Will Legitimacy Spoil Bitcoin?

New submitter F9rDT3ZE writes "Salon writer Andrew Leonard examines the U.S. Treasury's Financial Crimes Enforcement Network's (FinCEN) first 'guidance' regarding 'de-centralized virtual currencies,' noting that Bitcoin's supporters call it a 'currency of resistance,' while others suggest that 'the more popular Bitcoin gets, whether as a symbol of resistance or a perceived safe haven in financially troubled times, the more government attention it will inevitably draw, and the more inexorably it will be sucked into existing regulatory structures.'"

Comments

That's the price you pay

[allaunjsilverfox2]

No matter what you trade, if it has value, the state will look to control it's function.

Re:That's the price you pay

[Anonymous Coward]

If only we could put a tax on apostrophe's.

Re:That's the price you pay

[JustOK]

apostrophe's what?

Re:That's the price you pay

[ArcadeMan]

You would'nt bel'ieve how many t'imes Iv'e seen it use'd impro'perly.

Re:That's the price you pay

[Anonymous Coward]

When apostrophes are outlawed, only outlaw's will have apostrophes.

ftfy

Re:That's the price you pay

[maxwell demon]

That too. Indeed, those are a perfect matching pair: If you tax it, you have a good argument to control it (tax evasion), and if you control it, you have a good argument to tax it (in order to pay for the control). So no matter which one you introduce first, the other can easily be added.

Re:That's the price you pay

[Entropius]

The idea of Bitcoin, I think, is to give up on the idea of asking the state nicely not to control something, and make something that the state, whether it wants to or not, can't control.

Re:That's the price you pay

[gd2shoe]

You can't spend an "invalid bitcoin". There is no such thing as counterfeit or otherwise invalid currency in bitcoin. Perhaps you should study what you are trying to mock and deride.

With the right hack it is possible to have two copies of a bitcoin in circulation. It's possible to make this very hard to do, but it is impossible to prevent in an absolute sense.

You have a bitcoin. Great! Now how do you know that it's unique? The transaction was signed? Fine. But how do you know that it was legit before you received it?

No matter how you slice it, there must be a central authority to indicate which are real, and which are false. A hack there can cause all flavors of theft, fraud, and forgery. If you have no central authority, then you risk fracturing your money supply at the exchange level, with each exchange becoming its own authority.

Re:That's the price you pay

[Anonymous Coward]

With the right hack it is possible to have two copies of a bitcoin in circulation.

It's only possible if you have more processing power than the rest of the people processing bitcoin transactions combined.

Re:That's the price you pay

[waltmarkers]

Apostrophe now! It's the beginning of the end!

Re:That's the price you pay

[Anonymous Coward]

And even then, only possible for a moment.

That processing power - by the way - is currently equivalent to about 613 PetaFLOPS.

Re:That's the price you pay

[shaitand]

"You have a bitcoin. Great! Now how do you know that it's unique? The transaction was signed? Fine. But how do you know that it was legit before you received it?

No matter how you slice it, there must be a central authority to indicate which are real, and which are false. A hack there can cause all flavors of theft, fraud, and forgery. If you have no central authority, then you risk fracturing your money supply at the exchange level, with each exchange becoming its own authority."

Having come up with a decentralized P2P solution to this problem is the reason people are so excited about this Bitcoin thing. ;)

Every piece of every Bitcoin ever to exist has a transaction trail from it's point of origin to the current address at which it resides. Verifying these trails is what miners do. It isn't simply that you send me some bitcoin and I trust it or I trust the hash. You send me Bitcoin and the network begins validating the transaction from the point it was mined to you to me over and over again with it eventually becoming part of that trail.

In order to have even the tiniest minute fraction of fake Bitcoin you'd have control >51% of all the mining power. The more people mining, the harder that feat is to accomplish. The Bitcoin network can determine if someone actually has >51% btw.

Re:That's the price you pay

[shaitand]

"What exactly stops the government from coming up with some other collection of numbers with different properties and claiming that they are also bitcoins?"

Other people agreeing with them? The "properties" of a Bitcoin aren't secret. Claiming something is a Bitcoin isn't something a person does, it is something a computer does. There is a complete transaction trail for every coin back to the moment it was mined including the ability to verify that it qualified at the moment it was mined and every client has a copy of it. When you send me a coin that trail is audited repeatedly by third party miners only becomes part of the audit trail with enough verification.

