Riecoin: A Cryptocurrency With a Scientific Proof of Work

An anonymous reader writes "Enter decentralized, open source mining with the first scientific proof of work. Riecoin is a decentralized (p2p), open source digital currency. Proof of work is about finding Hardy-Littlewood k-tuples. Ultimately miners are verifying the Riemann hypothesis. Unlike for Primecoin the probability of accepting a false positive goes to zero as the network grows. Primecoin uses Fermat Test which runs the risk of accepting so called Carmichael numbers. Riecoin uses a stronger test to ensure correctness."

Comments

How much are they worth?

[rossdee]

In real money

Re:How much are they worth?

[jones_supa]

Follow @bitcoinprice.

Re:How much are they worth?

[jones_supa]

Wrong coin, dumbass. Still cool link tho.

Re:How much are they worth?

[Anonymous Coward]

You should talk to a psychologist.

Re:How much are they worth?

[Jane Q. Public]

"How much are they worth? In real money"

See, this is a big problem that many people don't understand: the difference between "worth" (or "value") and price. They are not the same things, and that is what has ruined Bitcoin.

Economically, the intrinsic value of something is approximately: the cost of production + the cost of distribution. Bitcoin was intended to be basically free to distribute. So the intrinsic worth should be approximately the cost of production. (Plus a tiny bit... it's not exact.)

The reason this is called the "value", is because if the price goes much higher than this, more people will start producing them because there's good profit to be had. If the price drops below that point, people will stop producing them because there's no profit to be had. Make sense?

Unfortunately, today's stock market all too often ignores value and goes by price alone. That is how bubbles form: the price of something gets outrageously inflated, completely aside from any value. When actual supply-and-demand rear their heads, and the commodity is suddenly associated with that value again, as it eventually must... everybody who bought at that inflated price lose a lot of money.

This all comes down to one basic point: the current stock market is often irrational, because it has gotten to a point where it completely ignores actual value of something and goes by price alone. This is irrational and leads to all kinds of problems.

So, keep in mind: if you invest in a cryptocurrency (or anything else, for that matter) at a price that is far above it's "intrinsic value", be careful. You might make money if you know what you're doing, but you could also become the victim of the bubble and lose your shorts at any time.

Re:How much are they worth?

[Jane Q. Public]

I neglected to mention one important step:

"... more people will start producing them because there's good profit to be had." ... And THAT makes the price come back down toward the "intrinsic value", because of supply and demand.

And this is only true because of Bitcoin's dual nature: it is not just a currency, like fiat dollars, but also a commodity that can be produced at home.

Which is why I say the market for Bitcoin is completely irrational. There is no economic reason for it to bounce all over the place. Investors are being stupid.

Re:How much are they worth?

[Jane Q. Public]

"Nothing has intrinsic value. Individuals decide how much value things have for themselves."

Go read just about any current textbook on macroeconomics. Then get back to me.

The concept of "intrinsic value" is central to the whole idea of "supply and demand". In a free market, it works. We have a couple of thousand years of history to prove it.

Re:How much are they worth?

[angel'o'sphere]

Sorry Misses,
While your first post made sense, this doeas not. In fact it contradicts your first post.

The concept of "intrinsic value" is central to the whole idea of "supply and demand".

Certainly not. What has the "intrinsic value" of a fresh baked bread (it can be eaten) to do with its value? Or what has the "intrinsic value" of a piece of coal (which can be burned, and thats it) to do with supply and demand on coal and hence its price?

Perhaps you want to define "intrinsic value" of a good as the cost of the source materials plus labour to transform it into the good in question. But that is not related to supply and demand, neither to the raw materials nor to the good itself nor to the demand for work (or supply of it) or their costs.

Prices are defined by one single thing: how much can I make the customer to pay for it (and considering my own production capabilities where is the balance point for the best price), see iPhones.

Most prices in the world are defined on a take it or leave it base.

Sure two gas stations from two different oil companies, like Shell and BP (oh did not one of them just buy the other one?), compete with each other. But all people demand oil/gasoline. Their demand does not change at all, regardless of price. There is no real competition.

The same for Mc donalds or Burger King ... there is no real competition. Some people want to eat junk food, they are to stupid to see they can get real food around the corner (even cheaper). What does that mean? The supplier defines its market. The market is 'just there', the demand adjusts to the suppliers abilities to form that market.

Back to iPhone again. 50% (or more) of its owners simply phone with it. (Includes me, I send some text messages - 5 to 10 a month, and I hated sending SMS/text messages with my ordinary phone) It has no intrinsic value at all. Supply and demand does not define its price, the price is defined by how much Apple can get away with. There is no market or competition, because either people want a very cheap smart phone, or if they want an expensive one, and in the later case their determination for an Android (or god beware for a Windows one) or an iPhone is already settled. Sure, if they settle for Android they perhaps have the choice and competition between 2 or 3 high priced smart phones, and if they settle for a low priced one they have the competition of a few dozen brands. However: the markt is completely controlled by the market droids, there is no "supply and demand" driven price ... and no intrinsic value to any of the phones involved (or companies).

And the idea to read a book about macro economics is so 1870ths ... sorry there is no point in it. As we meanwhile live in a 'globalized' world trade and market situation.

Using the term: 'read something about macro economics, and then come back to me' is a form of the anti pattern Intellectual Violence. Read up about it, then come back to me ;)

Re:How much are they worth?

[jfengel]

There is honest money to be made in the stock market. Not everything is overvalued all of the time. For most stocks, on most days, the price is a more-or-less reasonable approximation of the present value of the share, from which you can expect a reasonable return of a few percent per year, either from dividends or increased capital. That's a piece of the earnings of actual companies making actual products.

These are not the stocks that attract press, more or less by definition. Figuring out which ones are the best value involves a fair bit of work (and I'm not talking about technical analysis voodoo; I'm talking about reading prospectuses, evaluating products and management and markets, etc). You're unlikely to beat those who do that for a living, but they set a fair price, not an inflated price, and that fair price has a real if unglamorous return (better than your bank will give you, on average, though at considerably higher risk).

You can save yourself a lot of effort by giving it to a professional index fund with a low overhead, which yields even more modest rewards for considerably less work and somewhat more security.

Re:How much are they worth?

[hibiki_r]

That idea of value was nice, in the 19th century. While one can come up with a concept of value, that value is not the same for all actors: Value is not really cost of production, but utility. And we also have to consider marginal value: Water is extremely valuable, but we have so much, the marginal value of producing another glass of drinking water is pretty low.

Many things will never be sold for how much they cost to make, because their actual value, their utility, is far lower than the cost of production. And since values and costs of production change over time, it's not difficult to find items for sale for less than the cost of production.

Then we have stocks and bubbles. The price of a stock doesn't just reflect how much it's worth now, but how much it's expected to be worth in the future. This does cover speculation too: There is a utility in holding something if you expect to be able to resell it for more tomorrow. So I'd not say that what people call bubbles has that much to do with being far from fundamentals, but with information being propagated that shows that the current estimate of future value is very different from the current price. If a pharma company is on trials to cure a major kind of cancer, its stock will go up. If the trials are unsuccessful, it might go all the way to zero. But that doesn't mean that there was a bubble. This is especially true with stocks, where, if you really think a price is way too high, a hedge fund can make money shorting it.

So, when calling something a bubble, we have to have some very strong reasons to do so. You could claim that the Efficient Market Hypothesis doesn't hold, even at the weakest of levels, at which point you are very, very far from mainstream economics. You can instead claim that the problem is that the market is being manipulated, and that might be the case with Bitcoin, for instance. Maybe a company is committing major fraud, and most people don't know about it, but you do have insider knowledge. That'd not be much of a bubble, just plain decepcion. You could also claim that there are major amounts of risk baked into the price, so you can expect volatility. Many would argue that the financial crisis, for instance, was really all about the Fed just not making any sense, and not reacting to a sudden increase to the demand of money.

