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Amir Taaki Answers Your Questions About Bitcoin
Is the gold rush over?
by curunir
With BitCoin limited to a pre-determined amount and the difficulty of mining new BitCoins, it seems that this gives a huge advantage to people who got into BitCoin early and have already amassed a considerable amount of BitCoins. Is this true and, if so, do you think this disincentive will undermine BitCoin's ability to become more popular since the majority of the population will have to work so much harder to obtain the currency?
Amir Taaki: It is certainly true that early adopters have been rewarded. I do not think these inequities will be more shocking than those in the real world. Any guesses as to how this will play out is pontification. However, I don't think anyone has proposed a working model for a decentralized secure digital currency where such a thing would not happen. Overall, I believe the properties of this currency will significantly add to the wealth of all peoples, especially those less well off.
Crypto-Anarchism?
by conner_bw
I argue that bitcoin is interesting because it's a locked currency, with a known maximum, and a timeline for that maximum based on contemporary crypto math and radical ideas. There is clearly well thought out timeline for adoption and disruption. It's not just "Cool, new money!" Are you a crypto anarchist, or similar?
A.T.: Yes, I myself am a crypto anarchist. However, not everyone on my team has the same political ideologies and we do not try to push our ideologies on each other. In fact, we have all seen our ideologies change over time with the awareness of new knowledge and information. Ideologies should not be a point of contention, especially when we all see the immense prolific value of a more efficient means of commerce.
If not, then is this another Tulip craze [wikipedia.org] and all these news stories and bitcoin currency exchange services being hyped heavily the last month machinations for profiteering?
A.T.: I do not advocate that people speculate on bitcoins. In fact I actively advocate against that because those who are new to bitcoin might see it as just that, a 'craze.' I do however think that the properties of bitcoin are clearly advantageous over the current means of commerce. Although bitcoin is still underdeveloped, everything visible in the modern world can be adapted using bitcoins as a backbone. This will result in all the services of today's world (clearing houses, security, fraud protection, interest bearing accounts...) continuing to be offered, but with far less overhead.
Austrian Acceptance
by MyFirstNameIsPaul
I have found that the Austrians have a hard time accepting the idea of a digital currency. The core of their argument seems to be that digital currencies are not made up of something that had value before being a medium of exchange, such as gold and silver. When I counter to them that BitCoin is made up of code and people pay money for things like video games, they argue that the video game would have to be the thing valued, not the computer code. How do you deal with these kinds of objections?
A.T.: Gold is not a currency in my mind. It is a store of value. I would not want to go to buy bread from my local store and shave off some gold from a bullion and take out a scale and wait for an acid test to be performed. Gold is backed by real world properties.
Bitcoin is backed by the fact that is has unique properties as well:
- Decentralized
- No bank holidays
- International
- No concept of borders
- Divisible
- True micro-transactions possible (new markets feasible)
- New privacy model
- Private identity yet transparent
- Secure
- You do not have to trust merchant sites (Sony - Playstation) to protect your data
- Fast Transactions
- No Charge backs
Useful Calculations?
by Bodhammer
Is there any way to make the calculations more useful (i.e. Boinc) and
still maintain the same level of difficulty in the computations? It just
seems so wasteful to run Bitcoin at this time.
A.T.: Our world's current infrastructure depends on paying employees, building
large buildings, paying for heat, electricity, transportation, lawyers,
courts, judges, policemen, government bureaucracies, armies and much
more. Doesn't it seem wasteful to rely on tedious and sometimes
ambiguous real world laws with a lot of overhead instead of mathematical
laws?
When merchants started accepting bitcoins, verifiers (because miners is
a misnomer) started to see that their generated coins were worth
something. They became competitive and found ways to do the same
calculations cheaper which provided security for the network and verified the
transactions. Verifiers found out that running these hashing algorithms
on one's GPU was far more energy efficient than running them on one's
CPU. Specialized software was later constructed for these purposes. Some
keep their machines under dry ice. In the not so distant future,
hardware FPGAs will be specially designed for this verification process.
The advantages of bitcoin exist because it is an inherently more
efficient and less wasteful system. The reward for minting a block, provides a
healthy competition that causes the energy cost to be driven down.
Additional privacy layers and smartphones?
by DriedClexler
Is there any serious development underway to make the privacy more
robust? There has been talk of "Bitcoin laundry," where large pools swap their
coins around between each other to make it harder to connect a coin/address
with an owner. But for this to seriously work, it needs a lot more people to be
involved in it, and it has to be integrated in a way that's secure (against
someone just keeping coins in the middle of a shuffle) and transparent to the user
(so they don't have to think about the new addresses they generate, or
which coins are optimal to send where for the maximum shuffle). How soon can
we expect something like this? Also, how soon will smartphones be able to handle this with the same
ease as desktops and notebooks?
A.T.: A bitcoin laundry already exists. The volume on it is very low, but if demand
increases in the future then such a service is trivial to setup.