Every hacker and cryptographer and their dog has been trying to find a way to do what you suggest for the past four years (though most have already given up) and the best they've found is a theoretical way that requires controlling >51% of all mining power. A government that was willing to spend enough money might be able to do that (there is more demand than mining hardware as it stands so you can't just throw money at it) but the community can tell if someone actually has >51% of the mining power.

Re:That's the price you pay

[shaitand]

Party B would never need to sue Party A. The network would reject the fake transaction and it would never become part of the publicly viewable audit log. If you present the relevant address any judge could verify a transaction or lack of one along with anyone else who cared to.

The anonymity that people talk about with Bitcoin comes from the fact that there is nothing to indicate who any particular address is controlled by. The actual flows of coins between the addresses are all public record. That is why people use coin tumblers. With a coin tumbler you can get Bitcoin back out that is unrelated to the coin you put in. Even then, large transactions and conspicuous sums can be used for forensic accounting.

Re:That's the price you pay

[GreyWolf3000]

Tolkein? Is that you?

Re:That's the price you pay

[fuzzyfuzzyfungus]

No matter what you trade, if it has value, the state will look to control it's function.

So far, the main entanglements seem to occur because people what their bitcoins to be exchangeable with other currencies, particularly USD. Whether or not you think they are a terrible idea, the (copious) regulations that (sometimes, if you aren't big and important enough) cover bank-like institutions that deal in transactions large enough to be of money laundering concern aren't exactly new or surprising.

It would be a bit more novel if they were to go after bitcoin-only transactions floating around in the aether; but if the bitcoin system is going to link to conventional currencies, it isn't a huge surprise that regulations from conventional currencies will start to apply at those links. Not wholly unlike connecting a VOIP system to the local POTS. There are some ghastly hellholes where the VOIP simply isn't legal at all(though fewer of those can back it up); but a lot more where you can do whatever you damn well please so long as it's VOIP only; but once you start interconnecting with the POTS system, you get all the exciting legacy regulations associated with the incumbent copper for the last 50 years.

Re:That's the price you pay

[demonlapin]

This is one of the central insights of a book entitled Seeing Like a State, basically that all sorts of disastrous policies have been implemented not because they were likely to be successful at solving some particular problem (e.g., Stalinist collectivization of agriculture gave peasants a certain area of land, regardless of its quality, rather than the traditional division of best-medium-poor lands in roughly equal quantities to each family in a village even though this made it almost impossible for an outsider to identify who owned what) but because they made people's actions more visible to the state and thus more controllable (and more easily taxed).

Re:That's the price you pay

[Ol Biscuitbarrel]

M'or'e lik'e L'ov'e'craf't, Im' th'inki'ng.

Posted from ph'nglui mglw'nafh.

Re:That's the price you pay

[Anonymous Coward]

The death knell to bitcoin will be mass adoption. When millions of users are making transactions every day the miners will be unable to keep up with the transactions and the network will slow to an even more glaceral crawl. Already it often takes 20 minutes or more to validate a transaction.

Not to mention that the entire blockchain grows exponentially longer with every transaction and is already at 6GB. A few more years and it will be hundreds of terrabytes.

Re:That's the price you pay

[Karl Cocknozzle]

No matter what you trade, if it has value, the state will look to control it's function.

Everything that begins free and open inevitably evolves towards lame and bureaucratic as governments and big money corporations become involved. Or, rather, government gets involved at the request of big money corporations.

Re:That's the price you pay

[mestar]

This is a good question, and a normal thing for the network. You would have a temporary chain fork, and the branch that gets the next block first, wins. If the second blocks on two chains also happen at the same time, the third block will be the decider, and so on. That's why it's standard to wait 6 blocks before accepting the transaction.

So, the longer chain always wins, because, there is a very high probability that more processing power went into it.

Re:That's the price you pay

[SteveFoerster]

Then came the churches
Then came the schools
Then came the lawyers
Then came the rules

Re:That's the price you pay

[Anonymous Coward]

No, because the chains were merged.

