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Researchers Find Problems With Rules of Bitcoin
holy_calamity (872269) writes "Using game theory to analyze the rules of cryptocurrency Bitcoin suggests some changes are needed to make the currency sustainable in the long term, reports MIT Technology Review. Studies from Princeton and Cornell found that current rules governing the mining of bitcoins leave room for cheats or encourage behavior that could destabilize the currency. Such changes could be difficult to implement, given the fact Bitcoin — by design — lacks any central authority."
The main problem discovered is that transaction fees do not provide enough incentive to continue operating as "miner" after there are no more bitcoins left to be mined.
After all of the bitcoins are mined, there is no longer an incentive to treat it in this goldrush-like manner. The only people who will have reason to run a miner are the people who use bitcoins as a currency, to be a node in their decentralized economy. Most of the problems people describe seem to be directly related to its use as a pump and dump, actually. I must wonder what's going to happen once we reach that point.
The selfish mining paper makes sense in mathematically simplified game theory model but does not take into account real-world issues of latency. Anyway simple work-arounds exist eg for pooled miners, the winning miner can broadcast their winning solution to random nodes in the network, which prevents selfish mining (selfish mining depends on keeping the transaction secret temporarily delaying broadcast). Hosted mining is a problem, but people should stop overpaying for hosting mining contracts, and demand to control their own vote. The long-run economic question of fees crossing over with reward is WAY to early to declare defeat. We have large amounts of bitcoin reward for decades, bitcoin can be scaled to handle more transactions, and what do we know now about the bitcoin transaction fees & economic picture 20 years out).
So there is a potential problem that manifests itself in 25 years from now... We're doomed.
So the past 12 months of theft, fraud, corruption, system flawes and volatility in the bitcoin system are all just stories made up by government in your eyes? It is unbelievable the paranoia and conspiracy theories people are willing to resort to rather than believe the evidence in front of them.
Firstly, there already is a "tax" of the sort they say is needed. Currently the bitcoin relays don't accept transactions containing a tip of less than 0.6cents per kilobyte.
Secondly, there is nothing to force a miner to pick up a transaction, now. Right now, if a transaction doesn't contain a fee there is no incentive for the miner to include it in the block they are working on. Regardless of whether the miner includes transactions or not, they still get the mining reward.
Transaction fees are like an auction. The customer puts in a bid at the lowest price he thinks the miners will accept, each miner decides whether that fee makes it worth his while to include the block. If the customer wants the transaction processed quickly he will put a comparatively high fee on it so every miner will be interested. If not, they put a low fee on it.
This is called a market. It is how bitcoin is supposed to work.
Ignoring game theory, it's easy to see how the model of mining being only paid by transaction fees doesn't make sense. After all, mining security is something that benefits all holders of Bitcoin, regardless of whether or not they perform transactions, so surely all Bitcoin holders should be contributing to that security.
How do you do that? Make everyone pay equally. Currently that is how Bitcoin works due to the inflation subsidy. (about ~10% per year right now, leading to a per transaction cost of about $50) Just keeping that subsidy indefinitely at some sane level, say 1%, is perfectly reasonable. There's other options too, but fundamentally people like a free lunch.
-Peter Todd, Bitcoin developer
You can't win unless you cheat. That is what the system in general rewards. Liars win elections, thieves win on Wall Street, bullies become sheriff. Cheats and bullies are top dogs in today's society. They are the gangsters who write the rules. Bitcoin is just another chapter. If there was no way to cheat, it would never have gotten this far.
“He’s not deformed, he’s just drunk!”
That was by design.
Such changes could be difficult to implement, given the fact Bitcoin - by design - lacks any central authority." The main problem discovered is that transaction fees do not provide enough incentive to continue operating as "miner" after there are no more bitcoins left to be mined.
I'm not sure that is an accurate reflection of the research, but if it is, it is not very good research. Transaction fees can change, and have changed. The minimum transaction fee changed from 0.0005 BTC to 0.0001 BTC during the runup to $1100, to keep transaction fees low enough for small transactions. There is a central organization, The Bitcoin Foundation, whose authority is explicitly derived from consent of the governed; the miners and users choose to update their software to match recommendations by The Bitcoin Foundation.
If that summary is an accurate reflection of the research, it sounds like they don't really know much about how Bitcoin works. I mean, I know that much, and I've only spent a few hours reading about it.
Stop-Prism.org: Opt Out of Surveillance
The difficulty of mining scales with the amount of miners. If the amount of miners drops, the difficulty will drop, such that you still get a block every ten minutes or so. Then the only danger is that it is easier to mount a 51% attack, since there's less total mining power. Everyone who transacts in bitcoins will have an incentive to keep the difficulty high enough such that this is unfeasible. Plus, all the transaction fees are optional - you can put out a zero-fee transaction, or a 5 BTC-fee transaction, if you like. If the recommended fees that Bitcoin Core suggests are not sufficient then everybody can just offer more fees.
Bitcoin for all its technical sophistication is more of a threat to "stock exchanges" or "equity allocation" than it ever will be to "currencies"
It is not suitable to a "drive-thru" transactions due to the number of "confirms" required to have veracity in the exchange.
However, it is VERY WELL SUITED to the exchange of equity -- and is, given the current settlement times, much more of a threat to public ledgers like TORRENS (property exchange logs) -- or stock/ownership exchanges.
Old age and treachery almost always overcome youth and skill.
encourage behavior that could destabilize the currency
Isn't that the whole point? It's a gameable currency that can be easily stolen and is untraceable. It will NEVER be stable.
