Like the proposed solution to spam prevention, Bitcoin relies on proof-of-work.
Regarding your question, no. Bitcoins do not represent a fixed fraction of global processing power, it's dynamic. And although it could be interpreted like that, actually there is no such representation in the logical sense at all.
Processors, or miners, act like a transaction verification mechanism. The system adjusts itself so that a fixed amount of bitcoins are awarded to a single miner throughout the network at a fixed interval of global network time, which averages to 10 minutes. The award is for their work, which they have to deserve. New algorithms and new hardware is introduced constantly, and while the global processing power is always increasing, the difficulty to win the award is increasing according to it.
The value of bitcoins, on the other hand, is not affected by the cost of creating them. The demand directly determines the value. So it's the contrary. The value has a direct effect on the cost of creating coins. When the coins are valuable, more processing power is poured to create them. Since the created amount is fixed, it quickly converges to the value of actual coins, plus the investment you need to do the actual mining.
It's a constant competition between the miners and there is no practical way to "make a killing" by abusing the system. Miners who have made "real" money only made them either by keeping the coins as investment and selling them at a higher cost (which is not about mining at all, you could just buy them and sell them later, as any other investment), or by developing new technologies to mine and hence being beneficial to the network as a whole.
So actually the term "miner" is somewhat a misrepresentation. I think of it as decentralizing the security aspect of money, which central banks and centralized payment processing companies have to do anyway. It actually is more economical an endeavor than vaults, security experts, inefficient banking formalities, countless middle men, losses in inefficiencies and so on. I'm sure the environmental footprint is much lower too.
This is broken in so many ways, I don't think the governments of the world are exactly quaking in their shoes and/or writing laws to stop this.
I hope not, at least until it gets wide acceptance.
As synaptik has said in another reply, illiquidity is a RTFM issue.:-) No offense... When you hear "Bitcoin", you directly imagine individual cryptographic coins being circled around. It took me a while to get that there actually are no actual coins and what is being recorded is only transactions. There are many brilliant people using/developing on this, so it can't be *that* problematic at least...
I agree that deflation discourages actual use. I find bitcoin extremely useful, and use it almost daily, but my number of transactions severely decreased with the latest surge of value. On the other hand, it's more useful than any kind of money I use, so I don't think I will have a problem spending it once the prices are more stable, even with deflation. At best, it could make me more provident.:-)
Well I am, and many others have been using it for some time. But if the majority is generating coins and merely selling to hoarders and doing nothing else, which is a possibility, then you may be right. However, my counter argument is that, that kind of behavior would lead to the collapse of Bitcoin economy before it could be considerably harmful to the environment. Something that has no use can't have value. Let me remind you that the real purpose of the computation being done is to make network resilient to attacks.
As others have already stated, most of what we use as money, be it banknotes, coins or bank accounts, consume a lot of energy. I think Bitcoin's system is much more favorable, though my belief is based on back-of-the-envelope calculations.
Plus, my god, chill out, it's a protocol, not a software. And it's an open protocol. And all clients are open-source. And what miners are doing is pretty basic (sha256summing like mad), you can even check it out yourself.
I understand it was just a work of fiction, but would such an outcome be possible, or even desirable? Would we ever accept such a system as a replacement for the traditional banking conglomerates? Even worse, who do you trust more in this day and age, the bankers or the software nerds?:)
Nerds.
But seriously, who knows? I think it's hinting to a better future, but the real outcome might not be what we would like it to be. Freedom is also good but a lot of people die for it. I don't think Bitcoin has the potential to lead to the downfall of states directly though, like how WWW didn't, and might lead to a healthier economy.
Given the current state of things, I won't be moving my Sealy Posturepedic retirement fund into the Bank-O-Bits, but the potential is somewhat mind blowing for the future.
You have to admit, burning your savings on a disc and putting it in a safe is pretty appealing.
Why bother creating a new electronic currency when there is a perfectly viable one already in existence...
LOL!
Seriously? There has never been a decentralized international currency before and it is almost as revolutionary as money itself? If it works though...:-)
AFAIK, it's not a full P2P implementation, in the sense that it's a library. For instance, you can build an android client on it, which is probably one of the reasons he programmed that lib. On the other hand, such a client can't be less P2P than, say, a bittorrent client can. Though, miners (which are also vital for the security of the network) are a whole other issue.
