Slashdot Mirror
Ask Amir Taaki About Bitcoin
"Bitcoin," says the project's website, "is a peer-to-peer currency. Peer-to-peer means that no central authority issues new money or tracks transactions." Wikipedia offers a readable explanation of the underlying technology. In (very) short, Bitcoin uses a distributed database and public key encryption to allow users to reassign ownership of units of Bitcoin currency (BTC), and does so in a way that can keep the user's identity private. Bitcoin isn't yet accepted the way credit cards are, but it's more than theoretical. You can buy (some) things with Bitcoin, and trade the currency itself.
Now, you can ask question about Bitcoin of Amir Taaki, a developer of client interfaces and stock trading software for Bitcoin, and owner and operator of trading exchange Britcoin.co.uk. Amir requests that questions focus not "so much on the mining (too many people get focused on that
when it's a minor aspect of Bitcoin) nor simple technical questions (people can
go find that info themselves on Wikipedia/the forums/sourcecode)," but rather on the harder-to-answer questions. Reading some of the related stories listed below may give you ideas on what those are. Standard Slashdot Interview rules apply: ask as many questions as you want, but please keep them to one per comment. Amir will get back with his answers.
There's one interesting thing about Bitcoin that I think most geeks haven't either understood or havent thinked about. Both stock and forex markets are secured against all kinds of foul play. Doing a pump and dump scheme or various other schemes isn't easy. With Forex the sheer amount of transactions and money changing hands makes it impossible and the law protects against such schemes with stocks. If stock markets flunctuate much they also close down automatically. Bitcoin doesn't offer any protection against this. Anyone with the know-how and cash can come in to play with the market. This makes Bitcoin seriously vulnerable to losing huge amounts of money. Last friday we saw probably the first such scheme taking place. Someone slowly build up the value of Bitcoin and on an instant cashed out lots of money. That lowered the overall value of Bitcoin significantly, which made others join it and sell it. Whoever was playing Bitcoin market probably was thinking he had now got Bitcoin to the most high value possible and decided to cash out. Many people lost significant amount of money.
This all works wonderfully for the people who have the financial understanding of markets and such schemes. Geeks generally do not. All they see is this program that they can use to make money with their hardware. They forget that all the traditional pump and dump schemes and others still apply. Actually not only do they apply, they're safe to pull of with Bitcoin because it's legal, the market is really vulnerable to it and most people using it do not understand what is happening. Those who trade stocks or forex generally have even some understanding of how the market works. Bitcoin users generally do not, as they're just normal users.
With BitCoin limited to a pre-determined amount and the difficulty of mining new BitCoins, it seems that this gives a huge advantage to people who got into BitCoin early and have already amassed a considerable amount of BitCoins. Is this true and, if so, do you think this disincentive will undermine BitCoin's ability to become more popular since the majority of the population will have to work so much harder to obtain the currency?
"Don't blame me, I voted for Kodos!"
How many bitcoins is an eight ball of coke?
What about a quarter of kind bud?
What about LSD tabs?
Oh yeah, and X pills?
~nt~
Your hair look like poop, Bob! - Wanker.
Comment removed based on user account deletion
the idea that if you lose or destroy or whatever your computer and lose all your money isn't going to make the general public accept this
i can't see everyone having to drag a laptop to every transaction
But no need for bitcoin to do this.
Aside from this, my question is as follows: what's the contingency plan in the event that the currency is undermined, either by means of the PKI being broken or some other vulnerability being uncovered?
Viable Slashdot alternatives: https://pipedot.org/ and http://soylentnews.org/
Are there plans to deal with quantum computing, or with any of the algorithms used being compromised?
I understand that the hashes wouldn't be terribly devastating for Bitcoin -- worst case, I would think, you roll the entire network back to a snapshot of the transaction history before the first quantum computer started screwing stuff up, and start using a new hashing algorithm. It'd be very bad, but not catastrophic.
But for actual accounts, it looks like we rely on ECDSA -- and it looks like even if Bitcoin offers a quantum-ready algorithm, my wallet is still likely compromised unless I move everything to it before the first viable quantum computer. Still, there doesn't seem to be much noise about this other than a few forum posts, largely dismissed by saying things like "DWave is vaporware."
Don't thank God, thank a doctor!
more bitcoin slashvertising ! oh boy !
How much real money are you paying the Slashdot editors for the constant stream of stories about this worthless new "money"?
What do you think about the recent announcement by the Obama administration to deploy internet in a box? It seems to me that one problem with bitcoin is that although it isn't centralized, it does require the standard internet to function. The internet itelft is highly centralized is it not? It seems to me that bitcoin needs a decentralized bit torrent-like set of internets, possibly anonymous internets to insure it can function. It would probably also need a large military backing to keep it from being bullied out of the market by the existing centralilzed paradigm.
The means by which money enters an economic system is a pretty big deal. The creation of Bitcoins involves neither an act of wealth creation (as with tangible barter goods) nor an obligation by any entity to accept them as taxes or fees (as with fiat currency). How, then, can you say the mining constitutes a "minor aspect"?
Do you have trouble sleeping with the knowledge that for every BitCoin generated, a polar bear dies?
Good grief, yet another advertisement for bitcoin?
Enough, already!
http://www.geoffreylandis.com
They are paying in bitcoins, so the slashdot editors HAVE to keep plugging the crap for their payment to be worth anything.
If we eventually use Bitcoin in everyday life, say, in the supermarket, how will we deal with prices in fractions of a Bitcoin? What terminology might we use for something priced at 0.00000005 Bitcoins?
A latent existence
Not a question, but I thought I'd point to this explanation as a good introduction, not so much to Bitcoin, but to the cryptographic background you need to even make sense of how something like Bitcoin can work in the first place. (Wikipedia is a way too verbose and doesn't answer a lot of what's on people's minds.)
Remember, people are uneasy about using something without a decent level of understanding about it, and it's hard enough for the average person to understand public key cryptography -- so you first have to accomplish that herculean task as a substep in explaining the specifics of bitcoin.
Information theory is life. The rest is just the KL divergence.
My question is, what are your aspirations for the currency. Do you hope for it to be near-ubiquitous -- used by corner shops and mainstream merchants like Amazon? Or are you happy to see a parallel economy grow, as a niche thing? Or something else?
A currency is only as valuable as people perceive it to be and it takes much time and effort to establish or change the perception. The long term viability of the currency depends on stability, which is a function of some body exercising at least some measure of control to protect it from the destructive forces of pure unchecked free enterprise. Witness the adoption of the Brazilian real is an example of these principles. We've seen in this past month or two that the BTC is very volatile because of its susceptibility to basic market pressures and lack of oversight and that perceptions are all over the map.
What is the plan for establishing the currency as a stable unit with value when there is no central controlling body?
Answer honestly.
Seriously, what?
The Internet isn't terribly centralized as it is, other than the organization responsible for assigning IP addresses and domain names. BitTorrent and Bitcoin are both distributed protocols which run on top of that.
In fact, it looks as though Bitcoin is even less centralized than BitTorrent -- while both currently use some sort of central tracker to grab a list of peers, it seems as though Bitcoin could operate just as efficiently no matter how it gets its peers. More peers might be better for anonymity, but it also seems like Bitcoin could operate efficiently with a single peer, while BitTorrent wants to connect to many in order to saturate the connection.
If the "internet in a box" connects to the standard Internet, it's a central choke point. If it doesn't, it's a much smaller network on which it's much harder to hide. Connecting to a single network doesn't imply a single, centralized point of control.
Don't thank God, thank a doctor!
Right now, this technology is accessible/trusted to the people who have the capacity to understand it's underlying technology. In order for the non-tech public to accept this new technology (apart from the problems like merchant adoption and user-friendly client software), the underlying trust will need to shift from "the banks know what their doing" to "the geeks know what they're doing." What types of issues do you see with the public adapting in this regard? What about people who simply don't use computers on a regular basis?
Some "benefits" of Bitcoin, from one perspective, appear to be that its cash-like properties lend themselves to tax avoidance (making transactions without declaring them), illicit trading (e.g. drugs or prostitution) and money laundering.
Do you view this as a positive, a negative, or neutral? If you view it as a problem, how can the problem be mitigated?