Re:That's the price you pay

[vux984]

Same applies to VISA transactions. But nobody would ever commit 10^5 visa micro-transactions a day either for the same reason. Transaction fees would make it utterly pointless and counter productive. You'd inevitably switch to some sort of internal coins/points system for the majority of transaction and transact with VISA once a month or so.

Even iTunes already witholds processing puchases as they happen, and aggregates a day or two worth all at once to minimize their fees.

 

Re:That's the price you pay

[LaggedOnUser]

Unfortunately our "central authorities" nowadays are the biggest counterfeiters of all...

Re:That's the price you pay

[wonkey_monkey]

lol its sad that i get this.

*facepalm*

Re:That's the price you pay

[Abstrackt]

Looks like someone couldn't afford the apostrophe tax.

Re:That's the price you pay

[tehcyder]

The alternative way of looking at that is that the State is simply the legislative and administrative expression of the democratic will of the People, and that if goods are to be owned jointly and equally by all the people, then of course you need to make sure that no one is sneaking more than their fair share; and that, even if you don't have a communistic system and there is still private property, you need to be able to identify assets for tax and redistribution.

I don't imagine this interpretation will go down very well on slashdot.

Re:That's the price you pay

[wichawa]

"As it stands in the real world in 2013, currency, by definition is pseudo-anonymous."

There is nothing in the definition of currency that assures it is anonymous.

Don't put words in my mouth when I'm not asking you to feed me.

I made no claims about your assurances in the jurisdiction you live in.

I only made the claim that, by definition, money (or currency) is pseudo-anonymous. Allow me to explain this definition, starting by using your very next sentence as you have clearly not taken a monetary economics (300 level undergrad or higher) class:

In the US cash is far from anonymous.

Once again, I never said US cash is 100% anonymous. I said money (or currency) is pseudo-anonymous. And yes, US Cash fits this definition.

In some forms, US Cash is anonymous and in some forms it isn't. In some forms it is representative of anonymity (like the trillion "missing" dollars). In many (most) cases, the choice is yours as to how anonymous you would like your cash to be, but it will be very difficult (if not impossible, much like with Bitcoin as we will see at the end of this comment) to actually achieve 100% currency anonymity on any legitimate scale. The world is not as absolute as you'd like to think it is.

Pseudo-anonymity can can be contrasted with a currency like Bitcoin, which claims complete 100% anonymity (though it is not). Until the system is broken or until there is a warrant out for someone's arrest, you might feel as though you are 100% anonymous. This is how people felt when they first started posting things to livejournal/myspace/facebook, and it is how most people feel when they are using Torrents or some form of proxy.

Now that we have definitions out of the way, moving the current currency system closer to 100% anonymity has not yet been proven to produce more desirable outcomes than a definably pseudo-anonymous currency. Sometimes, for society, it is pretty important to know where, when, and who the money passed through, and there must be devices in place to access this information in the case of catastrophe.

Obviously, if you are receiving a direct deposit from your employer, and are paying for rent/mortgage with cheques/e-payments, and are withdrawing said cash from the bank where said payroll was deposited you should expect 0% anonymity in this case. Do you honestly think you have complete anonymity when you transfer those same dollars into Bitcoins, and from there on out?

If current US Cash were 100% anonymous for example, you would likely have more difficulty finding the person that hired the super-cool-ninja-assassin who to tried kill you in your sleep last night (thank god for the anonymous Bitcoin-purchased gun under your pillow). One way investigators (private and public) could do this would be to "follow the money" and its paper trail. But because the current government backed money systems in the Western Democracies I am familiar with are already pseudo-anonymous, the person who hired your assassin has ways to ensure his/her name is not associated with the act.

Everybody already wins.

Furthermore, many legitimate professions like Bartenders and Cab Drivers are paid in largely in cash and at no point are they required to be subject to said aforementioned tracking mechanisms. You can always ask your employer to pay you in cash. Where did you employer get that cash from? Who knows, only they do. Your employer doesn't want to pay you in cash, but you only want to be paid in cash? Find a new employer.