Sounds like something you get prescribed...
Mostly random stuff.
Visa and Mastercard tried this transaction fee model, and we all know they went out of bussiness. Case proven.
Some drink at the fountain of knowledge. Others just gargle.
Well, fortunately we won't have to worry about that until 2140. By which time I am sure transaction fees will be more than enough to compensate.
This won't be an issue in the future, fee's will be very expensive to cover miners costs.
The solution will be off-chain transactions and bitcoin banks (exchanges?), like coinbase (and others) - But secure ones, because hot balances won't be needed.
Next, each of these off-chain exchanges will settle each day amongst themselves (just like banks do now) using real Bitcoin transactions, and paying a large fee for it.
Finally, the settlement, between these companies will be managed by a debt based system like Ripple or similar.
The phrase "same stuff different day" comes to mind when I think of the future of Bitcoin. In the last 10-15 years we have witnessed the Dot.com bubble, Energy bubble (remember ENRON), real-estate bubble (CDOs, Credit Default Swap, etc.) Bitcoin is the brave new world for the Wolf's of Wall Street.
Bitcoin advocates talk about a lot of positive aspects to the system. People naively assume that everyone will 'play by the rules' and do what is best for the long term stability of the currency. Wall Street will continue to invent creative and complicated ways to fleece others of their money. There is truly no honor among thieves. I for one will not be holding the bag when Bitcoin implodes due to dishonest games by white collar criminals.
[1] - Reference from Stephen King novel but a little more vulgar in the book
Keep wasting your time on something that will never be a legitame currency.
AAAAARRRRGGGGG MAAAATEEEEYYYY's
Bitocin? Must be some offshoot of Bitcoin. Or the editors failed to "edit" anything and just want to be paid for sitting around, jacking off and hitting submit occasionally.
Should be "Researchers Find Their Biases".
Really, nothing new here. I blame the soft "sciences" for lowering expectations, science reporters for breathlessly reporting sensationalist drivel instead of digging in, and the global warming cabal for trying to pass off the output of their numerical models as "data".
I've read a bunch of this crap, but not all of it. Just off the top of my head, the global consensus does not in any way resemble a state machine, and writing a paper using one to draw "conclusions" about the other is a study of gullibility, not of bitcoin. So far, that one is still my favorite academic "research" into bitcoin.
In many ways bitcoin is an experiment. There are indeed open questions. With the huge number of unknowns in the system, I will continue to be skeptical of people that claim to already know how the experiment will turn out.
See that "Preview" button?
There is a reason people started developing second generation cryptocurrencies like Ripple, Nxt, and (under development) SkyCoin. Mining has high costs, as well as significant risks. It turns out that proof or work isn't actually needed to make a cryptocurrency work, so some new and improved designs have replaced with with proof of stake based solutions. These replace brute compute power with some nice crypto and exploit the fact that such currencies already have a well defined group (the currency holders) among which to reach consensus.
While the second generation cryptocurrencies I've mostly looked into (Nxt and SkyCoin) claim to be resistant to 51% attacks, its important to note that even if such attacks were possible, it wouldn't be as bad as with bitcoin. With bitcoin, the cost of attacking the network will be comparable to the total transaction fees paid (~= cost of mining, far less than the market cap unless transactions are very expensive), and you don't really risk loosing too much. If you 51% attack a proof of stake currency, you own most of the currency, and attacking it will drive the value down, so thats a stupid thing to do.
Initial currency distribution via mining is kinda neat, but there is nothing inherently great about that (It has pretty major issues these days with bot nets and ASICs). If you have an issue with the initial distribution, it would be easy to make a clone of Nxt (or some other coin) where initial distribution was done by destroying bitcoins in a particular way (effectually converting them to the new currency). Theres no inherently unsolvable (or even hard) problem there.
We don't need to fix bitcoin: we can make other currencies (as many as we like) and move to them. Bitcoin is nice since its popular and standard, but changing it isn't going to be easy compared to making a replacement. Bitcoin has done well, but its time to learn from it and improve. Mining is more expensive and less secure than the newer options, and does not scale to fast transaction verification very well (Point of sale does not want to wait ~10 minutes).
It is pretty safe to accept 0 confirmation transactions. Lots of companies do it. The risk, effort, and luck involved in doing a successful double spend are too high for anyone to bother trying to do it when buying a coffee or anything relatively cheap. If you're getting $50,000 worth of bitcoins you can afford to wait a few minutes for a couple confirmations.
This is entirely speculation until we've reached the point where the coins are no longer being issued.
No. **maybe** we'll see a viable "crypto-currency" but we have not yet.
BTC's main issue is that **whoever** controls a BTC exchange and mining operation can manipulate the currency at will, especially at the pinch points like when BTC values decrease by half at intervals. It's not just that someone could game the system, its that there is absolutely nothing preventing them, systemically and externally.
BTC has **built in** feedback loops, from a system science perspective. Areas where problems cannot be corrected if they arise given certain conditions.
The system doesn't have a fix for certain problems **by design** because...and everyone just needs to accept this: BITCOIN IS A SCAM
Thank you Dave Raggett
Sounds to me like he just took a bath (financially speaking).
But other than Skycoin (maybe), both NXT and Ripple look like corporate controlled scams.