So when it comes to bitcoin, how do you explain the bubble? My favorite is a combination of price manipulation from actors that control way too much bitcoin for a market to be all that efficient, tied to a high amount of variance in possible outcomes. If through something strange, Bitcoin actually happened to become important, then its current price is very low compared to what it should be. If it is not, then the current price is way too high. So what we see is a market that is mostly known by people who are just spending a few dollars hoping to make millions, so for them, it's a lottery ticket. Buying a lottery ticket, hand having it lose, doesn't mean that there was an asset bubble with the tickets, does it? :)

Re: How much are they worth?

[tom229]

Very good points you bring up. However I'm not sure it applies to currency. For example, the "intrinsic value" of a 100 dollar bill is far below $100, yet it still retains that value.

With a currency, worth gets computed as a factor of total amount of assets and production over supply of the currency. This, of course, assumes that everyone participating accepts that currency as valid. This is what is driving the price of bitcoin at the moment: pure speculation of wide acceptance of it as a valid currency. And if that happens the gdp of the entire world divided by a maximum of 21 million bitcoins is far above it's current comparative value of $600 per coin.

Re:How much are they worth?

[elfprince13]

Go read just about any current textbook on microeconomics. Then get back to me.

Re:How much are they worth?

[Jane Q. Public]

"For most stocks, on most days, the price is a more-or-less reasonable approximation of the present value of the share"

I don't disagree. I was saying that bubbles happen when the price becomes completely detached from any kind of realistic valuation.

Re:How much are they worth?

[Jane Q. Public]

"That idea of value was nice, in the 19th century. While one can come up with a concept of value, that value is not the same for all actors: Value is not really cost of production, but utility. And we also have to consider marginal value: Water is extremely valuable, but we have so much, the marginal value of producing another glass of drinking water is pretty low."

No, and no.

As I wrote in another reply: "intrinsic value" has a specific meaning. Different schools of economics might call it by different names, but the concept is present in any free-market economics. Without it, supply and demand would not give any kind of rational price signals. Intrinsic value is a clearly defined mathematical concept in economics. What you mean by "value" here is the subjective value of something to a consumer, which is a completely different thing.

Here is why it is an important concept: I produce commodity X. (It doesn't matter whether it's wheat or Bitcoins, the concept is the same.) In order to keep producing X, I must make a profit on it, or I simply won't do it. This is basic human behavior.

In order to make a profit on it, I have to sell it for more than my costs of production + distribution. This is the base amount I have to beat to make a profit.

If I can sell it for a lot more than that amount (which we are calling "intrinsic value"), then a lot more people will start doing it too. Which drives the price back down toward that amount again. If I try to sell it for my costs or less, then I cease to make a profit and I'll stop producing X altogether.

That's why it's called intrinsic value. It's a value that the market naturally drives the price toward. (IF, that is, it's a rational free market.)

But when a commodity starts selling at a price that is completely detached from any rational valuation, you get bubbles. That is what has been happening with bitcoin.

It might satisfy the "value" that a consumer subjectively attaches to it, but in rational markets that price will always gravitate toward the intrinsic value (but never quite reach it). When it doesn't, trouble is on the way.

Re:How much are they worth?

[Jane Q. Public]

I meant to add:

"Water is extremely valuable, but we have so much, the marginal value of producing another glass of drinking water is pretty low."

Again you are confusing subjective "value", or importance, to economic value. It doesn't work that way. This is the point I was originally making: in economic terms, cost, price and value are all very different things. But aside from that, marginal subjective consumer "value" is yet another thing, unrelated to the kind of "value" I was referring to.

Water is cheap precisely because of the effects I already described: the cost of production is extremely low, and there is ample supply. If it cost a lot to "produce" a glass of water, then that glass of water would cost you a lot. It doesn't get much simpler than that. And it has very little to do with the fact that you need water to drink, or like to live near a lake (your subjective consumer value).

But that gets us right back to why the market in Bitcoin has been irrational. If you tried to sell water on the stock market for $50 a liter (WAY more than it cost you to "produce"), nobody would buy it. Ridiculous, right? So why did they do that for Bitcoin? Answer: because they were being irrational.

Sure, some people are making a killing on Bitcoin. But for every one who does, someone else is either losing money, or will lose money.

But all the while, Bitcoins are getting harder and harder to produce (as they were designed to do), which means the "intrinsic value" is increasing, which means the market price price is ever more closely approaching that intrinsic value.

Re: How much are they worth?

[Jane Q. Public]

"Very good points you bring up. However I'm not sure it applies to currency. For example, the "intrinsic value" of a 100 dollar bill is far below $100, yet it still retains that value. "

Dollars are fiat currency. In economic terms, they have no intrinsic value. In fact that's part of the definition of a fiat currency.

Bitcoins, unlike dollars, are a commodity. You can literally create them at home. That is why they have an intrinsic value, and why economically speaking they are different from dollars.

But the market is treating as though they were the same. In part because a lot of people don't understand that difference.

Re:How much are they worth?

[Jane Q. Public]

"Using the term: 'read something about macro economics, and then come back to me' is a form of the anti pattern Intellectual Violence. Read up about it, then come back to me ;)"

Baldly stating

"Nothing has intrinsic value."

as GP did, to an explanation of intrinsic value is also "intellectual violence". Why should I not reply in kind? I reserve the right to defend myself from verbal violence, using verbal violence myself if necessary.

Speaking of which, you demonstrate the same kind of behavior by making argumentative but unsubstantive comments like:

"Certainly not. What has the "intrinsic value" of a fresh baked bread (it can be eaten) to do with its value? Or what has the 'intrinsic value' of a piece of coal (which can be burned, and thats it) to do with supply and demand on coal and hence its price?"

Amusing. You ask me to explain something I've already explained. So please tell me which this is: trolling, or just a failure to understand? If it is failure to understand, then it's fine. If not, then it's just another example of the kind of "violence" you mentioned.

A subjective concept of "value" to a consumer or end-user has nothing to do with intrinsic value. They are two completely different things. Intrinsic value is a specific and clearly-defined economic concept. It is a number that can be precisely calculated. If, of course, you have the relevant information about costs and so on.

If you want to know what it has to do with supply and demand, please see my replies to others above.

"Supply and demand does not define its price, the price is defined by how much Apple can get away with."

That's because it's not a free market. Only one company makes iPhones.

On the other hand, it's still not a total monopoly because if Apple charged too much, people would just buy an Android phone, or an Ubuntu phone, or a Firefox phone. In fact, many people have... leaving Apple with far less than half the market now.

So... nice try, but arguing that supply-and-demand doesn't work for a semi-monopoly is pretty much a non-argument.

Re: How much are they worth?

[cas2000]

i could make turd sculptures at home too - that doesn't mean they have any intrinsic value. certainly no more or less than the bitcoins i could make at home.

bitcoins and other cryptocurrencies are the ultimate in fiat currencies - there is no intrinsic value or worth in the fact that some calculation has been performed. proof of worthless work is just as worthless as the work.

they only have any "value" because it's a ponzi scheme of people pretending they have value.

Re:How much are they worth?

[Your.Master]

Here's one economic definition of intrinsic value:

http://www.investopedia.com/te...

1. The actual value of a company or an asset based on an underlying perception of its true value including all aspects of the business, in terms of both tangible and intangible factors. This value may or may not be the same as the current market value.

This says something very different from cost of production + cost of distribution, and the fact that it includes "intangible factors" and "perception" belies the notion that it can be precisely calculated.

http://www.businessdictionary....

3. Economics: No intrinsic value exists for any good or service except its price (see use value) which is reflection of its demand and supply position and not of any inherent quality.

This one is explicitly refuting the idea that value and price have a disconnect at all. This is basically a "subjective theory of value" being defined here -- "everything is worth what its purchaser will pay for it". The same cite has the investopedia definition as definition 7.

Here's the problem: there are multiple "intrinsic theories of value", and there is also the subjective theory of value. You are promoting the "Cost-of-production theory of value" as if it was the universally-accepted "economic definition" of intrinsic value:

http://en.wikipedia.org/wiki/V...
http://en.wikipedia.org/wiki/T...
http://en.wikipedia.org/wiki/C...