You do realize that there is already a lot of cash in circulation, yes? Much of it is "claimed" to be missing, yes? No currency that is already in circulation necessarily has to be associated with any one person's name. This is how drug dealers operate and provide their necessary services. Bitcoin is an alternative for them, as for now it provides them with more assurances regarding anonymity. Drug dealers will still be taking col

Transactional Currency, not Safe Haven Storage

[billstewart]

Unlike gold or silver, bitcoins don't even have a vague amount of price stability that lets them be a store for value. They're purely transactional currency, designed to be hard enough to make that their value probably won't change very much very fast, but easy enough to make that the quantity can expand to support a growing market (at least for a while.) So they're useful for online drug deals, where the potential currency risk is a lot smaller than the profit from making convenient transactions possible, but they're not something that it makes sense to stash in your mattress as a hedge against inflation. Their value isn't backed by a useful commodity, like gold or oil, or by the ability of a government to tax its subjects, they're just backed by the fact that they're designed to be useful for some kinds of transactions that might not happen otherwise, and by the existence of exchanges where you can trade the things for cash at today's price, which is random but usually somewhat close to yesterday's.

Re:Transactional Currency, not Safe Haven Storage

[complete loony]

easy enough to make that the quantity can expand to support a growing market

Not even close. They are designed to be hard to make, to only be made at a pre-determined rate, and for new supplies to eventually run out. Bit-coins are designed to be limited in supply.

Re:Transactional Currency, not Safe Haven Storage

[Anonymous Coward]

Money hasn't been based off of gold or silver, or any "real" good for a while. The value of money is based off the faith that it can get you something real.
en.wikipedia.org/wiki/Fiat_currency

Re:Transactional Currency, not Safe Haven Storage

[tsotha]

Dollars aren't based on gold or silver either, and unlike bitcoins the decision to create dollars happens through a totally opaque process that has no basis in economic reality. If we had a commodity backed currency I would agree there's no need for bitcoins, but we don't. Dollars are backed by and endlessly increasing supply of debt, which guarantees huge fluctuations of (perceived) value over time.

Re:Transactional Currency, not Safe Haven Storage

[Anonymous Coward]

You have a PROFOUND ignorance of economics, governance and politics.
Or, you've been steeped in the Fox Network view of the world.

Re:Transactional Currency, not Safe Haven Storage

[0-9a-zA-Z_. !*'()123]

Aren't you essentially arguing that they are backed by the transactional value of the drug exchange? Which is to say it's backed not by a commodity but by a service.

Re:Transactional Currency, not Safe Haven Storage

[mysidia]

BTCs may have fewer risks than actual currencies, because while they are subject to competitive market forces; there is actually a cost to produce a BTC. There is guaranteed to be a finite amount of BTC that can ever be produced, as long as the Bitcoin network continues to function, and has not been subverted technologically. You can be relatively sure BTC will be a viable exchange medium into the future, absent governments banning it entirely.

While I appreciate, that these are a couple of risks -- it could very well be that coins and cash currencies also have risks, even greater market risks than BTC -- resulting in BTC being a safer long-term storage, and currencies such as USD being a better idea for consumers for short-term exchange. They have a different set of risks: With USD, for example, the US treasury can print a large amount of money at any time; they can declare certain bills worthless; if money is in the bank, there is a chance that it could be seized without the knowledge of the account holder (until one day, when you really need that money and coincidentally some creditor or ID thief took it today...); there is a risk of identity theft (traditional currencies placed with a bank could be stolen -- because when you have physical dollars, they are easily stolen by physical thieves or fraudsters, and social engineering and insecure secrets such as SSN digits could be used against a bank to coerce them to make unauthorized transfers).

The government may devalue the currency, through poor management. Your bank may change their policies, e.g. they may quietly start charging inactive account fees on your savings account.

With BTC, your wallet kind of is your bank account as well, and you are not so reliant on a specific third party providing you a service -- to maintain the account terms, deposit interest rates, no maintenance fees, etc.

Furthermore, your bank can make an accounting error, or an employeen can conduct a fraud in which the result is that money you did not spend is removed from your account. With BTC, you are assured this can't happen, without someone compromising cryptographic secrets that you can secure.

With BTC, while the possibility of theft through malware exists, you don't need a bank, and you have control over how you secure the cryptographic secrets required to transfer your Bitcoins, without requiring a specific third party to act -- if you are sufficiently paranoid, you can divide bitcoins into as many accounts as you like, and very effectively eliminate the possibility of large theft; even "legal" theft, without you're knowing about it until the check bounces -- when some creditor decided to levy your bank account.

