a bubble or not, but it doesn't matter. I don't get paid in bitcoins, I get paid in dollars. If I encounter a paypal-like situation where they accept bitcoins, I'd just buy enough bitcoins for that transaction and then spend them immediately... as a young currency that's all it is good for. In the long term, it might grow and become more stable. If it ever gets nearly as big as they hope, only billionaires will actually own a whole bit coin. Most of us will be stuck with bitdust.
W..w..W - Willy Waterloo washes Warren Wiggins who is washing Waldo Woo.
This has been done before. See DigiCash, from 1990. "Clouds gather over Amsterdam as I ride into the city center after a day at the headquarters of DigiCash, a company whose mission is to change the world through the introduction of anonymous digital money technology. I have been inundated with talk of smart cards and automated toll takers and tamper-proof observer chips and virtual coinage for anonymous network ftps. I have made photocopies using a digital wallet and would have bought a soda from a DigiCash vending machine, but it was out of order. " - Wired, 1994. See the article for what went wrong.
The soundness of Bitcoin's crypto doesn't seem to have been analyzed by third parties yet. There's nothing in Cryptologia or sci.crypt. Until there's agreement in the crypto community that it's sound, I'd be suspicious. There's also the problem that if the money resides on user PCs and smartphones, the usual attacks on those devices can steal it. Once stolen and used, there's no way to get it back.
Transactions are not very anonymous. If you spend a coin with a server, the server now knows your public key, and can associate it with any other identity information it has for you ( IP address, Facebook login, shipping address, etc.) If Amazon, eBay, Google Checkout, or Facebook accepted bitcoins, they'd be able to collect this info for a sizable fraction of the online world. Since your public key remains associated with the coin for at least the next few transactions, it's possible to follow the money.
Systems like this detect duplicate spending of the same item, but you can't tell if someone has a duplicate but unspent copy of your coins. So you don't know your money been stolen until you try to spend it.
There's also the technical problem that "new transactions are broadcast to all nodes". That won't scale.
I expect that any government that is not technologically backward will end up wanting to try to break the system rather than prosecute against it. The likely hood of someone figuring out how to generate counterfit bitcoins will approach 1 as the potential profit for doing so increases. It will only take one person breaking the system for the entire system to be rendered useless.
Arresting people will cost money. But generating counterfit bitcoins is profitable in the short term and will acheive the longer term goal of getting rid of the system.
END COMMUNICATION
I'm no expert but all of the things you guys are talking about happen with real currency. The only reason a dollar bill has value is because everyone has agreed that it has value. If there was a zombiepocalypse tomorrow cash currency would become worthless next to things like shotguns or flamethrowers. Furthermore, currency's value IS adjusted to suit some agenda via the government set interest rates.
-Xoltri
But if you are counting virtual currencies, you are off by over an order of magnitude.
That's true, and it's hard to know exactly how much currency is out there.
But an interesting side-effect of bitcoin adoption is it would render the whole federal reserve system ineffective... as a finite resource there would be no way to just print money with no backing. It's basically like a return to a gold standard, ending planned inflation. I'm not sure that's progress, but I can see how it appeals to the keep-the-government-out-of-my-money crowd.
In any case, it's not clear that you need to factor in virtual currencies when relying on bitcoin, since those instruments would no longer be useful.
W..w..W - Willy Waterloo washes Warren Wiggins who is washing Waldo Woo.
Only to your banking monopoly.
Save a human life - kill a banker.
"Flyin' in just a sweet place,
Never been known to fail..."
cash, which can be transferred from person to person, is untraceable and unstoppable. each person transfers cash by means of physically moving their arms, holding the cash in their hand, and dropping into the hand of the next person.
The fascinating thing there is how Wizards "tricked itself" by misreading how certain cards form gamebreaker combos. So then they embarked on an elaborate "currency value adjustment" program, aka Type 2. (With all the spinoffs etc. In my areas "1.5" and "Legacy" and so on were never very popular.)
By being relegated to "Type 1" All those power cards were effectively cordoned off into a backwater, and lost most of their effective value. Then as the years rolled on, once cards left Type 2, they also dropped in value like a stone.