Note the other theories of intrinsic value linked in wikipedia. Even restricting yourself to intrinsic value theory, I don't think "cost-of-production" is considered the slam-dunk winner of all things. More like an aspect of valuation.

Re:How much are they worth?

[TrollstonButterbeans]

You have to jump on this opportunity NOW and invest BIG NOW and EARLY and then after the spike you will be laughing all the way to the BANK ---

[RUPTCY]

Re:How much are they worth?

[Beeftopia]

Economically, the intrinsic value of something is approximately

Nothing has intrinsic value. Individuals decide how much value things have for themselves.

The concept of "intrinsic value" requires the existence of an "Uber-Evaluator" who dictates that intrinsic value. Because that value can and will be radically different to different people at different times. But no such evaluator exists, so I must agree with the AC comment that nothing has intrinsic value. Items can have radically different values to individuals and markets depending on circumstance.

Item: An artist spends 2000 hours creating a life-sized Salvador-Dali-esque image of Donald Duck in marble. Intrinsic value? Determined by who?
Item: An operational car a family just wants to get rid of. They donate it to a car-reseller charity. Intrinsic value of the car? Determined by who?
Item: 27.5 pound block of gold. Intrinsic value? Determined by who? To a starving Ethiopian child, it's without value.
Item: Side of beef. Intrinsic value? Determined by who? To the starving Ethiopian, extremely high value. To a vegan, no value at all.

The concept of "intrinsic" value is a lot like centrifugal force - it doesn't actually exist, but we have an idea of what you mean: a "typical price" fetched in a "functioning market" in "typical circumstances." Is a bubble market a functioning market? Heck, this year's Nobel Prize in Economics (yeah, I know it's not named that specifically) was awarded to three co-winners. One, Robert Shiller has done extensive work on bubbles. Another, Eugene Fama, denies bubbles even exist!

Re:How much are they worth?

[7-Vodka]

Except in the case of bitcoin, the intrinsic value is zero.

Nobody wants a bitcoin for it's own sake, everyone wants bitcoin because of what you can buy with it.

Real things have intrinsic values. Money has intrinsic value. Currencies don't. Bitcoin is a currency. Dollar is a currency. All paper moneys are currencies.

Re:How much are they worth?

[ultranova]

Economically, the intrinsic value of something is approximately: the cost of production + the cost of distribution.

That's usually just called "cost". And "value" is used for how much I'd be willing to pay for it. And for currency, that's not "intrinsic value" but the value of the goods and services I can get with it.

The ideal currency has an intrinsic value and cost of zero.

Unfortunately, today's stock market all too often ignores value and goes by price alone.

That's because stocks are investment vehicles, which means their value is mainly based on how much the owner can get by selling them, which in turn depends on how much other people will value them in the future. That tends to lead to cyles of positive and negative reinforcement.

This all comes down to one basic point: the current stock market is often irrational, because it has gotten to a point where it completely ignores actual value of something and goes by price alone. This is irrational and leads to all kinds of problems.

The actors participating in the market, however, are rational. Their timing might be off, but the overall strategy - buy at the bottom and sell at the top of the cycle - is sound. The overall system is broken, but I'm not sure it can be fixed.

So, keep in mind: if you invest in a cryptocurrency (or anything else, for that matter) at a price that is far above it's "intrinsic value", be careful. You might make money if you know what you're doing, but you could also become the victim of the bubble and lose your shorts at any time.

You aren't investing in a currency, you're investing in the economy that uses that currency - or, to be exact, the right to acquire some of the products of said economy. So the questions here are: what is the total value of goods, services and whatever payable by a particular currency per unit of said currency? How is that ratio likely to evolve in the future (multiple scenarios and their probabilities)? How does that compare to whatever you'd trade it for?

Also, you should never invest your shorts. You can always have a case of bad luck.

Re: How much are they worth?

[ultranova]

Bitcoins, unlike dollars, are a commodity. You can literally create them at home. That is why they have an intrinsic value, and why economically speaking they are different from dollars.

True but misleading. What you actually can do at home is confirm Bitcoin transactions, which reinforces transaction history against double-spends. For this service, you receive transaction fees. As an added incentive, you currently also receive newly minted Bitcoins. However, the latter is merely a side effect to help bootstrap the network and provide the initial distribution of coins, and will slowly fade away.

The whole idea of Bitcoins having "intrinsic value" is about the same as claiming miles or newton seconds have an intrinsic value. They are simply arbitrary units of measurement in a distributed ledger system. Bitcoins have no identity, they're simply a unit of magnitude.

But the market is treating as though they were the same. In part because a lot of people don't understand that difference.

No, it's because the market understands what's actually happening. You are simply wrong.

Re:How much are they worth?

[kasperd]

Money has intrinsic value.

The intrinsic value of money is less than the value of the paper it is printed on. The real value of money is entirely due to the number of people who accept it as payment. Most countries' currencies are accepted as payment by more people than bitcoin is, which is why the value of bitcoin is still quite uncertain. There may be cases where the population of a country do not accept the official currency of that country as payment. But when that happens, they tend to choose using another country's currency as payment rather than something like bitcoin. That may change in the future, but for now I have yet to hear about any person who could handle all his income and expenses in bitcoins.

Re:How much are they worth?

[kasperd]

The only reason the countries accept it as tax payment is because they can control its value.

Does the government of a country really control the value of its currency? They can influence it, but if external factors become too strong they can no longer control the value of the currency.

Re:How much are they worth?

[mark-t]

Air.

Re:How much are they worth?

[Jane Q. Public]

"I think you've picked an unusual name for it by calling it economic value and implicitly claiming everything else was not economic value"

That isn't what I did.

"Intrinsic value" is a technical term. It has a specific definition. It is not the "value" that some consumer thinks it "intrinsically" possesses. That is a completely different thing.

I did not say that one is economics and the other is not. I said that "intrinsic value" is a clearly defined economic term, while consumer views of "value" are ambiguous and not clearly defined.

It is defined as cost of production + cost of distribution. You can call that "cost of production plus cost of distribution", and it is pretty close to cost of goods sold, but "intrinsic value" gives it a name, and I did not make that name up.

Re: How much are they worth?

[Jane Q. Public]

"i could make turd sculptures at home too - that doesn't mean they have any intrinsic value."

Like so many others, you are confusing the idea of "intrinsic value" with some "value" to you which is "intrinsic" to the good. But that's not what it means.

Look... I admit the name is somewhat unfortunate but I didn't make it up. Replace "intrinsic value" with "cost of goods sold" and you will be close enough to probably get the point.

Re: How much are they worth?

[Jane Q. Public]

"What you actually can do at home is confirm Bitcoin transactions, which reinforces transaction history against double-spends."

NO. You can actually "create" Bitcoins at home by "mining" them. (If you want to get technical, you are actually discovering them, but it's called mining.) This is NOT the same as confirming transactions. I know... I've mined some.

"The whole idea of Bitcoins having "intrinsic value" is about the same as claiming miles or newton seconds have an intrinsic value. They are simply arbitrary units of measurement in a distributed ledger system. Bitcoins have no identity, they're simply a unit of magnitude."

NO again. That's not what "intrinsic value" means. It isn't some "value" that you attach to something. It is a specific quantity that can be precisely calculated. It has nothing to do with a Bitcoin's "value" to you, and it has nothing to do with market price. Economically speaking, it is a COST.

Re:How much are they worth?

[Jane Q. Public]

"Here's one economic definition of intrinsic value:"

Neither of the definitions you give are the "intrinsic value" I was referring to.

The first one is not in the context of macroeconomics. It is a business definition. The second definition is the concept of a "value" that some good "intrinsically" has, which again is not the same thing. The "intrinsic value" to which I referred is neither of those things. It is an abstract economic concept. Technically, it is a cost.

I have explained this many times already, but I'll do it again: the term "intrinsic value" is unfortunate because strictly speaking, it does not reflect the "value" of something either to a producer or a buyer. The "value" of a loaf of bread may be different for you than it is for me. That's entirely subjective, and a different concept. Similarly, "intrinsic value" is not something that is "intrinsic" to the product in the usual sense of the term. It has to do with outside factors that aren't inherent or "intrinsic" to the product at all.

