Bitcoin's Success With Investors Alienates Earliest Adopters

If you... by neo8750 · 2013-05-23 10:23 · Score: 5, Insightful

did not see this coming then you must be new here...

Re:If you... by Anonymous Coward · 2013-05-23 10:56 · Score: 1

No, If you did not see this coming, you must not be new here...
Re:If you... by nitehawk214 · 2013-05-23 12:35 · Score: 1

If you saw this not coming, you must not be here.

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Re:If you... by Anonymous Coward · 2013-05-23 12:47 · Score: 3, Funny

I never read articles pertaining to bitcoin; I just read the /. comments with a bucket of popcorn.
The hysteria from both sides is going to get a lot better as the bitcoinpocalypse approaches.
Re:If you... by mwvdlee · 2013-05-23 19:38 · Score: 2

Why are they complaining?
Nobody is forcing them to use the payment and financial companies.
They can use bitcoins just as they did before any corporate entities got involved.

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Re:If you... by acid_andy · 2013-05-23 21:05 · Score: 2

In Soviet Russia, if here must not be you, this saw YOU not coming!

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How do they remove anonimity? by Anonymous Coward · 2013-05-23 10:26 · Score: 5, Insightful

I don't understand, how are they removing the anonimity of Bitcoin? They aren't changing how the algorithms work I assume?

Re:How do they remove anonimity? by ShanghaiBill · 2013-05-23 10:37 · Score: 5, Informative

I don't understand, how are they removing the anonimity of Bitcoin?
They aren't. Bitcoins can now be used in new venues, but that does not stop private transactions. The article is just stupid. If I deposit cash in a bank, I will be recorded by a security camera. But that doesn't mean I can no longer buy stuff anonymously with cash at the local flea market.
Re:How do they remove anonimity? by petermgreen · 2013-05-23 11:02 · Score: 4, Insightful

Bitcoin is and always has been psudononymous. It's trivial to track the flow of coins between bitcoin addresses (which are essentially psudonyms). So how much anonymity there is depends on how difficult it is to associate those bitcoin addresses with real people.
How difficult it is to associate those addresses with real people depends hugely on both what records are kept and how many significant players there are in the bitcoin market (it's much easier to force a small number of large entities to hand over records to the cops than it is to force a large number of small entities to do it)

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Re:How do they remove anonimity? by viperidaenz · 2013-05-23 11:15 · Score: 5, Informative

But you can wipe your fingerprints off that cash. Coins don't even have serial numbers and the numbers on notes are not tracked in every transaction.
You can't wipe your bitcoin address off the block chain.
If you associate that data with a person, they're forever tied to that transaction and you can follow it.
Re:How do they remove anonimity? by Immerman · 2013-05-23 11:49 · Score: 5, Insightful

So? That's been the case with bitcoins since day one, the anonymity claims were always pure hyperbole. If you wanted anything more than security-through-obscurity grade anonymity you needed to pass your coins through an (illegal in most jurisdictions) money-laundering service and hope they didn't keep any records themselves. All that's changing is that now there's institutions joining the game who are doing their legal record-keeping duty to tie the accounts they deal with to particular people. Unless they refuse to honor any bitcoins that have passed through a money-laundering service recently nothing has really changed except the currncy is . And if they do so refuse, well then... nothing has really changed because they didn't honor *any* bitcoins previously, so your laundered coins are still just as good.

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Re:How do they remove anonimity? by ShanghaiBill · 2013-05-23 11:49 · Score: 3, Informative

You can't wipe your bitcoin address off the block chain.
If you associate that data with a person, they're forever tied to that transaction and you can follow it.
But you can create as many bitcoin addresses as you want. You can use a different address from every transaction. The only way it can be tracked to you is if "they" already know who you are by other means.
Re:How do they remove anonimity? by viperidaenz · 2013-05-23 12:45 · Score: 4, Informative

Unless you use a different address for every transaction you will ever make, "They" find out your entire transaction history as soon as they match you to a single transaction, through one of these new services popping up that keeps and shares records with "Them"
Re:How do they remove anonimity? by anarcobra · 2013-05-23 12:51 · Score: 1

I thought using a new address for every transaction was the advised method of using bitcoin.
I don't use it myself, but I remember reading something along the lines of "never reuse your addresses" in the documentation.
Re:How do they remove anonimity? by pla · 2013-05-23 14:38 · Score: 4, Interesting

If you associate that data with a person, they're forever tied to that transaction and you can follow it.
Yes and no. Once you associate "me" with a transaction, you can always prove I owned part of block B at time T. You can't, however, prove that when I "spent" those bitcoins, I did or did not simply send them to myself, making anonymity (at least, at the "plausible deniability" level) always just one easy transaction away.
And for the really paranoid, you can use any of a dozen "mixing" services, that take your bitcoins along with those of thousands of other people and stir them all together to make tracing the ones you put in to the ones you take out as close to impossible as matters.
Re:How do they remove anonimity? by smellotron · 2013-05-23 14:52 · Score: 3, Insightful

"mixing" services

The term "mixing" sounds less pejorative than "laundering", but the principle is the same: disguise the transfer of wealth. I expect that some extreme pressure will be put on these mixing services as Bitcoins gain traction with nations.
Re:How do they remove anonimity? by pla · 2013-05-23 15:26 · Score: 3, Interesting

The term "mixing" sounds less pejorative than "laundering", but the principle is the same: disguise the transfer of wealth. I expect that some extreme pressure will be put on these mixing services as Bitcoins gain traction with nations.

