"As it stands in the real world in 2013, currency, by definition is pseudo-anonymous."
There is nothing in the definition of currency that assures it is anonymous. In the US cash is far from anonymous. Large cash withdraws and deposits are tracked. The same for combinations of withdraws and deposits that add up to large transactions. Bills have embedded metallic strips so that any notable quantity of cash is immediately detectable by security or police. Large cash purchases are similarly noted. Also cash may no longer be used in most cases to rent transportation, or a hotel room anonymously. Bitcoin definitely improves on all these situations except for the rentals.
"anonymity is not always the optimal situation for every transaction (nor law enforcement)."
Anonymity is usually optimal for transactions where payment can't be reversed. Most of the rest can be better solved with escrow or a deposit in escrow than current methods. As for law enforcement, I think you'll find that most people don't favor trading privacy or freedom simply for the sake of making law enforcement easier. In practice you wouldn't want law enforcement to always be effective. With imperfect law enforcement, it is those who break the law repeatedly who usually eventually get caught. With perfect law enforcement you'd imprison pretty much the entire population at some point. Additionally, with judicial oversight (a warrant) law enforcement in a bitcoin world could often identify your bitcoin addresses by examining your phone/computer and that would reveal your full transaction history.
There is a third option, government can control the bad things people sometimes do with currency. For instance, you can outlaw contract killing without actually controlling currency. You can outlaw fraud without direct control of currency.
There has to be control of currency for it to function but that control can come from an innate property of currency rather than government. For instance, control is needed to prevent counterfeiting. Bitcoin needs no government, or since this mechanism is peer to peer you could say it is performed by a direct democracy the supersedes national governments. Similarly, a set of rules that dictate the nature of exchanges is needed. Again, Bitcoin provides a reasonable set of rules consistent with a right to property.
What Bitcoin cannot do is provide rules for behaviors that might involve currency. That is where government is needed. But policing requires controlling people, not currency.
The big difference between a government controlled currency and bitcoin in the end is that no government controlled currency can ever be suitable for inter-government exchange and interaction or even international exchange. The reason is that governments can manipulate to their advantage. For instance look at the trade advantage china gives itself by under-valuing it's currency relative to the dollar. Look at the way Japan manipulated their currency to increase in value after fukishima. Or the way the US creates billions of dollars worth of inflation in secret bank loans each year that aren't visible even to congress let alone the people or other nations. A currency like Bitcoin is suitable in this sort of global arena.
If Bitcoin survives long enough I expect we will see that government control takes the form of nations mining and protecting the network to prevent anyone, including one another, from reaching >51% control.
I can only assume this all tongue in cheek since there is no science of economics, economics is about as far from a science as you can get. I've never yet known all the major economists to agree on anything and they neither predicted nor avoided the greatest depression in history. Here in the US we are still in an economic depression today... one caused by the financial models of the economists. We are far from out of the woods and a total global economic crash still isn't out of the realm of possibility.
Arguably this is fixed by returning to a deflationary currency (like the world used successfully for thousands of years) that solves the problems the old deflationary currency could not, that there wasn't enough to go around as the value of the smallest units exceeded the value of small daily purchases and saving it compounded the problem by artificially reducing circulation, by being infinitely divisible. That is why just about every cryptography geek (which means some of the top math geeks around) is quite excited about it.
"bitcoin takes it back to gold-standard, sort of. which i find huge problems with"
There are problems with the gold standard but I believe in the "sort of" aspect of Bitcoin you'll find the answers. Mostly the answer is found in the fact that gold is finitely divisible. Bitcoin is not. Having a fixed total amount that will be created makes it deflate like gold but unlike gold it is infinitely divisible so there will always be a unit small enough for the practical trade of small values and enough units of value to go around.
Unless people hit some sort of mental ceiling. I wish exchanges would automatically shift the decimal for the price displayed at $10 if the price holds for a few days. So BTC reaches $10. You shift to Bittenths priced at $1. If they reach $10. You display Bitcents priced at $1. So the price of the current Bitcoin unit is never more than $10. Similarly your wallet should be displayed in the current unit. So if you had 1 BTC before you now have 10 Bittenths valued at $7 each.
It's purely psychological but even knowing all that it impacts me. It feels like investing $145 should get me more than 2 measily Bitcoin. But if it gets me 20 units of coin each worth $7. That seems reasonable.