A mixing service (as they're called) requires a large volume and therefore a
persistent demand.
Smartphones can already use bitcoin :) An Android version of the command line Bitcoin was
compiled. Additionally one can use an online wallet service (or a bitcoin exchange) to store their bitcoins.
Lost/forgotten bitcoins?
by algorimancer
One thing that concerns me is the fixed maximum number of bitcoins.
Lets say people acquire bitcoins, but the amount isn't enough to worry about,
so they never use them, or perhaps their computer crashes and they don't have
a backup. My understanding is that these bitcoins are permanently lost
from the economy of bitcoins. Over time, the total supply would begin to
dwindle, presumably pushing up the value of those that remain, until people
become frustrated at the small supply and are motivated to move to a new
system, then bitcoin is abandoned. In the real world this happens with dollar
bills, but the government can compensate for this by creating more. Is this
issue addressed in some fashion?
A.T.: The supply of bitcoins is 21 million. The supply of money is infinite. A
bitcoin can currently be divided to 8 decimal places. The loss of
bitcoins in the future may lead to some deflation however I expect it to
be insignificant. In the very long term, even if there was only 1
bitcoin theoretically in circulation, running the world economy would
not be a problem. There exists only 6 MBTC in circulation at this moment.
Extreme instability of Bitcoin vs. USD
by Limerent Oil
Why would any merchant IN THEIR RIGHT MIND want to deal
with Bitcoin? With the insane USD-to-Bitcoin exchange-rate gyrations
happening lately, why would any serious retailer even bother, when the value of Bitcoin vs. USD could change by 50% or more in just a few hours?
A.T.: As liquidity increases transaction costs decrease. If there was already
an appropriate clearing house in place, a merchant would be able to
automatically accept bitcoins and liquidate them to dollars. In the same
way that people who use the internet are not all cognizant of the
communication protocols they are using, I foresee the possibility of
merchants offering their products in USD, EUR, GBP, and customers
purchasing those products in their local currency. And the underlying
mechanism which facilitates this transfer is the bitcoin. Bitcoin would
provide these same services that payment services, credit cards or banks
do but with much less cost to the merchant and customer.
What about the lack of inflation?
by Cyberax
It's long known that economic growth is severely stunted without some measure of inflation. Adopting bitcoins for the global economy would
mean that policymakers lose control on money supply, and while there are advantages in this, disadvantages far outweigh them. Additionally,
adopting a global currency standard will deny governments ability to influence currency rates robbing them of yet another way to control the economy. Is there any plan to solve this? Maybe a system of independent bitcoin 'roots' operated by governments would help?
A.T.: Ben Friedman has released a lot of work on E money and how it will affect the future and how governments will adapt. The truth is
that the government will still have monopolies on much of the operations
of the economy such as fractional reserve banking and the issuing of
licenses which allow banks to lend money.
Aspirations
by slim
What are your aspirations for the currency? Do you hope for it to be near-ubiquitous — used by corner shops and mainstream merchants like Amazon? Or are you happy to see a parallel economy grow, as a niche
thing? Or something else?
A.T.: I have lofty dreams of a world where people can send money abroad
without having to pay 20+% in many cases to rip offs like western union.
Where people can raise funds through services like paypal but not have
their accounts arbitrarily frozen. Where citizens in developing nations
who already oppose their government do not have to pay for wars of
genocide out of their own pockets as was the case in ex-Yugoslavia where
authoritarian control over the money supply helped finance a terrible
war and bring about the worst hyper-inflation in Europe since WWII.
Bitcoin in some form is going to be adopted whether it is used as a unique currency, a payment system or as a clearing house. Our aspiration for bitcoin is to provide competition to the current system making everything cheaper for all. It's about cutting the middleman, democratising money and handing back power to people.
Will governments let it survive?
by merdaccia
We live in a world where the supply and movement of money are
controlled by governments, central banks, money laundering laws, and financial institutions. How can BitCoin survive in this world? Middle men like
banks stand to lose a fortune in fees and exchange rates, governments stand
to lose a fortune in taxes if they can't track money movement, and the
black market stands to gain a silent way to move value. For BitCoin to gain adoption, some major retailers need to start supporting it, but given
the above risks, what stops a government from telling companies in its jurisdiction that they can't accept it?
A.T.: The US is not the world. If their government forces everyone to continue
to use typewriters in lieu of computers and pay through the nose, they
can. New and better technology, especially when it is revolutionary,
does threaten archaic models and practices. Hopefully there will not be
contention. My team is already in contact with SWIFT which has operated
for 30 years and is the backbone of international money transfer for
over 9000 banks. Many forward thinkers see the advantages of bitcoins
but it is easy to understand how those perhaps well-intentioned but not
well-versed in what bitcoin is can promote FUD.
