Your own key doesn't have to be permanent. You can change your own key between every transaction, if you wanted, which would make it much harder to trace money coming to you from somewhere else.
That's true, but it's certainly not built-in to the system. The system isn't inherently anonymous - you have to take steps to cover your tracks.
For what it's worth, there is a list on Wikipedia, but I have to admit being way out of my depth.
One thing to keep in mind when using alternative currencies is that you still have to pay the US government taxes in US legal tender, so you'd better have a non-alternative source of income or a good way to exchange the alternative currency!
If you agree you can have bonds then why is it impossible to pool bonds together and offer a very short term bond fund that maintains a constant share price via. payouts, i.e. a money market?
Because my brain wasn't working and I translated it to "currency markets" instead of "money markets".:)
You would obviously still have capital markets and all kinds of leverage.
I think Snopes has been caught out on some hot political issues. They are great for debunking urban legends. But there is FactCheck.org, PolitiFact, and to a lesser extent The Washington Post.
You are right that the member banks (lower case) are pretty much private. But the Federal Reserve (uppercase) is not private, for the reasons that I describe. Not many "private" institutions return all of their profits to the Treasury!
So for any transaction that you're worried about, you can simply create a one-off key and write it down and hand it to someone. Voila. Untraceable.
Like a hundred-dollar bill!:)
My point was only that the system isn't inherently untraceable, as TFA would lead you to believe. It is not an anonymizing network - you have to take steps to stay harder to trace.
You might as well just let it expand indefinitely at that point, either way the "limited" selling point has gone down the drain.
I don't think anyone who has put more than 10 minutes of thought into it really thinks that it will become a single currency for the whole world. It's a lot more limited than dollars, gold, or seashells.:)
I suspect that if it succeeds, it will be just another currency that gets used for specific things. It could be really nice for international payments, and nice for payments of things that have been restricted by governments (like online gambling). It could also eventually become the long-fabled micro-payment service that we all have always wanted.
I kind of dispute that the gold standard led to (b). There were wild price fluctuations of commodities even under the gold standard. If you are talking long-term, then (b) is true... there is virtually no long-term inflation or deflation. But in the short-term, there were definitely problems with stability, just as gold is not stable right now.
Why? You certainly agree you could have bonds in bitcoin? If I can have short term bonds that means I can have money market instruments. I can price stocks. I can have derivatives on those stocks and bonds.
You certainly can have bonds... but you can no longer just create new currency. Things like "quantitative easing" or just flat out "printing money" become impossible if bitcoin were the base currency.
Let me take a step back a moment and just say that I didn't mean to propose this as realistic - I was just defending the number of bitcoins as being sufficient. I cannot fathom a scenario in which bitcoin is the only currency used in commerce - but if that did somehow happen, money markets would be impossible:)
But if you are counting virtual currencies, you are off by over an order of magnitude.
That's true, and it's hard to know exactly how much currency is out there.
But an interesting side-effect of bitcoin adoption is it would render the whole federal reserve system ineffective... as a finite resource there would be no way to just print money with no backing. It's basically like a return to a gold standard, ending planned inflation. I'm not sure that's progress, but I can see how it appeals to the keep-the-government-out-of-my-money crowd.
In any case, it's not clear that you need to factor in virtual currencies when relying on bitcoin, since those instruments would no longer be useful.
There is a small problem that all those "dollars" aren't held in vaults until their owners retire, they're simply lent back out by the banks that hold them for people. In other words, you shouldn't hoard your bitcoins in your wallet, you should lend them to a bitcoin bank.
Yeah, I agree. Money is best used as a convenient stand-in for barter, not as an investment itself. And definitely not something to stuff in the sofa.
There is also the issue that speculative price spikes, like the current $7 one, retard their development as a practical currency, however high & long the speculators build the bubble, that's how far it must return and how long it'll take to do so.