Governments are trivial to make. All you have to do is declare one to be. People might not accept it, but on the other hand, they might, and if they do, that is the beginning of your own government.
What you are proposing isn't the end of Bitcoin but the start of BTC2. It is highly doubtful that everyone would jump ship to 2 overnight and it is quite likely people would trade both for quite some time.
The beauty of Bitcoin is in the objects it attempts to achieve not the method it uses. If a better algorithm comes along that is a good thing we could call the replacement Cheetos for all I care. It doesn't even matter if some people go broke in the transition. Life will just keep chugging on.
Yes but if the Bitpenny is practically used like the dollar today that means 1 BTC is worth $100. This solves the same problem. We always have enough units of value to cover the volume of transactions being conducted in Bitcoin. Doing so indicates the economy has grown. If you do that by adding currency you create units by stealing value from all the existing currency units and then picking and choosing who to give them to. If you do that with a fixed amount of currency and create new units through division then you increase the value of the existing currency and thereby make using the smaller units feasible. The value is given to those who already hold currency instead of taken from them.
If the Bitcoin market continues to grow there will come a time when very few people are wealthy enough to have an entire whole BTC in their wallet.
"but they're not something that it makes sense to stash in your mattress as a hedge against inflation"
Actually they are. Bitcoin handles the problem of having enough value units by being highly divisible. So where inflationary currencies produce more currency bitcoin simply divides into smaller units for the typical transaction. At $70 for a BTC that already is no longer a full BTC. A typical transaction is likely a tenth of that or a few hundredths of that. Inflation requires central banks to loan out the new currency and figure out who to give it to. Deflation automatically distribute the value to the existing holders of currency. That actually seems bad to the super wealthy who think inflation drives people to spend money rather than needing to buy things driving people to spend money! Where inflation drives people to spend by making them never quite have enough, deflation bribes them. At some point that large chunk of BTC is worth so much how can you afford to not spend it? It doesn't do you any good just sitting there and there are always going to be more risky ventures that could yield more BTC than simply sitting on it.
The speculators can drive the price up or down beyond reason at a given moment just like they can on any market (Bitcoin speculation markets are no more or less random than any other market) and as volume goes up volatility should go down. But over the course of time Bitcoin will go up. So it is perfect for stashing under you mattress.
It is actually the short to mid-term where you can get burned. If you buy Bitcoin today it is fairly certain you'll be ahead at some point in the future even if you have to hold it till the next reward cut in 2016. I don't keep many eggs in any basket but I wouldn't dump the BTC I have even if the market crashed back to $5.
"where they have a legitimate gripe that resonates across the masses, you get revolutions. where they have loony complaints that leaves people rolling their eyes, you get cranks"
That is one route for now. Another is the simple loophole, buy stick of gum for $140, comes with 2 free BTC. But I really see it as matter of time before a decentralized P2P exchange is setup.
I've already figured out the basic mechanism. Bitcoin allows multisign wallets. So one signer is the network, one signer the seller (whoever has BTC), the last is the buyer (USD, EURO, Paypal, etc). As soon as a buyer and seller are matched (not just amounts, but payment type and associated escrow term) a wallet is generated that requires 2 of the three sigs for a transaction. The BTC side the transaction is placed in the wallet. When the buyer sends payment his client signs off. When the seller receives he signs off and the funds are released to the buyer. If the seller does not sign off before the end of escrow his signature and that of the network are used to transfer the funds to randomly selected "miners" which are processing transactions and escrow reviews, etc.
So the buyer has the assurance that the money is really there before sending anything. The seller has the assurance that the buyer has no potential upside from screwing him. And if things do go south, at least the BTC the seller is out goes to someone making the network run rather than the asshole who burned him.
The classified ads in the newspaper are a registry of tax evaders that exists out in the open, any seller listed on there would be an easy target for the cops to go after for tax evasion.
Party B would never need to sue Party A. The network would reject the fake transaction and it would never become part of the publicly viewable audit log. If you present the relevant address any judge could verify a transaction or lack of one along with anyone else who cared to.