Regulatory compliance?
by molo
For those of us interested in developing financial services using
bitcoin, how have you dealt with regulatory issues? It seems like the SEC and
FINRA in the US would not be keen on unregistered broker-dealers and agents
and owners not having the legally required Series 7 and Series 24 certifications. Have you sought the UK equivalent certifications? The requirements of lawyers, accountants, certifications etc. seem to put
a very high capital cost on starting a legitimate business offering services
in this space.
A.T.: As well as being a developer, I own and operate www.Britcoin.co.uk (the
UK exchange site). My team has been in negotiations for a long time now
with lawyers and regulators. There is no regulatory process or
restrictions now on the running of such services. Non-regulated sectors
rarely seek out regulation. However, when it comes to bitcoins, I
believe the sooner they are regulated the better. If their regulation is
pushed by those who understand what bitcoins are then we may be able to
regulate them in the best way possible and show the world they were not
created for illegal practices. The sooner they are regulated, the sooner
users can have legal assurances that merchants are liable for their
operations. The negligence seen at MTGox would never have happened in a
regulated market.
Although the FSA have not made any official statement about bitcoins. We
at www.britcoin.co.uk are hoping that we can show to the proper
authorities that indeed we have recorded our history of transactions.
That all the money in our users accounts is accounted for. This process
would dispel the FUD surrounding bitcoins and allow the people of the
world to enjoy the freedoms and wealth of bitcoins that much sooner.
Tax avoidance and illicit trading
by slim
Some "benefits" of Bitcoin, from one perspective, appear to be that
its cash-like properties lend themselves to tax avoidance (making
transactions without declaring them), illicit trading (e.g. drugs or prostitution)
and money laundering. Do you view this as a positive, a negative, or neutral? If you view it
as a problem, how can the problem be mitigated?
A.T.: Most new technologies can be used for good and bad. Of course I do not
condone or agree with the use of Bitcoins for illegal purposes.
However, I really want people to understand one thing. The
criminalization of Bitcoin would not stop the illegal activity that
surrounds it. In fact, it would help those who use it as a means of
engaging in illegal activity by not regulating the purchasing and
selling of bitcoins. Criminalization would only stop people from
enjoying the tremendous and fruitful benefits of such a system, it would
hinder the social good. Regulation would allow the proper authorities to
find and charge those who use bitcoins for illegal activities.
Britcoin.co.uk has kept a clear record of the exchanges which have gone
on. Every single transaction is recorded and we are happy to open our
books to the proper authorities. We are aggressively advocating and
promoting the legalization and regulation of the exchanges.
Bitcoins offer massive potential for positive social change. It would be a sad thing to see Bitcoins outlawed due to ignorance or reactionary feelings. If you outlaw Bitcoin then the illicit trades will still continue, perhaps even proliferate, but the good would disappear.
Kings used to raise capital in order to wage wars. They required popular support before they were able to fund their wars. A common tool in modern day authoritarian regimes is currency manipulation in order to fund their wars of genocide (e.g Milosevic in the 90s). Bitcoin democratises governments.
Quantum Computing?
by SanityInAnarchy
Are there plans to deal with quantum computing, or with any of the algorithms used being compromised?
A.T.: If SHA256 or ECDSA was ever cracked, we'd have far bigger problems to worry about than bitcoin being destroyed. I suspect that there won't be any overnight switch, giving everybody enough time in order to adjust the current system to any changes.
The internet wasn't built perfect. But years of reshaping/patching/incremental design have shaped it into a workable network. Bitcoin will too undergo this transformation with time as it ages.
(More from the call for questions:)
is there ever going to be a bitcoin bank? ... The idea that if you lose or destroy or whatever your computer and lose all
your money isn't going to make the general public accept this.
A.T.: Bitcoin now stands at its early stages. It's the kernel of the software stack that will eventually exist for this financial system. Other services and software utilising Bitcoin will exist. A common view is where Bitcoin acts as an automated clearing house between all these user facing services in the future.
Bitcoin's protocol itself will need to be extended in order for it to grow. As the network expands, block sizes could become impossible large once it rivals the transaction volume of a comparable service like VISA or Paypal. To have lightweight clients that don't need to process these large GB sized blocks new protocol commands like a txmatch regex would need to be introduced in order that clients don't need to process the entire block data.
The point to Bitcoin is that you can choose your own level of trust in an external service. One of our group's members, Patrick Strateman, came up with a scheme whereby a wallet could be recovered algorithmically using an email and a password. In the future I expect savings accounts where retrieving the money is an arduous proccess. Then we can go further to where a person has all their funds in a trusted service like with email today- how many people run their own mail servers?
What markets do you think will be the first to most aggressively adopt bitcoins as their currency?
What insights can you offer as to why the US government is having a hostile
reaction to bitcoins?"
What kinds of competing P2P currencies are in development, and how will their
deployment affect the valuation of bitcoins?