Yep, people don't realise how bitcoin actually works. Anyone can fork it and fork the currency. If google get a majority of users on their new client they can simply update the client to accept whatever rate of inflation they want, and the currency will fork, which usually causes the minority to follow.
Which I'm not sure why is a good idea and how harmful it is supposed to be to bitcoin.
Bitcoin is also fundamentally flawed because any government could crash it. Bitcoin cannot possibly be secure against attack unless more than 50% of the worlds available CPUs were all committed to non-colusion. At the moment its something like 0.0001%, even private companies would have the CPU power to take it down.
This might be true. Probably not 50% but we can at least say that we need a lot more. At least in reserve, to counter an attack. But you are saying that anything anyone does that governments might not like is fundamentally flawed, aren't you. It's a little hard to swallow for me. Also there is no apparent reason to assume that they will carry out such an attack, states don't work that way. I would be more worried about legal pressures.
Also bitcoin is becoming a liability. If you have bit coin its in your interest to keep the blockchain ticking over, but people who do the calcs get so little reward they are not going to bother anymore, so you will have to give up CPU power just to maintain your wealth!
Transaction fees. They are there to cover the costs of miners. It will only get fairer.
Bitcoin is certainly useful for short term online transactions, but anyone who stores wealth in it is insane.
Maybe, maybe not, like all investment. That statement has been proven wrong until now, one day it might change. Feel free to recommend people to diversify their portfolios but it's a bit of a stretch to call it insane.
So if everybody is a watcher, who watches the watchers? Answer: everybody.
Well, the unspoken truth is that most (almost all?) of us dread the "majority". Depending on the issue at hand, majority is sometimes me, sometimes you, and sometimes that weirdo fundamentalist guy. For example, most (all?) of us, especially people with creativity and passion, do things that are not actually harmful to society but if discovered may be seen that way by people with linearly independent ideas on that specific subject, who are the majority if the act is really deviant or innovative.
Relativistically, not different at all. One can object to porn for the same reasons you object to "child" porn. Freedom vs. Dignity. Nation vs. Individual. Humanity vs. Nature. Nature vs. God. There are no bad analogies in this context.
We are complex little organisms formed on a rock to maximize entropy. We humans can do it more efficiently (in a shorter timescale) thanks to our intellectual capacity having the ability to give rise to culture.
We will fight to the death for our norms, be it genes or moral values, and the side that contributes the most to the maximization of entropy in the whole universe will win in the "long" run. At the context and scale of the topic at hand, that side seems to be the biggest producer of technology and industrial output in our human world. That might not last for long, and for instance going green might be a better way to go, so that we can endure more to create more entropy. And maybe Kaddafi is right, who knows? His ideals might win in a longer run. Norms are arbitrary from an absolutist standpoint, and there is no way to objectively know the solution other than to fight it out. We ARE the calculator here. We are here for this very principle, otherwise even abiogenesis wouldn't happen.
However, for the timescale this topic operates, my money is on technology and production. You in the West are leading it and it's highly unlikely for Kaddafi and the likes to hold ground anymore. We in the middle keep the score and will follow whoever wins. "Helping them out" is a good way to accelerate the process.
Wikileaks? Maybe that is the line that shouldn't be crossed. Is freedom the key? Who knows? But yes, all absolutists are hypocritical in this game. I'm all for freedom, with my Freenet node and Bitcoin miner, but still, I'm burdened by the knowledge that I like freedom because it's been more efficient in recent history and won out. It's not a priori or anything...
Having my e-mail account linked to some video sharing web-site or even social networking is not a big deal. I can create unlinked new accounts anytime I like and inform whomever I need to keep in touch with. I change my accounts all the time when I feel uncomfortable with the provider or the identity itself. But having some personal property associated with my on-line identity is like an anchor. I hope that they implement it in a way that you can disassociate identities, at least the data linked to those identities if need be. I like being able to redirect my main e-mail address to a GMail account and using it as a data store. Yes it's easy to trace but I at least know that I can opt-out without suffering much. This new thing looks as if I would have to close all my "other" Google accounts if I really need to distance myself from one of the associated identities.