The anonymity that people talk about with Bitcoin comes from the fact that there is nothing to indicate who any particular address is controlled by. The actual flows of coins between the addresses are all public record. That is why people use coin tumblers. With a coin tumbler you can get Bitcoin back out that is unrelated to the coin you put in. Even then, large transactions and conspicuous sums can be used for forensic accounting.
"What exactly stops the government from coming up with some other collection of numbers with different properties and claiming that they are also bitcoins?"
Other people agreeing with them? The "properties" of a Bitcoin aren't secret. Claiming something is a Bitcoin isn't something a person does, it is something a computer does. There is a complete transaction trail for every coin back to the moment it was mined including the ability to verify that it qualified at the moment it was mined and every client has a copy of it. When you send me a coin that trail is audited repeatedly by third party miners only becomes part of the audit trail with enough verification.
Every hacker and cryptographer and their dog has been trying to find a way to do what you suggest for the past four years (though most have already given up) and the best they've found is a theoretical way that requires controlling >51% of all mining power. A government that was willing to spend enough money might be able to do that (there is more demand than mining hardware as it stands so you can't just throw money at it) but the community can tell if someone actually has >51% of the mining power.
"You have a bitcoin. Great! Now how do you know that it's unique? The transaction was signed? Fine. But how do you know that it was legit before you received it?
No matter how you slice it, there must be a central authority to indicate which are real, and which are false. A hack there can cause all flavors of theft, fraud, and forgery. If you have no central authority, then you risk fracturing your money supply at the exchange level, with each exchange becoming its own authority."
Having come up with a decentralized P2P solution to this problem is the reason people are so excited about this Bitcoin thing.;)
Every piece of every Bitcoin ever to exist has a transaction trail from it's point of origin to the current address at which it resides. Verifying these trails is what miners do. It isn't simply that you send me some bitcoin and I trust it or I trust the hash. You send me Bitcoin and the network begins validating the transaction from the point it was mined to you to me over and over again with it eventually becoming part of that trail.
In order to have even the tiniest minute fraction of fake Bitcoin you'd have control >51% of all the mining power. The more people mining, the harder that feat is to accomplish. The Bitcoin network can determine if someone actually has >51% btw.
I don't know about the conspiracy. It is odd that so many are openly hostile toward Bitcoin. I can see why people find it compelling and would want others to adopt it but I'm sure I see why anyone would have an interest in actively discouraging it other than entrenched financial abusers. None of those are conspiracies. Government currency manipulation, bank nickel and diming, and VISA conflicting business interests aren't secret or open for debate they are public and obvious facts that aren't denied by the relevant parties.
I don't see any particular reason any of the aforementioned parties wouldn't engage in astroturfing. The government has actually published strategies for misinformation campaigns of this sort. Private commercial interests make no secret of doing these things either. What do you think a viral marketing campaign is? Actually you are a bit of a nutjob if your faith in the powers at be is so strong that you think they don't have these conflicting interests or engage in these sort of misinformation campaigns since they openly admit to doing all of the above.
How about murder, genocide, malaria, and monsanto!
I can name all sorts of bad things that aren't unregulated currency exchange too.
Cartels use roads. Obviously those are akin to murder by your standard. I hear they wrap kilos in cellophane. Must we should regulate that too eh? This argument is as misguided as blaming drugs for the actions of the cartels.
If murder is what you aren't okay with you only outlaw one thing, murder and your investigative techniques should be targeted to have the least impact on those who aren't committing murder as possible. Currency regulation is about the least targeted method imaginable. If the pesky rights of everyone else are making it difficult to catch some murderers... too fscking bad. Last I checked murder isn't a significant cause of death merely a significant cause of fear.
There is such a strong anti-bitcoin sentiment on Slashdot. It makes no sense to me.
Usually it seems like people cling to one of a few false ideas.
Pyramid - Bitcoin is not a pyramid. In pyramids value flows one way. Pyramids don't work because you need an ever growing base at the bottom. In Bitcoin value does not flow one way. A few early investors who gambled by keeping the rewards of their early efforts will eventually cash out, hopefully at a gain, but that just amounts to more coin being in circulation. Circulation is the key word. Value flows in a circle with Bitcoin. Bitcoin depends on products and services being introduced to keep it flowing not on an infinitely growing base of people.