The point I'm making here is that it is not what it sounds like it should be. It is not a "value" in the usual sense, and it is not "intrinsic" in the usual sense. But I did not make the name up. It is right there in my macro econ book.

Re:How much are they worth?

[Jane Q. Public]

"That said, I agree that Jane Q. Public's distinction between Worth/Value and Price is a bit broken, or at least, one-sided"

That's because that is NOT the distinction I was making. "Intrinsic value" is not a "worth". Nor is it a "value" in the usual sense of the term. In actual calculation, it is a COST.

I didn't say anything was "worth" its intrinsic value. What I said was: in a rational free market, prices tend to gravitate toward the intrinsic value. But it is not the "value" or "worth" of anything. It is not the subjective "value" you attach to something, nor is it the market price. It has nothing at all to with the former, and it has nothing directly to do with the latter.

It's just an abstract economic concept related to markets. With a name that should probably be different because it causes so much confusion.

Re: How much are they worth?

[ultranova]

NO. You can actually "create" Bitcoins at home by "mining" them. (If you want to get technical, you are actually discovering them, but it's called mining.) This is NOT the same as confirming transactions.

YES. What "mining" actually is is solving transaction blocks (if you want to get technical, finding nonce values that make the block's hash be smaller than the current difficulty) and thus lengthening the blockchain, decreasing the chance that an attacker can replace it after a certain point with an alternate history. You are not "discovering" Bitcoins, you are getting an extra reward on top of transaction fees, both as an incentive and to bootstrap the initial distribution of the coins.

I know... I've mined some.

The ability to start a fully automated client and let it work in no way implies any kind of understanding of how Bitcoin operates, any more than starting a computer implies understanding of chip design.

Re: How much are they worth?

[cas2000]

It was you that said that bitcoins are a commodity and have intrinsic value because you can make them at home - here's what you said:

Bitcoins, unlike dollars, are a commodity. You can literally create them at home. That is why they have an intrinsic value

my point was that this is complete and utter bullshit because i could make turd sculptures at home...this fact does not magically imbue them with intrinsic value or with commodity status. like your argument, they're still just worthless shit.

What we're really going to need ...

[cold fjord]

What we're really going to need, and soon, is a program to know what all these *coin currencies are, and maybe some exchanges to change your Xcoins to Ycoins to dollars. Maybe even a consumer report on the issue: "We recommend avoiding FraudCoin as a poor value."

Re:What we're really going to need ...

[NFN_NLN]

What we're really going to need, and soon, is a program to know what all these *coin currencies are, and maybe some exchanges to change your Xcoins to Ycoins to dollars. Maybe even a consumer report on the issue: "We recommend avoiding FraudCoin as a poor value."

https://www.cryptocoincharts.i...

To be honest though FraudCoin was kind of a dead give away just by the name.

Re:What we're really going to need ...

[Nemyst]

I do wonder if we're going to see a massive collapse of all those cryptocurrencies. Currently it seems like every time a currency stops being profitable to mine, another one springs up. This sort of thing won't last.

Re:What we're really going to need ...

[SuricouRaven]

There are really only three: Bitcoin, litecoin and 'other.' Brand recognition matters - only those two have managed to achieve any significent value.

Re:What we're really going to need ...

[Your.Master]

Has litecoin really achieved enough to break away from "other"?

Re:What we're really going to need ...

[Nemyst]

I usually see Litecoin and Dogecoin mentioned in the same breath, sometimes with other random cryptocurrencies. I'm not sure Litecoin's done enough to distinguish itself.

Still, there's a lot of people spending a lot of time (and electricity) on extremely volatile and unproven currencies, which could crumble down at any second.

Re:What we're really going to need ...

[SuricouRaven]

Dogecoin was never intended as a serious cryptocurrency. It's a joke currency.

Re:What we're really going to need ...

[Patch86]

Might I guess that you are involved in "litecoin" somehow (i.e., mine some, have bought some, whatever)?

I've never heard of it. Ever. Admittedly I'm not the sole arbiter of when something becomes brand-recognised, but I do read a lot of tech sites and I've never heard the name come up before (or at least, not in any way that has caused me to remember it). Can't see why you'd think that it has broken out of the "other" category. Frankly, Dogecoin is better known- and that's a take-the-piss.

Re:What we're really going to need ...

[SuricouRaven]

Litecoin is well-established enough to actually have an exchange rate and at least one real business taking payment in it, but it's still no more than a shadow of bitcoin. It's designed a little differently - I don't know the details, but the configuration is set to allow for faster transactions, and there are more coins so each one will be worth less and so invoke less subdivision complexity. The idea is to be more practical than bitcoin for very small, time-limited payments. If you want to pay the equivilent of £5 for some time on the latest life-sucking MMO, you don't want to be left waiting six hours for a BC transaction to validate. This does come at the expense of a faster-growing blockchain.

Fools

[Anonymous Coward]

The inability to intelligently regulate the value of the currency in accordance with the economic needs of the society is a bug, not a feature.

Re:Fools

[Bengie]

It's a feature if it's working as intended.

Re:Fools

[ThatAblaze]

Then why does your bitcoin purse have 100 coins in it?

Re:Fools

[SpankiMonki]

The inability to intelligently regulate the value of the currency in accordance with the economic needs of the society is a bug, not a feature.

Mod parent up, please! It's a good thing that government issued currencies are intelligently regula....oh wait...

Re:Fools

[SuricouRaven]

The problem as I see it is that 'conventional' economics has managed to screw things up so badly that people are desperate for anything that promises an alternative approach avoiding the obvious weaknesses. Even if it clearly introduces new weaknesses.

Re: Fools

[AudioEfex]

The argument that government backed currencies are so faulty is, well, faulty.

Do certain countries have piss poor systems set up that can make their money worthless, overnight? Yup, that's why folks don't invest in them.

The dollar, the euro, etc. may fluctuate, but there are as reasonable safe guards against them going flat as is currently possible that are what make the world go 'round.

Comparing major real-world currencies to "crypto" currency is like comparing a child's pretend store to Wal-mart. Sure, if you convince enough kids that the pretend stuff in your pretend store is worth enough, you can dupe them into giving you their money. You might even make a few bucks before people catch on, and if you have a large enough supply of dumb kids in your neighborhood that fall for it and believe a baggie of dirt you sell them is magic dirt that will someday turn into gold or candy.

But it ends when the real world gets involved - because the real world doesn't buy into your pretend.

Repeatedly solving equations on a computer does not actually do anything valuable. It simply controls the output. But if what is behind the output of nothing is still nothing, it's simply an age old money scam where the new folks pay to get in by "investing" so the early adopters make money, but eventually the pyramid falls when everyone realizes that it's all based on...nothing.

BitCoin "investors" try so hard to make it all "real" and will quote you academic papers and media curiousity stories and "conferences" of folks who get together to debate all this, but it's just because they want folks to keep believing that some type of alternate currency is just going to sprout up over nothing. Nothing backing it, nothing being produced but virtual money that has no true value except to speculators who depend on additional folks speculating to make their pile of nothing have the perception of being something.

It's all rather insane, but it breeds on basic human hopes for wish fulfillment - the wish to get rich quick. I have no doubt BitCoin has made some folks very rich - but those very rich people became rich because they cash out their hauls into real dollars which can then be used in the real world. Cashing out by selling to folks who come in at the bottom of the pyramid.

I said this elsewhere and was pummeled by a bunch of believers - but you cannot pay for any of the necessities or luxuries of life with BitCoin. They retorted about debit cards and BitCoin ATMs - but missed the point, which is that they had to cash out those BitCoins into real world currency to make it useful. Once folks stop buying into the bottom of the pyramid, hoping to get rich, and the jig is up - they are worthless.

In the future, folks will look back at this as a large experiment gone wrong and marvel at how some of the smartest folks got taken in by this. Scams usually prey on the old and weak, yet you have some otherwise brilliant people who fell for this hook, line, and sinker by the lure of getting rich quick out of nothing.