As I pointed out, though, you don't really need to use a mixer - You can accomplish almost the same thing just by sending your bitcoins to other accounts you control in more or less random chunks. You could even, if really motivated, create your own mixer with thousands of your own accounts. A handful of illegal sources go in, along with a large volume of legit transactions, stir stir stir, and who knows that you-#1701 equals you-#42 unless you tell on yourself?

Granted, we already have laws against "structuring", but even as blatant of a cash-grab as those laws appear, they still require "you" to deliberately make a series of related sub-$10k deposits specifically to avoid filing a CTR/8300. Key point there, they need to prove both intent (the standard defense), and the "you" part (which Bitcoin's entire structure makes all but impossible, though ironically, if they could prove all the accounts as you, that would pretty much put a nail in the "intent" coffin).
Re:How do they remove anonimity? by khallow · 2013-05-23 16:54 · Score: 2, Insightful

The point is at some stage you are using bitcoins to purchase real things
And how do you lose anonymity with that? Even if you can be identified by that transaction, so what? You can't be associated with previous transactions. Buying a car with bitcoins doesn't prove that you were the same guy who sold marijuana for bitcoins a few transactions back.
Re:How do they remove anonimity? by CodeBuster · 2013-05-23 17:31 · Score: 1

The difference with Bitcoins is that the entire transaction chain is by definition permanent public record. The bank might record the serial numbers of bills issued to you at the ATM, but the chain is pretty much broken as soon as you spend them because intermediaries rarely take steps to record serial numbers and link them with those who spend them. At best they might know what you bought and how much it cost, but not necessarily which bills you used to pay for the purchase. Unless you use your Bitcoins in a way that doesn't expose your identity, either by buying them in person at one of these ATMs or spending them in a way that links your wallet to your real identity, they can actually be less anonymous than cash and even one slip up exposes all of your previous transactions using that wallet.
Re:How do they remove anonimity? by viperidaenz · 2013-05-23 18:17 · Score: 3, Insightful

Or a search warrant is issued and your wallet file is taken from you, containing all your addresses.
Re:How do they remove anonimity? by kasperd · 2013-05-23 18:20 · Score: 2

Unless they refuse to honor any bitcoins that have passed through a money-laundering service recently
The fact that they can even tell the difference makes bitcoin less anonymous than physical money. Maybe the anonymity wasn't the selling point for bitcoin, maybe it rather was that they can be used without any regulation. Bitcoins can be used without regulation, but what you trade with bitcoins can still be regulated. That holds regardless if that something is goods or real currency. (The large focus on being able to exchange between bitcoin and real currency is a symptom telling us, that bitcoin is not yet a real currency. With a real currency you can have your income in that currency, and you don't worry about exchanging because you can also pay your expenses with that currency.)

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Re:How do they remove anonimity? by Linsaran · 2013-05-23 21:40 · Score: 1

Use Tor if you really want to add a layer of anonymity to the transactions. As soon as someone trying to track down a transaction based on IP addresses realize they've hit a Tor endpoint, trying to track any further would be an exercise in futility. You just have to be particularly vigilant that ALL your transactions flow through tor and all of your coins get 'mixed' before you try to use them.

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Re:How do they remove anonimity? by Yvanhoe · 2013-05-23 21:50 · Score: 1

Bitcoin and anonymity seems to be the most misunderstood thing in this whole mess.
Bitcoin is not by itself anonymous. It doesn't hide IPs, all the transactions are public, all the accounts balances are public. Bitcoin can be anonymous if you never link your identity to a bank account. That is, if you manage to hide your identity while buying bitcoins and while buying stuff with it.

Bitcoin was touted as an anonymous currency because it can be used as such in the dreams of cryptoanarchists who imagine a society of anonymous (or rather, pseudonymous) persons collaboratively earning money and spending it through dematerialized goods. Bitcoin has been made with this very narrow economical niche in mind. Anonymity in bitcoin is good just as long as you don't link a physical identity and address to an account. And then, your whole network of transactions can be discovered (unless you have been really very careful). If you want anonymity for buying physical goods, use cash.

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Re:How do they remove anonimity? by g4sy · 2013-05-23 23:46 · Score: 4, Interesting

You don't need to put your coins into a laundry if you use zerocoins instead. End of problem. Whoever wrote this article (and everyone commenting) doesn't know how to do a little research. Total anonymity and pseudymity are possible.

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Re:How do they remove anonimity? by g4sy · 2013-05-24 00:07 · Score: 2

Mixing or laundry services aren't necessary. There is a cryptographic solution to this problem, zerocoins. Can someone please tell me how this doesn't solve the problem? It seems to me like the conundrum has already been resolved.

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Re:How do they remove anonimity? by fastest+fascist · 2013-05-24 00:20 · Score: 1

I wouldn't say mixing services are only for the really paranoid. I think it's a good idea for anyone with significant funds in bitcoins to put some distance between their long-term storage and their spending wallets. You wouldn't want that bar owner in Kreuzberg to see you have thousands of dollars or more worth of bitcoins just because you paid them for a beer. If Bitcoin keeps gaining traction and people do not start mixing their coins, someone will get hurt because of this - mark my words.
Re:How do they remove anonimity? by fastest+fascist · 2013-05-24 00:24 · Score: 1

Sorry, pla, you were actually making a different point than I meant to reply to. In any case... hide your coins, folks, one way or the other!
Re:How do they remove anonimity? by fastest+fascist · 2013-05-24 00:37 · Score: 1

The fact that they can even tell the difference
How is that a fact? How would one readily tell whether a transaction has come from, say, a Silk Road wallet?
Re:How do they remove anonimity? by Rich0 · 2013-05-24 01:57 · Score: 3, Informative

I thought using a new address for every transaction was the advised method of using bitcoin.
I don't use it myself, but I remember reading something along the lines of "never reuse your addresses" in the documentation.
How do you get bitcoins into the new address? You either have to mine it, buy it, or transfer it from another address. Most likely you transfer it, and what account you transferred it from is public record. So, all your accounts are effectively linked, even if you use a new one for every transaction.
Sure, you can have multiple completely-independent accounts, but you can't move money between them unless you pass it out through cash, or you mine it. The ability to pass it out through cash is limited due to the developments in TFA - banks are asking for ID. So, unless you mine ALL the cash you use in discrete unrelated bundles, you're traceable. Mining is pretty expensive and a hassle, though it can be done (though over time it will become less and less practical).
Re:How do they remove anonimity? by Rich0 · 2013-05-24 02:00 · Score: 1

Presumably someone as paranoid about anonymity as this would have their wallet file encrypted.