Not even close. They are designed to be hard to make, to only be made at a pre-determined rate, and for new supplies to eventually run out. Bit-coins are designed to be limited in supply.

Indeed.. under the current design, the eventual amount of bitcoins available is guaranteed to be finite.

There are really only two forseeable long-term outcomes with regards to the value of bitcoins.... (1) They tend to become worth zero or less over time relative to their worth at previous times [either because of a flaw in the underlying crypto algorithms compromises the protocol, or, a significantly large number of people stop using the bitcoins, in sufficient number that Bitcoins become unusable as as an asset for trade/exchange, and therefore consumer demand for bitcoins eventually shrinks to a smaller amount at a given market clearing price] -- if there is a plentiful supply of people who have bitcoins (for example, through mining), and a very small amount of demanded product available for purchase that require Bitcoins to purchase, the demanded quantity for bitcoins will decrease, and they will eventually become worthless --- However, as long as there are demands for products that vendors will accept bitcoins for (ESPECIALLY services in demand for which v

Re:Transactional Currency, not Safe Haven Storage

[gd2shoe]

Actually, they're designed to be relatively easy to make. It's an ingredient of the snake-oil part of bitcoin.

People needed to use CPU cycles to "mine" them, thus they feel like they've accomplished something. They feel like they've contributed. They have earned something of value. It's a very nice, exciting, warm and fuzzy feeling. Having gotten something from nothing, they go from being skeptics, to converts.

There is a semi-legitimate social (not technological) reason for this. If I say I wanted to start an online currency, but I'm starting with all the cash, nobody is going to buy from me. On the other hand, if I say that other-people-not-me are the originating parties, people don't assume it's a thinly veiled money grab.

(To be perfectly clear, I do not believe Bit Coin to be a thinly veiled money grab. I do believe it to be ephemeral. I just can't figure out if it's unthinking zealotry, a complex scam, or an inevitable part of our zeitgeist - a word I swore I would never use.)

Re:Transactional Currency, not Safe Haven Storage

[Reschekle]

No. The smallest unit of Bitcoin is the Satoshi, which is 1/100,000,000 of a bitcoin.

Re:Transactional Currency, not Safe Haven Storage

[Reschekle]

That's not really true. Miners can collectively switch to a new client that supports whatever feature they want, but everyone else needs to run the same client in order for that to work.

Otherwise the rest of the bitcoin network will refuse to confirm their transactions.

Re:Transactional Currency, not Safe Haven Storage

[complete loony]

Dollars *are* backed by debt. And that debt seemed to be ever increasing, at least up until 2007-ish when the housing market finally imploded.

The Fed doesn't really control or constrain the supply of money, though many economists still believe that they do. It's the double entry book-keeping rules of the banking industry that predominantly create and control the supply of money. A new loan creates both a future obligation and current spending power that didn't exist before. Sure the bank has to find a small amount of money to meet their deposit insurance, liquidity and capital requirements, but that's tiny in comparison to the value of new loans.

Since the level of debt is now such a huge factor in the economy, small accelerations and decelerations in the growth of debt have an enormous impact on the economy. And when everyone recently slammed on the debt brakes the economy practically died.

Re:Transactional Currency, not Safe Haven Storage

[swalve]

There is nothing more real about the faith that you'll be able to exchange gold for things you need than that you will be able to exchange dollars. Every currency is based, at some point, on the belief that it will be able to be exchanged for something. It doesn't matter if that faith is direct, as with fiat currency, or indirect, as with metal backed currency. The dollar has been more stable since we got off gold. Yes, inflationary, but stable. That's a good thing. Our currency is worth what people think it is worth, instead of being pegged to the whims of the gold market.

Re:Transactional Currency, not Safe Haven Storage

[shaitand]

Yes but if the Bitpenny is practically used like the dollar today that means 1 BTC is worth $100. This solves the same problem. We always have enough units of value to cover the volume of transactions being conducted in Bitcoin. Doing so indicates the economy has grown. If you do that by adding currency you create units by stealing value from all the existing currency units and then picking and choosing who to give them to. If you do that with a fixed amount of currency and create new units through division then you increase the value of the existing currency and thereby make using the smaller units feasible. The value is given to those who already hold currency instead of taken from them.