Re: Fools

[TsuruchiBrian]

Repeatedly solving equations on a computer does not actually do anything valuable.

What value is done by digging up shiny pieces of metal from the ground?

Re:Fools

[syockit]

We all know that government issued currencies are buggy, hence the attempt to come up with these pseudo currencies. But replicating the bug in their new design means they're doing it wrong.

Re: Fools

[TsuruchiBrian]

What value is done by digging up shiny pieces of metal from the ground?

Are you deliberately being obtuse?

Are you?!

Re: Fools

[AudioEfex]

That's actually not true. I assumed that as well, but there is no actual value in mining other than a time sink. It's not like it actually contributes to anything or a greater whole. That was pretty shocking to me - it's just busy work, I thought that somehow intrinsically it would be using CPU cycles to do something useful.

If we make it we can break it

[3seas]

currency only works as well are all those making use of it agree on its value. And as there are always those looking for a free lunch and control that will figure out a way to cheat.

Re:If we make it we can break it

[Jane Q. Public]

"Fiat currency only works as well are all those making use of it agree on its value."

There. FTFY.

Bitcoin is not a fiat currency. It is a commodity. It has an "intrinsic" value, which is not subject to opinion.

Yes, its price has been all over the map. But that's just because of stupid investors. They've been handing the bulk miners the keys to the bank.

Re:If we make it we can break it

[Jane Q. Public]

"Intrinsic value" is magical thinking to begin with."

Then you'd better tell all the economists, because they aren't aware of this.

Without a concept of intrinsic value (even though some schools of economics might call it something else), there can be no such thing as supply and demand. As I say: the name may be different, but without the basic concept of intrinsic value not one of their hallowed economic curves will work.

Re:If we make it we can break it

[SpankiMonki]

"Fiat currency only works as well are all those making use of it agree on its value."

There. FTFY. Bitcoin is not a fiat currency. It is a commodity. It has an "intrinsic" value, which is not subject to opinion.

Not sure what bitcoin has to do with GP's post, but since you brought it up...

While a commodity can be used as currency, commodities always have uses outside of their value as currencies. Bitcoin does not share this property. A bitcoin is nothing more than a numerical balance in a distributed triple entry ledger.

But if you can tell me what you can do with a bitcoin other than spend it (transfer the ledger balance from one account to another), I'd be willing to change my mind. :-)

ps - All Money is Fiat Money

Re:If we make it we can break it

[angel'o'sphere]

(* facepalm *)
Ofc, Bitcoin is a fiat currency.
It has no intrinsic value, you can not eat/burn it, use it as a brick to build a house from or as an ingredient to an electronic device or any other real world thing you can take into your hands.
Perhaps you should read up about the term intrinsic.
Heck, without a computer to transfer it for goods or 'real' money it is completely worthless.
Real money as in a piece of a one dollar bill, I at least can trade hand to hand in Morocco for a can of green tee, regardless of its (the dollar bills) intrinsic value. The old german currency DM is still in circulation in east Europe (besides it is completely worthless now) because people there consider it a fiat currency. I guess they just like the colour of the bills, and no: without pulling a lot of strings you can not even exchange it into Euros!
A barrel of oil has an intrinsic value, the dollars it might cost: not. The bitcoins I need to buy the dollars or the barrel have none at all.

Re:If we make it we can break it

[Anonymous Coward]

"Intrinsic value" is magical thinking to begin with."

Then you'd better tell all the economists, because they aren't aware of this.

That might explain their terrible track record.

Re:If we make it we can break it

[Jane Q. Public]

"While a commodity can be used as currency, commodities always have uses outside of their value as currencies."

Always? Well, it's true that gold, when it was both a commodity and a currency, had other uses. But until very recently, from a historical perspective, the only other use it had was art. And even then, it was only valued as art because it was effectively money; other less-expensive substances also had as much shine.

Re:If we make it we can break it

[Jane Q. Public]

"It has no intrinsic value, you can not eat/burn it, use it as a brick to build a house from or as an ingredient to an electronic device or any other real world thing you can take into your hands. Perhaps you should read up about the term intrinsic."

And perhaps you should read up on economics, or at least just look up the phrase "intrinsic value" in an economic context.

I'm not saying that out of "intellectual violence", I'm making a genuine suggestion for improving your knowledge of the subject.

And the reason I'm doing so is because you are still getting it wrong. Your subjective ideas of "value" have NOTHING to do with the economic concept of "intrinsic value". The former is ambiguous; people have different subjective ideas of value. The latter is a clearly-defined quantity in the field of economics.

So I'm saying this with the intent to be constructive and helpful, not "violent": go look up intrinsic value. But note that while it is called something else by different schools of free-market economics, every one of them does make use of the concept.

Re:If we make it we can break it

[angel'o'sphere]

Intrinsic: in it self.
Intrinsic value: having a value in it self.

Everything that can not be used by the owner for the owners benefit (and probably consumed by using it) has no 'intrinsic value'.

The intrinsic value for a cask full with one million dollars in bills is the value you give it to tapestry your walls or the value you give to it if you burn it in your furnace.

On the other hand the same amount of 'value' in potatoes will feed you a couple of millennia. That is intrinsic value.

Referring to 'books about macro economics' is quite rude, if you not even mention one author/book - preferable with either chapter or page, and it implies you never have read one. Sorry, you are simply to easy to defeat, smart, but uneducated, nice ideas, but no clue. Perhaps you should at your age start up reading? You could make quite history if you would stop wasting your time with bullshitting around and put action where your mouth is.

Re:If we make it we can break it

[SpankiMonki]

Always?

Yes!

And even then, it was only valued as art because it was effectively money

No! Gold was valued as a pretty thing/art medium before it came into use as a currency. In fact, all commodity monies arose from physical goods that had other non-currency uses.

Some folks really really want bitcoins to be a commodites because of their ideological disposition, but in reality they're nothing more than bits 'n bytes representing ledger balances.

Re:If we make it we can break it

[kenshin33]

What's intrinsic about the value of any given service/comodity/product?
it depends on the value of somthing else which depends on the value on something else ... etc, it will end up depending on someone's time somewhere costing. what is the intrinsic value of time? yours? mine? the time of the guy sitting in the corner? the miner's? the cop's?

Re:If we make it we can break it

[TsuruchiBrian]

I'm not sure why you think "pretty thing/art medium" counts as being useful. I could say that bitcoin is useful to because some people derive pleasure from knowing the answers to useless math problems.

You can make things that are the same color as gold. Why is it important that things actually be made of gold? It is only because it is a status symbol because of it's rarity. Gold's most useful feature is it's rarity. Bitcoins are rare too. Things don't need to be physical to be rare. Maybe everyone will decide not to want bitcoins anymore and they will be worthless. Maybe someday everyone will decide they don't want gold anymore. We don;t need bitcoins or gold. This is in contrast to real commodities like water and food that we can;t one day decide we just don;t really want anymore.

Re:If we make it we can break it

[TsuruchiBrian]

Bitcoin is not fiat currency. Fiat currency is backed by government decree.

Re:If we make it we can break it

[angel'o'sphere]

Fiat currencies are not backed, hence the name "fiat".

Re:If we make it we can break it

[TsuruchiBrian]

Fiat currencies are not backed by a commodity. Fiat just means "let it become", "let it be done", "it shall be" (i.e. "backed" by government decree rather than by a commodity)

Bitcoin is not tied to any government or law and therefore cannot be a fiat currency.

Re:If we make it we can break it

[angel'o'sphere]

There is no definition that a fiat currency needs to be tied to any law or government.
All none backed currencies are fiat, as you so eloquent translated.

Re:If we make it we can break it

[TsuruchiBrian]

From wikipedia: Fiat money has been defined variously as: 1. any money declared by a government to be legal tender.
2. state-issued money which is neither convertible by law to any other thing, nor fixed in value in terms of any objective standard.
3. money without intrinsic value that is used as money because of government decree.
Notice how the word government or state is mentioned in each definition.