Well, except that this didn't happen. Yes, a number of cards definitely lost value once they fell out of Type 2 - but the price of the core type-1 power cards has never actually gone down, and in fact Legacy has meant that a number of secondary cards from that era have now skyrocketed. A white-border Black Lotus will set you back more than a thousand dollars; a black-border one you'd be lucky to find under two thousand. All the dual lands are north of $50 in white-border now and more than $200 in black border; half-blue duals are at least $5-600 each in black border. Some of the cards from the earlier sets (esp. Arabian Nights) have seen corrections, but that's more a matter of the market realigning itself around playability rather than just rarity - old out-of-print cards that see any tournament play at all (or even saw tournament play at one point) have skyrocketed (Karakas at $50-60, Sylvan Library at $25, etc.)
Keynes has a classic statement in general theory, which is like "the good, fast, cheap; pick any 2" meme about programming.
a) adjustability (the ability of the government to manipulate interest rates for the common good)
b) stability (the currency trades at a stable level relative to other currencies)
c) convertibility (you can move easily between this currency and other currencies)
Pick any 2.
Our system is designed for (a) and (c).
Bretton Woods was (a) and (b)
Gold standard (or bimetalism which is what the US actually had for most of its history) is (b) and (c)
In a (b) and (c) system the government's involvement is helpful. The real problem for the "keep-the-government-out-of-my-money crowd" is they hate adjustability.
Why? You certainly agree you could have bonds in bitcoin? If I can have short term bonds that means I can have money market instruments. I can price stocks. I can have derivatives on those stocks and bonds.
Let's just assume, for arguments sake, that all the technical claims are correct. It's untraceable, and verifiable. One can trust that a transaction involving bitcoins behaves like a transaction involving physical objects. The payer had the coins before the transaction, and didn't have them after, the receiver ends up with them and can spend them later. It's as if they are trading in atoms of unobtainium.
Governments will not need to outlaw bitcoin specifically, all they need to do is spread FUD. The existing financial establishment has such a vested interest in preserving the existing system that they will effectively prevent exchange between national currencies and bitcoin. This will involve FUD and freezing out any known bitcoin traders.
If you feel like you are doing business with crooks when you transact in bitcoin then you will not really be motivated to use it for anything but black market items. All I need to say is "Bitcoin is just used by perverts to buy child porn". It doesn't really have to be even close to accurate. It just has to smell plausible.
You know the traditional form of currency used by black markets around the world is US $100 bills.
This is not to say that all Libertarians are ignorant, but that Gold appeals to Libertarian ideals and requires ignorance of how money works to be sold. Gold has no in-built velocity. Taxing authorities won't accept it and having a fixed amount of Gold atoms in the universe means that it doesn't have a debt-based life-cycle as does the money most of us claim ownership to. Also, even if Gold were to take off, as demand for it increased, it would create its own valuation bubble where it becomes more valuable to hold it than it does to invest it. Nobody would be able to borrow in Gold at a reasonable rate of interest, real demand drops, then speculators are left holding a bunch of worthless metal. If you think that Gold is a good idea, you are likely in need of an education in economics and accounting and need to lay off of the conspiracy theories.
This is why the Great Old Ones' seem so godlike to us.
They didn't have a sufficiently long history of stellar nucleosynthesis, and without elements as heavy as gold, they never had currency. Hydrogen wasn't up to the task. It would take billions of years and many generations of supernovas, but Cthulhu and his like had no time to lose and had to get on with their liv-- existence.
Without currency, sophisticated economic systems couldn't develop, which in turn kept leisure time down and inhibited technological development (though that was also retarded by the mineral scarcity). There was nothing to do, but turn to what we can only think of as "magic." Magic -- the other way of doing things -- the thing that people who live in a later universe where heavy elements exist on planets, cannot possibly comprehend.
What beings walk the sky in a universe where wealth is measured, not by the long-awaited output of gravitationally-compressed fusion reactors, but the output of mathematical processes like what BitCoin uses? Not gods, surely. With their immense but illusory "wealth" they never have occasion to draw upon real power, the power that sustains you through unimaginable scarcity. It's not just the billions of years of experience that makes one a badass motherfucker; it's the fact that you were the one of the few who survived those early eons of the universe's overwhelming poverty. When Cthulhu talks about the "Iron Age", he's referring to when the first atoms of iron were created.
As copyright owner of this comment, I authorize everyone to defeat any technological measure which limits access to it.
Let's pretend there will, be. Whoops, the whole notion of stability because of limited supply just went out of the window as people are transferring half of their assets to bitgold.
Analogies don't equal equalities, they are merely somewhat analogous.
Well, that assumes people actually upgrade their clients (likely, despite claims to the opposite the developers effectively are a central authority, most people will blindly upgrade) instead of forking and finding ways to profit from only being able to transfer significant quantities. So instead of using bitcoin directly, you'd entrust it to one of the major holders who would deal with mass transfers with other holders and so on. A banking system if you will.