While I do thing the current generation mining needs to be altered in some form, hitching yourself even more tightly to someone else's wagon seems like folly to me.
exchanges != bitcoin
It is a fantastic way for, say, drug or arms dealers to move money around more or less "off-grid". C'mon, say it with me . . . L - A - U - N - D - R - Y.
As I've pointed out before, it's currency, but it isn't what I'd call money. Money, you see, is that (often colorful, often artistic) representational marker created by a sovereign government for use as legal tender. It's tracked, monitored, regulated . . . all of the things that I for one expect my money to be. Currency on the other hand (if you insist on counting cryptocurrency as currency) is something of value (not necessarily paper or coin, but those will do as well) which is commonly exchanged in a marketplace. Unregulated currency? Okay, but when something goes wrong don't come to your government (including the police and the courts, by the way) for help - they may or may not do you any good, but you have to remember that they have a vested interest in seeing you use their competing product - that is, money . After all, what are you, a tax cheat or worse yet, some kind of criminal?
Now, the government (here in the US) has no problem with seizing and liquidating those assets when they can (and they have - see Silk Road). There's no denying that cryptocurrency has a value and government's worldwide aren't about to overlook that. Protecting you and me when the next BitCoin Exchange goes *pffft* and takes our (offshore, untracked, untaxed) assets with it? I'm not sure how that works (and I doubt that many bitcoin miners are in a hurry to declare their virtual income to the real IRS).
It's 2014, why are we discussing this at all? As difficulty increases to the point that it is no longer financially feasible, miners will switch coins thus giving those who stay a better return rate. And at the current rate of valuation, 21Mil bitcoins will eventually be at least worth $21 Trillion or more with the current inflation rate of the dollar. And with the full transparency of bitcoin, its only a matter of time before the whole world moves to it. So laugh indeed all you wish... these "pump dumpin cheats" are easily making back what they invest in their systems.
And that ABSOLUTELY doesn't happend with $$$$??? Like not even remotely as much as it happens to $$$? So far technically bitcoin has not been hacked or anything. All of problems happened with no specific relation of Bitcoin mechanism. Guess what, IRL currency get's manipulated much worse.
Back in the 1920's when that great depression struck, many banks folded, and people who had money in banks ended up with nothing.
No matter for what reason the banks folded depositors were the ones left holding the empty bag.
Kinda like what is happening in the various Bitcoin exchanges. No matter if it's stupidity, lack of security, or malice, it's the depositors (whoever parked their Bitcoins in that exchange) ended up losing it all.
Well ... back to the 1920's.
When the banks folded, did people abandon the greenbacks ? Yes or no ?
Same situation here ... The fact that exchanges vanishing into thin air doesn't render Bitcoins invalid.
True, some of the "rules" are flawed ( I kinda have a sense something is amissed ever since Bitcoin came out, back in 2009, but I just couldn't pin-point what is wrong with it, but thanks to those scientists at least now I know, but I digress ... ) and they may need to be changed ( ... as been pointed out, the implementation of the necessary rule change may turn out to be very hard ... ) but all in all, the system of Bitcoin, at least, for the concept of it, is still as valid as ever.
Many people are digging at Bitcoin, trying their best to make it sounds as if it's something uncertain, something ephemeral, something "flash in the pan" but if we are to look at the alternative to Bitcoin, ie, the FIAT MONEY SYSTEM, it too has been damaged beyond repair --- as so much money was created out of thin air, which means, the value of the fiat money is no longer valid.
Muchas Gracias, Señor Edward Snowden !
Can't tell if serious or successful troll.
This is a point I hve tried to make several times at bitcoin gatherings and seems to fall on deaf ears.
Do you have an estimate for how long it takes to process a bitcoin transaction all the way through to
multiple confirmations/part of the chain? Last one I had was 20 minutes which makes it pretty much useless
as a payment mechanism/currency and of course as the chain lengthens this can only get worse.
The beauty of bitcoin is that its not unregulated, its self regulated in every meaningful aspect. Price, mining difficulty, transaction taxes. If any of these aspects go off the track feedback will push them where they need to be. That is how a stable system is supposed to be designed. That is the only way a stable system can be designed. With conventional currencies you rely on governments to steer it in stable direction, make the right decisions, fix all the market fluctuations, that is inherently unstable. Anyone who knows a bit about control theory and stability will tell you as much.
Mathematical modeling isn't speculation; it's not a guarantee, but it's a lot more than an unfounded guess, which is what the contrary position is. Economics is a science, it's not astrology.
Don't blame me, I voted for Baltar.
Theft, fraud and corruption. If you give someone f-ton of your money, what do you expect? I frankly don't see how bitcoin is different from any other currency in this aspect. Volatility? Its not 12 months, bitcoin has been going up and down ever since it broke 1$ barrier, get used to it. You get mad price rallies with bitcoin every now and then, market collapses are inevitable consequences of these.
You're ignoring the real problem: when the gold rush is over, most of the miners will disappear. Yes it will be easier for the remaining people, but that's the problem. That means it will be a hell of a lot easier to mount a 51% attack. If you own bitcoin, it's in your interest to invest heavily in mining even after the gold rush is over; otherwise a surprise 51% attack from a botnet could steal all of your bitcoins.
All this, unfortunately, is irrelevant. Bitcoin in itself has no inherent value. Its only value lies in what its users, and ultimately what the public perceives it to be worth. If I agree to accept 1 bitcoin from you in payment for goods worth USD$1, to both of us it is worth USD$1. If I refuse to accept any bitcoins in payment, to me it is worth nothing.