One thing that concerns me is the fixed maximum number of bitcoins. Lets say people acquire bitcoins, but the amount isn't enough to worry about, so they never use them, or perhaps their computer crashes and they don't have a backup. My understanding is that these bitcoins are permanently lost from the economy of bitcoins. Over time, the total supply would begin to dwindle, presumably pushing up the value of those that remain, until people become frustrated at the small supply and are motivated to move to a new system, then bitcoin is abandoned. In the real world this happens with dollar bills, but the government can compensate for this by creating more. Is this issue addressed in some fashion.
Why is the system designed with built-in deflation? While it seems like an exceptional system in most respects, why have the total number of bitcoins limited over time? What is the purpose of this? It seems there are instances where there is a need to increase the volume of currency in circulation, as long as it is backed by value. Having it backed by "spare CPU cycles", is a very interesting idea, as it reflects a certain level of economic capacity, but my guess is that it can't scale beyond a niche based on this attribute. Is there a step after this? An end game? Once the "infrastructure" is in place, create a new instance with a different algorithm to allow for an expanding economy?
Regardless, I think the project is truly exceptional and fantastic! Keep up the great work!
Is there any way to make the calculations more useful (i.e. Boinc) and still maintain the same level of difficulty in the computations? It just seems so wasteful to run Bitcoin at this time.
"I say we take off, nuke the site from orbit. It's the only way to be sure."
You know, the one that makes trades get filled in a completely random order...
Is there any serious development underway to make the privacy more robust? There has been talk of "Bitcoin laundry", where large pools swap their coins around between each other to make it harder to connect a coin/address with an owner.
But for this to seriously work, it needs a lot more people to be involved in it, and it has to be integrated in a way that's secure (against someone just keeping coins in the middle of a shuffle) and transparent to the user (so they don't have to think about the new addresses they generate, or which coins are optimal to send where for the maximum shuffle). How soon can we expect something like this?
Also, how soon will smartphones be able to handle this with the same ease as desktops and notebooks?
Information theory is life. The rest is just the KL divergence.
I have found that the Austrians have a hard time accepting the idea of a digital currency. The core of their argument seems to be that digital currencies are not made up of something that had value before being a medium of exchange, such as gold and silver. When I counter to them that BitCoin is made up of code and people pay money for things like video games, they argue that the video game would have to be the thing valued, not the computer code. How do you deal with these kinds of objections?
I once took an excursion to Reddit, and later HN. Unlimited up/down voting sucks when dealing with a hive-mind.
Convince me it's not a Ponzi scheme.
The BitCoin ecosystem is composed of very flaky entities. The biggest "exchange", Mt. Gox, seems to be one person reachable only on IRC. They're a depository institution, and people have substantial balances with them. Not only are they not regulated, they don't even seem to have a business address.
The "exchanges" all seem to transfer funds in and out through even flakier services, like Liberty Reserve (somewhere in Costa Rica) and Dwolla (run out of a hackerspace in Des Moines). Neither is registered as a money transfer agency. What we're not seeing is some bank in Switzerland or Luxembourg, handling Bitcoins.
All these organizations are acting as depository institutions without a license to do so. None of them guarantees contractually that they will pay out funds within a set time. All are uninsured and unaudited. Most of them seem to be having some problems delivering cash lately now that there's been a crash in Bitcoins.
On top of this, the whole Bitcoin system is set up like a Ponzi scheme, where there's an advantage to getting in early.
It's probably already too late to get in, and it may be too late to get out.
How does bitcoin prevent forgery? What's to stop someone from modifying their local database to give themselves lots of money, and how do you verify that money coming to you is real?
We live in a world where the supply and movement of money are controlled by governments, central banks, money laundering laws, and financial institutions. How can BitCoin survive in this world? Middle men like banks stand to lose a fortune in fees and exchange rates, governments stand to lose a fortune in taxes if they can't track money movement, and the black market stands to gain a silent way to move value. For BitCoin to gain adoption, some major retailers need to start supporting it, but given the above risks, what stops a government from telling companies in its jurisdiction that they can't accept it?
*blinking cursor*
1. Create new "currency"
2. Make new "currency" progressively harder to acquire as time goes on
3. Get new people to buy into the "currency"
4. Sell off your easily gained currency holdings to new adopters
5. Profit!
Hey guys, I found Step 4!
The only thing necessary for evil to triumph is for it to be pitted against a slightly greater evil
My question: Why would any merchant IN THEIR RIGHT MIND want to deal with Bitcoin? With the insane USD-to-Bitcoin exchange-rate gyrations happening lately, why would any serious retailer even bother, when the value of Bitcoin vs. USD could change by 50% or more in just a few hours?
How many early adopters were there, or in other words: how many people were involved in mining the first one million Bitcoins?
Over the years while compute power increases we regularly increase key sizes in every application that uses encryption. How does this work in bitcoin? Is there a mechanism to handle this? What about the old private keys that have been used? Can they be marked expired and recreated with a new larger key size? Even if so, what about those that don't bother to create new keys? If someone is eventually able to figure out a private key that was used won't they be able to sign as that key? I'm really curious what bitcoin's mechanism is to protect against this as compute power increases. I'm thinking mainly of private keys because it seems like being able to sign as someone else can be really damaging, but the hash algorithms must be accounted for as well?
Being a fiat currency, even a small flaw can destroy the faith in and so the value of the currency, so this seems pretty important. From my perspective the potential for a flaw to be found over the years majorly detracts from possibility of considering bitcoin as useful currency. If a notable flaw is discovered or exploited then overnight the entire system can be destroyed and the currency could lose all value. Any thoughts on why we shouldn't be concerned about this?
What about the lack of inflation?
It's long known that economic growth is severely stunted without some measure of inflation. Adopting bitcoins for the global economy would mean that policymakers lose control on money supply, and while there are advantages in this, disadvantages far outweigh them. Additionally, adopting a global currency standard will deny governments ability to influence currency rates robbing them of yet another way to control the economy.
Is there any plan to solve this? Maybe a system of independent bitcoin 'roots' operated by governments would help?
with the regulations of trading when you get big enough?
As someone who create a smart card system that allowed merchants to put on and take off units of currency on a smart card, I knos first hand how fast the regulations will change so that a bank must be included.
seriously, undermining the relative stability of an economic environment will not go well, and that's exactly what would happen if bitcoin where to get huge.
The Kruger Dunning explains most post on
"You can (some) things with Bitcoin"
i guess it would have been too dishonest to say that you could "buy" anything with such a bullshit ponzi-scheme scam.
How will your business change when countries regulate exchanges?
How do you ensure your exchange isn't being used for illicit purposes (to avoid being shut down by government authorities)?
e.g., http://wnflam.com/news/articles/2011/jun/08/senators-seek-crackdown-on-bitcoin-currency/
What is the exchange rate between dollars and bit coins? How do these exchanges take place, and is there a risk that the value of bitcoins will deflate making them worthless?
And I'm a hipster.
Amir isn't worth listening to. He loves online poker and getting customers to trade on his exchange, but is useless wrt technical knowledge and capabilities.
Watching him on TWi Startups left me cringing almost every time he opened his mouth - stuttering the same few bulletpoint ideas for an hour and showing little understanding of the questions he dived in on. An energetic guy who wants to make money using something new-and-exciting he may be, but Slashdot deserves much better for chatting about something as novel, useful and *technical* as bitcoin. Slashdot accepting people for an interview that cop-out of technical questions? What the shit, people - bad choice.
Gavin Andresen, on the otherhand is a technical guy (running the bitcoin.org project, no less) who happens to *also* run services and generally get the bigger picture.. he makes this thing tick, blogs his ideas and reactions to bitcoin coverage plus he tweets quite often to answer questions (..someone want to fetch him from the twitterverse?)
Is bitcoin just a scam, invented by nVidia to sell GPUs?
See him here, here and here.
In short: Although Bitcoin may have some admirable features as a medium of exchange, why do you suppose that it can represent a popularly desirable store of value when there are so many other excellent alternatives?