It's impossible to say whether it is a bubble or not, but it doesn't matter. I don't get paid in bitcoins, I get paid in dollars. If I encounter a paypal-like situation where they accept bitcoins, I'd just buy enough bitcoins for that transaction and then spend them immediately... as a young currency that's all it is good for. In the long term, it might grow and become more stable. If it ever gets nearly as big as they hope, only billionaires will actually own a whole bit coin. Most of us will be stuck with bitdust.
I was under the impression that the main reason why people hate physical pennies is the cost of minting vs. their value.
I just think it's too small of a value to be worth my time. When I do my taxes, I round to the nearest dollar (and the IRS encourages this). I regularly dump pennies when I get them in the donation bin at whatever store I'm at, and I give them to my daughter to throw into the local pond/fountain.
And rounding everything off to the nearest 10 just sounds onerous.
Gasoline is often priced to three decimals and we round to the nearest hundredth all the time, so I don't see why the same couldn't be done with hundredths being rounded to the nearest tenth. 99% of the time the hundredth digit is a 9 anyway: 9.99, 12.49, etc.
It is pretty sad when national symbols are for the exclusive use of a private entity.
That's not what happened at all. The problem was that someone made some very deceptive currency. That they happened to do it by using national symbols is not really germane.
The Federal Reserve Bank (not the Treasury) are the ones you are talking about, and they are a private entity.
No they aren't. Their headquarters is a federally-owned building, their board of governors is appointed by the President of the United States and confirmed by Congress, and they enabled and subject to oversight by the US Congress. All profits are returned to the US Treasury. Hell, they even have a.gov web address. The member banks are private - is that what you mean? Or is it because they can make large decisions without congressional approval? That is by design, and Congress could change it in a single session - it doesn't make them "private", it makes them somewhat independent.
Thus as long as you keep it stored but never release it, there is absolutely no way for it to be traced to you.
At some point, you have to either buy or sell bitcoins in some other currency. Or at least you have to sell things and make purchases. Those entry and exit points to the system are where they will get your public key.
The guy who was printed Liberty Coins (99% pure silver) has been told he's no longer allowed to do it.
Yeah, because he tried to make them look like official US currency. They say LIBERTY across the top like official US coins, they say "Trust in God" rather that "In God We Trust" - but it's rather close. They have a bust of Lady Liberty like official US coins, and they say USA across the bottom.
Disney has been printing money for decades and the government does not stop them because they are clearly not US currency. Using a bunch of US national symbols on your coin is probably going to invite Treasury attention.
The hash is analogous to the serial number on a bill, only with bitcoin you know all of the other signatures that ever touched the currency. You don't even need a warrant to get this information - every client has it built in. It's like having wheresgeorge.com on every single bill in your wallet.
I don't know how difficult it will be for a government to track down the people who hold the keys, but as soon as they catch one guy with a key they will know every single transaction that key has ever made. If they catch two guys with keys and see common transactions, they know those guys are in cahoots. It seems like it makes money laundering harder, not easier.
And how is the world economy going to function with a currency that maxes out at 21 million?
Let's pretend for a moment that no other digital currencies will be created - bitcoin will be it.
I'm not sure whether bitcoin will work out or not, but who cares what the absolute upper limit is to the currency? The software currently supports 2 decimals and the bitcoin themselves support division into "bitdust" of 1/100000000 bitcoin. So there are 2.1 quadrillion individual units. That ought to do us. There are perhaps 55 trillion "dollars" out there in the world. That's 1/4 of the economy so you need roughly 220 trillion dollars for the world economy. We use two decimal places with dollars, so the smallest unit is actually a penny. That's 22 quadrillion pennies to make the world go round.
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It would make sense that they would stay proportional to one another if they all have finite quantity.
You could probably drive the bitcoin guys nuts by creating another currency with built-in inflation :)
Your own key doesn't have to be permanent. You can change your own key between every transaction, if you wanted, which would make it much harder to trace money coming to you from somewhere else.
That's true, but it's certainly not built-in to the system. The system isn't inherently anonymous - you have to take steps to cover your tracks.
Disney dollars?