Re:If we make it we can break it

[angel'o'sphere]

And? It is a wikipedia article!
Fiat money is older than wikipedia, perhaps looking into s real dictionary/enciclopaedia helps. But let me check the german version, perhaps it agrees with you :)
Well, the german version agrees with me http://de.wikipedia.org/wiki/F...
Every money that is not backed or has an intrinsic value (like using rice as money) is fiat money, has absolutely nothing to do with a government or not.
Or how exactly would you call money that I myself invent?

But perhaps americans simply define what fiat means different from Europe, no idea.

Re:If we make it we can break it

[TsuruchiBrian]

The "fiat" part of fiat money is referring to the fact that "someone" is simply proclaiming/decreeing the money to have value rather than it having instrinsic value or being able to be exchanged for something of intrinsic value. This "someone" needs to have the legal authority to create the fiat money in the first place (i.e. a government).

Bitcoin is not a fiat currency because it doesn't have intrinsic value. It is not a fiat currency because no authority has proclaimed "let it be done" (i.e. the "fiat" part) that this currency shall be accepted as money. People have decided to value bitcoin without any proclamation/decree from any authority. The creator of bitcoin lacks the authority to give a fiat decree. People freely and organically chose to value this new currency. This is similar to the way that people organically decided to value gold despite it's lack of utility, although gold was natural rather than being a human artifact.

This is the historical connection between the word "fiat" ("let it be done") and concepts like intrinsic value, commodity backing, and government authority, etc.

Re:If we make it we can break it

[angel'o'sphere]

Everybody has the authority to create fiat money, there is no special government or something else needed.
But as I said before, perhaps the definition or interpretation about what fiat means varies from culture to culture.

For me, and all people I know, Bitcoin is a classic example for a fiat currency ...

The historical connection might be, but that is not the reason for the term, fiat simply means: out of nothing, just like Bitcoins are out of nothing.

Re:If we make it we can break it

[TsuruchiBrian]

Yes everybody has the authority to create whatever kind of new money they want. What they don't have the authority to do is to make it valuable to people (i.e. by forcing people to accept it as payment). The creation of the money is not by fiat. The value of money through forced use is by fiat.

I agree that it doesn't ultimately matter what concept we associate with fiat. That's just semantics. The point I am trying to make is that with bitcoin the value is not by fiat. Nobody is forced to accept bitcoin as payment. People choose to accept bitcoin as payment (i.e. they choose to value it). This is in contrast to other currencies (which I and English wikipedia refer to as fiat currencies like the dollar and euro) , which have the force of law behind them.

And I would object that bitcoins are "out of nothing". They require a great expenditure of resources (i.e. electricity) to create. Dollars only require flipping a few bits in a computer to create. You can create a trillion dollars as easily as you can create 1 dollar. This is not true of bitcoin.

Re:If we make it we can break it

[angel'o'sphere]

You have a point regarding the electricity/computation costs. Nevertheless in my culture fiat means: non backed, nothing more. Unlike e.g. a gold backed currecny.

Re:If we make it we can break it

[TsuruchiBrian]

What is gold backed by? Is gold a fiat currency by your definition?

Re:If we make it we can break it

[Jane Q. Public]

"Gold was valued as a pretty thing/art medium before it came into use as a currency."

You make a good point.

"Some folks really really want bitcoins to be a commodites because of their ideological disposition, but in reality they're nothing more than bits 'n bytes representing ledger balances."

No, they're commodities all right. The "bits 'n bytes" thing makes no difference. By that logic, you could say that electronic documents are not "commodities", even though they outSOLD paper books last year. But of course they (and Bitcoin) ARE commodities in every economic sense of the term: they are tangible goods (in a rough sense... I can put them on my cell phone and take them with me), they have costs of production, they can be sold on the free market, they can be traded. There isn't a single economic sense I am aware of in which they are NOT commodities.

Re:If we make it we can break it

[Jane Q. Public]

"Intrinsic: in it self. Intrinsic value: having a value in it self."

I know what the definitions are. And I admit that the name "intrinsic value" is unfortunate, because what it describes is not a "value", per se, and what it describes is not "intrinsic" to the product either, but depends on outside factors.

But I did not make the name up; it's right here in my economics book. I'm just using it.

That is the cause of much confusion here. I've spent more time explaining that "intrinsic value" is not intrinsic and not a value, for a good part of the past 2 days.

It's just an abstract economic concept. As an example, but somewhat less abstract, is "bull market". Do you think it literally has anything to do with bulls? Probably not; it's just a name. Same here.

"Referring to 'books about macro economics' is quite rude, if you not even mention one author/book - preferable with either chapter or page, and it implies you never have read one. Sorry, you are simply to easy to defeat, smart, but uneducated, nice ideas, but no clue."

If I'm so easy to defeat, why have you never done it?

I learned about "intrinsic value" in college. I still have my textbooks. However, of course I have no easy way to show you my economics textbooks, nor for that matter do I particularly want to dig them out of the box they're in. You can say that "implies" I'm making it all up, but your argument carries no weight. Here is an example of how "intrinsic value" is defined. But that is an old reference so it mentions "cost" mostly in terms of labor. Nevertheless, it's still cost, exactly as I described.

So now that I've proved it's not bullshit, will you stop your own bullshitting and leave me be? You are a pain in the ass.

Re:If we make it we can break it

[SpankiMonki]

Well...like I said before, if you can tell me what can be done with a bitcoin other than transfer it to a different wallet/account, I'd be open to the idea that bitcoins are commodities. But balances in a ledger simply don't qualify as commodities, and that's all bitcoins are - ledger balances. So perhaps we'll have to agree to disagree.

Cheers!

Re:If we make it we can break it

[angel'o'sphere]

I don't get what you chat about.

A burger has an 'intrinsic value'. You can eat it.

A 1 dollar bill has not really, except you consider it useful to sniff up a line of cocaine.

Work involved to make something, as your link implies, does not give the artifact resulting any 'intrinsic value' ... it might still have no value at all regardless how much raw material or work you have put into it.

Re:If we make it we can break it

[SpankiMonki]

I'm not sure why you think "pretty thing/art medium" counts as being useful.

Hey, you don't have to take my word for it...go ask the jewelry industry.

Re:If we make it we can break it

[TsuruchiBrian]

If it is true that something like jewelry is "useful" because there is an industry built on it, then bitcoin is the same kind of "useful" by the same logic.

I am not arguing that gold and jewelry don't serve as status symbols. I am saying that I don't consider status symbols to be useful in the same sense as things like food, water, and shelter (i.e. in the sense that we are no worse off without status symbols).

Also, I think gold's usefulness in jewelry comes mostly from the fact that it is valuable as a currency. If all of a sudden you could synthesize gold in the lab for $0.01/ton, what would change? maybe we'd see more gold coated stuff to serve as conductors for non-corrosive qualities. But I suspect the era of gold jewelry would be over, because it stops being a status symbol if everyone can get it easily. Not only that, but fake gold would no longer be produced (why would you want to fake being cheap?). All the gold bars stored in safes would be taken to the scrap yard.

There was a time when aluminum was more valuable than gold, because we did not have the technology to extract pure aluminum from bauxite. Aluminum is definitely useful, and while not cheap, is certainly much cheaper than it used to be due to it's newly acquired abundance. It is valuable because it is noncorrosive and relatively light for how strong it is. If we were to remove all but 625 cubic meters of aluminum from the earth (about how much gold there is on earth), it would surely become more expensive and we would probably store it in vaults and use it in jewelry, but I wouldn't say that aluminum would have become more useful, it probably became less useful, because now it is no longer cost effective to make aircraft from it, regardless of what price per ounce aluminum jumps to.

Obviously gold is not going to become magically abundant in the way that aluminum did. This was just hypothetical.

Re:If we make it we can break it

[TsuruchiBrian]

correction: 15625 cubic meters is how much gold is on earth (25^3) not 625 (25^2)

Re:If we make it we can break it

[SpankiMonki]

If it is true that something like jewelry is "useful" because there is an industry built on it, then bitcoin is the same kind of "useful" by the same logic.

And that logic would be absolutely valid. A bitcoin is useful - as a currency, nothing else.