I agree with the rest of your post about reasonable suspicion, but encryption won't get you anything. In the US they can keep you in jail for life for failing to divulge an encryption key, even if you were only charged with a crime that carried a six month sentence.
Re:How do they remove anonimity? by sacrilicious · 2013-05-24 02:22 · Score: 1

That's been the case with bitcoins since day one, the anonymity claims were always pure hyperbole.
Please feel free to support your claim with facts.

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Re:How do they remove anonimity? by kasperd · 2013-05-24 03:12 · Score: 1

How is that a fact?
The comment I was replying to, was implying it was a fact. Others have implied that as well, and I haven't seen anybody deny it. If you think they are wrong, you are welcome to present your argument, then I'll watch from the sideline until I know which side to believe.

How would one readily tell whether a transaction has come from, say, a Silk Road wallet?
Silk Road run a mixing service? I have only seen it presented as a market place for trading goods using bitcoins.

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Re:How do they remove anonimity? by Anonymous Coward · 2013-05-24 04:10 · Score: 1

You apparently didn't read all the way through that Zerocoin page. It's a proof of concept that is NOT ready to be rolled out and more widely used, and indeed, running it instead of a normal bitcoin client results in over 50x cpu use. It's a great concept, but is absolutely not ready for use yet.
Re:How do they remove anonimity? by didroe84 · 2013-05-24 06:06 · Score: 1

Isn't there a chain recorded with the coins though? Couldn't you just look for the earliest address that all the coins have in common and that would be the person?
Re:How do they remove anonimity? by crtreece · 2013-05-24 08:46 · Score: 1

Silk Road run a mixing service?
I believe they have an internal bitcoin mixing service. See here, "Bitcoin wallet that mixes all incoming and outgoing coins so as to obscure their origin".
Or here "Silk Road has a built in coin mixer. When you add coins to your account, they are sent through a bunch of dummy transactions, split up and recombined with the coins of other people."
There is likely more detailed info on the SR forums.

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Re:How do they remove anonimity? by AlphaWolf_HK · 2013-05-24 09:39 · Score: 1

You're confusing wealth with money.
As a side note, the poor - and everybody else for that matter - are wealthier than they've ever been. Not by a little, but by a lot. DVD players, cell phones, cars, personal computers...If you look back far enough, only the richest of the rich owned any one of these things. This is the difference between wealth and money. Try to find somebody who doesn't have any one of these things who wants one.
http://buburuza.net/2009/01/homeless-bum-using-the-web/
Capitalism has done for the poor what the government never could.

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Re:How do they remove anonimity? by viperidaenz · 2013-05-24 18:52 · Score: 1

I assume in the US they'd issue a search warrant for suspicion of money laundering.
Re:How do they remove anonimity? by Linsaran · 2013-05-26 09:08 · Score: 1

Eh, I think the 5th amendment says otherwise, I know there is some legal precedent about encryption keys but I'm not particularly familiar with the cases, and a quick google search reveals an article that seems to support my argument. Of course if you can provide some counter examples I'd be happy to look at them.

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Re:How do they remove anonimity? by Rich0 · 2013-05-26 12:05 · Score: 1

That case was novel because it was the first time a court DIDN'T toss somebody in jail indefinitely for failing to disclose an encryption key. The only reason they ruled this way was because the prosecution couldn't give evidence that it was likely that the defendant knew the key, and divulging the key would have therefore provided evidence that he did, and was therefore associated with the encrypted content. The defendant argued that he had just received the hard drive and did not know anything about the encrypted content on it. If it were a computer he had bought new the court would have ruled differently.
I agree that the way the courts handle these cases is completely contrary to the 5th amendment, but you can argue that all you want while you rot in jail. Just google for contempt of court for not disclosing encryption keys for many examples.
Re:How do they remove anonimity? by Rich0 · 2013-05-26 12:07 · Score: 1

It's really just finally getting to the point where it is getting easier to buy bitcoins with THINGS instead of MONEY if you want to maintain your pseudonymity.
Sure, assuming you can find another party to sell your things to who doesn't log your identity. However, chances are the money you buy in this way is traceable to the person who sold it to you, which means that they'll probably get questioned by the police when you use that money to do something illegal. If that becomes a trend, expect to find few people willing to trade things for bitcoins without ID.

Hipsters by Anonymous Coward · 2013-05-23 10:26 · Score: 5, Funny

"I liked Bitcoin before it was cool. It's too mainstream now"

Re:Hipsters by seepho · 2013-05-23 10:41 · Score: 5, Funny

I encode my wallet file using touch tones and pressed a recording of it onto vinyl. The smoothness on the waveform of the 3/6/9 keys adds a certain warmth to my financial transactions.
Re: Hipsters by cultiv8 · 2013-05-23 13:49 · Score: 1

Young 'uns, I remember the days of encrypting from the cli...