This brings me to the second point- all this widely reported scandals involving hacks, scams and failed exchanges is very, very bad for bitcoin. It does not matter where the failure lies- the general public will simply perceive bitcoin to be unsafe and hence refuse to accept or use bitcoins. Hence to the general public, bitcoin is worth nothing.
To be widely adopted, bitcoin has to prove that it is better than fiat currency and so far it is doing a terrible job. The failure of the ex-largest exchange, Mt. Gox is the cherry on top.
It seems to me the "finite" argument gets thrown around quiet a lot with Bitcoin... but isn't every resource that is mined i.e. iron, etc. a finite resource as well?
I just see the finite thing as being absolutely stupid.
In the analogy of a real mine it's like you're operating the mine in your backyard despite making a loss on doing so all so you can keep using the dollar. You wouldn't do it. Unless the mining process can break even or at least remain cheaper than paying interest or transaction fees at financial institutions then there's no point in being involved.
Aside from the cost issue, there's also the convenience/nuisance factor to consider. I think most people would have serious objections to having to purchase, maintain and run a miner just to be able to make payments compared to paying an intermediary like a bank fees to take care of transaction costs for them.
So why did more astrologers than economists predict the 2008 crisis?
Cue all the Bitcoin boobs about how this guy is wrong, and Bitcoin is justsowonderful and nobody who isn't slobbing the Bitcoin knob knows anything.
Bitcoin has basically shown that we've now supassed Barnum's Law. Suckers are now continuously spawning at a rate approximating the Planck Instant.
Chas - The one, the only.
THANK GOD!!!
Of course, when we apply game theory to the current fiat dollar system, there's absolutely no way anyone can cheat.
ayottesoftware.com
After all the bitcoins are mined, you can't mine them, right? Because they're all mined.
There aren't any left to mine.
So you can't mine them.
I don't see how this is a problem that incentives can solve, and I don't see how it is a problem period.
.sigs: Just Say No!
Can somebody explain to me WHY it matters if there is a fixed amount of coins when you can split a coin to something like 8 decimal places, price and buy things in fractions of a coin.
The dollar practically speaking can only be split into pennies. I can understand why you would need more money made. Bitcoin will probably ALWAYS have enough atomic satori to go around.
Jesus, Slashdot. Is this what you have become? Oh dear.
Yes, no more coins will be mined. But simple code adjustments can be made to prioritize transactions with fees. And if transaction totals are high enough, 1% or less can still be a huge incentive to mine. I see more of a short term problem. the exponential rate of difficulty is outpacing hardware advancements. Buying a mining rig right now becomes obsolete so fast that the electricity costs run you into the negative unless there is a pretty big uptick in dollars per coin. scrypt might be the answer but asics for scrypt are already coming. I thought sha was the better route for energy efficiency, but when you just keep building machines and driving up the difficulty it scales stupid :)
A mathematical model is just an assertion about relationships of things. It may be well-founded or a completely random guess. Drawing conclusions about the correctness of an assertion just because someone bothered to write it out as a formula makes as little sense as drawing conclusions about the correctness of an assertion just because someone wrote it in english.
Garbage in, garbage out.
Most of the time, economics is a marketing campaign, trying to sell a particular product (like a mortgage) or a worldview (like laissez-faire capitalism or tax cuts for the rich). Economists are as much scientists as used car salesmen are, and far less trustworthy.
Forget magic. Any technology distinguishable from divine power is insufficiently advanced.
> to continue operating as "miner" after there are no more bitcoins left to be mined.
There are no more Bitcoins left to mine. The USA / NSA has mined them already, except they did it in isolated supercomputing env, so you don't know about it (yet). However, should the exchange fraud schemes fail to topple BT, Uncle Sam can just drop all remaining Bitcoins in the streets, thereby making it worthless.
Isn't it amazing to be so powerful and the Lord's chosen nation?
We all "just" need to take your word for it, or did you have anything to substantiate this claim?
Seriously, it *might* be that bitcoin is legit but frankly it is absurdly easy to paint the picture that bitcoin is a Pump-and-Dump scheme. If I were to describe a hypothetical pump and dump scheme using a hypothetical digital currency, it would sound an awful lot like bitcoin. Doesn't necessarily mean that bitcoin is such a scheme but anyone who uses it without strongly considering the possibility is a fool.
Bitcoin is just a mechanism to transfer tokens ("coins") securely from one wallet to another, and gradually add tokens to the available pool by letting anyone who wants to mine them.
No it is NOT just what you describe any more than dollars are just printed pieces of paper we can hand to one another to buy things. It is a type of currency and as a result it is much more than just a mechanism of transfer. Bitcoin is the entire system it creates including the exchanges, the software, the transaction infrastructure, the rules and the rest. The ability to transfer bitcoins between digital wallets is pretty much useless without the rest of it so saying it is just a transfer mechanism really isn't correct.
What's curious about bitcoin is that functionally it's pretty much a digital money order. It seems to have some geek appeal but there isn't anything functionally novel about what it does. I think it is an intellectual curiosity that will be studied closely by economic researchers but practically speaking I don't really see much point in it. It carries a huge amount of risk and externalized cost for something that I can already do with a lot less bother.
One of the premises of bitcoin was that we would no longer have to pay the middle man in a transaction
Which is largely a false premise. Virtually all bitcoin transactions will require exchanging bitcoins for other currency. This means you have to find a middle man to exchange the money and that is never free. Furthermore by taking out the bank from the transaction you have instead incurred a lot of additional risk (exchange rate risk, counterparty risk, volatility, opportunity cost, market risk, etc) which under any sane accounting carries a cost. You have essentially taken on the costs that would normally be borne by the middle man on to yourself when you use bitcoin.