Note that a successful currency requires both features. Absent a reason to store value in bitcoins, people will keep their stock of wealth in other assets and then exchange them into bitcoins only when they need to engage in a transaction. But in that case, the real value of a bitcoin will be approximately zero; it will be slightly positive if the market deems its virtues as a medium of exchange to exceed those of other currencies, but beyond that, it will be zero.
of the new writing. by verbs, it allows your imagination to free, free as the wind. it a long time since we such a refreshing update to the english language. you with the flow.
personally i we should also adjectives articles.
bitcoin is free market money. if you're not interested, nobody is forcing you to use it so stop whining about it not being regulated. just continue using your equally worthless dollars and trust your governments to save the day. some people buy gold because it's the most proven storage of wealth. some buy into schemes like stocks, bonds, etc. if some like the bitcoin so be it. perhaps its wise for some comrades to move to a socialist totalitarian country where everything is regulated and handled by the government.
Since I've discovered Bitcoins I've been very enthusiastic about the possibilities of a virtual currency.
In this paper http://www.newbitcoin.org/documents/newbitcoin.pdf I have tried to describe some problems of the current Bitcoin system, together with some possible improvements.
On the 'official Bitcoin forum' I have been trying to explain my views and express some concerns, resulting in:
* Some positive reactions, some in public, some in private, for which I thank the issuers.
* Some valid critique or discussions concerning content, for which I thank the issuers..
* Way too many reactions, either with or without critique, containing disdain, misquotes or false accusations.
* A forum policy where all 'newbies' were banned to a special 'Newbie area'.
The ban has been lifted, but I cannot be sure it will not happen again. Further, I want an open, civilized discussion, in order to come to a better Bitcoin, but decided to no longer waste my time on defending my paper on a forum where the atmosphere is more about trying to tackle one personally than about issuing valid critique.
It is my view that a lot of the agressiveness comes from the fact that already there seems to be a lot of money involved in Bitcoins and people are more worried about their investments than about Bitcoin improvements. And it is my opinion that a new Bitcoin distribution scheme is inevitable. I want to create an environment where this opinion can be explored freely.
Therefore, I want to invite anyone that shares my belief in a better Bitcoin on this forum: http://bitcoinforum.org. I also invite anyone with other opinions to spawn their critique, valid or not valid. With the only restriction that only polite and respectful posts will be allowed.
Ok, you can some things with Bitcoins... what about the things you Bitcoins can't?
Dark Reflection
Without some form of inflation, how do you prevent people from hoarding bitcoins over a long period of time? This is the same problem gold or any other currency that can't be created at will has.
Why should I bother with bitcoin when the market can be driven around with wash trades and manipulation due to low volume? The manipulation on mtgox is plain to see for anyone with experience in other markets. Buckets, nay, truckloads of paint for painting the tape.
Why should I bother with bitcoin when the only real demand for it is money laundering for buying drugs on silkroad? The evidence for this is the big crash when silkroad went down last Friday.
Why should I bother with bitcoin when I can lose my shirt on the currency exchanges that are not even regulated to ensure a level playing field? Lose half value in 12 hours? The volatility is insane.
Why should I bother with bitcoin when exchanging bitcoins for cash after a trade takes days?
Why should I bother with bitcoin when it doesn't translate into anything in the real world except a speculative market based upon illegal activity?
These and other problems make me wonder how far the scam goes.
Why does everything about bitcoin point at a scam?
--
BMO
Here's my question:
Do you ever regret not having had access to some economic expertise when you set this up, in order to prevent deflation, and possibly even create a working Bitcoin economy? Or has your initial investment already paid off so much that you have no regrets whatsoever?
What happens when there are more than 21 million Bitcoin users, 21 million being the largest amount of bitcoins that can be in circulation at any given time?
See subject. Socially, technically, and economically.
Do you even lift?
These aren't the 'roids you're looking for.
Bitcoin is a fiat currency. Sure, it's decentralized, but it has no intrinsic value.
People already agree that dollars, Euros, etc. have value. What worth does Bitcoin bring to the table? I use my credit card; it's very convenient and I don't care who knows what I spend at Dunkin' Donuts. But if I was worried about privacy, I'd use cash everywhere. It's easy to exchange between nations, if you need to, and most people don't.
So other than being "distributed!" and "electronic!" and - admittedly - pretty cool, what is it actually good for? Anybody who won't accept cash for identity purposes won't accept Bitcoins, and anybody who might accept Bitcoins will almost certainly accept cash.
And it's really new. As a customer, I'm very nervous about spending "real" (cash) money on worthless bits. As a provider, I'm even more nervous about accepting payment in worthless bits. Not saying they are, but it's my money so the concern is enough to avoid it when cash is a perfectly viable alternative.
In short, why should I use Bitcoins? Why should I accept them for my labor? What assurances do I have that it won't all go belly-up when the fad dies down and people stop caring?
I have developed a truly marvelous proof of this comment, which this signature is too narrow to contain.
So far, in the bitcoin community, you see miners, speculators and marketplaces. The system is well designed to attract greedy people, but not to perform useful transaction.
In money history, metal coins are successful for trade when there metal value is weak. If they contains too much gold or silver, people tend to keep them. It's the same for bitcoin: the built-in deflation encourage actors to accumulate bitcoins, not trade them.
Overheard in 1924...
"My question: why would any merchant IN THEIR RIGHT MIND want to deal with gold? With the insane Weimar Deutschmark-to-gold exchange-rate gyrations happening lately, why would any serious retailer even bother, when the value of gold vs. Weimar Deutschmark could change by 50% or more in just a few hours?"
Information theory is life. The rest is just the KL divergence.
First Mr. Taaki, thank you for doing this: Both the interview and helping to open a possible path to decentralized means of exchange. I have two questions: Do you think the program adequately accommodates the people's tendency to lose coins whether by neglecting to back up their wallet, or just through general forgetfulness? Now that Bitcoin has survived it's first huge crash, gained some publicity in the mainstream and caught the eye of the CIA are you more or less confident of it's viability than you were six months ago?
I don't know what the optimum curve for the increase in the BitCoin supply would have been, but an asymptotic curve isn't it. They were not thinking very well at all. The asymptotic curve limits the total size of the "BitCoin economy" because of guaranteed massive deflation if the economy increases in size at all. This renders it quite useless as a viable currency. (The current value of all currency in circulation is currently far too small to be viable, and the deflation required to get the BitCoin economy to a size where it would be a viable currency is far too high, leading to hoarding that would exacerbate the problem.) At the very least, it should have at least leveled out to a linear slope to account for increase in gross economic output.
So yes, this is a tulip craze, and I wish Slashdot would stop wasting their time on these things. (I also have serious doubts about scalability... once you start subdividing the BitC's down to make them usefully liquid, the amount of tracking required quickly becomes ridiculous and makes BitC's no more non-trackable than my Visa card due to issues with data and bandwidth portability.)
It's sort of an interesting idea, and the concept of a non-trackable currency is an interesting one which raises far-reaching economic and social questions, but this particular currency isn't going to answer them.
Question: Will BritCoin be registering with any Financial Regulatory body? If not, how significant does he consider the risk of the BritCoin exchange being shutdown by a government authorities?
I am curious if any others read Cryptonomicon by Neal Stephenson, he wrote in part about crypto-currencies, I just finished it a few nights before the Slashdot multi Bitcoin arcs. I enjoyed the story (set in WW2 and the early 90's) and actually thought it was written recently, turns out it is over ten years old, guess it took them that long to roll this out :)
With a final tally of 21 million bitcoins, a rapidly growing user-base and the potential of billions of users, won't bitcoin suffer from a much greater deflation than a metal based currency? What safeguards are available to prevent massive hoarding and subsequent market crashes much like the one that occurred last week?
that I can (some) things.
http://www.acetonestudio.com
WTF? BitCoins are like PayPal? At least PayPal (unreliably) collects the local currency, the value of which is internally consistent. PayPal does NOT collect "PayPal Bucks" which are then worth widely varying amounts of currency you can actually carry out non-niche transactions in.
If you don't understand what I just said, let me know, because I'd like to dig up some Flooz to sell you.
Physical currency can be destroyed. A central authority is typically responsible for creating new currency to offset this loss.
However, no more than 21 million bitcoins can ever be created. If I were make my bitcoins unrecoverable, they would be lost not just to me, but to the system forever. Granted, the loss is small, but it is cumulative. The effects can only increase as bitcoin becomes more widely used. In my mind, the conclusion seems to be unstoppable deflation as bitcoins become increasingly scarce.