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nothing acceptable without "sellout" by swschrad · 2013-05-23 10:28 · Score: 2, Funny

also, no "free as in beer" and no "quality goes in before the name goes on." the news knocked me right off my unicorn, and I am so embarassed...

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if this is supposed to be a new economy, how come they still want my old fashioned money?

If you think Bitcoin was ever Anonymous... by trims · 2013-05-23 10:28 · Score: 4, Interesting

...I've got a bridge somewhere that needs to be sold that you might be interested in.

Bitcoin does irrefutability (i.e. the ability to prove that a transaction occurred, and occurred only once). I can thus prove that I do, in fact, own all Bitcoin I possess.

It never has been anonymous. There are characteristics that make it more difficult to trace the payer, but the protocol and implementation have never been configured (or designed) to be a strongly anonymous technology.

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Re:If you think Bitcoin was ever Anonymous... by hguorbray · 2013-05-23 10:30 · Score: 3, Informative

here's a pretty good technical overview of Bitcoin from El Reg today:

http://www.theregister.co.uk/2013/05/23/bitcoin_spam_byzantine_generals/

-I'm just sayin'
Re:If you think Bitcoin was ever Anonymous... by Anonymous Coward · 2013-05-23 10:33 · Score: 2, Insightful

I would agree with you if Silk Road was not still operating strongly, and with the only related busts being from tracking criminals through something other than the bitcoin trail.
In theory it may not be anonymous but in practice it is.
Re:If you think Bitcoin was ever Anonymous... by cheater512 · 2013-05-23 11:24 · Score: 1

It is...kind of.
The transactions are fully public of course.
The semi-anonymous part is tying a bitcoin address with a specific person. You'll have a lot of difficulty doing that if they are being careful.
Re:If you think Bitcoin was ever Anonymous... by Qzukk · 2013-05-23 11:39 · Score: 2

Masking your IP is another (solved) problem
I fully expect that tor will be completely mappable by this time next year, with every packet in tracked to the exit out (or onionsite) and back, especially as we get closer to universal data retention laws making it trivial to find out who sent every packet where.

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Re:If you think Bitcoin was ever Anonymous... by Immerman · 2013-05-23 11:58 · Score: 1

Yes, but you'll still need to at some point transfer money from account A to account B before you can spend it in another transaction, and unless you're a brilliant information-theorist or use a money laundering (excuse me, "mixing") service it won't be terribly difficult to link your various accounts to the same entity.

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Re:If you think Bitcoin was ever Anonymous... by Immerman · 2013-05-23 12:12 · Score: 2

You and I will (for now). I seriously doubt it'd be more than a minor project for the FBI or other institution that deals with the pattern analysis necessary to identify tradtional money laundering operations.
Now of course you could use any of the numerous mixing (aka money-laundering) services out there to "disconnect" your public and anonymous tranactions - but they have two major problems that I can see:
* money laundering is illegal in most jurisdictions, and you've just publicly announced that you're using one to everyone who ever looks at your transaction history.
* You're trusting the service themselves to not keep their own transaction records, which considering the blackmail potential seems rather... optimistic.

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Re:If you think Bitcoin was ever Anonymous... by tftp · 2013-05-23 13:29 · Score: 2

I'm not even sure if it is legally significant who paid for the drugs. I'd think it's more important to know who received them. Two quick scenarios to illustrate; one is legal, another is not.
1) You approach the drug dealer and give him $10. You never receive anything in return.
2) You approach the drug dealer and receive a dose of a drug for free.
Re:If you think Bitcoin was ever Anonymous... by Anonymous Coward · 2013-05-23 14:35 · Score: 1

Laundering is complicated. And seldom effective. It also requires trust, somewhere along the line.
Microsoft has been exploring the ZeroCoin protocol, which - when added atop bitcoin - provides for real anonymity.
Here's a Microsoft Research video presentation:
http://research.microsoft.com/apps/video/dl.aspx?id=192058
Enjoy.
Re:If you think Bitcoin was ever Anonymous... by h4ck7h3p14n37 · 2013-05-23 16:32 · Score: 1

That's why you hack into someone else's wifi connection. Or, if you're old school, you tap into a hardline somewhere :)

Bitcoin is a novel success by TrollstonButterbeans · 2013-05-23 10:28 · Score: 2

But at the end of the day, once something becomes successful it loses its identity.

Loss of anonymity and regulation happens to anything that becomes large enough to be noticed.

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The ultimate laissez faire capitalist technology by Ukab+the+Great · 2013-05-23 10:31 · Score: 3, Insightful

Is selling out to the highest bidder. How dare they.

Hipster Bitcoiner Kitty by idontgno · 2013-05-23 10:31 · Score: 1

is miffed that bitcoins are too mainstream now.

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The only anonymity lost it the ability to convert by rahvin112 · 2013-05-23 10:33 · Score: 5, Insightful

Bitcoin is and always will be just as anonymous as it was promised. No one EVER said exchanging Bitcoin for other currencies would be an identity protected venture. In fact it's always been assumed by anyone with any brains at all that Bitcoin is only anonymous as long as you keep it Bitcoin and don't trade it for any hard goods or currency.

There have always been regulatory requirements that make transaction tracking easy for government when you convert to currency or goods. And this has ALWAYS been BitCoins greatest weakness because at the end of the day the currency is only as valuable as it's ability to exchange it for goods. That exchange will never be anonymous.

Re:The ultimate laissez faire capitalist technolog by VortexCortex · 2013-05-23 10:37 · Score: 1

Is selling out to the highest bidder. How dare they.

Duuuuuuuuude, this is some chronically dank stank you got. I need to buy ME some bitcoins, man!