If the Bitcoin market continues to grow there will come a time when very few people are wealthy enough to have an entire whole BTC in their wallet.

Re:Transactional Currency, not Safe Haven Storage

[siride]

More like a tad full of shit. You can rattle off anecdotes about those hippie-dippie liberals who can't hold down a job or keep track of their money, and I can probably rattle off a longer list of liberal friends of money who do an amazing job of managing money or even starting and running business, while I have a list of conservative friends and acquaintances who are only a few steps away from being in the poverty line. Some people are responsible and some aren't, and it has little to nothing to do with broad political affiliations.

You claim to be an independent, but almost everything in your post is a talking point from the Fox News crowd. We have the myth that liberals like to blame other people for everything, that they can't manage money, that they don't have jobs, and that conservatives really *understand* economics, even though they propose ridiculous ideas like flat taxes and trickle-down, and believe that the Laffer Curve is a valid model to be used for serious tax and policy decisions.

No, you aren't a hypocrite. You're just another conservatard drone who is too chicken to admit it.

Re:Transactional Currency, not Safe Haven Storage

[petermgreen]

Volatile??? Have you even been following bitcoin over the past 2+ years?

I dunno about the guy you are replying to but I have been following bitcoin and it has certainly been volatile. It's not all that unusual for the value of bitcoins compared to major world currenecies to double or halve within a single month.

What other new currency has this kind of upward trend?

http://bitcoincharts.com/charts/chart.png?width=940&m=bitnzNZD&SubmitButton=Draw&r=&i=&c=0&s=&e=&Prev=&Next=&t=S&b=&a1=&m1=10&a2=&m2=25&x=0&i1=&i2=&i3=&i4=&v=1&cv=0&ps=0&l=0&p=0&

So you talk about 2+ years and then link to a chart that only covers about 1.5 years and therefore conviniantly misses off the 2011 peak. Yes in the last month or so the value of bitcoin has surpassed it's 2011 peak but only time will tell whether the current price is stable or another bubble (personally I suspect the latter).

http://www.bitcoincharts.com/charts/chart.png?width=1223&m=mtgoxUSD&SubmitButton=Draw&r=&i=&c=0&s=&e=&Prev=&Next=&t=S&b=&a1=&m1=10&a2=&m2=25&x=0&i1=&i2=&i3=&i4=&v=0&cv=0&ps=0&l=0&p=0&

Re:Transactional Currency, not Safe Haven Storage

[invid]

A real software engineer would have made the smallest unit 1/4,294,967,296. Screw this decimal crap.

Re:bitcoin's value is for it's utopian idealizatio

[circletimessquare]

when you can only process opposition to your worldview in simpleminded cartoon stereotypes, you might have a problem

Legitimacy

[Grashnak]

I can't question its legitimacy until I see some evidence that it has any.

Re:Local Bitcoins

[Anonymous Coward]

That will just make Bitcoin dealers like drug dealers. Sure I can go buy drugs from my local dealer, but the dealer lives with the risk over his head that I'm going to narc on him.

The registry that exists of local bitcoin dealers is out in the open - any bitcoin seller who is listed on there would be an easy target for cops to go after for being an unregulated exchange.

Quantum computing and bitcoins?

[myowntrueself]

http://www.scienceworldreport.com/articles/5759/20130323/lockhead-martin-quantum-computer-speeds-through-problems-millions-times-faster.htm

How fast could this thing mine bitcoins?

If one were a major superpower with access to this tech and if it could be used to produce huge amounts of bitcoins... and if one wanted to destabilise the virtual currency...

Re:Quantum computing and bitcoins?

[Kal Zekdor]

The difficulty of mining bitcoins (and hence the speed that a given set of hardware mines bitcoins) is directly proportional to the amount of computing power mining bitcoins. If the amount of computational power in the system goes up, that means that (in the short term), the amount of bitcoins mined in a given period goes up. Every X number (I forget exactly how many) of blocks (the basic structure of bitcoin as a currency, currently each block "creates" 25 BTC, given to the block's solver. The amount of BTC earned per block is halved at distinct intervals, but that's not relevant here.), the bitcoin system (i.e., each client that is creating these blocks, as there is no central server) analyzes the length of time it took solve all X blocks. If that time is less than Y (again, don't recall the exact number, but I think it was a week), then the difficulty of mining blocks is increased by a proportional amount. If it was greater than Y, the difficulty is decreased.