Is this a problem? What might solve it?
The BitCoin system has guaranteed deflation because lost hashes disppear from the monetary system forever. (Lost, destroyed or hoarded US currency can be replaced by the Federal reserve with a few keystrokes.) In addition, the current total value of the BitCoin currency (expessed in any normal monetary unit you'd care to name) is far too small to be a viable currency. It would have to deflate by several thousand percent to be any more than a niche currency. Since no one would volunteer to be the victims of such deflation, BitC's are doomed to irrelevancy.
How can bitcoin overcome problems such as:
If a computer is lost, disk fails or any other number of problems, how can the wallet be recovered natively?
How many of the wallets created in 2009 have forever vanished already or never logged in again?
What quantity of coins in the market are being held for speculation by the top 5% of speculators?
What is to prevent a large cache of bitcoin from being dumped at any time causing a distributed loss of all value?
When the foot seeks the place of the head, the line is crossed. Know your place. Keep your place. Be a shoe.
Can it!
I once took an excursion to Reddit, and later HN. Unlimited up/down voting sucks when dealing with a hive-mind.
How would you explain the huge advantage for early-adopters to latecomers, given that a perfectly natural fair distribution exists, where (proof-of-)work is always rewarded the same number of bitcoins?
Both stock and forex markets are secured against all kinds of foul play. Doing a pump and dump scheme or various other schemes isn't easy. With Forex the sheer amount of transactions and money changing hands makes it impossible and the law protects against such schemes with stocks.
It's easy if you are one of the Too Big To Fail banks, and the regulatory agencies have long since been captured by said banks. The regulators would all love to go work for the people with the money.
Deleted
This will just become an useless file on your hard drive once the top guys (and the developer) cashes them in.
Hi!
Is there a good service to convert Bitcoins to and from ordinary currencies?
Sending dollar bills in envelopes is just ridiculous and smells scam.
PayPal is almost as bad as a Nigerian scam and I'll never ever use it.
But show me a serious (as in they have a postal address and a support phone
number) exchange entity that accepts bank wire transfers. If there isn't one,
then sorry. I don't believe in Bitcoins.
I accidentally the (whole) thing.
The US shuts down people who attempt to print their own currency in competition with the US Dollar. This creates a moat to competition for currency in the US which keeps people using the US Dollar.
Does Bitcoin have a moat? What prevents someone from starting a Bitcoin clone currency and devaluing Bitcoin through creation of competing digital money?
The current arrangement for arbitrary transaction fees (min 0.01 Bitcoin) make it next to impossible to use Bitcoin for micropayments despite the hype that it can be subdivided to 8 decimal places. What are your thoughts on this fee and is it necessary to provide this to encourage a real P2P exchange of verified transactions?
anon coward.
I've always wanted a currency I can only spend on exotic nerdy drugs on the Internet.
Those who take out loans early after a "recession", can use the money to make far larger gains than those who take out loans at the peak of a boom.
Those last in effectively lose everything or are at least deep under water for years to decades. US housing market is a classic example. At the end they were trying to grow the scheme by giving loans to people who patently couldn't afford to repay them in a million years. They were just bag holders.
Ponzi would be jealous.
Deleted
It seems that much of the problem people have with Bitcoin is the fact that an in crowd of early adopters made a killing and represent a huge percentage of the overall Bitcoin economy.
However, now that the geeky world is effectively on notice of this, wouldn't the more fair and sustainable (and resentment-minimizing) move be to start a second chain, where tons of people can pile in from the beginning, giving a far more distributed... um... distribution?
Granted, this would involve quite a bit of unfairness to current investors, but could you explain your take on this strategy as possibly giving the system as a whole more universal acceptability and less of a flavor of get-rich-quick?
Fractional reserve banking has a multiply effect on the supply of money. People put their money into a bank, the bank loans that money out and some of it gets redeposited back in the bank to be loaned out again.
The FAQ says that there is nothing to stop someone from starting a fractional reserve system with Bitcoin. Once someone does, the "supply" of Bitcoin will no longer be fixed and instead will depend on the "fraction" that banks hold in reserve. As banks go out of business and new banks are formed, the supply will fluctuate --- probably wildly since banks tend to all go bust at the same time. The US government has regulation and auditors to ensure that banks meet certain requirement and set interest rates in an attempt to keep these wild cycles under control.
Do you have any thoughts about how this will work with BitCoin? Can a stable currency exist with unregulated fractional reserve banking? Can banking be regulated with an unregulated currency? If banking becomes regulated, will it reduce the value of BitCoin as an unregulated currency?
Finally, an alternative to gold...
But my worries is that there are still potential for copy and dupplication. A 1 and a 0 is still a 1 and a 0... While gold cannot be created from nothing. Wouldn't it be less safe.
Wish it the best tho. Thanks for this innovation.
Amir: Suppose the government knocks on your door demanding your Bitcoin wallet (under, say, the Regulation of Investigatory Powers Act, since you're from the UK), or demands details of people with whom you have transacted bitcoins. What are you planning to do?
Paid Q&A/Research
While the supply of Bitcoins is limited. There is no reason I see, that someone else could not come up with another bitdollar, bitpeso, digifranc, or other such digital "money" with the same properties. In this sense, these digital monies are not unlimited, and I fail to see why they would have any inherent value. With raw metals, like gold there are alternatives too, paladium, platinum, silver... But the periodic table, chemistry and physics have assured us that there is a limit to the alternatives. The US dollar is backed by a giant military and the strategic resources it controls (also limited). What makes Bitcoins worth having, when tomorrow someone could invent another digital currency? Is this just a popularity contest? What value could you add to bitcoins to make them unique or worth having?
My Question: Is Slashdot was the official corporate sponsor of Bitcoin?
Is it under 12 bits?
This constant bitcoin crap is seriously eating slashdot's credibility.. It's as much as a scam that anything can be and still its advertised here all the time.. :(
From the beginning there have been people alerting that Bitcoin, while technically impressive, has dubious economic fundamentals. Namely, the built-in hard-cap on the total number of Bitcoins that will ever be generated (21 million) will result in deflation dynamics once new currency stops being generated, and may induce hoarding, speculation, and the formation of a bubble much sooner than that.
The USD/BTC index for the past few months and the overall mentality seen in the Bitcoin forums seems to be confirming the worst case scenario described by critics of Bitcoin's economic model. People are talking of Bitcoins not as a currency but as a store of value. Instead of spending them to kickstart the economy, people are instead hoarding them with the expectation they will continue to multiply in value. And indeed, the steady influx of new users with the same expectation of a once-in-a-lifetime opportunity has caused the value of the currency to soar. However, without an actual economy taking off, there is the danger that sooner or later there may be a massive loss of confidence in the currency, leading to a catastrophic crash.
I suspect that the above dynamics could have been prevented with a simple tweak to the algorithm: instead of a hard-cap, let the total number of coins continuously increase in such a way that the inflation rate approaches a small, but positive number (say 0.1%). This small change would have multiple advantages:
With all of the above in mind, my question is as follows: would you agree that the strict adherence to Austrian Economics espoused by most members of the Bitcoin community may render them too dismissive of the dangers of the built-in deflation, and thus end up being Bitcoin's Achilles' Heel?
Bitcoin is an asset, not a token. Please comment. Specifically, as an economy grows, governments (e.g. the US Fed.) produce more currency to keep pace, attempting to keep inflation in check. This is the right thing to do, although that view is not universally held, especially by proponents of Bitcoin. Bitcoin is intentionally designed so that it's value will not be stable. It is designed as an asset not a currency. This factor is, IMO, the main reason people have concerns about the deflationary/ponzi nature of bitcoin. Isn't the inability of bitcoin to maintain stable value (e.g. vis-a-vis a loaf of bread) in a growing economy a deadly flaw?
BitCoins are currently used almost exclusively in financial transactions of an illicit nature. You want to buy drugs online and not be traced? Head to the dark webs with BitCoins at the ready! There are clear advantages to using BitCoins if what you are doing is illegal and so it makes perfect sense for them to take off in that market.
But eventually, one would want to use BitCoins to pay for legal services. My question is; how do you get to that point? Why would a legitimate business accept a currency that is used almost exclusively for illegal means? What is the strategy to convince mainstream businesses that BitCoins have a purpose in the main web, as well?