Most of the time, economics is a marketing campaign trying to sell a particular product (like a mortgage)...
Your assertion is every bit as absurd as claiming that medicine is a marketing campaign because some people try to sell pills. Economics is the study of behavior with regard to scarce resources. Economists don't have anything to do with selling mortgages or any other specific financial product, nor does the field of economics. Economics most certainly is a science and is conducted using the scientific method. Economists develop a hypothesis, build a model to predict a behavior and then try to test that model. The fact that we cannot in many cases conduct double-blind experiments due to practical constraints does not make it any less of a science. The fact that our understanding of economics is imperfect likewise does not make it any less of a science.
When people get into trouble with using economic research is when they use it beyond the limits of the models. For instance the Black-Scholes equation is incredibly predictive *provided* that you stay within the constraints on the model, which are numerous. Go beyond the assumptions of the model and you do so at your own risk.
Economists are as much scientists as used car salesmen are, and far less trustworthy.
Perhaps you should actually find out what economics actually is and how it really works publicly proclaiming your ignorance to the world.
ANOTHER bitcoin article by someone talking out their ass with no idea what they're talking about. Yay!
"The main problem discovered is that transaction fees do not provide enough incentive to continue operating as "miner" after there are no more bitcoins left to be mined."
That's 96 or so years from now. By then, they're hoping the volume of transactions makes the fees worth more than the block itself. Plus, the block will be cut in half many times prior to then so it will be even earlier that the reward will drop. But then there's supply and demand. When the block reward every 10 mins went from 50 to 25, the price rose quickly. That's how it works. So if the block rewards is 1.25 and the transaction fees add up to 4.2, bitcoins are simply worth more. It auto-adjusts. That's how it was designed!
Issues such as this might encourage use of alternate coins that don't rely on mining in the long term (e.g. peercoin).
All your attention are belong to my old internet meme.
6 confirms are not really required, its an arbitrary limit for "absolutely, no chance in hell it will ever be reversed" set in early days of bitcoin. Now when transaction gets to even one block, its pretty much done deal. For small transactions you don't really need to wait even that, id say once you get valid transaction order out there you are golden. Who is going to do a double spend on groceries?
Those weren't in the "bitcoin system". Those were outside the bitcoin system, in situations where people chose to trust third parties with their bitcoins and had that trust violated.
If the Mt. Gox collapse means that there is some fundamental problem with bitcoin, then the MF Global collapse means that there is a fundamental problem with every currency and market on the planet (hint: it doesn't in either case).
Also, nice strawman. OP didn't say anything about stories being made up. The premise of the article is flawed beyond belief, as there will be far fewer miners once there are no more bitcoins to be mined, so difficulty will fall, and they will get a larger share of the perhaps larger transaction fees.
Economics absolutely is NOT a science. Science doesn't have schools of thought that persist for decades (especially after being proven false).
Economics and science have a common ancestor in PHILOSOPHY.
Pump and dump schemes exist within markets. Markets themselves aren't pump and dump schemes. Just because there is a Highway to Hell doesn't mean we shouldn't use roads.
"I performed a 51% attack on bitcoin and all I got was this stupid t-shirt"
>For all debts public and private" (within the USA.) Bitcoin has no such mandate.
These are just words printed on paper, and don't actually have much meaning. As long as people are willing to accept bitcoin (or dollars for that matter) for debts, that is all that matters. The only hang up here is probably the word "public", since bitcoin is by and large treated like a foreign currency you can't pay your taxes with it.
Depends on context - for mail order transactions the BC confirmation time is negligible, and for drive-through transactions, as others have pointed out, the risk is usually low enough to be ignored. Compare it to paying by check, an option still widely available in the world - until you have a chance to deposit that check you don't know for sure that the account it draws on even exists, it could just be a convincingly printed piece of stationary - a fraud far easier to perpetrate than double-spending bitcoins. Meanwhile you can immediately at least confirm the existence of money in the source bitcoin wallet by examining the public block chain.
--- Most topics have many sides worth arguing, allow me to take one opposite you.
Checks take even longer to confirm - sometimes days or weeks, and have seen widespread usage for decades.
--- Most topics have many sides worth arguing, allow me to take one opposite you.
as there will be far fewer miners once there are no more bitcoins to be mined, so difficulty will fall, and they will get a larger share of the perhaps larger transaction fees.
So you have a scenario where miners are giving up and the toal network hashrate (and hence the difficulty) is falling. This means two things.
1: The ammount of hashing power needed for a 51% attack goes down
2: The ammount of mining hardware available on the likes of ebay at knockdown prices goes up.
Combine the two and it potentially becomes a lot more economical to amass enough mining power to do a 51% attack.
The motives of the attacker could be varied. It could be a government who wants to destroy bitcoin. It could also be done by someone (or a cartel) for "buisness" reasons (if you control 51% of the hashing power you can enforce a minimum transaction fee by refusing to accept any blocks that contain transactions with lower fees).
note: i'm known as plugwash most places but i screwd up registering that here somehow in the past and now can't register
The goddamned MIT wankers think that the normal English writing system used by their masses isn't good enough for their scholarly and erudite articles.
"Such changes could be difficult to implement, given the fact Bitcoin — by design — lacks any central authority."