What this all means is that if someone were to bring an astronomical amount of computing power to bear on mining bitcoins, the difficulty of mining bitcoins would automatically compensate, and the addition of new bitcoins into the marketplace would proceed at the same rate. Granted, the person at the head of all this computing power would be the recipient of most new bitcoins, but the currency would not be destabilized (at least through computing power alone.) There would be other things said person could do to destabilize bitcoins, though, through either Financial or Technical means. They could hoard all BTC they mine, causing the price of BTC to rise. They could sell BTC they mine at ridiculously low prices, causing the price of BTC to plummet. If they comprise more than 60% or so of all computing directed at bitcoin mining, they could hijack the blockchain, and would be able to spend bitcoins they don't own, or double spend their own bitcoins.

I'm fairly sure that anyone who attempts to hijack bitcoins through raw computing power would end up spending more on said computing power than they would earn from bitcoins. So unless a malicious billionaire or an intrepid hacker organization with a few supercomputers in their botnet decide one day that they really don't like bitcoins, it doesn't seem likely to happen.

Re:What is their to spoil?

[Trepidity]

In what sense has U.S. currency been devalued? Its real purchasing power has remained quite strong over the past few decades; there hasn't been a significant erosion of real purchasing power (i.e. high inflation) since the late-70s/early-80s period of inflation.

bitcoin alternatives will emerge

[srk]

I think that a bunch of alternatives to bitcoin will eventually emerge so if government regulates one virtual currency there are going to be other safe havens.

Re:bitcoin alternatives will emerge

[maxwell demon]

Of course you can regulate bitcoins, just as you can regulate drugs. What you are saying is that it is easy to evade that regulation. But that's a different thing. All you need to do to regulate something is to put out laws making certain related actions illegal. This doesn't make it impossible to do it (just as the law that makes murder illegal doesn't make murder impossible), but it means that you are in trouble if they find out you do it.

Re:bitcoin's value is for it's utopian idealizatio

[circletimessquare]

i'm not entirely sure when faced with the same mental vomit over and over again why it is my responsibility to find a new creative path to sanity for the crackpot. it is the crackpot's responsibility to make fucking sense

It's all fun and games...

[gatkinso]

..until it becomes actual money.

At that point the suits take control, and there is absolutely nothing you can do about it.

Bitcoin Legitimacy

[fyngyrz]

The idea of Bitcoin, I think, is to give up on the idea of asking the state nicely not to control something, and make something that the state, whether it wants to or not, can't control.

That actually addresses the question in TFS: Will legitimacy spoil bitcoin?

First, you have to achieve legitimacy. In the USA, the power of currency, essentially, belongs to the federal government. If they perceive a threat (or simply a challenge) to that power, what do you think they will do? Hint: It's going to be directly related to the term "legitimate."

The thing about the assumption that the state "cannot" control something, is that it is almost always entirely wrong. This discovery is almost always accompanied by wailing and gnashing of teeth.

There is only one condition under which the state cannot control: When the state itself has been dismantled. And there is absolutely no sign of such a thing, even well out on the horizon.

Consequently, the answer to the question in TFS is: No. What's going to "spoil" bitcoin are actions of the state. Guaranteed. It won't be legitimacy, because that's permanently and irrevocably out of reach.

Re:Bitcoin Legitimacy

[Anonymous Coward]

How long would it take the NSA to destroy the bitcoin by devaluing it? Give you a hint, they build silicon to do whatever the hell it is they want to do. No problem hoarding bitcoins and then devaluing the currency in one huge move.

Re:Bitcoin Legitimacy

[paiute]

How long would it take the NSA to destroy the bitcoin by devaluing it?

Why would the NSA/CIA/ETC want to destroy a way for them to fund whatever they want wherever they want with a system they can game to be invisible to oversight? Hell, they probably funded the invention of bitcoin.

Re:Bitcoin Legitimacy

[spiritplumber]

Bitcoins are unique based on a mathematical property. The state has about as much chance of controlling this as it has to declaring pi equal to three. This is a good thing.

Re:Bitcoin Legitimacy

[Anonymous Coward]

The thing about the assumption that the state "cannot" control something, is that it is almost always entirely wrong. This discovery is almost always accompanied by wailing and gnashing of teeth.