Analogies don't equal equalities, they are merely somewhat analogous.
That was kind of my point :)
Bitcoin does not need to have enough coinage for the entire world economy because it will never be the only currency.
W..w..W - Willy Waterloo washes Warren Wiggins who is washing Waldo Woo.
You might as well just let it expand indefinitely at that point, either way the "limited" selling point has gone down the drain.
Analogies don't equal equalities, they are merely somewhat analogous.
Bitcoins are virtual coins in the form of a file that is stored on your device. These coins can be sent to and from users three ways:
1. Direct with peer-to-peer software downloaded at bitcoin.org
2. Via an escrow service like ClearCoin
3. Via a bitcoin currency exchange
Each owner transfers the coin to the next by digitally signing a hash of the previous transaction and the public key of the next owner and adding these to the end of the coin. A payee can verify the signatures to verify the chain of ownership.
The benefits of a currency like this:
a) Your coins can’t be frozen (like a Paypal account can be)
b) Your coins can’t be tracked
c) Your coins can’t be taxed
d) Transaction costs are extremely low (sorry credit card companies)
Just a few reactions:
a) Not only can your coin be frozen, but any coin you transferred can also be frozen by identification of your signature - there may be a "cash economy" where bitcoin is exchanged without oversight among iPods, etc., but when it hits a regulated transaction processor, it's even worse than putting cash in the bank.
b) I'm sorry, if your signature can't be tracked, what good is it?
c) The author sorely underestimates taxing authorities, at a minimum, the government can demand that you self report transactions, much as they do for cash and similar instruments today.
d) Credit card companies' transaction costs are also extremely low...
You're right about replacement costs. However I was trying to address the idea that overall the number of "Type 1" tourneys being held dropped dramatically, so that at least as I recall the mood in my areas for several years, their broad play value evolved into something like a museum piece on a pedestal. Perhaps the concept I was trying for was something like a liquidity problem.
My first Journal Entry ever, in 8 years! http://slashdot.org/journal/365947/aphelion-scifi-fantasy-horror-poetry-webzine
Geeks are smart but they lack understanding of the behaviour of common people and of developing user interfaces that are useable to common people. I call this the Linux effect.
Yeah, I can't imagine a time when ordinary people have Linux machines in their living rooms, or on their mobile phones...
There's an experimental Android client for Bitcoin. There's no reason why the user experience needs to be difficult. The bigger barriers to Bitcoin adoption are that the benefits are difficult to explain, and address concerns that most people don't have an issue with (including myself, I must admit).
Well of course this system if it explodes is primarily going to be of interest to grey market, black market and criminal activities.
I kind of dispute that the gold standard led to (b). There were wild price fluctuations of commodities even under the gold standard. If you are talking long-term, then (b) is true... there is virtually no long-term inflation or deflation. But in the short-term, there were definitely problems with stability, just as gold is not stable right now.
Why? You certainly agree you could have bonds in bitcoin? If I can have short term bonds that means I can have money market instruments. I can price stocks. I can have derivatives on those stocks and bonds.
You certainly can have bonds... but you can no longer just create new currency. Things like "quantitative easing" or just flat out "printing money" become impossible if bitcoin were the base currency.
Let me take a step back a moment and just say that I didn't mean to propose this as realistic - I was just defending the number of bitcoins as being sufficient. I cannot fathom a scenario in which bitcoin is the only currency used in commerce - but if that did somehow happen, money markets would be impossible :)
W..w..W - Willy Waterloo washes Warren Wiggins who is washing Waldo Woo.
Wow, I don't understand the hate here for Bitcoin. It is a very clever idea that is trying new ideas out
If it's worthless except as a ponzi scheme it deserves hate.
"You're right," Fisheye says. "I should have set it on 'whip' or 'chop.'"
You might as well just let it expand indefinitely at that point, either way the "limited" selling point has gone down the drain.
I don't think anyone who has put more than 10 minutes of thought into it really thinks that it will become a single currency for the whole world. It's a lot more limited than dollars, gold, or seashells. :)
I suspect that if it succeeds, it will be just another currency that gets used for specific things. It could be really nice for international payments, and nice for payments of things that have been restricted by governments (like online gambling). It could also eventually become the long-fabled micro-payment service that we all have always wanted.
W..w..W - Willy Waterloo washes Warren Wiggins who is washing Waldo Woo.