How many megawatts/gigawatts of electricity would you estimate will be used generating these Bitcoins / and how much power has been used to date?
Booms and busts are caused by the Fractional Reserve Banking system which we use. During the booms, interest rates are low, the money multiplier allows banks to expand the credit supply to the market (easy credit). This causes inflation in day to day commodities, the stock markets, property markets, commodity markets; A bubble.
When interest rates are increased or credit has expanded to the maximum allowed by the money multiplier, or simply banks decide to tighten credit and further "growth" isn't possible, there is a corresponding bust to follow with loan defaults, unemployment, stock market declines, housing market declines, commodity market declines.
How does Bitcoin prevent fractional reserve lending by banks and therefore this boom/bust scenario?
Deleted
How can you convince the average person that Bitcoin is a viable alternative or even supplement to real currency or that it is even worth paying attention to? (Rhetorical question, don't have to answer) At current, one has to mine for possibly two years, with decent hardware at that, just so they can get 50 BTC. Additionally, the number of BTC received via mining decreases by half after a certain number (~200,000) of BTC are in existence. In that same amount of time, a average joe with a high school diploma can complete a course, get a job, make more money, and purchase real assets.
The only use I can see for Bitcoin is if all financial infrastructure collapses and this currency is the only one left. However, the production and distribution of Bitcoin largely depends on the types of physical infrastructure (networks) that largely depends on a stable financial infrastructure. If you can't afford an internet connection or electricity, you can't use Bitcoin effectively enough to be remotely relevant.
Real question: How is Bitcoin going to gain acceptance when it is even more unstable than the currencies we already use, even if it is adopted widely?
For those of us interested in developing financial services using bitcoin, how have you dealt with regulatory issues? It seems like the SEC and FINRA in the US would not be keen on unregistered broker-dealers and agents and owners not having the legally required Series 7 and Series 24 certifications. Have you sought the UK equivalent certifications? The requirements of lawyers, accountants, certifications etc. seem to put a very high capital cost on starting a legitimate business offering services in this space.
-molo
Using your sig line to advertise for friends is lame.
What happens when (not if) the US Federal makes the use of BitCoins in any transaction illegal?
What happens when China decides to dedicate swathes of supercomputers to generate BitCoins - and how could anyone possibly know until the market is destroyed?
Yea! government backed "paper" is at least backed.
I will invest my effort in amassing WOW cash, or Second Life thingys, or wagon loads of smurfberries. You can get virtual goods with these -- and oohh trade it for real cash! Hahha wowtrades.com
bitcoin... dont-do-it.
In Dutch, I believe BitCoin is pronounced Tulip Bulb
It seems to me if the government starts raiding people with bitcoin holdings, that they would be able to go back up the chain. They will be able to identify every person that has exchanged bit coins with the person they raid. From there, they can raid the next person, and so on, with absolute certainty. Compare to cash, and after the exchange there is no per-bill or per-coin accountability. With enough information, they should be able to reconstruct the entirety of bit-coin history, like mitochondrial DNA allows us to find our female lineage. No?
Slashdot's rate-of-post filter: Preventing you from posting too many great ideas at once.
How do you know that governments or [other] nefarious entities are not running rogue nodes watching for transactions between known identities? The coin exchange chain is a gold mine of relationship data. You might be able to launder it through an exchange, but not as it is currently today.
Slashdot's rate-of-post filter: Preventing you from posting too many great ideas at once.
Isn't bitcoin just one of many possible implementations? Shouldn't we expect various developers to create competing ones tweaked to different parameters in hopes of attracting bitcoin miners and traders?
As I see it, Bitcoin is a cryptographic peer-to--peer accounting system, with a virtual currency 'attached' to it. For me it looks like it's an experimentation platform for the accounting system itself, as well as for free markets. From my point of view, the Bitcoin other FIAT money exchangers show what happens on 'really' free 24/7 markets.
Currently, just wasting energy for mining accounting data makes not much sense for me (apart from someone else would pay you some kind of FIAT money for the results). The network adapts well to more and more miners added to the network, but basically adding more and more miners just increase the total power consumption, which is not proportional to the amount of security gained.
I believe Bitcoin is not end of the line. What will be the systems in planning building onto or what we learn from Bitcoin?
The main problem I see with the current economic system is that finance becomes more and more decorrelated from production and consumption of actual goods, be they manufactured products, or services. Well, it shouldn't, otherwise crises happen, and they did happen - two in the 2000's - and they will happen again if nothing is done to fix the mess. (I believe nothing will be done, and we will pay dearly for this.) That Bitcoin thing tries to solve unessential problems, mostly ideological, while making early adopters rich. Should it really gain momentum, however, I see nothing in it that would alleviate the risk of a future financial crisis. On the contrary.
I see two criticisms crop up constantly: 1) bitcoin has no intrinsic value and will fall to worthlessness. 2) Bitcoins will become too valuable to trade. Well, which is it?
if you want a non-dilutable, electronically transferable, fungible, discreet and theft resistant currency, then you want Bitcoin. if you want something that conforms to erroneous notions of economics, create it and see how it works out.
Why would any individual gain any advantage by participating in bitcoin, except that some early adopters may have been able to realize profits at the expense of later adopters? The closest the bitcoin FAQ seems to come to answering this is:
Is Bitcoin a Ponzi scheme? [...] Bitcoin has possible win-win outcomes. Early adopters profit from the rise in value. Late adopters profit from the usefulness of a stable and widely accepted p2p currency.
The final sentence is what is supposed to make it not a Ponzi scheme. Let's break that down into pieces:
Stable: I live in the US, so this doesn't do much for me. The dollar has had a relatively low inflation rate for decades now, whereas bitcoin could become completely worthless at any time. Even if I was living in a country like Venezuela, which has crazy inflation, I would be foolish to hold any significant portion of my assets as bitcoins. I'd be much better off stuffing US currency in my mattress. If I was the type of libertarian who gets upset about "fiat currency," I could put my money in real estate or gold coins.
Widely accepted: It's not widely accepted, and I don't think it's plausible that it ever will be.
P2P: Why is this a good thing?
Find free books.
One problem I see with bitcoin is it offers very little over what we currently have. If I want to perform an online transaction using my computer, unless I am buying something illegal, then there are already companies which offer products for me to use. If I want to make an anonymous purchase in person, I would easily use cash.
Bitcoin seems to suffer from a lack of portability, which makes me wonder, what "need" is bitcoin catering to. What do I do in my day-to-day life that bitcoin will help me do such that as some point, bitcoin becomes irreplaceable and achieves de facto permanency?
Mod parent up -- spam comments for spam stories!!
How else do you bootstrap a distributed currency? Appeal to greed is a feature - there would never be anything like the processing power otherwise. Without the processing power the transactions can't be secured.
Bitcoin's reward system is quite cleverly designed to help propagate it. It is also what gives it a stink of a pyramid scheme but that doesn't make it any less valid as a medium for transmission of wealth on the Internet. If anyone can think of a better way to seed a currency - one that magically gains significant mind share and fairly distributes the value without resorting to exploiting our baser instincts, I'd be very interested in hearing your ideas!
We're witnessing a messy birth of a system. No one knows if it will make it yet but perhaps we shouldn't throw the baby away just because it's covered in goop. Instead, try to imagine what we could do with such a system if it actually works.
In the last weeks I've seen an extraordinary increase in difficulty and value. Knowing that difficulty will increase forever, that in 2012 the reward for a valid block will decrease to 25 BtC, and the deflation, can you make an educated guess on the stability of BtC value in mid term (1 year time)?
I've heard that the creator of Bitcoin holds approximately 1/3 of all Bitcoins in existence, which is (by some back-of-the-envelope math) in the neighborhood of 1/10 of all the Bitcoins that will ever exist. Even if everything else about the idea is good, what are the reasons to use Satoshi Nakamoto's coins instead of forking the currency?
Maybe I'm a bit of an alarmist, but is he trying to distract us from the fact that the earliest (very few) miners own 19% of total available BTC, which is 2/3rds of currently available BTC?
As discussed here this is a rather large elephant in the room. Since he is a developer actively working on BTC projects I cannot imagine how Amir Taaki would not hold a sizeable (early adopter?) stake in BTC. In light of that, it would seem he is telling us to pay no attention to the man behind the curtain.