You need minimal bandwidth but if you are around Mars, the latency would prohibit the usage of a bitcoin miner. Otherwise, you might want to consider selling those juicy CPU cycles...
For security I have to rely on my networked machine not being compromised with a keylogger and uploader - more fucking likely than someone walking into my home and stealing my wallet, especially if something on my hard drive represents the value of, say, a shiny new house.
LOL! What on earth does this have to do with BTC? Why the hell didn't you encrypt your savings wallet? What are you doing on Slashdot?;-)
Looks like it was centralized and looks like that's why it failed. I'm not an expert but I guess we have many centralized semi-anonymous currencies right now. Don't know you but for me it's easier to trust a protocol than a group of people.
It's not yet apparent how well bitcoin will penetrate the micropayment area but it's just not true that it is only accepted by a half finished internet store. Check your facts. You can't yet use it to buy just any random thing online, but you can buy a lot of services.
I see it as an alpha phase and it's just beginning to be really useful. I like how I can send very small amounts of money to anyone without restrictions and commissions and even if it turns out to be problematic for tangible goods, I think it will be accepted for online services, like hosting, online casinos and donations.
Why was parent modded Troll? Although I don't agree with it, it/is/ a common point of view.
Actually I guess I agree with it in the sense that I don't fully get what physical backing of a currency is supposed to mean. Bitcoins are unique entities which cannot be replicated, so the question suddenly becomes a metaphysical one in my mind. Is it about the secondary use of the material that is supposed to back our currency? But that itself depends on the day's technology and scarcity of the thing, doesn't it?
Erm, wouldn't that involve every ISP in the world having to keep record of ALL IP traffic? And you probably have to count in records of open wireless connections and internet cafe's and such. Plus, considering that end-to-end ecryption is being used, they would have to know security details of nodes involved. It's not even plausible.
You know, you don't have to work there... In this case at least, your enemy is your drive for "success". If we all could balance pursuit of immediate monetary/emotional gain with other concerns, there wouldn't/be/ corporate overlords.
the massive and persistent wars that WILL break out between the refugees and those who occupy the higher ground. It's the starvation, violence and sheer depravity the human race will engage in for individual survival. If there are large displacements of people in a world with 6 billion there is going to be violence of the scale that makes WWII look like a minor conflict. No doubt nuclear weapons will end up used, and I personally would be surprised if biological weapons were deployed as well. Entire countries and even continents will be devastated by those seeking the resources contained within.
Dude, what have you been smoking?
Even if there will be floods eventually (there will always be floods if you wait long enough), the changes will take a long time to happen (climatologists say decades are a too small timescale, remember?). Land prices will drop. Property will change hands. There will be government driven programs, some innovative engineering, renewal of old infrastructure, jobs created, et cetera, that sort of thing. Some people will lose money, some people will make money, in that kind of timescale it's not really certain beforehand if there will be an overall loss. And hopefully those areas will be richer/more stable than they are now before that happens, so think Dubai and the Netherlands.
They might catch child abusers who upload content directly (though I doubt that such people exist) but there's the negative side of censoring content in the other direction. You are preventing people from realizing the extent of the situation. If viewing child porn doesn't have the power to convert ordinary people to paedophiles, I don't see why it needs to be filtered. Do I have to trust their better judgement about what I can expose myself to?
It's probably that they don't think they will be able to take down these websites, and even if they do, they know that it won't decrease the prevalence of child abuse. Keeping us from being exposed to the reality while seeming to do something about it is the most rational choice for them.
You don't have children for their sake, you have them for your own.
Or because your wife wants one. Either way, your selfishness is undermined by the sheer stupidity of the idea that you could somehow benefit from the endeavor. The meaning of selfishness gets complicated fast in cases like these. You can't be a parent and be 'just' selfish, there has to be a transcendent quality to your selfishness. You can be 'just' stupid though...
Slashdot Mirror
Like the proposed solution to spam prevention, Bitcoin relies on proof-of-work.
Regarding your question, no. Bitcoins do not represent a fixed fraction of global processing power, it's dynamic. And although it could be interpreted like that, actually there is no such representation in the logical sense at all.