Whether or not they are legal, there do exist places that exchange in-game currency for $US (as well as other currencies).
If Bit-coin is to be outlawed, all it-game currency should be outlawed as well. The Bit-Coin game is boring -- focusing solely on the generation and transactions of bit-coins, but it is essentially the same as any modern MMO game with transferable in-game currency.
Interestingly enough, Bit-coin makes an excellent in-game currency if you don't mind giving up control over the value of the in-game goods, and require players to purchase their starting in-game currency allotment (otherwise you're giving away free bit-coins).
Or, you can turn the whole in-game currency thing on it's ear and just make a free to play MMO with a game client that doubles as a your own personal distributed Bit-Coin mining operation.
I suppose players could subvert your network protocol and claim the bit-coins that their machines generate, but as long as most people don't do this the idea could be "profitable" (providing you can exchange bit-coin for more than enough than the currency required to run the servers that power the game).
> a debt-based life-cycle ... as opposed to previous "intrinsic value"-based life-cycle monetary systems? How do barter systems that use tokens of value fit into your theories?
How do you differentiate the inflation of a "debt-based currency", either paper inflation or hard-asset inflation, from the inflation of the entirely speculated value of bitcoin valuation? How is a bitcoin bubble different from a housing bubble?
Not trolling for reaction here. You profess an education in economics and accounting, so I'm 'trolling' for answers, if I can get them.
I'm kind of surprised that nobody has yet created a botnet to mine bitcoins.
it's a honeypot. if i were the government i'd run silent, and deep, and allow bitcoin to prosper. there are more interesting and useful ways to track people using bitcoin than knowing exact transactions. just allow usage of bitcoin to be your red flag for investigating someone. 90% will be innocuous or low-level idiots, but its useful data nonetheless. then just pick off the more interesting major shitflies that bitcoin attracts. the golden goose that keeps on giving: it's untraceable says the advertising. tap, tap, tap, says the government. why kill the golden goose?
intellectual property law is philosophically incoherent. it is your moral duty to ignore it or sabotage it
Slashdot editors: I submitted this EXACT article last night, and it was labelled SPAM by one of you. Why?
1. Coin ownership is determined by possession of the private key for that bitcoin address. If you don't have that private key, you can't sign a transaction using those coins, and thus can't spend them.
2. Because when you transfer coins, you announce that to everyone you are connected to, and they send it on to everyone they are connected to, etc. If you send out two transactions involving the same coins, everyone will be able to see that (you can determine the value held by each address by tracing through the blockchain and adding up all the transactions involving that address) and know there are no longer any bitcoins at that/those address(es). One of the transactions will go through (the first transaction to be received by the majority of the network. Which one that is depends on network latency, etc.), and the other ones will be rejected as the inputs (the addresses coins are being removed from) will be invalid (they won't contain the amount of coins you say they do).
3. Your wallet doesn't contain coins. It contains the public-private keypairs for each address you own, each of which has some amount of currency associated with it. You can think of it like a bunch of keys to safe deposit boxes, each of which contains some amount of currency. You spend that currency by giving the key(s) to that box(es) to someone else and thus transferring the currency within to a box owned by them. If the amount in the box(es) isn't equal to the amount you wanted to send, you will get a new box and the key for it that contains the remainder. Duplicating the keys would not duplicate the box itself.
upon the advice of my lawyer, i have no sig at this time
The difference is that the full faith and credit of the US government probably carries a bit more weight than the full faith and credit of an anonymous internet startup
http://www.treasury.gov/connect/blog/Documents/20110516Letter%20to%20Congress.pdf
Hope This Helps.
Deleted
Wait a minute... The article mentions that if your hardware crashes and you have not "backed up" your bitcoins, then you are SOL and they are gone for good. Sooo if you can actually "backup" or in some way clone your bitcoins, what is stopping you from making infinite copies? As long as one buyer never gets two of the same copy, how will they know the money is counterfeit? Being peer-to-peer there is no centralized server to check dupes against (I assume here).
Did I miss something?
You are trying to rules-lawyer a community. There is only one rule, piss us off and we will fuck with you. Switch nicks if you want. Do whatever the fuck you like, but don't expect that you will gain acceptance, respect, or even tolerance. You seem to think that tolerance, acceptance and respect are your birthright, that your own choices and actions should not influence how others see you. This is not the case.
Why do you complain? Who are you whining to? Who do you think is going to swoop in and say, "Hey! Be nice to cpu6502!"? Do you believe that the community simply does not have all the facts, and if we understood your side of the story, we would all love you?