Thanks, http://exercisesto-reducetummy.com/articles/workouts-for-abs/
I've not delved into the BitCoin world much, but here is a question:
I 'own' BitCoin xx1 - xx10. I have this backed up on a thumbdrive, stored in a safe.
LAter, I transfer BitCoin xx1 - xx5 to someone in exchange for goods/services/currency. Those BitCoins are now removed from me. My BitCoin stash now holds BC xx6 - xx10.
Later,I restore that backup, so that my stash again holds BC xx1 - xx10. Who is the arbiter of this dispute. Does the recipient have to somehow 'prove' that he received them from me? Can he not somehow fake this and 'steal' BC xx1-xx5 from me?
With currency, there is a physical transfer from my pocket to yours. With electronic money, a bank or credit card agency is the arbiter.
What similar function is there with BitCoins?
For any discussion in which BitCoins are mentioned, the first person to say the words 'inherent value' loses. Call it Nakamoto's Law.
Those who advocate genocide deserve every protection afforded by law, and none afforded by common human decency.
What evidence do you have that Silk Road and illicit transactions are the sole benefactors of bitcoin right now?
Did you only read what was in the news?
I run a 3000$ USD equivalent per month legitimate business that accepts a large portion of that income in the form of Bitcoins.
You ask... why? And... thats not that much right?
Correct. Its not that much, and BTC to USD trades are volatile on MTGOX. However, I use Tradehill (which is typically a bit more stable and offers better services).
The transaction time to get BTC to USD or vice versa does take awhile, its not quite as liquid as say... using a credit card.
But look at it this way. Back when credit cards were first introduced, people said the same thing. Not a snowflakes chance in hell this will be useful, who accepted credit cards back in the 70's compared to now? Nobody! It took 30 years, but now today a large portion of the economy wouldn't work without credit cards (IE: internet / e-commerce).
So you say.. why bitcoins? To me, the utility value is tremendous.
Will it take time to catch on? Yes.
Is it a ponzi scheme? No.
Would I rather my 'wallet' and 'wealth' be digital and secured? Yes.
Would it be nice if I could complete purchases instantly with my mobile device rather than with a card that charges ridiculous fees, takes a few days to process (it does if you investigate it), and is subject to identity theft?
Do I want a big brother organization to protect me against losses at the expense of others (fostering irresponsibility)? No.
Do I want a hidden tax (Fed/USGov printing new money every time they run out and can't get sheeple to approve higher taxes)? No.
Do I like the idea of a currency that is by design protected from fraud (double spending, phony money) and inflation? Absolutely.
Would I rather my holdings appreciate in value rather than depreciate with time? Indeed. (Its my own opinion that inflation itself encourages fiscal irresponsibility. If you don't spend your money or invest it in something other than the currency itself, its pretty much guaranteed to lose value. With bitcoin, if I do not buy that thing I do not need, I know my bitcoins will increase in value as erosion occurs. I'm inherently more responsible about my bitcoins than I am about my US Dollars, simply due to the nature of the currency. )
To me there are a plethora of reasons that Bitcoin is a good concept. Its not about whether or not you have the capacity to understand its utility value, or the insight or vision to see what it 'could be' that existing currencies can not be no matter how they are altered.
Whether or not Bitcoin itself weathers the criticism of the hordes of people only time will tell.
Many of you will think I'm nuts (along with anyone else who wants to use Bitcoin outside of illicit purposes).
I will however say that I think personally that all of you purely naysayers are incredibly narrow minded and naive.
You clearly do not even understand it enough to answer the most basic questions. Many of you won't even do research beyond reading a biased article or listening to a rant by a politician who would tell you how to wipe your own ass if he could. And even most absurd, you don't have a vision of the future for yourself.
Your vision of the future of currency is one that the US Government (or another government) and the Federal Reserve (a private bank) lays out.
Also worth mentioning.... look at the track record for success vs failure in the US Government vs the open source community. US Gov gives us TSA, Medicare, and Medicaid. Open source community gives us bittorrent, p2p, and now bitcoin. The same people that think Bitcoin should be illegal are the ones that thing bittorrent and p2p are only used for purposes of pirating software. Seriously though, look at the success vs failure rate just on those few items. 3 implementations are either exploding, causing major headaches and turmoil about individual futures, or causing you and I to be taxed into the gr
I am a person who has had numerous difficulties with the american banking system. I emphasize this because i went to england for a year and had NO problems AT ALL!. As a result, it will be a little longer before i can have a bank account without paying out a couple of hundred dollars for fees i never should have incured. How is a person without a checking account supposed to easily purchase bitcoins, the only solution i have come up with is a prepaid visa card but they cost $5 and the transaction fees are insane and dont allow me to purchase bitcoins at a rate near the market one. Any ideas, It would be handy if i could get a retailers gift card and purchase bitcoins with that.
Another question i have is, It appears some members of the US and German governments are upset about bitcoin thanks to a darknet web site called silk road. How secure is it, really. I have read that bitcoin uses elliptic curve crypto. I found the following article which has me very concerned. I wonder if a government decided to nationally filter bitcoin traffic, how successful would they be? If the bitcoin protocol always uses the same port it strikes me as being fairly easy, as some of the ISPs in the US alone are rather big. Think comcast, Qwest etc.
http://www.h-online.com/security/news/item/Successful-timing-attacks-on-elliptic-curve-cryptography-1247772.html
That said, I really like bitcoin, I am just worried that its not as secure as we would like it to be.
Cheers
My first computer had 1024 bytes of ram
Having a hard top means that the currency might become scarse causing a drastic valuation of the currency once demand exceed offer. Can any economy run on it, and if not, what will be done afterwards? Bitcoin v2.0?
The problem with Bitcoin is it's the only game in town.
The other problem is it's not backed by anything. How do we really know bitcoins exist and aren't a scam?
BitCoin does NOT provide anonimity by default. Node to node messages are not encrypted at all, for one example. There are plans to add anonimity, overall btcfn ( #btcfn at freenode irc) - transport over freenet (and TOR already works, and soon i2p). Also we need mixing services to loose the "coin serial numbers" problem (following the blockchain).
Do you sell bridges? I'm interested!
Grammar nazis are to this community what excrements are to gold.
Assuming that valid criticism of the bitcoin protocol/design are accepted by more than 50% of the community, an upgraded client could change the direction of the longest valid block chain and the less than 50% would be forced to upgrade to a compatible client to spend their bitcoins or else splinter the bitcoin network into pieces with a common history but an incompatible block chain after the point that the design change was made. Do you see splintering as a potential problem for bitcoin or just a natural evolution? Obviously it would be useful to keep all the bitcoins in one pool because of their limited nature, but what if a group of Keynesians wants to fork the code and allow for an inflationary currency by never reducing the payout for creating new blocks, or perhaps even increasing it as the difficulty increases? If the parameters are chosen right, the new network could attract a significant portion of the miners to the new network, especially if it looks like the currency market is moving to the new network and taking the real value of the system with it. In short, I don't think any current flaws in the bitcoin design are a fatal flaw; the best design will ultimately win out with a fork and a significant majority of the GPUs following the best fork.
Amir has been active in a number of projects that are trying to add legitimacy to Bitcoin. However, he has also posted on the Bitcoin forums offering "erotic Skype chat" with "two 16 year old girls together" or "one 16 year old girl and one 18 year old boy", in exchange for Bitcoins (source). Is he not worried that activities like this undermine his attempts to look legitimate? The services offered are, as far as I'm aware, completely illegal in the UK.
Here's my question: what if bitcoin has some level of success and starts to get used on things (purchasing drugs, cough, cough) that the govermint doesn't like ? What will you do then ? Accept a ban ? Fight it ? Implement 'modifications' to allow gov interference and control ?
Non-Linux Penguins ?
"Why would a legitimate business accept a currency that is used almost exclusively for illegal means? What is the strategy to convince mainstream businesses that BitCoins have a purpose in the main web, as well?"
They can follow their natural userbase
for example, for all those folks buying cannibis over the net, they can order complementary goods from
http://bitmunchies.com/
Please. You can buy all sorts of crap with USD, at stable rates, just as you can (with a little more effort) with gold, just as you couldn't with WDM, and just as you can't with bitcoins.