There are only a core hand full of people who decide on what changes are placed into the Bitcoin code base. They have acted unilaterally and swiftly in the past to effect changes. The most recent example is the on-going attack on XCP by reducing OP_RETURN from 80 to 40 bytes in length. This change in the code base was made quickly, and without discussion of the implications. It was done as a shot across the bow of XCP, the first [b]working[/b] decentralized exchange technology built on top of the Bitcoin blockchain.
The idea that both Bitcoin and its development is decentralized is an illusion.
I agree, with the caveat that I am uncertain which schools of thought to which you refer that have been *proven* false. Communism? Socialism? Keynesianism?
The problem with economics is that there is no empiricism. You can have different schools of thought presented with the same set of economic data and they will draw completely different (often diametrically opposed!) conclusions and *none* of these are falsifiable. None of them have any models that are accurate. Instead, what happens is that their models predict, often incorrectly, then they squint at the data and come up with a retcon to rationalize what happened (consistent with their bias, of course).
That's more akin to witchdoctory rather than science.
It seems to have some geek appeal but there isn't anything functionally novel about what it does.
What is novel about bitcoin is it does what it does without requiring a central authoritiy. People who have tried to make "alternative money" systems with a central authority have found themselves either crushed or subsumed into the regulated system where the government can tell you who you may or may not give money to or order transactions reversed long after the fact.
bitcoin is to e-gold as gnutella is to napster.
note: i'm known as plugwash most places but i screwd up registering that here somehow in the past and now can't register
So, in JaredOfEuropa's comment we see a great example of the **true fanboi** in action in the wild.
See, JaredOfEuropa knows **just enough** about the topic under discussion to articulate points & opinions about mechanisms which he does not understand.
It's the narcissism of the fanboi, that roiling nerd/rage that hides under a disheveled appearance, that is driving JaredOfEuropa's comments, not a desire to understand reality more. It's a desire to **sound right** rather than to **know right** It comes from upbringing when a complex mind is placed under the control of a stupid, inarticulate authoritarian.
JaredOfEuropa knows "just enough to be dangerous" on this topic.
Avoid.
If you're JaredOfEuropa reading this, well, WTF are you doing...google a bit to find out how BTC **really** works then you're welcome to re-join the discussion.
Thank you Dave Raggett
You say it's not a scam, but people *use it to run scams*...it's used nearly exclusively for criminal activity...investing in it is stupid ("to be sure")....and you're "fooling yourself" if you use it...But it's not a "scam"
Then what would be a "scam" by your definition?
"intended to foist some cryptocurrency on the world"??
Is that your standard for determining if something is a "scam"? It has to be like, a James Bond villain-level event or its not a "scam"?
Hey man...tell you what...you're right...nevermind...why don't you let me tell you about these awesome new high tech transportation devices being tested up in Alaska that lets cars drive **right over water**
Thank you Dave Raggett
What's curious about bitcoin is that functionally it's pretty much a digital money order. It seems to have some geek appeal but there isn't anything functionally novel about what it does. I think it is an intellectual curiosity that will be studied closely by economic researchers but practically speaking I don't really see much point in it. It carries a huge amount of risk and externalized cost for something that I can already do with a lot less bother.
What an odd statement. Can you name any other way to wire funds to another person or business instantly and securely for costs of half a penny to free? Is there any other secure system that allows for multisig authentications to remove the need for counter-party trust? What about Oracles, DAO's, smart contracts? There is long list of novel features that only exist within bitcoin. Sure some of these features could be copied and created outside of bitcoin but such a system would ultimately be insecure attacks. Bitcoin will remain novel as it has first movers advantage, has the benefit of the networking effect and the hashing power that makes it near impossible for any group or government to launch a successful attack on it.
What is novel about bitcoin is it does what it does without requiring a central authoritiy.
That is how it is designed, not what it does. What bitcoin does is functionally almost identical to money orders. Furthermore it is not at all clear that the lack of a central authority is a beneficial feature or that the design of bitcoin is economically sound. This argument against central control of currencies appears to be more of an ideological argument than an evidence based practical consideration.
People who have tried to make "alternative money" systems with a central authority have found themselves either crushed or subsumed into the regulated system where the government can tell you who you may or may not give money to or order transactions reversed long after the fact.
Naive. Bitcoin does not and never will exist outside the regulatory structure of the government. If the government decides to make trade in bitcoin difficult then government will have little trouble doing so through laws and regulations. It's already illegal in some countries. Want to risk jail time to use bitcoin?
bitcoin is to e-gold as gnutella is to napster.
Without meaning to seem snide, who cares?
This is not true. It just requires many payment providers to come into existence before it becomes main-stream.
Once more and more BTC payment providers pop up, you will wee more and more "deposit your coins here, and we will let you spend them with 0 confirms!" Who will assure merchants "on trust" that they will resolve any issues that pop up, or cover the transaction themselves. (likely in exchange for a % of the transaction value)
There are MANY other methods that can be built up to allow "cash-like" exchange of value as well, though it's a hard thing to do that allows the creation of a transaction that "the network" can verify many levels down the chain.
Bitcoin for all its technical sophistication is more of a threat to "stock exchanges" or "equity allocation" than it ever will be to "currencies"
It is not suitable to a "drive-thru" transactions due to the number of "confirms" required to have veracity in the exchange.
However, it is VERY WELL SUITED to the exchange of equity -- and is, given the current settlement times, much more of a threat to public ledgers like TORRENS (property exchange logs) -- or stock/ownership exchanges.