My argument here is not about the utility of gold or jewelry, it is about whether a bitcoin can be rightly called a commodity. Since bitcoins are nothing more than numerical balances in a distributed, triple entry electronic ledger, I maintain that bitcoin isn't - and cannot be - considered a commodity.

Re:If we make it we can break it

[TsuruchiBrian]

And that logic would be absolutely valid. A bitcoin is useful - as a currency, nothing else.

I guess we agree that bitcoin is not a commodity then :)

I would go one step further and say that while gold is technically a commodity, it's use as a commodity is almost completely overshadowed by it's use as a medium of exchange (i.e. a currency), and if we treated gold as purely a currency, we would see pretty much exactly what we see now, minus some gold plated electrical conductors.

And if I may ask, why would bitcoin being a commodity bolster anyone's ideology? What possible negative implication does the non-commodity status of bitcoin have on which ideology?

Obviously there are all kinds of crazy ideologies out there, but I am just not aware of any that need bitcoin to be more than just a (non-fiat) currency.

Re:If we make it we can break it

[Jane Q. Public]

"Well...like I said before, if you can tell me what can be done with a bitcoin other than transfer it to a different wallet/account, I'd be open to the idea that bitcoins are commodities."

"Commodity" is not defined by the utility it has to someone. Ceramic figurines have no utilitarian purpose. They just sit there and people look at them. You could sit there and look at your stock of Bitcoins, maybe that gives you pleasure like some peoples' ceramic figurines give them pleasure. Where is the difference?

If it is something that is produced, which has an actual cost of production, and somebody will buy it, it's a commodity. What they do with it after they buy it has absolutely nothing to do with that.

Re:If we make it we can break it

[Jane Q. Public]

"A burger has an 'intrinsic value'. You can eat it."

I know you don't get it. But if you read what I have actually been writing, you would know that the quantity described in economics as "intrinsic value" is not "intrinsic" in the usual sense, nor does it have anything to do with "value" in the usual sense. It's just a name for an abstract economic concept. It has not one thing to do with what its "value" is to you, or what the market price is.

I have explained this many times now elsewhere in this thread. I am repeating it here for... well I don't know how many times it has been. I have no reason to repeat it again.

Re:If we make it we can break it

[SpankiMonki]

And if I may ask, why would bitcoin being a commodity bolster anyone's ideology? What possible negative implication does the non-commodity status of bitcoin have on which ideology?

Obviously there are all kinds of crazy ideologies out there, but I am just not aware of any that need bitcoin to be more than just a (non-fiat) currency.

Certain radical libertarians, anarcho-capitalists and others subscribe to a theory of money that requires money to have "evolved from private enterprise from the most marketable commodity".

Later in the above linked article: "In short, money is the thing for which all other goods and services are traded. Furthermore, money must emerge as a commodity. An object cannot be used as money unless it already possesses an exchange value based on some other use. The object must have a pre-existing price for it to be accepted as money."

More than a few bitcoin proponents worship this religious dogma. They desperately want bitcoin to succeed because the system pushes many of their ideological happy buttons. But since one of their high priests has ruled that real money must arise from a commodity, bitcoins have to be commodities - or they won't be "real" money.

Re:If we make it we can break it

[TsuruchiBrian]

Thanks for the link. Although that particular article seems to be trying to use the fact that bitcoin is not a commodity along with mises views on money and commodities to show that bitcoin is not real money.

I am well aware of the libertarian division on bitcoin. It's either a technological salvation, or a giant ponzi scheme depending on which libertarian you ask.

I consider myself a libertarian, although not one of the typical ones you find these days.

I wouldn't consider myself a mises proponent, although I probably agree incidentally with some of his arguments. In regards to this particular Mises quote, I am not sure there is a clear way to interpret it. I could see it to mean:
1. Lots of things including gold and bitcoin would emerge as a commodity
2. Not a lot of things emerge as a commodity (bitcoin is somehow different than gold)
3. It doesn't make sense

Not necessarily in terms of ideology, but only in terms of which libertarian economic ideas I find interesting, I would more associate with Milton Friedman, Hayek, etc. Mises just seemed like too much of an idealogue to me, and also kind of boring. That said, I am not necessarily opposed to people like Keynes or even people like Marx. I think there are probably several workable economic models ranging from very libertarian to very socialist, and it is important to recognize that parts of economic theories of various people may hold insight and be useful even if their ideas as a whole have problems (Mises included).

Unfortunately, ideological economics books are just way too boring for me to actually read, and I'd rather just have discussions with people on the subject of economics without actually having to read anything.

Re:If we make it we can break it

[SpankiMonki]

Thanks for the link. Although that particular article seems to be trying to use the fact that bitcoin is not a commodity with the mises views on money and commodities to show that bitcoin is not real money.

Yep, the article's author recognizes (correctly) that bitcoin is NOT a commodity, and then goes on to argue (incorrectly) that therefore bitcoin CAN'T be money/currency. The reality that bitcoin is actually being's used as money/currency apparently is something he can't accept.

For the bitcoin proponents that adhere to the Mises orthodoxy, they (rightly) recognize that bitcoin is money - but then find they have to do a shitload of mental gymnastics to convince themselves that bitcoin is a commodity.

It's kinda funny, but also pathetic. But as you say, there's some crazy beliefs among ideologues. Cheers!

Time for an ecologically sound cryptocurrency

[spasm]

Can we please have a cryptocurrency that doesn't very rapidly involve burning vast amounts of electricity to perform calculations that have no other purpose than creating the currency? This just seems like a grotesque waste of resources. If there's no way to make a viable cryptocurrency other than performing long calculations, at least find a way to make the calculations have actual utility - incorporate foldingathome into it or something so at least you're curing cancer while generating the currency.

Re:Time for an ecologically sound cryptocurrency

[Anonymous Coward]

No. Money is important, more important than any single of the "more important" issues you can think of, because without money, nobody can work on those problems. It is quite OK to put some energy into a working money system. Cash isn't free either. It is printed, distributed to banks, carried by people who go to banks to get cash, received at and collected from businesses, and after a lot more time being moved around by car, eventually destroyed. All the time it is analyzed to make sure it's not counterfeit and guarded in specially built containers by specially trained people. Despite all the energy spent on mining Bitcoins and other cryptocurrencies, they still manage to pay for it all with a smaller percentage for transfers than classic banking. That should give you an idea how expensive money is and how cheap cryptocurrencies are in comparison.

Re:Time for an ecologically sound cryptocurrency

[Anonymous Coward]

Look up CureCoin.

Re:Time for an ecologically sound cryptocurrency

[kenshin33]

what's wrong with finding primes ?

Re:Time for an ecologically sound cryptocurrency

[pjt33]

Ah, Slashdot at its best: comments by people who haven't even read TFS.

Re:Time for an ecologically sound cryptocurrency

[Cruciform]

Gridcoin. You can mine normally with cgminer, but you also earn coins from your BOINC work. They're currently implementing a feature called scrypt-sleep which will rest your transaction mining so that BOINC apps which utilize GPU will earn work credits that way.
The dev has been working hard on it, and releases updates every day or two for the mining client.

Re:Time for an ecologically sound cryptocurrency

[SuricouRaven]

Very difficult, really. There are very few problems which meet the technical requirements to use in the mining process, and mining is actually an essential part of how the technology works at a technological level. Just remember that conventional finance is hardly energy-efficient either.

Re:Time for an ecologically sound cryptocurrency

[thegarbz]

No. Way to miss the point.

The problem with each additional coin is that they aren't bitcoin and thus don't have a userbase, on top of that they never will have if they are tied to a specific project. What is really needed is that the proof of work concept be centralised for the scientific community. That way if you mine bitcoin / curecoin / dogycoin / whatever, you're part of a distributed resource for real projects.

Re:Time for an ecologically sound cryptocurrency

[Your.Master]

I'd prefer such a currency if it, as a side effect, solved useful problems, vs. one that does busywork and has no useful side effects. Even if it's only marginally useful.