Some people figure out social interaction by watching others and learning. Others figure it out the hard way, by making mistakes, pissing people off, and then learning what not to do. Other people never learn from their mistakes and continue acting in an anti-social manner. It may not seem fair that people will judge you like this, a group imposing its will on an individual, but the alternative is the individual imposing his will on the group, and that is even less acceptable.
We do not have to like you. We are not required to respect you. We don't even have to tolerate you. If you want to be accepted here, then you must earn it through your actions. Despite what Saturday morning television might have told you, you are not the most important person in the whole wide world. You are not unique. You are not special. You are just one of nearly seven billion human beings with an opinion and a big loud mouth.
If you find yourself in a situation where you are not accepted or tolerated by a group, there is a good chance that the problem is with you, not the group.
- None can love freedom heartily, but good men; the rest love not freedom, but license. -- John Milton
Obvious problems:
1) Can you say deflation? That's bad, and it's built into a system that has a fixed number of units (that also experiences breakage.) Since the number of units in circulation does not rise with the size of the economy utilizing them, the price of anything bought with it MUST drop over time. This discourages their actual use. Economists do not universally refer to "deflationary spirals" with horror because they are all equally brainwashed.
2) They want to replace credit cards, but the supply is limited to 21M over the next 130 years? That's like an economy where the only transaction unit is shares of Berkshire Hathaway. And people think a $5 minimum credit card purchase is a gross violation of civil rights...
This is broken in so many ways, I don't think the governments of the world are exactly quaking in their shoes and/or writing laws to stop this.
Holy shit. I should open the suitcase I have in my garage then and see if any of it's worth anything. :D
We've already gone over the fact that this guy was a simple scammer trying to defraud people by passing off fake legal tender and then undervaluing the amount of silver in it. Repeating the same falsehoods when everyone already knows the truth may work in your local John Birch group, but most of us here are sane.
Libertarians know how currency works. You're just ignorant of how currency should work.
"I assumed blithely that there were no elves out there in the darkness"
What is a money's "velocity"? And how would it be built in?
My taxing authorities also won't accept Euros. There is an exchange rate between dollars and bitcoins.
I also don't know what a "debt-based life-cycle" is.
Also, even if Bitcoin were to take off, as demand for it increased, it would create its own valuation bubble where it becomes more valuable to hold the money than it does to invest it.
If it takes off, I imagine more people would mine for coins, but yeah, deflation is an issue.
real demand drops, then speculators are left holding a bunch of worthless digital currency.
Yeah, inflation is also a bitch.
I'm not going to lie, economics seems like voodoo to me. I can barely grasp the basics and anything I say on the subject is guesswork and conjecture. But then again, nobody understand the economy, and guesswork is as good as it gets. Anyone saying otherwise is either lying to you or lying to himself.
As a Libertarian, I would disagree with your argument. :) The Fed and Bernanke and your "debt-based life-cycle" manipulate interest rates in order to incentivize companies to spend now instead of saving. This has always seemed to be short-sighted. If the company thinks it best to save, it is probably best for them to save. I tend to believe their analysis of their own financial situation. The Fed, however, thinks that saving is bad and uses inflation to force them to spend earlier than they would have. They think this "keeps the economy going". I think it is more likely to be a wasteful short-term stimulus to the economy. The economy isn't just a chart that we need to keep high, it's a collection of a million million personal/corporate decisions, and forcing those decisions to be less optimal for the individuals in ways that may stimulate the chart does NOT necessarily improve the reality.
21 million, but divisible down to 10^-8 parts. So, consider it 2.1 quadrillion over 130 years; not quite so illiquid as BRKA. Agreed about the built-in deflation, though.
HSJ$$*&#^!#+++ATH0
NO CARRIER
Sounds like the current US housing market.
In the end, it's about acquiring wealth and the tried and true scams will always work on any monetary system.
In the case of a zombiepocalypse, if the zombies are at your house and you have two vehicles to escape in and one has 1,000,000 tons of gold in the back and the other a shotgun and 100 shells sitting in the passenger seat, which would you take?
The million-ton-payload vehicle would be one hell of a ride, easily capable of rolling through barricades, zombie hordes, even buildings untouched. It would probably be pretty fast without that cargo, too!
Socialism: a lie told by totalitarians and believed by fools.
I was going to object that there are limits to the amount of cash you can conveniently use ($10k transaction limits before attracting attention, etc)... but then again, BitCoin has similar problems (scarcity, lack of secure options for storage, etc). Really, what is the advantage of BitCoin over plain old cash?