For what it's worth, there is a list on Wikipedia, but I have to admit being way out of my depth.
One thing to keep in mind when using alternative currencies is that you still have to pay the US government taxes in US legal tender, so you'd better have a non-alternative source of income or a good way to exchange the alternative currency!
If you agree you can have bonds then why is it impossible to pool bonds together and offer a very short term bond fund that maintains a constant share price via. payouts, i.e. a money market?
Because my brain wasn't working and I translated it to "currency markets" instead of "money markets". :)
You would obviously still have capital markets and all kinds of leverage.
Thanks for the clarification.
if we have snopes.com?
I think Snopes has been caught out on some hot political issues. They are great for debunking urban legends. But there is FactCheck.org, PolitiFact, and to a lesser extent The Washington Post.
You are right that the member banks (lower case) are pretty much private. But the Federal Reserve (uppercase) is not private, for the reasons that I describe. Not many "private" institutions return all of their profits to the Treasury!
So for any transaction that you're worried about, you can simply create a one-off key and write it down and hand it to someone. Voila. Untraceable.
Like a hundred-dollar bill! :)
My point was only that the system isn't inherently untraceable, as TFA would lead you to believe. It is not an anonymizing network - you have to take steps to stay harder to trace.
LOL, take it up with Dr. Seuss!
Still, if the cops find your costume chest, you aren't exactly "untraceable"...
Thanks for the funny analogy :)
You might as well just let it expand indefinitely at that point, either way the "limited" selling point has gone down the drain.
I don't think anyone who has put more than 10 minutes of thought into it really thinks that it will become a single currency for the whole world. It's a lot more limited than dollars, gold, or seashells. :)
I suspect that if it succeeds, it will be just another currency that gets used for specific things. It could be really nice for international payments, and nice for payments of things that have been restricted by governments (like online gambling). It could also eventually become the long-fabled micro-payment service that we all have always wanted.
I kind of dispute that the gold standard led to (b). There were wild price fluctuations of commodities even under the gold standard. If you are talking long-term, then (b) is true... there is virtually no long-term inflation or deflation. But in the short-term, there were definitely problems with stability, just as gold is not stable right now.
Why? You certainly agree you could have bonds in bitcoin? If I can have short term bonds that means I can have money market instruments. I can price stocks. I can have derivatives on those stocks and bonds.
You certainly can have bonds... but you can no longer just create new currency. Things like "quantitative easing" or just flat out "printing money" become impossible if bitcoin were the base currency.
Let me take a step back a moment and just say that I didn't mean to propose this as realistic - I was just defending the number of bitcoins as being sufficient. I cannot fathom a scenario in which bitcoin is the only currency used in commerce - but if that did somehow happen, money markets would be impossible :)
"federal reserve banks" != "The Federal Reserve"
I acknowledged that the member banks are private in my original reply to you.
That was kind of my point :)
Bitcoin does not need to have enough coinage for the entire world economy because it will never be the only currency.
But if you are counting virtual currencies, you are off by over an order of magnitude.
That's true, and it's hard to know exactly how much currency is out there.
But an interesting side-effect of bitcoin adoption is it would render the whole federal reserve system ineffective... as a finite resource there would be no way to just print money with no backing. It's basically like a return to a gold standard, ending planned inflation. I'm not sure that's progress, but I can see how it appeals to the keep-the-government-out-of-my-money crowd.
In any case, it's not clear that you need to factor in virtual currencies when relying on bitcoin, since those instruments would no longer be useful.
There is a small problem that all those "dollars" aren't held in vaults until their owners retire, they're simply lent back out by the banks that hold them for people. In other words, you shouldn't hoard your bitcoins in your wallet, you should lend them to a bitcoin bank.
Yeah, I agree. Money is best used as a convenient stand-in for barter, not as an investment itself. And definitely not something to stuff in the sofa.
There is also the issue that speculative price spikes, like the current $7 one, retard their development as a practical currency, however high & long the speculators build the bubble, that's how far it must return and how long it'll take to do so.