A.T.: Immediately as liquidity improves in exchanges, the best use for Bitcoins will be individuals transferring funds between countries without fees. Our group has a lot of interest from mobile sectors because of the potential as a micropayment system. Currently now in Africa, people use mobile credit as a form of currency to transfer funds across borders, but that's usually less than ideal.
The US government isn't a homogenous entity, and one senator (possibly funded by bankers) made a false claim on Bitcoin- calling it a scheme for drug trafficking networks. It may simply be due to reactionary misunderstanding like the people in Yahoo Finance calling Bitcoin a Ponzi scheme invented by bankers. That's why our group is aggressively pursuing press in order to dispel these myths.
Terminology
If we eventually use Bitcoin in everyday life, say, in the supermarket, how will
we deal with prices in fractions of a Bitcoin? What terminology might we use for
something priced at 0.00000005 Bitcoins?
A.T.: The accepted 'standard' is to use SI prefixes. 0.005 BC would be 5 mBC.
Here come the regulators ...
How will your business change when countries regulate exchanges? How do you ensure your exchange isn't being used for illicit purposes (to avoid
being shut down by government authorities)?
A.T.: It is our goal (and has been for months) to get legal legitimisation. Our organisation has been aggressively seeking FSA regulation here in the UK for Britcoin. Our hope is that when governments do come to look at Bitcoin, they will see a long running, honest, legal exchange with open books. By having something in the law books about Bitcoin, it sets a positive legal precedent in the future and puts us as the policy makers rather than a bunch of old 60 year banker types.
Our exchange complies with the UK Know Your Customer laws which ensures it's not being used for illicit activity. We keep detailed transaction records and run regular audit logs to look for missing funds.
But eventually, one would want to use BitCoins to pay for legal services. My
question is; how do you get to that point? Why would a legitimate business
accept a currency that is used almost exclusively for illegal means? What is the
strategy to convince mainstream businesses that BitCoins have a purpose in the
main web, as well?
A.T.: The illicit markets are a very small part of Bitcoin yet the most sensationalist. I can see how one would think Bitcoin is purely for illegal trade if I didn't know better.
Check out the list of merchants.
Full and open disclosure: how many bitcoins do you currently own?
A.T.: 32 BC. At one point I had 6000, but I'm a bad hoarder. Everytime Bitcoins would double (and I'd have $2k), I'd donate half my wealth to other free software developers. Then recently I was going to wait until I had $4k, but the price went down and I'm very bad at holding onto cash :)
But that doesn't bother me at all. We have our group of free software developers developing Bitcoin itself and other related projects. Funds are coming in and we're growing. The goal is to this as a sustainable operation paying developers working on Bitcoin fulltime.
What are the advantages of bitcoin?
One problem I see with bitcoin is it offers very little over what we currently
have. If I want to perform an online transaction using my computer, unless I am
buying something illegal, then there are already companies which offer products
for me to use. If I want to make an anonymous purchase in person, I would easily
use cash.
Bitcoin seems to suffer from a lack of portability, which makes me wonder, what
"need" is bitcoin catering to? What do I do in my day-to-day life that bitcoin
will help me do such that as some point, bitcoin becomes irreplaceable and
achieves de facto permanency?
A.T.: Sending funds abroad is time consuming, expensive and difficult. Recently I tried sending funds to a Polish bank from the UK- the bank was closed and I waited until Monday. Requiring me to be in person at the bank, the woman was unable to enter the Polish L looking character into her terminal. I had to aquire an internet banking code to do it online. Waited 3 days, logged in and the internet banking form didn't work. In the end, I ended using a friend to aquire Bitcoins and use the Polish exchange bitomat (we never use Britcoin ourself).
I wanted to donate funds to the excellent Symphony of Science musician. I went to fill in the Paypal form, spent 10 mins signing up to an account, entering all my very personal details and my card was rejected. In the end I got him to accept Bitcoins and donated directly without paying fees to Paypal.
Sony recently was hacked. Millions of accounts were leaked. If they were using Bitcoins then the addresses people donated to would be known to the attacker. Not my private keys which enable said attacker to spend my cash.
With commerce, everything becomes cheaper. Bitcoin vastly reduces the overhead needed for fees. We no longer require staff sitting inside banks pressing numbers on a keyboard since the system is automatically backed by mathematics and cryptography, not laws and people.
How do I combat the shakes when 24 hours pass without a Bitcoin article on /.?
How have you managed to flood /. on a daily basis?
So in short, lots of rationalization for having spent lots of time working on this with nothing of real substance to get people to actually use it.
Your hair look like poop, Bob! - Wanker.
The bitcoin effort needs the involvement of some economists with experience studying and understanding currencies, not just techies. It could also use some PR and marketing people, with all the bad press they've been getting lately for their poorly crafted currency system.
It sounds like they have the technology stuff reasonably well figured out, but they have utterly failed on the economics and marketing side of things.