I am trolling
Holders of debt denominated in Bitcoins would really be sucking it up in a deflationary environment, as the effective balance due would keep going up with time. But, you say, no one is making loans denominated in Bitcoins. That makes the situation even worse for the currency. Loans actually create money out of nothing - if there are no loans, then it's hard to see how there could ever be a supply of the currency sufficient to support an economy of any size.
I guarantee you that if there were tons of people out there with their mortgages denominated in Bitcoins, there would be a giant outcry about the deflation. But as it stands now, practically no one uses bitcoins for anything. That's why no one minds.
Essentially everyone with a negative net worth would be tremendously victimized by a deflation. Even some people with positive net worth would have problems, per the example someone gave above: you get paid $x/week, regardless of the deflation. Good for you, right? But your employer keeps having to cut prices for the product you make because of deflation. Eventually he can't afford you any more, and lays you off.
I've never understood how people got hoodwinked into thinking that moderate inflation is bad. The only people it's bad for are the very wealthy.
Deflation has victims because of the limits it places on trade, credit, and economic growth. Yes, the currency you have is "worth" more over time, but the opportunities to spend that money get more and more limited as the value goes up. Because if an economy is shrinking, why would I want to sell goods and services to you, deflating-currency holder, so I can get a slice of an ever-shrinking, pie?
Let's say I sell a cart of groceries for ten BitCoins. Now, I spy a shiny new gadget in the window and want to buy it, and for unfathomable reasons, the merchant accepts BitCoins. However, because of the deflation I'm going to wait a few months while my BitCoins are worth more money before I buy said electronic doodad. Geeks 'r us isn't going to receive any BitCoins and will eventually drop them as a payment method.
Those merchants are going to sell my groceries, services, gas, oil, etc. in trade for, say, Dollars instead. And you are stuck with a BitCoin you can't actually buy what you want with...
I've said it before, and I'll say it again. BitCoins have a (dubious) value as an investment. As a currency, they are completely broken.
In fact, I'd be surprised if illegal activities weren't the biggest use for Bitcoins. Silk Road is a service (you need to be on TOR) specifically designed to exchange Bitcoins for various illegal drugs, delivered right to your door.
Planning on deflation to me says that they were building a pump-n-dump scheme, and knew it. I am hoping that instead it was a result of a hopeless understanding of economics, and absolutely no clue about what strict limits on monetary supply does to trade growth and the viability of a currency.
You can tell they made an attempt at "solving" the deflation issue by making it minutely subdividable, which effectively solves the liquidity problem. (Though it does all kinds of wonderful things to the system's scalability.) But since it doesn't solve problems with hoarding BitC's as an "investment", it ultimately fails as a currency.
The "victims" of deflation are those that spend any kind of resource into accepting these things, but fail to actually collect very many due to it's doom as a viable option.
My question: is there a planned expansion of BitCoin to increase the amount of BitCoin currency, in the event it become necessary due to increased popularity.
Yes, I realize PayPal is unreliable, and you should never keep your money there for any length of time. But what does that have to do BitCoin's usefulness; the analogy is simply is not valid. If I have $100 in my PayPal account, and sweep that money into my Checking, at the end of the day I have reasonable certainty I'll have $100 - fees. If I collect a pile of BitC's over the course of the day, I cannot predict with any certainty whatsoever how many dollars/Euros/genuine viable currency I can change that into without changing my BitC-denominated pricing on a continuous basis.
BitCoins are a currency. PayPal is a payment network. The inherent issues with one have nothing to do with the inherent issues with another.
You can chalk up occasional PayPal losses as a cost of doing business. I suppose you could hedge your BitC pricing against currency volatility and call THAT a cost of doing business, but that would be REALLY expensive.
Can we stop greenlighting bitcoin stories? We've had what, 4 stories about bitcoin recently, none of them were newsworthy. It seems like someone is just trying to manipulate the bitcoin market.
When I said "non-trackable" I meant you cannot track WHO the BitC's were traded with. I wasn't referring to the audit trail of the individual units.
BitCoin is a currency. People are buying things with it. It's worth about $10 per BTC.
So you have "markets" and "exchanges"... but you can't spend the BitCoins anywhere (other than paying another BitCoin user for "services")... So where does the value come from? I know even gold is only valued by demand and supply (basic economics), but with no real world demand, how do you expect this to go anywhere other than the likes of a Dungeons and Dragons player's fantasy world... only valuable to them or the person/people they play with?
What you're saying is that if the smallest denomination of dollar were a $100 bill, very few people would use them as a medium of exchange. That may be true. Fortunately Bitcoins can be divided into very small pieces with the appropriate amount of value. With deflation, something that could be bought next year for .01 BC may go for .0001 BC in another ten years. I don't see that as a problem.
You say it would encourage people to "hoard currency". So it would encourage people to save instead of spending themselves into debt? How horrible!
I got interested in silver, so I paid attention to those happenings. (I only bought a couple dozen ounces' worth of silver coins, and not on credit)
Silver already slid, from high 40s to high 30s.
People who did borrow/buy on margin may well have been part of the spike to the high 40s.
Since the silver market is a lot smaller than the gold market, it's easier to mess with silver.
Gold's still around 1500, but yeah, who knows if that's next?
I listen to both RIAA and non-RIAA stuff if I like the music, tangential business/politics nonwithstanding.
Full and open disclosure: how many bitcoins do you currently own?
Also, as this is a fiat currency, trust is fundamental. Therefore, what kind of ethical standards do you have in place to prevent conflicts of interest in having the developers / promoters of this currency being potentially some of the largest holders of the currency and potentially the most likely to profit in it?
Do you like your new scammer reputation? And how does it make you feel?
If the economy is growing fast enough, money supply deflation won't mean price deflation.
You have it exactly backwards. If the economy grows AT ALL, price deflation is guaranteed, given a fixed money supply. To avoid deflation you'd need to have the economy size grow (or shrink) in lockstep with the money supply. (This, by the way, is why virtually every single modern economy uses a central bank controlling the supply of a fiat currency. Although some countries are better at it than others...)
Let's say the current BitC total currency value is $50M (or, if you don't want to use USD, 0.5M barrels of oil, 10 bars of gold, whatever...), and that value exists in a maximum of 1M BitCs. (I have no idea what the actual numbers are, and it doesn't matter...) Now, that $50M is nowhere near enough of an economic size to be anything but a niche currency unit. To be viable, lets say it needs to be $5B USD (or 50M barrels of oil, etc.)... that means that you MUST have price deflation of 99% to reach the size of viability. "Utility" depends on getting people to accept it, and a system doomed to a deflationary spiral were that to actually occur is not one destined for wide use. (Deflation inhibits spending and trade, and therefore inhibits the desire of anybody to go through the trouble of getting set up to accept them.)
You are absolutely right that we can't predict what will happen tomorrow. But I can confidently predict that well before "five years from now", most of the people playing around with this will have given up and moved on to another hobby because their currency was doomed to irrelevancy from the start.
As I have stated many times, the BitCoin fans are confusing utility as a currency with value as an investment. They are NOT the same thing. Yes, you, investor in X, want the value of X (in relation to some other thing you desire) to rise over time.
Ideally, you do NOT want is the value of your currency to change over time (you don't want it to increase OR decrease.) Why? Because the inevitability of somebody getting the short end of the stick tends to limit economic growth. Inflation harms savers, who then choose to spend instead of lend (crippling credit availibility) and deflation hurts spenders (who choose to hoard instead of spend.)
Yes, people invest in currencies. But those investors aren't USING that money as a currency, they are merely investing in something that happens to be a currency. If the "currency" was nothing BUT an investment by everyone holding it, as opposed to a nearly universal medium of exchange, then it isn't a currency at all.
Given all the attacks by Anonymous and LulzSec lately, how sure can you be that BitCoin is capable of withstanding all possible attacks against it? What if someone decides to destroy the distributed database (perhaps via a virus that spreads to all the hosts) or transfer bitcoins to different users? Should we trust that you have created a perfect security system that blocks people smarter than you from all the attacks they might imagine? And if the database were destroyed, would we all have to throw our hands up and start from scratch with zero (bitcoin) money?