Debit and Credit cards take much longer to confirm. Bitcoin takes between 10 minutes to an hour to confirm. Cards take 60 days to confirm and before than the transaction can be reversed as fraudulent instantly. In store purchases can be done instantly with either using a customer shopping card, allowing unconfirmed transactions for small transactions backed up by security camera footage, or payment processors like bitpay/coinbase who conduct investigations and could offer insurance like credit card companies.
If the government decides to make trade in bitcoin difficult then government will have little trouble doing so through laws and regulations. It's already illegal in some countries. Want to risk jail time to use bitcoin?
While governments can sometimes go after individual users doing so on any significant scale carries a very high political cost. It's much easier to paint a handful of people who form a competing central authority as "criminals" and shut them down than it is to go after everyone participating in making a decentralised system work.
Which is not to say it's impossible for governments to crush bitcoin just much harder for them to do it than to crush comparable centralised schemes.
note: i'm known as plugwash most places but i screwd up registering that here somehow in the past and now can't register
look you're making a pointless distinction between things that are not different...and in so doing conflating two things which are completely different into one disctinctionless mass of error.
things that are not different (but you think they are): A financial transaction system made to use for scams and an actual scam. They are the same thing. The whole point of a scam (or magic trick) is to make a system for it. You're a suburbanite white kid so you've probably seen that Magician movie with Batman and Wolverine that features Tesla...same principle.
You're talking like a person who has never seen **how** a scam works.
Everything that involves "scamming" money is a system...even the homeless people you see when you go downtown to see shows or shopping. Those panhandlers have a system.
two things that are different (but you don't think they are): BitTorrent & BitCoin. A distributed file transfer system where multple uploaders send parts of a file simultaneously to **increase download speed and avoid DRM** is not the same as a currency system that is designed to be untrackable & originates from computers lining up to process transactions.
that's all i'm going to type b/c you need to learn how to find this information for yourself
you're understanding of technology is superficial and shows "TED-talk thinking"...thinking & discussing complex interactions using only the simple aspects of interaction
just educate yourself and quit tossing around words/concepts to sound smart
Thank you Dave Raggett
This is in 2040. Bitcoin will have either won or disappeared long before then.
The better. Seriously, why won't anyone think of the poor GPUs and ASICs toiling needlessly for some nerd fantasy play money?
âoeIf your mining power is more than a third of the system total, this always works,â says Ittay Eyal, who did the research with colleague Emin Gün Sirer. âoeYou may be able to do it with much less,â Eyal adds.
Eyal proposes a modification to the mining protocol that would ensure that only someone controlling at least a quarter of all mining power could profit from selfish mining, and says the Bitcoin community should also make efforts to limit the power of mining operations.
Wait, what? So right now it takes 1/3 of the mining power for selfish mining to work but Eyal is proposing a change that reduces the power needed? I don't get it.
'The tyrant will always find pretext for his tyranny.' - Aesop's Fables
Can you name any other way to wire funds to another person or business instantly and securely for costs of half a penny to free?
No and you can't do that with bitcoin either. NOTHING is free. Half a penny? Not if you are actually considering the rest of the costs including currency exchange cost, opportunity cost, volatility risk and the rest. There also is the non-trivial fact that very few people use bitcoin so the odds of a counterparty being set up and willing to use bitcoin is close to non-existent for most of us. Do you seriously think I'm going to ask someone to waste a considerable amount of their time setting up to use bitcoin so that I can save at best a few cents on a money transfer at considerably higher risk to both of us? I honestly don't know anyone in real life who has done a single transaction in bitcoin.
Is there any other secure system that allows for multisig authentications to remove the need for counter-party trust?
Bitcoin does not eliminate counterparty risk from a transaction. At most it might shift the type of risk to worry about. Furthermore, escrow is nothing new at all in financial transactions.
What about Oracles, DAO's, smart contracts?
What about them? You're confusing the specific technology used with the function it serves. Those all have existing analogs that have nothing to do with bitcoin.
Bitcoin will remain novel as it has first movers advantage
Being a first mover is not necessarily an advantage. Second movers often can simply watch the mistakes of the first mover and act accordingly. Ask MySpace how being a first mover worked for them. Bitcoin isn't going to succeed because of "first mover advantage".
has the benefit of the networking effect
So does the US dollar to a considerably greater degree. I'm not about to use bitcoin simply because it is digital or because it is isn't a dollar. It needs to provide me with a real benefit superior to the alternatives I already have. I am a certified accountant and I honestly cannot think of a single circumstance where bitcoin would provide me any real world advantage over using dollars.
and the hashing power that makes it near impossible for any group or government to launch a successful attack on it.
Which presumes that there is no flaw in the implementation, does not account for future advances in computing power, etc. Just because it is currently secure does not mean it is safe to assume it will remain so. Are you an expert in cryptography? I'm sure as hell not and yet I'm expected to trust the code written by no one I know and certainly no one who is accountable to anyone? Yeah, not going to happen... Hell, someone doesn't have to launch an attach on bitcoin itself to make it not worth using. You think bitcoin is going to remain popular with anyone other than true believers if exchanges keep going belly up?
An internation money order will cost you 7-10% in fees wheras fees on bitcoin transactions round down to zero even if rounding to the nearest tenth of a percent. Say you are a home builder and decide to accept bitcoin. Right away you can give a 2% discount to costumers paying in bitcoin. Then many of your workers who regulartly send money to families in other countries will accept partial payment in bitcoin so more of the money reaches thier family. Yes they probably need an exchange on that end, but so long as 3-4% of your costumers pay in bitcoin you don't need an exchange on your end.