Processors, or miners, act like a transaction verification mechanism. The system adjusts itself so that a fixed amount of bitcoins are awarded to a single miner throughout the network at a fixed interval of global network time, which averages to 10 minutes. The award is for their work, which they have to deserve. New algorithms and new hardware is introduced constantly, and while the global processing power is always increasing, the difficulty to win the award is increasing according to it.
The value of bitcoins, on the other hand, is not affected by the cost of creating them. The demand directly determines the value. So it's the contrary. The value has a direct effect on the cost of creating coins. When the coins are valuable, more processing power is poured to create them. Since the created amount is fixed, it quickly converges to the value of actual coins, plus the investment you need to do the actual mining.
It's a constant competition between the miners and there is no practical way to "make a killing" by abusing the system. Miners who have made "real" money only made them either by keeping the coins as investment and selling them at a higher cost (which is not about mining at all, you could just buy them and sell them later, as any other investment), or by developing new technologies to mine and hence being beneficial to the network as a whole.
So actually the term "miner" is somewhat a misrepresentation. I think of it as decentralizing the security aspect of money, which central banks and centralized payment processing companies have to do anyway. It actually is more economical an endeavor than vaults, security experts, inefficient banking formalities, countless middle men, losses in inefficiencies and so on. I'm sure the environmental footprint is much lower too.
This is broken in so many ways, I don't think the governments of the world are exactly quaking in their shoes and/or writing laws to stop this.
I hope not, at least until it gets wide acceptance.
As synaptik has said in another reply, illiquidity is a RTFM issue. :-) No offense... When you hear "Bitcoin", you directly imagine individual cryptographic coins being circled around. It took me a while to get that there actually are no actual coins and what is being recorded is only transactions. There are many brilliant people using/developing on this, so it can't be *that* problematic at least...
I agree that deflation discourages actual use. I find bitcoin extremely useful, and use it almost daily, but my number of transactions severely decreased with the latest surge of value. On the other hand, it's more useful than any kind of money I use, so I don't think I will have a problem spending it once the prices are more stable, even with deflation. At best, it could make me more provident. :-)
Not entirely. The fact that it's hard to find a hash renders the system secure, besides creating artificial scarcity.
Well I am, and many others have been using it for some time. But if the majority is generating coins and merely selling to hoarders and doing nothing else, which is a possibility, then you may be right. However, my counter argument is that, that kind of behavior would lead to the collapse of Bitcoin economy before it could be considerably harmful to the environment. Something that has no use can't have value. Let me remind you that the real purpose of the computation being done is to make network resilient to attacks.
As others have already stated, most of what we use as money, be it banknotes, coins or bank accounts, consume a lot of energy. I think Bitcoin's system is much more favorable, though my belief is based on back-of-the-envelope calculations.
Plus, my god, chill out, it's a protocol, not a software. And it's an open protocol. And all clients are open-source. And what miners are doing is pretty basic (sha256summing like mad), you can even check it out yourself.
I don't think it's suitable for fighting spam, but if it were, it would automatically make it successful as a micropayment system as well.
Also, Bitcoin does not suffer from the main weakness of DigiCash, mainly being centralized. There is no one person or group that can blow anything.
I have to admit that I didn't read too much in the original post, but the idea that something even remotely close is being worked on is fascinating.
FYI (a highly compact presentation): http://www.weusecoins.com/
I understand it was just a work of fiction, but would such an outcome be possible, or even desirable? Would we ever accept such a system as a replacement for the traditional banking conglomerates? Even worse, who do you trust more in this day and age, the bankers or the software nerds? :)
Nerds.
But seriously, who knows? I think it's hinting to a better future, but the real outcome might not be what we would like it to be. Freedom is also good but a lot of people die for it. I don't think Bitcoin has the potential to lead to the downfall of states directly though, like how WWW didn't, and might lead to a healthier economy.
Given the current state of things, I won't be moving my Sealy Posturepedic retirement fund into the Bank-O-Bits, but the potential is somewhat mind blowing for the future.
You have to admit, burning your savings on a disc and putting it in a safe is pretty appealing.
Why bother creating a new electronic currency when there is a perfectly viable one already in existence...
LOL!
Seriously? There has never been a decentralized international currency before and it is almost as revolutionary as money itself? If it works though... :-)
Yes but those real-life counterparts have near universal acceptance. It'd be a stretch to say even a .0001% of entities accept bitcoins.