Here's something I'd like to discuss. It seems to me that the one factor that may make bitcoin succeed is its resistance to hyperinflation. It's Geithner and Bernanke proof. It's impossible for anyone to pull any QE crap by creating millions of bitcoins and assigning them to their friends. The system simply does not allow it. In that sense it has resistance to debasement. Because of this, could it be a contender or model for a new alternate world reserve currency; one beyond the reach of politicians to quantitatively manipulate?
BitCoin is a medium of exchange like any other money before it, from feathers to paper backed by military force (US dollar). The fact that fiat currencies can be printed willy-nilly without the discipline of anything to back it with (ie gold / silver) is the direct cause of all the evil in the world today. The Cabal in charge of the printing press manipulates the entire physical paradigm of existence and eventually destroys it. "Permit me to issue and control the money of the nation and I care not who makes its laws. — Mayer Amsched Rothchild", 1800's. I hear idiots talking about Ponzi schemes, bubbles etc, and don't have a clue about the fundamentals of money. it's a MEDIUM OF EXCHANGE. Like any other medium of exchange, criminals can build ponzi schemes ontop, markets can get excited about it and create bubbles, like anything else. Money is a store of value, period. The difference here is that the value of it, vis-a-vis how much stuff you can but with a unit of it, is determined by far more parties than has ever been possible. This is the proper market democratisation of trust in the unit. The US dollar currently is run by a tiny private Cabal inbreds. For the love of Christ, learn about and understand money in history first, the role of Gold and Silver for 5000 years, the attempts by Government to eradicate Gold & Silver so they can print money and fund wars etc etc, then comment.
BitCoins are currently used almost exclusively in financial transactions of an illicit nature.
How can we know that? I'm guessing, most transactions are investment-related in nature. After that? Hosting? Services? Gambling? It's pretty hard to imagine that people are lining up to buy drugs online to be sent the their home addresses though. Silk Road is just something someone would eventually do, and did, and the media thought it could be sensational and picked it up.
What happens when a bitcoin is lost? It would seem that that after the full number are created there will be a certain percentage each year that are lost due to hard drive failures or other failures if people aren't careful. Won't this cause problems in the long run? What if someone loses 1 million bitcoins?
I'm a freelancer and I'm debating whether or not to accept Bitcoins as a form of payment: is this legally possible or could there be legal issues in regards to the tax code?
Are there any peer-reviews or other academic papers about bitcoin and the original bitcoin paper?
Why is there only 21 million of possible bitcoins. It would mean that one bitcoin could buy a house in 100 years, when it replaces money. It is very unfair to the late adopters of bitcoin.
Bitcoin only has to be 'interesting'. Watching the bitcoin drama is like watching a reality tv show. There are at least as many uninformed haters as there are curious gawkers.
For those who want bitcoin to go away, just stop commenting on it.
http://10CentMail.com - the Amazon SES app.
For most of history until 1900, precious metals species were the primary currency. All through the 19th century, the US used pure gold and silver species as its currency, and it had substantial industrialization during this period.
As the cost of producing bitcoins goes up mining will largely be done by miners (including geeks at work) using stolen computing power. The rightful owners should then be able to reclaim their stolen property provided they can identify it no matter how many times a bitcoin has been traded. Does this not make bitcoin a high risk object for speculation?
AFAIK BitCoins “clients” need a common medium to “publish” all the transactions. At the moment, it appears to be an IRC channel. IRC servers are obviously resource limited, and so is the nickname namespace. So my question is, if my understanding is correct, how does the system scale (and what happens in case of a netsplit) ?
By the NSA and what happens if non-repuriation is DOSed? Does everybody lose their investment in bitcoin?
I've not seen the answer to this question anywhere that i'm aware of. - What happens with bitcoins that are lost? IIRC there can only be a maximum of 21 million bitcoins in existance total. Supposing i hoard a million bitcoins on a flash drive and then that gets toasted in a fire and i have no backups. Does the 'system' have a way of knowing that the population of bitcoins has been depleted? (i doubt it). Does that then mean that there can only be a total of 20 milion bitcoins? Will the currency eventually DoS itself out of existance through these losses?
oh my god. you have no idea how much i needed that laugh.
If the currency is so volatile that my customers won't have the least clue how much they will pay until they hit "submit", why on earth would I EVER set myself up to accept such a lousy currency? Moreover, why would any of my customers do so either, unless their sole reason for shopping at my store is to unload some BitC's they got suckered into taking?
Large corporations do accept trades of highly volatile things (it's called the commodities market.) Most web retailers, even those that trade internationally, do not. They have the currency(ies) their store accepts, prices posted in those few currencies, and if you don't have it, you let Visa/MC take care of the exchange. And their rate only adjusts once a day.
It's a volatile currency because it's too thinly traded to be stable. And the inherent deflationary spiral ensures it will never get any better.
Yep... there are lots of happy BitCoiners out there who are pleased as punch with the current "value" of their holdings. Just as there were a lot of happy owners of "investment condos" five years ago, Beanie Baby owners about 15 years ago, and Dutch tulip investors many decades back. I leave the appropriate conclusions you could draw from this as an exercise for the reader.
Potential as an investment != usefulness as a currency.
A quote from the troll gmhowell says it all:
"I do whatever amuses me at the moment. Sometimes that is trolling. As far as AC? I only do that to avoid undoing moderations." - by gmhowell (26755) on Wednesday April 20, @12:49AM (#35877174) Homepage
Your own words prove to us that you're online trash gmhowell, you scumbag troll. This IS why nobody here takes you seriously, or pays you any heed: You're a troll!
The above not enough? Well, here's more from you:
http://slashdot.org/comments.pl?sid=1907528&cid=34543612
And here also:
http://slashdot.org/comments.pl?sid=2087330&cid=35846218
("3 strikes, & you're out" - And, there's NO DENYING you are a troll, gmhowell. (Especially when you admitted it there in the links above, literally, in your own words!))
What if someone sends millions of 0.00000001 BC to millions of random adresses, or send 1BC back and forth to one adress a lot ?
Even satoshi admit that it would cause troubles : http://forum.bitcoin.org/index.php?topic=287.msg8810#msg8810
When it will become impratical to verify the hash of transactions, I think we can consider bitcoin dead. It only take one determined flooder.
George's a jerk in real life also. I know him. George M. Howell is just another dime a dozen web page flunkie http://www.google.com/search?hl=en&source=hp&q=George+M.+Howell&btnG=Google+Search who thinks he knows about computers. George M. Howell's a joke. Now that I see how he spends his time online bothering others I stand by what I said even moreso.
I understand that Bitcoin is designed to be a pseudonymous currency. Given the fact that users can easily generate new pseudonyms, it makes it a GOOD pseudonym system. However, BC does not provide full anonymity. Could you think of any decentralized currency system, similar to BC, which at the same time provides real anonymity (as David Chaum's blinded digicash does)?
There are SOME games that actually give you better odds based on number of players interacting....
I noticed a horribly-edited slashdot story just now about these successfull games, namely because everyone but one person each day wins....and if you lose, it's only -2% of what you put in.
http://zombietoday.com/bitdouble/faq.php
http://forum.bitcoin.org/index.php?topic=18350.0;all
With a bitcoin limit you have deflation by design.... what reasoning motivated that limit? As someone said, maybe it would be better to have some economist to provide some background. I personally think that currencies should be increased or taxed just to regulate inflation and deflation, maybe agree on some inflation level and stick to that, do you see that something like this could be done?
Dear Amir, You've made in my opinion a really cool decision to implement OpenID only on your exchange, and not record any username/password pairs, have you discussed this basic security proposition with other exchanges in the light of Mt Gox, Sony et al? Cheers Mark -- http://www.openid.co.uk/
Dear Amir,
I have yet to see one decent article on BitCoin which demonstrates the writers understanding of the relationship between the amount of electricity needed to mint a bit coin and the difficultly curve ahead providing a base price. There seems to be an implied assumption that geeks are in over their heads when it comes to trading in a marketplace. But fundamentally please find me a geek who is going to sell their BitCoins for less than it took to mint them + a little extra for their GPU card?
Question: Do you feel that the press is incompetent at being able to describe BitCoin to the general layperson, or do you also personally have a hunch that the popular press couldn't ever write up a Scout's meeting without a legion of mistakes and typos?
Cheers Mark