And where exactly are the externalized costs? 100 million credit card credentials were stolen from Target, who paid for that? Target didn't get footed with the bill of fixing it, it was the credit card compnaines and all of thier costumers. What systems do it with less bother? And by it I mean secure, verifiable, and irreversable transactions between any two parties on the globe without being subject to review or refusal by a third party?
As I see it, you are passing judgment on the BitCoin creators' of intent. I'm assuming you are not the creator of BitCoin and I know I'm not so there is no way for either of us to actually know what their intent actually was. So at this point, I'll agree that we disagree on this.
Now to put you on my ignore list....
"File to fit, pound to insert, paint to match" - Aircraft Maintenance 101
So when only transaction fees are left & fee specified is left up to payer/sender, when I'm at Starbucks buying my coffee and I send my payment with MY CHOICE of ZERO fee will Starbucks give me coffee? Will it still be hot?
I'm in the drive-thru, how long do the cars behind me have to wait till my payment is confirmed and Starbucks is willing to give me coffee?
If you think the coffee cost is so low that Starbucks will take the risk it goes thru, then change it to $250 for concert tickets at the ticket counter & people waiting in line behind me minutes before the concert starts.
Not if you are actually considering the rest of the costs including currency exchange cost, opportunity cost, volatility risk and the rest.
I do not need to pay any currency exchange fees. I can directly spend my bitcoins with thousands of merchants directly or by git cards for 0 fees with the remaining ones like amazon or walmart. There is 0 need for exchanging back to fiat. If I needed, 1% or lower is much less than the 3-5 % avg for merchant processing fees. Volatility risk doesn't effect me either as I simply buy when its higher than what I purchase the coins at. So the volatility makes items less expensive.
You are also focusing entirely on the risks with bitcoin and not mentioning the many risks with debit cards or usd cash.
Do you seriously think I'm going to ask someone to waste a considerable amount of their time setting up to use bitcoin so that I can save at best a few cents on a money transfer at considerably higher risk to both of us? I honestly don't know anyone in real life who has done a single transaction in bitcoin.
Bitcoin isn't just about you but about others who are underbanked or unbanked. It benefits those that regularly have to send money so the little extra effort in initially setting things up and buying some coin is worth it. It is about countries where there is hyper-inflation or bail-ins where 60% of your savings disappear overnight. It may indeed be too much of a hassle for you now because you don't know anyone that uses it but once you join you will start to interact with the 2.5+ million and growing of our community and than you may find it actually much easier than traditional online banking.
Bitcoin does not eliminate counterparty risk from a transaction. At most it might shift the type of risk to worry about. Furthermore, escrow is nothing new at all in financial transactions.
You must be unfamiliar with the many services out their like https://www.bitrated.com/ and even hot wallets like https://www.bitgo.com/ which make it impossible for the third party escrow, bank, or arbitrator to independently steal your funds. How can this be done without a crypto-currency ledger system like bitcoin?
What about them? You're confusing the specific technology used with the function it serves. Those all have existing analogs that have nothing to do with bitcoin.
Can you cite any examples that do so with the efficiency and security of bitcoin?
Being a first mover is not necessarily an advantage. Second movers often can simply watch the mistakes of the first mover and act accordingly. Ask MySpace how being a first mover worked for them. Bitcoin isn't going to succeed because of "first mover advantage".
has the benefit of the networking effect
Bitcoin is not a central company or website so your example is poor. Bitcoin is an open source evolving protocol. Bitcoin has in the past incorporated code changes other 2nd movers like litecoin and can simply adopt other altcoins feature sets if they prove advantages. The networking effect is critical in not only open source protocols but currencies thus the stranglehold USD has on the world reserve currency and why Visa/Mastercard remain dominant above paypal. It takes something with unique features like bitcoin to start to carve out some market share.
Which presumes that there is no flaw in the implementation, does not account for future advances in computing power, etc. Just because it is currently secure does not mean it is safe to assume it will remain so. Are you an expert in cryptography? I'm sure as hell not and yet I'm expected to trust the code written by no one I know and certainly no one who is accountable to anyone? Yeah, not going to happen... Hell, someone doesn't have to launch an attach on bitcoin itself to make it not
I think it's good you "foe" ppl you disagree with strongly. I do the same. It helps us to keep from feeding the trolls. Which I am not, but it's your call.
So you can't argue against my logic so you switch the controversy to something that **neither of us can prove and is completely parenthetical**
I didn't say the *act* of creating BTC is, in and of itself, *illegal*. That's what you wanted to hear.
I said it was a *scam*...of which there are myriad legal examples of. Ex: selling consumers "insurance" on products that already have a 30 day guarantee by federal trade law.
Scam is different than crime.
But you know that...you're incapable of processing your own error.
You need to learn how to be wrong and not ashamed of yourself, such that you irrationally hold to your ideas as if they are your only connection to reality.
Thank you Dave Raggett
Two hundred-thirty-some years after independence, dollars are still circulating because people believe in them
No they are not. The Continental inspires the old saying "Not worth a Continental" and the Gold Dollar does not circulate.
The Bank of North America no longer exists and the First Bank of the United States became the central bank in 1791.
stop spouting fud. bitcoin is not instant and the fees are a lot higher than 1 cent once you add in all the overhead like escrow and exchange rates.