Be reasonable: there's no reason someone couldn't be all three.
The rules can certainly change if the majority of the network agrees to it. It happens occasionally when the software is updated significantly.
For example, a rule that recently existed was no transactions smaller than 0.01BTC were allowed (This was to prevent annoying people from spamming the network with tons of tiny transactions and disrupting things). Miners wouldn't process them into a block and thus the transaction wouldn't go through. That was removed in the most recent version and now that most of the network has updated, you can now do transactions as small as 0.00000001 BTC (Theoretically anyway. Tiny transactions (0.01BTC) incur a 0.01 BTC fee, which is likely to be reduced/removed in the near future, probably next version, as 0.01BTC is about $0.08 and a bit too large a base unit for most people, barring those who are used to Swedish rounding).
If a change was controversial and only part of the network upgraded, then yes, that would result in a currency fork.
upon the advice of my lawyer, i have no sig at this time
Your thesis is that Bitcoin values will go up too much, which will mean that Bitcoin values will go down too much.
You've *almost* made it to a proof-by-contradiction; the only remaining step is to actually notice the contradiction...
I don't think you should view BitCoins as a replacement for "real" currencies just yet as the article implies. You should see it as investing in gold (but safer since we know exactly how many bitcoins there are). Being able to send money anonymously is it's core value.
Thanks for browsing at -1
Please vistit my blog: www.framtiden.nu
This is broken in so many ways, I don't think the governments of the world are exactly quaking in their shoes and/or writing laws to stop this.
I hope not, at least until it gets wide acceptance.
As synaptik has said in another reply, illiquidity is a RTFM issue. :-) No offense... When you hear "Bitcoin", you directly imagine individual cryptographic coins being circled around. It took me a while to get that there actually are no actual coins and what is being recorded is only transactions. There are many brilliant people using/developing on this, so it can't be *that* problematic at least...
I agree that deflation discourages actual use. I find bitcoin extremely useful, and use it almost daily, but my number of transactions severely decreased with the latest surge of value. On the other hand, it's more useful than any kind of money I use, so I don't think I will have a problem spending it once the prices are more stable, even with deflation. At best, it could make me more provident. :-)
How is a bitcoin bubble different from a housing bubble?
It isn't, and that's the problem. Bitcoins are intrinsicly prone to these kind of bubbles (isn't TFA saying the value's gone up by a factor of 4 in a short time?) because they're deflationary rather than inflationary so speculators will hoard them, and that's not conducive to their being actually useful as a currency. Imagine if selling anything (i.e. "buying money") became as difficult as buying a house was in 2007; that's going to happen periodically with bitcoins, which makes it harder to run a business on them.
I am trolling
Being minted under "the authorization of the U.S. Mint" does not make them legal tender! The mint simply gave them permission to make commorative coins that look like antique legal tender.
Citation needed.
Seriously... just about anything you say, "Jane Q. Public", needs to be followed with a citation from now on. Since you obviously don't know what the hell you're talking about most of the time, and you follow people around trolling them.
No actually... I'LL provide the citation, since I know for a fact that you're wrong. Fuck you and your shit. Here. Straight from the U.S. Mint itself. Bullion coins from the U.S. Mint IS LEGAL TENDER.
http://www.usmint.gov/downloads/mint_programs/am_eagles/AmerEagleGold.pdf
Page 2, under "Easy to buy and sell":
American Eagle Gold Bullion Coins, with their unique U.S. government backing, may be sold for cash at many coin and precious metals dealers worldwide. They are also legal tender.
First of all I have to admit up front I haven't fully studied it. But I think I get the idea. You create a virtual resource by computation and trade in it.
Slight problem is that it doesn't have a natural value/use unlike precious metals. Second there is the possibility of a mathematics breakthrough. A quantum computer would crash the economy only to have it restart with a different algorithm. So it only works best as an intermediate transactional denomination and the place to catch people is when they try to convert it which they will.
What about fractional coins? It doesn't seem like it would scale correctly if it actually caught on.
Last I can see market fragmentation of Bitcoin though clones with slightly different rules and methodologies.
I don't want to think about the electrical energy being burned in computation to generate these virtual coins...
Good enough for gambling though.
Question: As I understand it, a bitcoin represents some fraction of global processing power. What happens, if bitcoins become widely accepted, and someone develops new hardware/software ? Won;t they make a killing ?