I suspect that bitcoin needs to be replaced with a new system that has the advantages of the current without the raging disadvantages, re-branded without the negative associations of bitcoin, and work to make sure they don't fuck up again.
However, I really want people to understand one thing. The criminalization of Bitcoin would not stop the illegal activity that surrounds it.
Well, I think you're jumping to conclusions if you thought that the idea is to halt the drug trade and prostitution rings by illegalizing BitCoins. I think the question was really asking how you feel about BitCoins enticing and extending illegal activities. Allow me to provide a real world example. A person I knew in a small town high school was making yearly trips to the nearest metropolis with his stash of cash, purchasing drugs from many sources and then driving back and dealing them. At some point this stash became $15,000 and on his last trip he made his first stop to pick up some mushrooms from a woman who had been compromised by police. As he pulled away, they picked him up and found some shrooms but also $14,000. Now, he went to jail for six months for drug possession but also the very large sum of money. They were able to prove that he was a dealer and was en route to make more purchases. If he had had BitCoins, he merely would have kept a wallet on his phone then transferred the cash to the woman and could have denied the whole transaction had taken place and was clueless about the shrooms in his car. Would they have been able to make anything stick?
Criminalization would only stop people from enjoying the tremendous and fruitful benefits of such a system, it would hinder the social good.
Not if the bad elements of society enjoy those "fruitful benefits" much more than the rest of society. All the old organized crime tactics like protection rackets suddenly become virtually untraceable when you can demand the money be sent to an anonymous BTC handle and then move it again. The flow of cash is a seriously important element in detecting and prosecuting crime and the anonymity of a currency destroys that. Corporate embezzlement becomes easier, drug dealing becomes easier, funding terrorism becomes easier, etc. Someone could steal my bank account information and pilfer money from me tomorrow but at least the bank would be able to trace it. Who traces the stolen wallet files? Sure the bank charges an overhead but they provide a service that is more secure than a mattress store.
You seemingly sweep the bad under the carpet and talk about only the good. This is a double edged sword and it's insulting for you to deny it.
We are aggressively advocating and promoting the legalization and regulation of the exchanges.
You keep saying this but you fail to provide any details on how this will be done. When transactions are anonymous, how in the hell does this happen?
Kings used to raise capital in order to wage wars. They required popular support before they were able to fund their wars. A common tool in modern day authoritarian regimes is currency manipulation in order to fund their wars of genocide (e.g Milosevic in the 90s). Bitcoin democratises governments.
That is so bizarre, you're all for the regulation and legalization of exchanges ... are you seriously that daft that you don't think the government is going to tax that which it regulates? You can't eat your cake and have it too. How will we fund schools and libraries and roads if everyone's going through BTC? How will we even know that everyone's going through BTC? I cannot fathom how you expect this to work!
I understand the good points of this experiment but I'm insulted by how quickly you try to pull the wool over everyone's eyes.
My work here is dung.
I am amazed it took this long for someone to work out a way to mine and exploit unexamined privilege as a resource.
http://rocknerd.co.uk
I'm Amir Taaki from this article. You lump us all in as Ayn Rand right wing 'nerds'. Maybe you should google my nickname 'genjix'... then you can see my past history for the last 10 years working below minimum wage on free software, and my writings on Wikipedia about building a better future for all.
You're acting like politicians who smear there enemies by pointing at anyone they dislike and shouting 'TERRORISTS!'
We're all very diverse in the Bitcoin community, but we recognise the potential of this currency how others recognise the potential of something like Esperanto or Linux. Your Ad Homineum attacks on our personalities are counter-productive for any kind of sensible debate about the merits of this system.
What amazes me is that people who understand the cryptography still do this stuff on Windows machines. WHAT.
http://rocknerd.co.uk
Link of above claim: http://lists.wikimedia.org/pipermail/foundation-l/2011-June/066437.html
http://rocknerd.co.uk
working below minimum wage on free software
Working below minimum wage is when you have to go out and get a job to survive and you're so desperate that you take something below what even the state considers reasonable for your survival. Choosing to spend time on free software projects voluntarily because they happen to interest you is not "working below minimum wage" - it's a hobby.
my writings on Wikipedia about building a better future for all
Wikipedia is the ultimate Objectivist dystopia. And Wales may be a slimy embezzler but at least he doesn't deny his admiration for Rand, so you can't plead ignorance.
You're acting like politicians who smear there enemies by pointing at anyone they dislike and shouting 'TERRORISTS!'
That's only bad when "terrorist" isn't well-defined or when the target doesn't fit the definition. But when a group of people act as self-righteous Ayn Rand-reading nerds then it's perfectly acceptable to call them self-righteous Ayn Rand-reading nerds.
We're all very diverse in the Bitcoin community,
Why is it that every single oddball group uses the defence, "We're all very diverse"? You're as diverse as any group of people who think bitcoin is a good idea can be - and that's not very diverse.
but we recognise the potential of this currency how others recognise the potential of something like Esperanto or Linux.