Simmons, he's the one. That's the highest bidder. Sell Now!

the bottom line.. by wbr1 · 2013-05-23 10:53 · Score: 2

For a currency to be useful it has to be trusted. Unfortunately it would appear that after a certain critical mass is reached the people using it also want the other people using it to be trust able. Not easy to do whilst remaining anonymous.

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Silence is a state of mime.

Pyramid scheme by gTsiros · 2013-05-23 11:01 · Score: 1

why do i have this suspicion that the whole bitcoin is some elaborate, very drawn out, convoluted, mutated version of a pyramid scheme?

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Re:Pyramid scheme by drcheap · 2013-05-23 11:12 · Score: 2

why do i have this suspicion that the whole bitcoin is some elaborate, very drawn out, convoluted, mutated version of a pyramid scheme?
You tell me why... because I don't see it. No referrals, no downlines, none of that telltale pyramid stuff.
First they were worth squat, then there was all kinds of marketing hype, the value skyrocketed as a result, and then bam...it crashes. A lucky few got in before the marketing (knowing it was coming) and bailed out while it was spiked. To me that more closely represents a pump & dump.
Re:Pyramid scheme by Lehk228 · 2013-05-23 11:38 · Score: 3, Interesting

it's a little bit of both.

there are tons of unaccounted for bitcoins harvested in the early days they will not reenter the market until

a) the market is large enough to not crash when whoever is sitting on them cashes out

or

b) whoever is sitting on them needs the money badly enough not to care.

--
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Re:Pyramid scheme by Anonymous Coward · 2013-05-24 07:24 · Score: 1

You might want to do some more research. There are no "unaccounted for bitcoins." All the bitcoins ever mined are recorded in the block chain and all transactions are recorded as well. No bitcoins have ever left the market to "re-enter" at a later time. There are bitcoins that have been mined and not yet used in transactions, but they don't travel anywhere; they are always just records on the block chain, and your wallet is just a record of those that either you have mined yourself or have received from other users.
The early adopters are smart enough to know that "sitting on them" is far more profitable than "cashing out" or spending them on frivolous purchases (like the legendary $2.5 million pizza purchased with BTC). The whole point of this cryptocurrency is not to convert it into fiat coins when it is in high demand, but ultimately to make fiat currency obsolete.

Re:Every transaction is in the blockchain already. by Zan+Lynx · 2013-05-23 11:01 · Score: 1

It is super-easy if the contents of that wallet were created by a credit card purchase and the transfer from a Bitcoin exchange wallet. The exchange then has the identity of the credit card holder linked to the wallet.

Bitcoin versus Real Money by CuteSteveJobs · 2013-05-23 11:02 · Score: 3, Insightful

The whole idea that you could create money by having your computer crack at a cryptographic algorithm is ridiculous, but so too is the fact that some professions earn so much more than others, that those professions form unions (oops! I mean 'professional associations') that limit supply of their professionals, or that during the GFC the Fed could pull billions of dollars from out of their ass and give it to banks who could then earn themselves interest off that. Bitcoin may be a bubble, but so is the entire stockmarket where you have computers buying and dumping stock microseconds later without any idea what is being traded. Hey did you know the big investment banks pay a premium so they connect their computers closer to the exchange's computers? As soon as they detect buys on a certain stock, they start grabbing massive amounts of it on the assumption others will follow and they can dump it microseconds later? http://en.wikipedia.org/wiki/High-frequency_trading Please tell me how this is good for the economy and sensible investment?

Bitcoin may have its problems and speculators are really bad for anything, but so called 'real money' is just as bad and maybe worse.

Re:Bitcoin versus Real Money by GenieGenieGenie · 2013-05-23 11:16 · Score: 1, Flamebait

Nice tirade. Can you explain to us in what sense is cracking a crypto problem more ridiculous than figuring out where there are more shiny bits of rock that people like to wear in their jewelry? Both require dedicated equipment, know-how, time and effort; Both produce something that other people find valuable and want to own, but are ultimately useless on their own (oh, alright, cue the wedding ring jokes...); Both are subject to market laws of supply and demand that determine their price. After you're done with that, we'll deal with the rest of the ridiculous stuff you seem to have in the same bag as Bitcoins (HFT? seriously?).
Re:Bitcoin versus Real Money by Immerman · 2013-05-23 12:24 · Score: 2

If you think about it cash is at least as ridiculous. That's just some guys with a fancy printing press and government backing saying "Hey, let's print a few million bucks more today". Works great so long as the government is responsible about it, but as every case of hyperinflation in history shows there's no guaranty on that front.

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--- Most topics have many sides worth arguing, allow me to take one opposite you.
Re:Bitcoin versus Real Money by Anonymous Coward · 2013-05-23 12:34 · Score: 1

...which is part of why fiat money makes sense.
Yes, and there are reasons why fiat money does not make sense...like being able to create more by more fiats.
Re:Bitcoin versus Real Money by Anonymous Coward · 2013-05-23 14:37 · Score: 4, Funny

I paid cash for a Fiat. Worst car I ever owned.

Re:Every transaction is in the blockchain already. by Rhacman · 2013-05-23 11:03 · Score: 1

As soon as you sell someone something for bitcoin you have some amount of information about that persons identity if only where you shipped the product to. If you also happen to know the wallet ID of a popular sex-toy shop from either shopping there or from a list someone published of wallet IDs you can then note if there is a transaction between this vendor and the person you just did business with. Heck, if someone mentions buying a particular item from a particular vendor at a particular time, since the database is public I can narrow down the wallet ID for that person and start working out what other vendors they may have purchased from. Once you have a handful of known wallet IDs you can build all sorts of correlations to help determine who's who. If someone tries to hide by creating a new wallet, you can also see that money from a known account got transferred to a wallet for which no previous transactions exist. Perhaps this is a different person, but when you see the same transaction patterns in the new account you can start narrowing your assumptions.