On the other hand, the assumption that the state "can" control something is also almost always entirely wrong. This discovery is also almost always accompanied by wailing and gnashing of teeth.

Re:Bitcoin Legitimacy

[fyngyrz]

What you're completely missing is that they can, and are perfectly willing to, control you. Without the latter, the former become irrelevant. They have done this many times. They'll do it again.

Let's cast your argument this way: Cocaine is based upon a natural property. The state has about as much chance of controlling this as it has to declaring Alcohol is non-inoxicating.

Now lets look at how the state actually exerts control over cocaine. Do they attempt to revise the laws of nature?

Oh, I see you're way ahead of me now. As are the huge numbers of US citizens in prison, permanently branded as felons, etc.

Funny how actual contact with the system in these matters brings reality directly, immediately, irrevocably home to even the staunchest freedom fighter.

Re:What is their to spoil?

[Sigma 7]

When dollars can not be used to pay for things, they will be as worthless as bitcoins.

Dollars made of paper or metal can still be used as toilet paper or scrap metal if necessary. As such, they're still worth more than any non-physical currency once money is no longer used for trade.

Re:What is their to spoil?

[casehardened]

Here's the CPI data: ftp://ftp.bls.gov/pub/special.requests/cpi/cpiai.txt Even if you accept that it's representative data, there has still been persistent inflation. Even if it's only 2-3 percent/year, it adds up. One dollar today is worth 79 cents in 2003.

Re:bitcoin's value is for it's utopian idealizatio

[swalve]

What is supposed to happen: the Fed will raise interest rates and sell some of the trillions of assets it is holding and vacuum up some of that money to balance the money supply with the demand.

Re:Local Bitcoins

[bloodhawk]

Interestingly enough that is exactly what the Australian Tax office has just done, used records such as Ebay to track people you are evading tax and/or illegally claiming social security.

You aren't thinking expansively enough

[stoploss]

Do you realize that any entity that controls over 50% of the hashrate of the Bitcoin network controls the entire thing?

Have you seen the hashrate of the new, high-end ASIC rigs? How much would it cost to buy 100% equivalent of the current network hashrate in brand new ASIC rigs? A few million dollars? 10 million dollars?

Do you think that's a significant amount to "suits"?

Re:bitcoin's value is for it's utopian idealizatio

[wichawa]

i'm not entirely sure when faced with the same mental vomit over and over again why it is my responsibility to find a new creative path to sanity for the crackpot. it is the crackpot's responsibility to make fucking sense

Not going to lie, I like this guy. I have seen most bitcoin arguments. They do not answer the questions of "how is this better than current currency" often enough. Yet it has been on slashdot's homepage for a while now.

I also support abolishing IP in favour of more humanistic property laws as is (kind of) mentioned in this guy's sig. I do not support bitcoin.Maybe we should mate or something?

i generally like the news that slashdot posts, but over my vacation over the last week or so I have engaged in many debates on this website with people I can only best define as crackpots.

I am not suggesting that there are no legitimate aspects to the bitcoin currency theory, nor that everyone that uses bitcoin is a crackpot, just that I can totally understand why someone on this site would just resort to trolling something like bitcoin after all the crackpots have exhausted the legitimate angles of their argumentative stance.

Not enough people that use and defend bitcoin know enough about currency and why we have evolved to the current money system over a long ass process of time, testing, and failures.Maybe if there were more knowledgable people in the field of monetary economics that used bitcoin and could help explain to people like me how this is an improvement, I might be willing to help other people adopt this standard.

Bitcoin will ruin Bitcoin

[GPF(BSOD)]

The blockchain is already growing out of control. If you don't bribe miners, your transaction could sit for hours in limbo. To get the maximum benefit, you should hoard them, but without some movement, there is no 'economy'. And, the Bitcoin fan club is full to the brim with scammers, criminals, liars, and frauds salivating to cash out and leave everyone else holding the worthless bag.

Bitcoin is not a currency. It is not a good store of value. It is a proof-of-concept that has been ruined by its biggest fans. Bitcoins only have the worth that they have right now due to rampant speculation. Good luck with your digital Beanie-Babies. A handful of people will win, most will lose. Such is the way of all scams.