Back in the what will we do with spam days, there use to be this very funny post, which went something like
Your proposal for spam prevention won't work because (check all that apply)
(a) costs to much (b) relies on users to know something
etc
where is that list when you need it ?
But transactions at stores should be rounded by law. The time it takes to count change is very relevant. Items should still be priced to the penny but it's only the final bill that should be rounded and only if your paying cash. Stores should be required to accept pennies, but stop giving them out.
The Bitcoin author can't control anything. While he could create a rogue transaction (as could anyone) it would have to check out by other users before it'd be accepted in the block, and a bad transaction in a block would mean nobody would accept that block and build upon it.
Examples are payments from nowhere, from accounts without adequate balance, accounts you don't have the signing key for, etc.
I understand this is a hypothetical. If you agree you can have bonds then why is it impossible to pool bonds together and offer a very short term bond fund that maintains a constant share price via. payouts, i.e. a money market?
As for (b) you are misunderstanding stability. Gold based currencies are stable relative to one another not stable in terms of good prices. Stability in terms of goods is (a) not (b).
Good point. The majority of the network can vote. My point was no central point can change the rules.
Thanks for the clarification.
W..w..W - Willy Waterloo washes Warren Wiggins who is washing Waldo Woo.
If you agree you can have bonds then why is it impossible to pool bonds together and offer a very short term bond fund that maintains a constant share price via. payouts, i.e. a money market?
Because my brain wasn't working and I translated it to "currency markets" instead of "money markets". :)
You would obviously still have capital markets and all kinds of leverage.
W..w..W - Willy Waterloo washes Warren Wiggins who is washing Waldo Woo.
Economics is about the seen and unseen. If relative price starts to decrease it becomes more valuable to use than to keep holding onto. It's an equilibration, not a landslide. And it's not velocity that's important, it's the volume of trade. Bitcoin could work with a 10% velocity. Bitcoin is perfectly countable and all standard accounting procedures may used with it. ( I don't get why you think accounting disproves the idea of bitcoin) Also sense authorities, especially taxing authorities don't track or use bitcoin, there is an incentive to spend rather than hold. Sense no other currency offters this. it may be that for a while on the the largest value of bit coin is it just being bit-coin, but this bauble is only enticing if you ever plan to actually trade with them. And yes Bitcoin won't be a good environment to offer credit in until it stabilizes, but so what? Nobody is going to be using bit coin exclusively until it is used extensively (and it's much more likely to be a stable market at that point). There is no reason why you couldn't get credit in USD, and invest it into capital in order to make bit-coin. In fact doing so, during the initial expansion phase of bit coin is likely to give you higher returns than receipts in USD, because anything you make above what you needed to make the payment would make more interest keeping it in your pocket than what you are losing by not adding it to your bank payment. In fact this high interest you complain about is a signal that investment into production for that market is disparately desired.
How am I to ever understand what bitcoin is without the car analogies ???
Gotcha. Though I'm thinking that moving away from the hypothetical what's likely to happen with these e-currencies is that start trading at fractions to one another. The situation starts looking a lot like mid 19th century USA where the Atlanta dollar traded for $.97 in New York dollars.
If there was a zombiepocalypse tomorrow cash currency would become worthless next to things like shotguns or flamethrowers.
False. Cash dollars are an easily transferable scarce resource. Your shotgun guy would accept it as payment for a shotgun, trade it for gasoline with some guy who would trade it for tinned beans with some guy who would trade it for sexual services from your mom who would trade it for protection from you and your shotgun. Scarcity (and confidince in scarcity) is sufficient for tradeability, and tradeability is value.
Velocity is just how often a currency is exchanged. This is an indirect measure of the value of goods and services produced by an economy. Those who trade more often tend to be more highly specialized, and thus produce higher value products. But this is not necessarily always true, so there are caveats. Specialization and trading more often also creates risk, which is bad. Velocity can be built in by confiscating money via force (taxes) and then re-distributing it. Some delusional retards think this is a good thing for some reason.
"I assumed blithely that there were no elves out there in the darkness"
...but governments don't combat "uncontrollable... bazaars for contraband" by eliminating the currency used in said bazaars, they do it by sending heavily-armed soldiers to break up the party.
We are talking about situations where the party is not necessarily gathered in one specific place, at one specific time. Delivery of goods and services will, of course, be vulnerable - but bitcoin transfers will do away with the very real "problem" of the money trace (with regards to both the investigation and litigation). A lot of things can be bought and sold entirely online, and bitcoin does change the game.