But that's not about the environmental impact, is it?
AFAIK, it's not a full P2P implementation, in the sense that it's a library. For instance, you can build an android client on it, which is probably one of the reasons he programmed that lib. On the other hand, such a client can't be less P2P than, say, a bittorrent client can. Though, miners (which are also vital for the security of the network) are a whole other issue.
Yep, people don't realise how bitcoin actually works. Anyone can fork it and fork the currency. If google get a majority of users on their new client they can simply update the client to accept whatever rate of inflation they want, and the currency will fork, which usually causes the minority to follow.
Which I'm not sure why is a good idea and how harmful it is supposed to be to bitcoin.
Bitcoin is also fundamentally flawed because any government could crash it. Bitcoin cannot possibly be secure against attack unless more than 50% of the worlds available CPUs were all committed to non-colusion. At the moment its something like 0.0001%, even private companies would have the CPU power to take it down.
This might be true. Probably not 50% but we can at least say that we need a lot more. At least in reserve, to counter an attack. But you are saying that anything anyone does that governments might not like is fundamentally flawed, aren't you. It's a little hard to swallow for me. Also there is no apparent reason to assume that they will carry out such an attack, states don't work that way. I would be more worried about legal pressures.
Also bitcoin is becoming a liability. If you have bit coin its in your interest to keep the blockchain ticking over, but people who do the calcs get so little reward they are not going to bother anymore, so you will have to give up CPU power just to maintain your wealth!
Transaction fees. They are there to cover the costs of miners. It will only get fairer.
Bitcoin is certainly useful for short term online transactions, but anyone who stores wealth in it is insane.
Maybe, maybe not, like all investment. That statement has been proven wrong until now, one day it might change. Feel free to recommend people to diversify their portfolios but it's a bit of a stretch to call it insane.
So if everybody is a watcher, who watches the watchers? Answer: everybody.
Well, the unspoken truth is that most (almost all?) of us dread the "majority". Depending on the issue at hand, majority is sometimes me, sometimes you, and sometimes that weirdo fundamentalist guy. For example, most (all?) of us, especially people with creativity and passion, do things that are not actually harmful to society but if discovered may be seen that way by people with linearly independent ideas on that specific subject, who are the majority if the act is really deviant or innovative.
To put it not so nice, Muslims breed to fast.
s/Muslims/Arabs/
s/Arabs/poorer Arabic nations/
Relativistically, not different at all. One can object to porn for the same reasons you object to "child" porn. Freedom vs. Dignity. Nation vs. Individual. Humanity vs. Nature. Nature vs. God. There are no bad analogies in this context.
We are complex little organisms formed on a rock to maximize entropy. We humans can do it more efficiently (in a shorter timescale) thanks to our intellectual capacity having the ability to give rise to culture.
We will fight to the death for our norms, be it genes or moral values, and the side that contributes the most to the maximization of entropy in the whole universe will win in the "long" run. At the context and scale of the topic at hand, that side seems to be the biggest producer of technology and industrial output in our human world. That might not last for long, and for instance going green might be a better way to go, so that we can endure more to create more entropy. And maybe Kaddafi is right, who knows? His ideals might win in a longer run. Norms are arbitrary from an absolutist standpoint, and there is no way to objectively know the solution other than to fight it out. We ARE the calculator here. We are here for this very principle, otherwise even abiogenesis wouldn't happen.
However, for the timescale this topic operates, my money is on technology and production. You in the West are leading it and it's highly unlikely for Kaddafi and the likes to hold ground anymore. We in the middle keep the score and will follow whoever wins. "Helping them out" is a good way to accelerate the process.
Wikileaks? Maybe that is the line that shouldn't be crossed. Is freedom the key? Who knows? But yes, all absolutists are hypocritical in this game. I'm all for freedom, with my Freenet node and Bitcoin miner, but still, I'm burdened by the knowledge that I like freedom because it's been more efficient in recent history and won out. It's not a priori or anything...
