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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.
"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.
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.
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.
I believe they mean it is peer-to-peer, so there is no middleman, unlike something like PayPal where PayPal is the middleman, so it can't be traced unless you are there. In addition, if it doesn't save the "from" source after the transaction, there is no way to tell where the money came from.
Seems like it would make money laundering and tax evasion easy. Of course, there is an easy way to fix that as far as drugs go - make all drugs legal and tax them, then spend the money that went into enforcement on education (like Portugal did).
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?
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
Yeah. Buy high and sell low. That'll get 'em.
Fun with Anagarams! LADS HOST, SHALT DOS. HAS DOLTS. AD SLOTHS, HATS SOLD. ASS HO, LTD.
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)
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.
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.
Comment removed based on user account deletion
"It is a pretty clear cut case."
Please explain the fake money at Chuck E Cheese and other places that have arcade games, then. It's intended for use as current money (geared to be accepted by CURRENT coin collecting and vending machines, it also weigh the same and is similarly-sized to our currency, for the purpose of compatibility with current machines.)
Still waiting on Serviscope_minor to wake up to fucking reality and realize that Jessica Price isn't going to fuck him.
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.
I'll explain it. No adult in his right mind would set foot in a Chuck E. Cheese unless he was taking a kid there, and Secret Service agents are prohibited from having children with them while on duty. Trust me, Chuck E. Cheese is safe to do what it wants.
quiquid id est, timeo puellas et oscula dantes.
http://en.wikipedia.org/wiki/Tulip_mania
I love Jesus, except for his foreign policy.
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.
You seem to forget the fact that Bitcoins are divisible to at least 8 decimal places. So even if there is only 1 bit coin in the world, it could be divided among millions of addresses.
Even if 1 BTC = 10,000 USD, I could buy something for .00001 BTC.
The only way to make it unstable would be to buy and sell large amounts of bitcoins, likely to an extent that governments own MOST bitcoins. I suspect such attempts would fail, and would in practice only give bitcoin more legitimacy
This is my signature. There are many like it, but this one is mine.
Wait... that's exactly what they did.
Deleted
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!!!!!
As I understand it -- and it's only a vague understanding -- the creation of bitcoins is a side-effect of administering the bitcoin transaction chain. So those systems are indeed doing useful work.
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.
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.
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.'"
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
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.
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.
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).