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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
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 still have no clue what this 'bitcons' are. Can anyone give an explanation not stepped in sensationalism?
Simply put, it's a form of digital cash. Its main advantage is that it's a peer-to-peer thing, so there's no central authority (aka PayPal or Visa) to shut it down, or to block payments from anyone to anyone for political purposes. For instance, there's no way to prevent someone from donating to Wikileaks if they want to. Like cash, there are no chargebacks, which is either an advantage or disadvantage depending on your point of view. The cryptology makes it rather secure and prevents people from issuing a double-spend, or "writing a bad check" so to speak.
There are a few other aspects, such as low transaction fees and its status as a deflationary currency, and backing up the wallet file because suddenly you are your own bank and are in charge of your own security, but you don't need to know much about that unless you're interested in learning more.
At the moment, it's more of an experiment or proof-of-concept, though it's rapidly expanding beyond that. It's a currency in that it has value because people believe it to have value and are willing to exchange it for goods and services. The market is somewhat shallow at the moment, but it's growing all the time. An interesting project to watch, at the very least.
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
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)
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.
"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.
http://en.wikipedia.org/wiki/Tulip_mania
I love Jesus, except for his foreign policy.
Bartering is still taxed the same as income in every state I know of, and still counts as income for federal income tax purposes. E.g., if you give me a sheep for fixing your PC, I just had a taxable event at the prevailing market rate for one sheep. This is true whether it's goods or services that are exchanged. It does allow for some wiggle room in your valuation perhaps, but everything's negotiable anyway, so there's not much advantage over bartering. OTOH, it may be a bit easier to get your money back than to get your sheep back when you find out that the grain I exchanged was spoiled. Additionally, being left with a pot full of BitCoins when the music stops is like having a jug full of babysitter tokens -- absolutely worthless if nobody else wants them. The same is true of any fiat currency of course, or even backed currency if the underlying asset becomes worthless. 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. For now, anyway.
https://www.eff.org/https-everywhere
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.
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.