+1
Having my e-mail account linked to some video sharing web-site or even social networking is not a big deal. I can create unlinked new accounts anytime I like and inform whomever I need to keep in touch with. I change my accounts all the time when I feel uncomfortable with the provider or the identity itself. But having some personal property associated with my on-line identity is like an anchor. I hope that they implement it in a way that you can disassociate identities, at least the data linked to those identities if need be. I like being able to redirect my main e-mail address to a GMail account and using it as a data store. Yes it's easy to trace but I at least know that I can opt-out without suffering much. This new thing looks as if I would have to close all my "other" Google accounts if I really need to distance myself from one of the associated identities.
You need minimal bandwidth but if you are around Mars, the latency would prohibit the usage of a bitcoin miner. Otherwise, you might want to consider selling those juicy CPU cycles...
For security I have to rely on my networked machine not being compromised with a keylogger and uploader - more fucking likely than someone walking into my home and stealing my wallet, especially if something on my hard drive represents the value of, say, a shiny new house.
LOL! What on earth does this have to do with BTC? Why the hell didn't you encrypt your savings wallet? What are you doing on Slashdot? ;-)
Looks like it was centralized and looks like that's why it failed. I'm not an expert but I guess we have many centralized semi-anonymous currencies right now. Don't know you but for me it's easier to trust a protocol than a group of people.
It's not yet apparent how well bitcoin will penetrate the micropayment area but it's just not true that it is only accepted by a half finished internet store. Check your facts. You can't yet use it to buy just any random thing online, but you can buy a lot of services.
I see it as an alpha phase and it's just beginning to be really useful. I like how I can send very small amounts of money to anyone without restrictions and commissions and even if it turns out to be problematic for tangible goods, I think it will be accepted for online services, like hosting, online casinos and donations.
Why was parent modded Troll? Although I don't agree with it, it /is/ a common point of view.
Actually I guess I agree with it in the sense that I don't fully get what physical backing of a currency is supposed to mean. Bitcoins are unique entities which cannot be replicated, so the question suddenly becomes a metaphysical one in my mind. Is it about the secondary use of the material that is supposed to back our currency? But that itself depends on the day's technology and scarcity of the thing, doesn't it?
Erm, wouldn't that involve every ISP in the world having to keep record of ALL IP traffic? And you probably have to count in records of open wireless connections and internet cafe's and such. Plus, considering that end-to-end ecryption is being used, they would have to know security details of nodes involved. It's not even plausible.
You know, you don't have to work there... In this case at least, your enemy is your drive for "success". If we all could balance pursuit of immediate monetary/emotional gain with other concerns, there wouldn't /be/ corporate overlords.
the massive and persistent wars that WILL break out between the refugees and those who occupy the higher ground. It's the starvation, violence and sheer depravity the human race will engage in for individual survival. If there are large displacements of people in a world with 6 billion there is going to be violence of the scale that makes WWII look like a minor conflict. No doubt nuclear weapons will end up used, and I personally would be surprised if biological weapons were deployed as well. Entire countries and even continents will be devastated by those seeking the resources contained within.
Dude, what have you been smoking? Even if there will be floods eventually (there will always be floods if you wait long enough), the changes will take a long time to happen (climatologists say decades are a too small timescale, remember?). Land prices will drop. Property will change hands. There will be government driven programs, some innovative engineering, renewal of old infrastructure, jobs created, et cetera, that sort of thing. Some people will lose money, some people will make money, in that kind of timescale it's not really certain beforehand if there will be an overall loss. And hopefully those areas will be richer/more stable than they are now before that happens, so think Dubai and the Netherlands.
They might catch child abusers who upload content directly (though I doubt that such people exist) but there's the negative side of censoring content in the other direction. You are preventing people from realizing the extent of the situation. If viewing child porn doesn't have the power to convert ordinary people to paedophiles, I don't see why it needs to be filtered. Do I have to trust their better judgement about what I can expose myself to?
It's probably that they don't think they will be able to take down these websites, and even if they do, they know that it won't decrease the prevalence of child abuse. Keeping us from being exposed to the reality while seeming to do something about it is the most rational choice for them.
You don't have children for their sake, you have them for your own.
Or because your wife wants one. Either way, your selfishness is undermined by the sheer stupidity of the idea that you could somehow benefit from the endeavor. The meaning of selfishness gets complicated fast in cases like these. You can't be a parent and be 'just' selfish, there has to be a transcendent quality to your selfishness. You can be 'just' stupid though...