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Account -> Discussions -> Disable Sigs

This is as it should be. by Anonymous Coward · 2013-05-23 11:03 · Score: 1, Interesting

It is impossible to build an anonymous irrevocably currency on top of a revocable non-anonymous. Thus, you can't make something like bitcoins as a layer ontop of credit cards, traditional banks, checks etc.

However, it is possible to do the reverse: you can (and they did) build a revocable non-anonymous payment system on top of bitcoin. This is good: now bitcoin is being used for both kinds of currency. You don't lose the ability to spend bitcoins anonymously and irrevocably just because there are now ways to use them closer to traditional payment systems. Both have benefits, and both can be powered by bitcoin simultaneously. I fail to see the problem.

Sure, if the goal of bitcoin was to force change on the world, it failed. If the goal was to allow access to a new technology, anonymous irrevocably currency, then its working. I won't argue thats its an ideal implementation of the idea, or that its a great currency to use, but it is usable, and proves that such a thing can exist should you need it.

Re:Maybe not such a bad thing.. by Anonymous Coward · 2013-05-23 11:05 · Score: 1

Value of BitCoin - just like any other currency - is based purely on faith of people trading in it.

Faith in real world currencies is supported by government and regulations limiting what you can do with alternative currencies on country's territory. This is pretty unique for every currency - Russia props up faith in RUR and China does the same for RMB.

BitCoin's value is exact opposite, lack of government and regulations. What do you think happens when there are a hundred competing BitCoin branches, all wanting to be valued on the same no-government behind it?

Re:The only anonymity lost it the ability to conve by Anonymous Coward · 2013-05-23 11:05 · Score: 1

In fact it's always been assumed by anyone with any brains at all that Bitcoin is only anonymous as long as you keep it Bitcoin and don't trade it for any hard goods or currency.

But if no one ever trades Bitcoins for hard goods or currency, then they are worthless.

A replacement for BitCoin! by Rhacman · 2013-05-23 11:10 · Score: 1

I'm going to start a new currency called KidneyCoin! The currency is kidney stones! The proof of work is passing the kidney stone!

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Account -> Discussions -> Disable Sigs

Re:A replacement for BitCoin! by Deliveranc3 · 2013-05-23 11:52 · Score: 1

You can tell what level people got stupid cynical and stopped figuring out Bitcoin:
Level 1. - Internet Money
Level 2 - Mining
Level 3 - Anonymous
Level 4 - Pyramid Scheme
Level 5 - Specific Theft vs Overall security
Level 6 - Government shutdown
If you're so sure that BTC will drop in value then sell it short, there are resources available.
Selling Short: I talk to someone who owns some Bitcoins or more likely has clients who own Bitcoins. I agree with him to sell those Bitcoins now with an agreement that I will provide them at a future date. The biggest difference between investing (buying long) and short selling is that the money you give the agent is used as a guarantee against (possible)(and potentially unlimited) growth. I.E. if you buy a stock you can lose the price of the stock, if you sell short you can lose everything because the price never hits a 0 point.
If you're interested let me know, bakerfinancialinstruments@gmail.com
Re:A replacement for BitCoin! by stinerman · 2013-05-23 12:21 · Score: 1

I'd be more than happy to short the hell out of Bitcoins if I had the resources. And even if I did, a smart man once said the market can remain irrational longer than I can remain solvent.
Re:A replacement for BitCoin! by Rhacman · 2013-05-23 13:16 · Score: 1

I never said BitCoin will drop in value. I have no expectation / confidence that it will rise, fall, nor stay the same value relative to other currencies.

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Account -> Discussions -> Disable Sigs

Re:The only anonymity lost it the ability to conve by mysidia · 2013-05-23 11:19 · Score: 1

That exchange will never be anonymous.

I wouldn't say that... I would say that exchange will sometimes not be anonymous. Especially when that exchange is made from bitcoins to a currency, and one of the trading partners is a large institution with regulatory requirements to meet.

But there will be other cases where it could be nearly anonymous. Mainly when neither of the trading partners keeps records of the identity of the other trading partner; or when they trade without learning the identity of whom they are trading with in the first place -- probably for intangible goods like data.

Re:Every transaction is in the blockchain already. by mysidia · 2013-05-23 11:28 · Score: 1

If someone tries to hide by creating a new wallet, you can also see that money from a known account got transferred to a wallet for which no previous transactions exist. Perhaps this is a different person, but when you see the same transaction patterns in the new account you can start narrowing your assumptions.

You could generate a large number of holding wallets in advance of any transaction, and retain a set amount of money in each wallet.

Then when you are planning to make another transaction, you generate a new transaction-specific wallet, and execute some sequence of transfers from a random assortment of your holding wallets to your transaction wallet, and then execute the transaction.

You could also have multiple layers of holding wallets and transaction wallets, and conduct some bitcoin rotations with friends to shuffle things around.

I envision if a few people are doing that, it could be very difficult indeed to correlate transaction to holder; now, I won't say impossible, because there are probably bound to be some patterns that might be detected through statistical analysis...

Not general problems, but implementation-specific problems that would be likely to occur.

There is also the issue about transaction cost, since the 'holding' and temporary/thorwaway wallets generates spurious non-transactions that look like transactions, and therefore, would use part of the bitcoin network's capacity.

When was Bitcoin anonymous? by betterunixthanunix · 2013-05-23 11:29 · Score: 2

Bitcoin has never been anonymous. There is a public record of transactions. You have to rely on a separate mixing service, which almost nobody does.