Adoption of Esperanto was an interesting idea for cross-border communication which evolved into... everyone speaking English. Linux is and always was a pragmatic operating system project based on a Free software licence which has resulted in a very usable operating system. Bitcoin has... no redeeming feature whatever. It's not untraceable; it's not secure (unless you regard users' machines as less crackable than a bank's); it's not scaleable... so what is it, apart from a get-rich-quick scheme for its founders?
Your Ad Homineum attacks on our personalities are counter-productive for any kind of sensible debate about the merits of this system.
It is very important, in studying any human system, to examine the personalities of its leaders. It would be irrelevant ad hominem to dismiss you because you are, say, fat or Asian or whatever. But to consider bitcoin's political culture is entirely appropriate.
you are very short sighted. Ask yourself, is this type of system inevitable? If not with Bitcoin, do you really, really think this is NOT going to happen in my lifetime? You are nuts not to express general interest.
CS majors know the time/space tradeoff, but they never get taught the 3rd, crucial, tradeoff of the set: comprehension!
He's talking out his ass is how you explain it.
World economy - roughly 74 trillion GDP. 74,000,000,000.00 dollars - (source - Wikipedia)
1 bitcoin is divisible to 8 decimal places, giving 100,000,000 units of value (source - Bitcoin)
If 1 bitcoin were running the world economy, then the smallest unit of currency in our new world economy would be worth approximately 740 dollars. Good luck buying a cup of coffee or a pack of gum. And if you think gas prices are high today, good luck earning your .00000001 bitcoin/liter.
Right now the divisibility of Bitcoin is 8 decimals. This can be extended if need be in the future. The placing of the decimal point is completely arbitrary.
There will be (in the future) only 21 million bitcoins, but currently there is 6 million. I tried to use the SI prefix mega to emphasise the fact of the decimal's placing to be arbitrary... But maybe it came out ambiguously. Internally 1 BC is stored as 100 000 000 in a 64 bit integer.
Ergo theoretically we could run the entire economy on a single bitcoin :)
History is littered with the detritus of "inevitable ideas whose time has come" that weren't inevitable, and whose time hadn't come.
Is this type of system inevitable? No, I don't think so. In fact I think it has a lot of things actively working against it, not the least of which is the simple fact that it'll be hard for the government to trace, tax, and control this new currency, and the government is the only one with the guns and laws to enforce adoption of a fiat currency, so you've just alienated the very organization whose support you desperately need to be able to break out of the small niche you're occupying.
Do I really, really think this is not going to happen in my lifetime? There will always be naive simpletons willing to buy into the delusion that this sort of thing will catch on "any day now." I don't think that means that this is going to happen in my lifetime.
A steady drumbeat of articles flogging this pyramid scam is not "expressing a general interest," it's beating a dead horse.
Bitcoin...Esperanto or Linux.
Hm...
I see your point.
Palm trees and 8
So let me get this straight - to pay people for doing productive things, like the physical labor to build and maintain the infrastructure bitcoins implicitly rely on - electrical power being among the most trivial when you think about it - is wasteful?
News flash dickhead - unless you've growing your own food with handmade tools and living in a hut you build yourself from materials you gathered yourself, you are sitting near the top of a MASSIVE pyramid of laborers, designers, artisans and technicians. All your "success" comes at a price of tens of thousands of other individuals doing their job. You just called all that wasteful.
Hell, the computer he's using probably has a hundred thousand sets of fingerprints on it - from the guy who dug the earth for the raw materials to the guy who dropped the box on his doorstep (because fuck knows he probably never leaves the house, which itself took a small army to make possible).
=Smidge=
Holy crap, that other AC was right!
http://www.bitcoin.org/smf/index.php?topic=3066.0
Yep, that's Amir "Genjix" Taaki, pioneer of a revolution in currency, pimping out two 16-year old girls for 50 BTC/hour.
This reads like it was written before the peak, the first crash, the Mt.Gox break-in and shutdown, and the second crash.
A sizable fraction of the Bitcoins in existence are now trapped at Mt. Gox (formerly Magic, The Gathering Online Exchange) which turns out to be two guys in Tokyo who are in way over their heads. Mt. Gox is trying to re-establish who owns which account. Since the names, email addresses, and hashed passwords of their customers have been published, this is difficult. No date has been given when trapped funds will be available. One thing that's now clear: don't keep any significant funds in any of these "exchanges". They're not banks. They are unregulated non-bank depository institutions.
Meanwhile, another exchange in Chile has taken up some of the slack, and the price of a Bitcoin has settled down around $14-15. At the beginning of June, it was around $8, and last week it spiked up to $30.
It's worth bearing in mind that the entire Bitcoin economy has less volume than a typical US supermarket. There's not much you can actually buy. Unless the volatility drops below 1%/day, there won't be. Merchants can't set prices in Bitcoins yet without a big exchange rate risk.