You make an interesting point vs. the classical financial system, and I'd like to hear more on that. I can't immediately see why, if we all flipped to bitcoin tomorrow, we wouldn't need essentially all the same infrastructure, plus a little bit of new waste. I feel like you think I'm missing something important, and would like to know what it is.

Even so, if we can flip in one step to something where the proof-of-work is actually useful, that would be a wonderful achievement. It leaves a really bad taste when random jackasses who are intentionally wanton are rewarded financially for their waste (see posts years back about people stealing electricity from other places to mine bitcoins back when that was still somewhat feasible).

Re:Time for an ecologically sound cryptocurrency

[spasm]

Yes.

http://pando.com/2013/12/16/bi...

Re:Time for an ecologically sound cryptocurrency

[sfcat]

I feel like you think I'm missing something important, and would like to know what it is.

You are, its that Bitcoin is far weirder than you seem to understand. Consider for a second what a Bitcoin is...theoretically it is an international currency (that hopefully will be stable one day) that is inherently deflationary. What does that mean to normal people? That a Bitcoin wallet is a swiss bank account they can carry around and control themselves. This is because the new supply of Bitcoin is constantly decreasing so the price of Bitcoins to other currencies should rise over time. This emulates the interest that savings accounts would usually pay. It can also transfer money internationally in a safe way in 1/1000th the time the banks do it. And it solves all sorts of problems with micro-payments. For instance, a coke machine that takes non-paper money (ie CC, Debt Card, other electronic payment etc) isn't really economically viable without Bitcoin. With Bitcoin you could make a machine with a QR code on the front and when you want a coke you send a small amount of Bitcoin to the wallet indicated by the QR code. Now I know this isn't practical due to the time it takes to verify a Bitcoin transaction but you get the idea. Whoever can shrink that transaction time will get very rich.

2/3rds of the world's people currently don't have a stable local currency in which they can save for the future. So Bitcoin enables anyone with a cell phone to have a Swiss Bank Account that they can convert into the local fiat currency each day to insulate them from hyperinflation. Think about how that might someday change how people in the 3rd world live. For the first time, thinking and planning for the future would be rewarded instead of next year's government deciding that all their savings are actually worthless now.

Now I realize that currently the price of Bitcoin is volatile as hell. I understand that currently its a risky investment plaything of traders. But having a stable pool of traders to stabilize conversion rates to other currencies is necessary requirement for any type of currency. And over time the price should stabilize as more players come to the table. The real worry is that the banks figure out that Bitcoin actually competes with their retail banking business. If they ever figure that out, they'll outlaw Bitcoin in a heartbeat. This is the only real risk to Bitcoin based businesses, traders and economies. Hopefully the powers that be will be asleep at the switch on this one. They were for most other business changes that software brought about. Look at the music industry, 14 years after Napster, they still make a fraction of what they made when Napster was around. And yet they still are filing lawsuits against their own customers.

Re:Time for an ecologically sound cryptocurrency

[sfcat]

One quick add to that link, they estimate that miners are spending 90% of their mining income on power for their rigs. This ignores ASIC miners where only about 5-10% of the value of the Bitcoins mined gets spent on power (on average, I'm using CA power in the USA so my power rates are probably higher than miners in other parts of the world). Also, ASIC miners are probably 60% miners by hashrate, at least currently and will be more like 95% in the next year. So basically take all the values in that article and divide by 10. Other than that, its pretty accurate. And before you get all hot and bothered about mining again, all the Bitcoin mostly goes to buy the ASIC miners to keep up with the quickly growing mining industry. Take a look at the difficultly charts before buying anything, its a tough business.

Re:Time for an ecologically sound cryptocurrency

[TsuruchiBrian]

I thought one of the major selling points of riecoin is that calculating prime numbers *is* useful. To who, and for exactly what, I don't know....

Re:Time for an ecologically sound cryptocurrency

[TsuruchiBrian]

I'm sure most money made from mining gold, goes into buying gold mining equipment... It's kinda lame, but it's not novel.

Getting started?

[drinkypoo]

I couldn't figure out how to get Dogecoin working either.

Why does every new cryptocurrency assume that you're already familiar with how they work? I don't want to go start mining bitcoins in order to figure out how the software works. Whatever happened to quick start guides?

I'm sure I could figure this stuff out, but I'm already in the middle of three other research projects

Re:Getting started?

[BitZtream]

If I tell you how to make something worth value with little effort, then you don't have to buy it from me.

The fewer 'miners' (thats a stupid fucking name for the process) the more profit each one can get.

Re:Getting started?

[SuricouRaven]

I set up a mining thing to learn how it works too: My objective is to mine the minimum amount of bitcoin needed to achieve a payout on the mining pool. I've had a GPU running for a month now and it's more than half way there. It'll run up a power bill a bit higher than the value of the coin, of course, but I'm not doing it for the profit. Plus I spent a chunk of money on the GPU itsself, on the idea that one day I will think up a use for it.

Re:Getting started?

[TsuruchiBrian]

The fewer 'miners' (thats a stupid fucking name for the process) the more profit each one can get.

Why is it stupid? It's intended to be analogous to the process of expending resources to mine precious metals like gold.

Re:Getting started?

[Slashdot Parent]

I couldn't figure out how to get Dogecoin working either.

I'll admit that I don't keep on top of every new cryptocurrency, but I am fairly certain that Dogecoin is intended to be something of an inside joke. It's probably not worth taking it too seriously.

Cool.

[cshark]

Every innovation in crypto is step forward. I'm curious to see if this will be adopted by other currencies.

Ethical energy considerations

[spiritplumber]

This is great. Selling my bitcoins now. (Even if I make a loss, it will be worth it in peace of mind). Any chance we can use this for seti@home, folding@home and stuff like that?

It already exists, it just needs a gateway...

[Anonymous Coward]

www.ripple.com

Proof-of-Wasted-Work vs. Useful Work

[billstewart]

Most of the proof-of-work systems out there are really demanding that you waste some amount of money, time, or both, to prevent people from just generating arbitrarily high numbers of coins (as opposed to the Hitchhiker's Guide To The Galaxy use of leaves as coins.) Bitcoin number-crunching is purely wasteful potlatching. Dogecoin is such wow, so calculation!

At least this one is doing a kind of work that's potentially valuable to the world, assuming the system collects all of it in a way that can be used to contribute to mathematical knowledge. (Yeah, yeah, this is /., and I'm commenting on the article without reading it :-) There may be other kinds of calculations that are both useful and verifiable out there. Unfortunately, protein folding and most other non-mathematical real-world applications probably aren't easily verifiable except by having N people redo the same calculation, which is a problem for currencies that need to prevent double-spending. (I ran Folding@Home for a while, as well as the GIMPS Mersenne Prime Search. For SETI@Home, which for some years was a far larger supercomputer than anything on the Top-500 list, sure, you can contend that there really aren't aliens in the chunk of sky your system was testing, but that's not the kind of verification we're looking for...)

Re:Waste products from mining

[dargaud]

Well, technically no, for two reasons:
- others can produce the same amount of bitcoin for much less electricity than you using ASICs.
- you can heat much more effectively by using a heat pump.

Re:Waste products from mining

[OneAhead]

Wow, that's impressive! Being a bitcoin miner and telling yourself you're trying to live in a sustainable way sounds like an olympic-grade exercise in self-deception. And look at these marvelously contrived arguments in favor of it! If Bruce Springsteen had ever recorded "Born to Self-deceive", you would have been on the album cover.

Tax and Currency Value

[reluctantjoiner]

If an economy goes bad enough (e.g.hyperinflation) black markets spring up, and only at the end are the cognac/cigarettes exchanged for the currency to pay the taxes. So being accepted for tax isn't a sufficient condition for a currency to have value.

In a normal economy, currency has value because it's accepted everywhere for local transactions because of certain safeguards*. That is, if I hand over money to a store to buy something, and the storekeeper never hands me my item, I can go and ask Plod for help. And the converse situation holds as well. In a black market, you have to rely on word of mouth (or force) to put the unscrupulous out of business.

(* The flip side is, as Libertarians are fond of pointing out, is the currency can be manipulated. That's the price you pay for having the state involved in maintaining the Rule of Law.)