Most important, though, is this: very few people actually want to use Bitcoin. Most view it as a way to make an electronic transfer of government-backed fiat currencies, so they rely on services that do the Bitcoin transfers for them and exchange Bitcoin currency for fiat currency. Those services are going to comply with the law and require things like identification. To put it another way, cash is anonymous too -- but large numbers of people use credit and debit cards, which are not anonymous.

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Palm trees and 8

Re:When was Bitcoin anonymous? by Deliveranc3 · 2013-05-23 11:36 · Score: 1

so they rely on services that do the Bitcoin transfers for them and exchange Bitcoin currency for fiat currency. Those services are going to comply with the law and require things like identification.

This implies that you need another agent to complete a Bitcoin transaction which is not the case.

Yes most bitcoins flow through currency exchanges (though personal transactions such as LocalBitcoins.com are pretty common still).

I suppose of Bitcoin anonymity you could say you can keep track of the contractor you paid the BTC to, but you can't tell where his employees buy their groceries.

Most fascinating about Bitcoin is that you can have it in a sense that applied to gold more than say bank notes, and the effect this will have on fractional reserve banking and other financial instruments, if someone has an article on this I would be happy to read it... or pen one if you'd pay me per word.
Re:When was Bitcoin anonymous? by betterunixthanunix · 2013-05-23 11:48 · Score: 1

I suppose of Bitcoin anonymity you could say you can keep track of the contractor you paid the BTC to, but you can't tell where his employees buy their groceries.
Unless you bother to examine the public record of all Bitcoin transactions.

This implies that you need another agent to complete a Bitcoin transaction which is not the case.
Except that you need to broadcast the transaction to the Bitcoin network, which must then confirm that the transaction is valid. What I said is that most people rely on another agent to complete their transactions for them -- because most people want fiat currency, not Bitcoin currency, and they usually do not want to wait for confirmations (nor do they want to accept payments without confirmations) or deal with an ever-fluctuating exchange rate.

Most fascinating about Bitcoin is that you can have it in a sense that applied to gold more than say bank notes
Let's put it this way: try to use gold to buy a car, or even to buy something as simple as a single meal.

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Palm trees and 8
Re:When was Bitcoin anonymous? by stenvar · 2013-05-23 19:12 · Score: 1

Let's put it this way: try to use gold to buy a car, or even to buy something as simple as a single meal.
You certainly used to be able to do that for centuries. That only stopped when governments needed to finance expanding military debts and started moving to fiat currencies; that entailed making the use of other forms of currency illegal.
Re:When was Bitcoin anonymous? by rjstanford · 2013-05-24 02:23 · Score: 1

Actually, you can still do this. Its just that most people don't want to receive a lump of what might be gold (and the attendant responsibility for validating it, weighing it, etc) in exchange for cooking you some pancakes. In the age of international shipping we're currently in it also holds your country's currency hostage to the countries that own the mines and can increase your money supply for you.

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You're special forces then? That's great! I just love your olympics!
Re:When was Bitcoin anonymous? by stenvar · 2013-05-24 03:04 · Score: 1

You can barter with gold, but that's legally quite different. As for currency being held hostage by the countries owning the mines, mining gold is hard and annual production is a small fraction of total gold in circulation; countries already have an incentive to extract as much as they can. In addition, the amount of available gold per capita has remained fairly constant over time, actually making it a pretty good standard of value.
Re:When was Bitcoin anonymous? by spiralx · 2013-05-27 09:31 · Score: 1

No, half of all gold ever mined has been mined since 1967.
Re:When was Bitcoin anonymous? by stenvar · 2013-05-27 20:02 · Score: 1

No, half of all gold ever mined has been mined since 1967.
And in 1967, the world had about half the population it has today. Funny how that works out.

SilkRoad as an example by Anonymous Coward · 2013-05-23 11:44 · Score: 1

Lets look at the structure of silk road and we can come to some sort of understanding of how this may play out for anonymity.

You have a account with Mt. Gox, So they know your starting wallet number. They then trace it to a ID over at silk road, however they have no idea that it is silk road, for all they know it is simply another wallet of yours, or your friends. Then silk road handles the transaction between the two wallets it has. After that the seller needs to transfer the bitcoins back to a agency like mt. gox (or another seller on silk road). Even if they have the information for the start and the end of this transaction they have no real way of finding the in-between. You could also do a simple money laundering exercise by creating multiple wallets to protect yourself.

It may not help if the government comes knocking and asks where you got the bitcoins though.

Re:Maybe not such a bad thing.. by Anonymous Coward · 2013-05-23 12:00 · Score: 1

Faith in real world currencies is supported by government and regulations limiting what you can do with alternative currencies on country's territory

I know of no real world cases where that sentence even makes sense. Do you mean everyone had great faith in the Z$ when Mugabe banned all use of all other currencies? Or great faith in it when they gave up and started letting people use whatever currency they wanted? Faith in currency is directly tied to the production of that currency.

when there are a hundred competing BitCoin branches, all wanting to be valued on the same no-government behind it?

Supply and demand. If EZCoins flood the market, then the value of EZCoins drop compared to HarderCoins. If exchanges manage to operate smoothly (something that we don't seem to be able to count on, based on history so far) then the multitude of currencies simply becomes an inconvenience, even if merchants decide they only want to deal in one particular coin (though if they become the only dealer in that kind of coin, they'd probably have a lot of trouble.

Yeah, they may control the gates to Disney Land... by argoff · 2013-05-23 12:01 · Score: 1

... but once you get in, you can take any ride you want.