It's impossible to say whether it is a bubble or not, but it doesn't matter. I don't get paid in bitcoins, I get paid in dollars. If I encounter a paypal-like situation where they accept bitcoins, I'd just buy enough bitcoins for that transaction and then spend them immediately... as a young currency that's all it is good for. In the long term, it might grow and become more stable. If it ever gets nearly as big as they hope, only billionaires will actually own a whole bit coin. Most of us will be stuck with bitdust.
I was under the impression that the main reason why people hate physical pennies is the cost of minting vs. their value.
I just think it's too small of a value to be worth my time. When I do my taxes, I round to the nearest dollar (and the IRS encourages this). I regularly dump pennies when I get them in the donation bin at whatever store I'm at, and I give them to my daughter to throw into the local pond/fountain.
And rounding everything off to the nearest 10 just sounds onerous.
Gasoline is often priced to three decimals and we round to the nearest hundredth all the time, so I don't see why the same couldn't be done with hundredths being rounded to the nearest tenth. 99% of the time the hundredth digit is a 9 anyway: 9.99, 12.49, etc.
It is pretty sad when national symbols are for the exclusive use of a private entity.
That's not what happened at all. The problem was that someone made some very deceptive currency. That they happened to do it by using national symbols is not really germane.
The Federal Reserve Bank (not the Treasury) are the ones you are talking about, and they are a private entity.
No they aren't. Their headquarters is a federally-owned building, their board of governors is appointed by the President of the United States and confirmed by Congress, and they enabled and subject to oversight by the US Congress. All profits are returned to the US Treasury. Hell, they even have a .gov web address. The member banks are private - is that what you mean? Or is it because they can make large decisions without congressional approval? That is by design, and Congress could change it in a single session - it doesn't make them "private", it makes them somewhat independent.
it doesn't save the "from" source after the transaction
I wasn't aware of that - how is that possible? If you have a big list of previous owners, don't you get the "from" automatically?
Do we really need penny resolution? Bitcoins are effectively limited to "dimes".
Thus as long as you keep it stored but never release it, there is absolutely no way for it to be traced to you.
At some point, you have to either buy or sell bitcoins in some other currency. Or at least you have to sell things and make purchases. Those entry and exit points to the system are where they will get your public key.
The guy who was printed Liberty Coins (99% pure silver) has been told he's no longer allowed to do it.
Yeah, because he tried to make them look like official US currency. They say LIBERTY across the top like official US coins, they say "Trust in God" rather that "In God We Trust" - but it's rather close. They have a bust of Lady Liberty like official US coins, and they say USA across the bottom.
Disney has been printing money for decades and the government does not stop them because they are clearly not US currency. Using a bunch of US national symbols on your coin is probably going to invite Treasury attention.
The hash is analogous to the serial number on a bill, only with bitcoin you know all of the other signatures that ever touched the currency. You don't even need a warrant to get this information - every client has it built in. It's like having wheresgeorge.com on every single bill in your wallet.
I don't know how difficult it will be for a government to track down the people who hold the keys, but as soon as they catch one guy with a key they will know every single transaction that key has ever made. If they catch two guys with keys and see common transactions, they know those guys are in cahoots. It seems like it makes money laundering harder, not easier.
And how is the world economy going to function with a currency that maxes out at 21 million?
Let's pretend for a moment that no other digital currencies will be created - bitcoin will be it.
I'm not sure whether bitcoin will work out or not, but who cares what the absolute upper limit is to the currency? The software currently supports 2 decimals and the bitcoin themselves support division into "bitdust" of 1/100000000 bitcoin. So there are 2.1 quadrillion individual units. That ought to do us. There are perhaps 55 trillion "dollars" out there in the world. That's 1/4 of the economy so you need roughly 220 trillion dollars for the world economy. We use two decimal places with dollars, so the smallest unit is actually a penny. That's 22 quadrillion pennies to make the world go round.
Every client has a complete list of all transactions... how can they be called untraceable?