Bitcoins are a reasonable idea, but the Bitcoin financial ecosystem is far too flaky to take seriously.
Step 1 - Look at everything you hate about credit card companies... now do the reverse of all of that.
Step 2 - Look at all the things you like about cash... now do all of that.
You now understand the goal of bitcoin. Even cash money systems have problems starting. Just look at confederate dollars.
Then again, you'd think the Secret Service would love a a counterfeit proof system and wish they could copy it somehow.
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YOU aren't. Every business owner IS. Think about how that affects you, I know indirect costs are just so hard for most people to fathom. (huge per-use fees?? fees based on percentage when the network cost is fixed?)
CS majors know the time/space tradeoff, but they never get taught the 3rd, crucial, tradeoff of the set: comprehension!
If you'd bothered to RTFA, you'd already know the answer is 32 (currently worth about $500).
But I know that conspiracy theories are easy while reading is really hard.
Look to the right of your browser window.
You see that vertical bar with the arrows on it?
You can use that to do something called "scrolling".
Whenever you see the mean, nasty Bitcoin stories you can "scroll" past them instead of clicking on them like you seem to think you are forced to do.
To be fair, it is hard to be more expensive than Visa/MC/ACH. Also, one would work on some money that isn't the desired currency if the other party is willing to work such currency. If you can exchange it imediately, why would you refuse a currency that isn't your preferred one (maybe add a small amount for conversion, but not refuse).
I never expected Bitcoin to get where it is, and I don't expect it to go much further. But I was wrong once...
Rethinking email
The major difference is that credit cards and the computerization of banking didn't "replace" any currencies, they simply eased the circulation of standard fiat currencies around from bank to bank and account to account. They digitized the existing system, in other words.
There are *very* few use cases where Bitcoin offers substantial benefits above and beyond using something like a credit card, and most of those use cases are directly antagonistic to the governments and regulatory bodies who would need to embrace bitcoin to make it a truly viable standard beyond the niche market it currently occupies. Of the list of strengths Mr. Taaki cited, the only ones truly unique to Bitcoin (that could NOT be implemented in our current system) are the decentralization and privacy offered - both of which do nothing to entice a centralized regulatory body charged with overseeing, taxing, and monitoring the system to accomplish those goals, and in fact actively work against their accomplishment of those goals.
I'd also say that you could make a pretty solid argument that the majority of people who are buying into the Bitcoin hype at this point are the paranoid & the criminal (for whom a decentralized, anonymous transaction mechanism is appealing), or the excessively-nerdy folks with very fast computer rigs (who dream of making millions on something which bears all the hallmarks of a pyramid scheme).
If SHA256 or ECDSA was ever cracked, we'd have far bigger problems to worry about than bitcoin being destroyed
Yeah, the world was in chaos and turmoil with no currency system or economy whatever before SHA256 or ECDSA.
The internet wasn't built perfect. But years of reshaping/patching/incremental design have shaped it into a workable network. Bitcoin will too undergo this transformation with time as it ages.
You insult the people who built the Interent by comparing your little project with it. The Internet wasn't built to make a few people with awful PR skills rich. It was a resilient defence network, then an academic network, then a general communications tool. It is a network of autonomous networks, parts being built independently to make a useful whole. Bitcoin is a single, poorly-thought-out idea with one fairly routine mathematical feature.
Bitcoin's protocol itself will need to be extended in order for it to grow.
By me, right? This is a democratic thing, so I get to vote for the representatives who decide on monetary issues, just like with regular government, yes?
The point to Bitcoin is that you can choose your own level of trust in an external service.
That is the "point to" every social endeavour, including exchange of plain-ol' dollar bills.
Then we can go further to where a person has all their funds in a trusted service like with email today-
We could call it a "bank".
Bitcoin- calling it a scheme for drug trafficking networks.
So you're saying it's not for that? It shouldn't be for that? What objection do you have to that statement?
The accepted 'standard' is to use SI prefixes.
The accepted standard when dealing with currency you're trying to sell to the wider population is not to say things like "the accepted standard is to use SI prefixes". This is the real world, not the science lab.
Our organisation has been aggressively seeking FSA regulation here in the UK for Britcoin.
If the FSA even thinks about granting some sort of approval for bitcoin then I'll be giving up on this country entirely. The disease of caveat emptor libertarianism has already deregulated the financial industry to the point that the country's public and private financial affairs are neck-deep in the shit - if the same disease manages to weave its own currency into the system then sensible investors and workers ought to pack up and leave before the country collapses into depression.
The illicit markets are a very small part of Bitcoin
Prove it. Show me the records that bitcoin is supposed not to have.
Sending funds abroad is time consuming, expensive and difficult. Recently I tried sending funds to a Polish bank from the UK- the bank was closed and I waited until Monday. Requiring me to be in person at the bank, the woman was unable to enter the Polish L looking character into her terminal. I had to aquire an internet banking code to do it online. Waited 3 days, logged in and the internet banking form didn't work. In the end, I ended using a friend to aquire Bitcoins and use the Polish exchange bitomat (we never use Britcoin ourself).