Re:Every transaction is in the blockchain already. by Rhacman · 2013-05-23 13:26 · Score: 1

The clues are always there, albeit obscure. It's just a cat and mouse game bounded only by the interest / resources of the respective party.

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Account -> Discussions -> Disable Sigs

Think of the planet! by Anonymous Coward · 2013-05-23 14:21 · Score: 1

Bitcoin == CO2 Bitcoin only works because it's incredibly inefficient.

Re: Think of the planet! by Anonymous Coward · 2013-05-23 23:44 · Score: 1

Money isn't paper, it's cloth.
Re: Think of the planet! by captain_sweatpants · 2013-05-24 01:46 · Score: 1

actually in civilised countries it's made of plastic :)
Re: Think of the planet! by daveime · 2013-05-24 07:06 · Score: 1

As opposed to burning 1000s of megawatts of energy the world doesn't have, sure.

"Anonymity" by ildon · 2013-05-23 14:21 · Score: 1

Bitcoin NEVER afforded real anonymity. It only afforded slight obfuscation. See: http://anonymity-in-bitcoin.blogspot.com/2011/07/bitcoin-is-not-anonymous.html

You guys are missing the point by Anonymous Coward · 2013-05-23 15:11 · Score: 1

The weakness is not with bitcoin itself, but with trading traditional currency for them. There will be a point where only people with extravagantly modern mining rigs will be able to make any profit from mining.

Therefore, the average person will have to buy bitcoin from an exchange where it will undoubtedly be regulated.

another untruthful bitcoin article by slashmydots · 2013-05-23 16:37 · Score: 1

Yay, another one. This is one side of the story. They're getting shut down by the feds EVERYWHERE. There's the banking secrecy act that killed some big time operators. MTGox is even getting screwed with with Dwolla lately and they're around 85% of all exchange transactions. Small little operations don't attract attention. The big ones are under so much scrutiny, it's like the feds are just waiting for any reason to shut them down (they actually are by the way). It's so hilariously stupid too because by design, it's stoppable. They could throw $50 billion at it and not destroy the network unless they literally but all bitcoins with it and then delete them, lol. Actually, that wouldn't "destroy" the network either.

Re:another untruthful bitcoin article by petermgreen · 2013-05-24 00:48 · Score: 1

They could throw $50 billion at it and not destroy the network
If they want to destroy bitcoin then all they need to do is get more hasing power than the rest of the bitcoin network put together. I'm fairly sure that with the current level of hashing power that is within the reach of most governments.
Once they do that they can create arbitary rules for refusing transactions they don't like. For example they could require that all bitcoin addresses used as transaction destinations are registered with the government before use. They would enforce these rules by refusing to accept transactions that violate them into blocks they generate and refusing to use blocks that contain such transactions as a base for blocks they generate. Occasionally a non-governement miner may generate a block with your non-government approved transaction in it but the government miners would fork it off before it got any significant number of confirmations.

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note: i'm known as plugwash most places but i screwd up registering that here somehow in the past and now can't register

Re:without anonymity by maxwell+demon · 2013-05-23 16:51 · Score: 1

I think it is much more expensive to accept Visa payments than to accept Bitcoin payments.

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The Tao of math: The numbers you can count are not the real numbers.

This is all about money laundering by Karmashock · 2013-05-23 18:28 · Score: 2

The regulatory agencies that control the major banks won't permit overt laundering schemes that are within the reach of any but the most sophisticated bankers.

That said, f' them. By all means, allow bitcoin to become whatever it is going to become. But the technology that built it can be made again and again and again.

Set up another bitcoin currency. And this time learn from the mistakes. We might have to proxy the money into and out of the system through cash. That is... no electronic deposits or withdrawals. Rather, use cash. Cash is by its nature opaque. Set up accounts like pre paid debit cards. The cash in the system but no names. Only ID codes linked to the money but not to people.

This will shield the next system behind the legitimacy of physical currency itself. Physical currency won't go away. The governments say they don't like it because its hard to trace but there are many purchases they make that are intentionally murky. Remember the giant bricks of cash sent to Iraq? Literally pallets of 100 dollar bills stacked and shrink wrapped. Why did they do that? Think we couldn't have come up with an electronic and documented system? We chose not to do that. And think the big banks are entirely upfront about all the money that flows through their systems? Most of it is tracked and documented. But some of it is intentionally obfuscated. Go to Switzerland or Luxemburg and you'll find whole industries based on the practice.

All Bitcoins would do is let the middle class have access to the same financial toys afforded to the very rich.

I believe in the freedom of money. I understand that controlling money makes law enforcement easier. You can track what people are doing by following money. But you could say the same thing about putting cameras in people's homes or tapping every phone in the country.

I have the right to privacy. And while many will disagree with me, I will respond that they can TRY to stick cameras down my throat to see what I ate for breakfast but I won't make it easy for them.

We can be free. If even 1 percent of the economy flows through these systems it will break the control the government has on us.

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I've decided to stop wasting my time responding to AC trolls/sockpuppets... so if you want a response from me... login.

Re:a feature, not a bug by Ash-Fox · 2013-05-23 19:19 · Score: 1

It serves as an example as to why one should not bother.

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Change is certain; progress is not obligatory.

Sucks for early adopters by coldsalmon · 2013-05-24 03:32 · Score: 1

This 1,000,000% increase in Bitcoin's value has made it soooooo uncool.

Information asymmetry by NewYork · 2013-05-24 17:01 · Score: 1

Bitcoin is NOT immune to https://en.wikipedia.org/wiki/Pump_and_dump
Unless https://en.wikipedia.org/wiki/Information_asymmetry#Adverse_selection is implemented in Bitcoin protocol, I'd not invest in it.

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