But no, it does not make any contraband bazaar "uncontrollable", or impervious to government interference, as the article suggests.
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It would make sense that they would stay proportional to one another if they all have finite quantity.
You could probably drive the bitcoin guys nuts by creating another currency with built-in inflation :)
W..w..W - Willy Waterloo washes Warren Wiggins who is washing Waldo Woo.
Goods and services have to be delivered at some point. Unless you can fit AK-47 rifles through your series of tubes, that is. Or, maybe what we're talking about here is the next version of the RepRap that will print out cocaine?
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And this is just becoming obvious to you?
This is an interesting point that people have raised, even if you are too stupid to see it.
And this WILL escalate over time
If Google really cared they would fix Android Chrome to reflow text, instead of discriminating
Oh no, they would be very volatile based on demand relative to one another if there were strong markets that allowed you to move back and fourth. If there aren't such markets they might be stable. The Atlanta / NY situation was a risk premium issue, why high risk bonds have higher interest rates than low risk bonds.
Oh no, they would be very volatile based on demand relative to one another
Don't you think that they'd behave differently relative to one another compared to traditional currencies? Why would demand vary so much? With normal currencies it is because they are tied to national economies, but if these e-currencies become widely used in the world, they wouldn't be tied to any specific economy.
W..w..W - Willy Waterloo washes Warren Wiggins who is washing Waldo Woo.
Who cares about this? Bitcoin is crap, and right-wing "libertarians" just want to find some new scheme to destroy the republics they embrace only as long as they give bosses and landlords the kind of power they had during Monarchy, and if they don't get it they do everything they can to undermine and destroy the republics. They are a bunch of crooks and exploiters.
Yes they would be tied to an economy just not an economy which is itself tied to an army.
Say for example
currency X allows you to buy goods A,B,C,D and sell E and F
currency Y allows you to buy goods C,E,G,H and sell A and D
In X there is a A::D, A::E, C::D, C::E ratio (among others)
In Y there is a A::D, A::E, C::E, E:: ratio (among others)
If I want to acquire C and have E then I can:
a) Sell E to get X, spend X to get C
b) Sell E to get X, exchange X for Y, use Y to get C
c) Sell E to get X, spend X to get A, sell A to get Y, and spend Y to get C
paths (a) (b) and (c) have to all be roughly equal otherwise people will make money arbitraging goods between currencies.
This is what is called Purchasing Power Parity in terms of real currencies and it would equally apply to artificial currencies.
I guess I was thinking that the use of all e-currencies would be so similarly diversified that they wouldn't be too volatile compared to one another, but you got me thinking that if one big player - say OPEC - decided to use currency Y, then currency Y would move relative to X whenever demand for oil changed.
W..w..W - Willy Waterloo washes Warren Wiggins who is washing Waldo Woo.
As I understand the system, every transaction gets validated by other machines. The computational cost of this validation is compensated by the award of bitcoins. This means that every time a transaction occurs a miner can profit. Hence a bot net miner is constantly able to make money. The more transactions the more profit.
Next following what I understand to be the logic here. If it appears that the validation is too easy then the price of computation will be increased. This will mean that eventually only miners with the lowest overhead costs -- the bot nets-- will be in the business of validation.
I guess one could look at this and say, "well good, now those tards that click on trojans will be performing a public service and paying for their indilligence". Everyone wins in a way. The tards get to be slothful at a price. the rest of us get our transactions validated. And the botnets are busy doing something actually useful to society.
But another way to look at this is that if you leave out food for rats you get more rats not just occupying the same number of rats. With profit to be made we will get more people in the trojan business.
Some drink at the fountain of knowledge. Others just gargle.
Where is the Bitcoin federal reserve? without that you can have infinite inflation overnight.
I create a bank that pays 5% interest on deposits.
1) player A1 deposits M0 bitcoins in my bank.
2) Player A2 borrows Mo bitcoins from my bank
3) player A2 pays M0 to player A3 for some service
4) Player A3 decides to deposit M0 in my bank
5) the bank now has 2*M0 deposits, and M0 is loaned out.
6) The bank now loans out M0 to A4
7) A4 pays A5 who then deposits M0 back in the bank
8) the bank now has 3*M0 deposits and 2*M0 is loaned out.
repeat forever:
even though there was only M0 bitcoins minted, the money supply has expanded to K*M0 where K is arbitratrily large.
THe federal reserve was set up to prevent this infinite expansion of money.
Who is the federal reserve for the distributed bitcoin system?
Some drink at the fountain of knowledge. Others just gargle.