Because of the number of Polish people in the UK there are a billion and one reasonably priced ways of sending money quickly to Poland. If you don't know any of them and don't know how to use the Internet to find any of them then I seriously question your competence. When Poland enters the eurozone it'll be even SWIFTer, and certainly free for individuals. You know, there's a reason why it's harder to send money to certain countries, and as countries develop and their financial systems become more secure, it becomes easier to send money to those places. Since you're clearly libertarian you won't be able
1) The expansion curve has nothing to do with the volatility BTC is currently experiencing; that's because it's a new currency with an uncertain future (in terms of who will accept it later).
The expansion curve has everything to do with BTC's issues. The poorly-chosen curve guarantees deflation if the currency is going to expand to a level where the net value of every BTC in existence is more than a trivial, useless, quantity. Expected deflation triggers hoarding. Hoarding triggers illiquidity. Illiquidity triggers volatility.
2) People's expectations of a nascent currency's volatility are way too high. Any new currency is going to be that way! This expectation is effectively ruling out any new currency that can't get its volatility down to that of the USD immediately -- which means you're against any new currencies that don't start with some stabilizer. (Btw, no you can't tell me how much gasoline a USD will buy tomorrow.)
When the Euro was introduced, nothing even remotely like this volatility occurred. Nothing like this: http://bitcoincharts.com/charts/chart.png?width=1228&m=mtgoxUSD&k=&r=60&i=&c=0&s=&e=&Prev=&Next=&v=1&cv=0&ps=0&l=0&p=0&t=S&b=&a1=&m1=10&a2=&m2=25&x=0&i1=&i2=&i3=&i4=&SubmitButton=Draw& That's a chart that I'd expect to see with a pump-n-dumped penny stock or a fad like Beanie Babies. Not a serious means of value transfer.
This is a problem with the currency, not "people." If the currency was more liquid because of a better chosen expansion curve, it would not be an issue. (BTW, I can say that my USD will purchase 93-octane gas at around $3.90 to the gallon tomorrow in my area. I can say that with error bars of around 2%, barring some major swing in the world oil markets that have nothing to do with currency valuations. I can make no such statement about BTCs.)
3) Inflation and deflation are caused by changes in *expectation* of the growth the money supply. That is, it's only unexpected money shocks that change the price level/inflation rate. Bitcoin has broadcast how many there will be at all points in time, eliminating this uncertainty. This means that there will be no unexpected growth (though their could be unexpected velocity, liquidity, or acceptance level), and so the limited (final) quantity of bitcoins is *already priced in*.
So you won't have a scenario where, in 20xx, people say, "golly, they just stopped minting bitcoins, now they're suddently ultra scarce so we have to bid MORE MORE MORE for them." No: everyone will price in this event well in advance of the termination of growth.
At current prices, the total number of BTCs, after every single one has been mined many years from now, is roughly $303M (at current supply levels, it's much smaller, but I'm trying to cut the BTC some slack here.) For a currency that seeks worldwide adoption as an alternative to Visa/MC, this is, to be blunt, puny. Last year, Visa ran $5.4T in payments. If BTCs achieve the pathetic ubiquity of Discover (not accepted most places, little international presence), they managed to transact about $100B. If every BTC in existence at the end of BTC creation changed hands twice a week (which would be an unheard of currency velocity for an economy with a vaguely stable currency... the USD's velocity is approx. once a month.), the currency would have to deflate by a factor of 30 to reach $100B. (At the velocity of the USD, it would have to deflate by a factor of 240-ish.) Because it would have to deflate so much to be useful, it's unlikely to ever actually do so. T
The BTC exchange volumes are still far too low for a sane merchant to accept; the bid/ask spread and intra-day volatility is far too high. So, I'd accept my BTC, wait the required 10 minutes before I can turn it around (the BTC FAQ talks about this), and then end up collecting several percent less (or more) actual currency than I priced for. And that's if I implement totally dynamic pricing feeding off the data feed of my preferred exchange.
And Visa/MC provide far more services than just transfer. I guess for a more fair comparison would be the ACH system, which runs $0.25 and up per transaction.
That's how I feel when game system posts come out. There are lots of topics that don't interest me, you don't see me cry each time an article gets posted.
Working below minimum wage is when you have to go out and get a job to survive and you're so desperate that you take something below what even the state considers reasonable for your survival. Choosing to spend time on free software projects voluntarily because they happen to interest you is not "working below minimum wage" - it's a hobby.
Could also be that he's incapable of landing or keeping other jobs than http://i.somethingawful.com/u/elpintogrande/june11/eroticbitconchat.JPG">pimping 16 year olds and pump-and-dump schemes. I wouldn't presume to know.