Ponzi - Bitcoin is not a Ponzi. In Ponzi schemes a controller uses subsequent investments to pay make believe interest to early investors to solicit new investment. Bitcoin's value is not based on investment. Bitcoin has no innate value anymore than the USD does. It's mathematical tricks are about making it counterfeit proof not making it rare or valuable. A bitcoin represents a unit of buying power of goods and services. That isn't an easy thing to measure but lets pretend we know there is a total of 1 million dollars worth of goods and services in the Bitcoin economy (that won't change for simplicity) and there are 1 million bitcoins. Now lets say 10% of the coins are lost permanently. Now the remaining 900,000 coins still have to represent 1 million dollars. They've just deflated. Yes there is interest gained by someone who held on to their coins but it isn't fake or imaginary it came from the value represented by the lost coin. Sooner or later the early investors are rewarded and yes their profits come out of the pool of goods and services in the Bitcoin economy but provided they do it slowly enough for the market to bear there is nothing wrong with that. Their coins just slowly seep into common circulation and the economy continues to operate. The economy is driven by goods and services, not investors. Bitcoin is a currency not an investment. You can speculate on a currency but speculation is gambling not investment, whether it be speculation on stocks, commodities, currency or anything else.
Limited Supply - Fiat currency inflates. If you need more units of value you just create more of it. Bitcoin deflates. Fiat is infinitely growable, Bitcoin is infinitely divisible. The only difference is the direction you move the decimal, moving it in either direction results in a 10 fold increase in the total number of value units. There is a limit of total Bitcoin blocks but there isn't a limit on the total possible value units. Currently the Bitcoin network agrees to recognize 8 decimal places. That can be increased but every bitcoin mined gives 10^8 units of value. If bitcoins were USD each 1 BTC would represent 10^6 or 1 million USD (leaving two places for cents). The Bitcoin supply is limited to 22 million BTC, so if the Bitcoin economy ever needs more than the equiv of 22 million million USD worth of value units an updated client that recognizes a 9th decimal place with increase that total supply by 10 provided more than 50% of those using Bitcoin vote for the extension by applying the update. There is plenty of Bitcoin and there is no theoretical limit on the amount of value units.
Deflation - If you've read the above you already know why deflation doesn't create money out of thin air. You might also realize that where inflation creates a need to give out the new money somehow deflation simply spreads it evenly among everyone who has money in proportion to the money they have. But some believe you need inflation to prevent people from simply hoarding currency. This is simply backwards thinking. Mostly this view is held by those have an abundance of wealth and thus have no need to spend most of it. Inflation and deflation do not drive an economy they are driven by it. People needing goods and services are what drive people to spend currency or to work for currency. If someone is saving or hoardin
Exactly. People are always looking for what they need Bitcoin for right now. Bitcoin fortunately has managed to find enough answers for that so far but the benefits if Bitcoin gains critical mass are astounding.
Bitcoin has the potential to be a universal currency that no government and can seize or freeze. No company can trick you into a subscription with fine print and make you pay. No vendor can force you to put a debt before buying food for your family because the bank or government supports them over you.
This is all good for the people. No more charge backs, and no more ability for merchants to pull funds from your account without getting authorization every single time. No more US creating money through hidden inflation. No more China artificially reducing the value of it's currency.
The current schemes burn honest consumers, merchants, banks, traders, and even governments. For every advantage gained by manipulating the system in some way there is somewhere else they get burned. A value exchange medium that isn't controlled by anyone, is global, can't be seized, can't be manipulated, and can be exchanged instantly and easily is ultimately a good thing for everyone.
"I somehow doubt that (but if they'd do, then gov't'd just regulate Amazon in this regard)"
Well no they wouldn't. They just released a statement saying they intend to apply no more regulation to Bitcoin than any other foreign currency which Slashdot has somehow turned into a bad thing.
The ruling clearly states that you do not fall under regulation if exchanging Bitcoin or Bitcoin for goods. It only comes into play if you personally (not using an exchange) trade coins for dollars. Despite the spin this is a statement the government has no plans to attack bitcoin, not that it is attacking.
No you didn't. Bitpay did and on behalf of themselves (in order to purchase inventory from their supplier, amazon, to supply their customer, him) not him. The net result if that if I offer to pay you to mow my lawn you know you can spend that coin buying things from Amazon. It doesn't really matter to the Bitcoin economy if the thing you buy with Bitcoin is USD, or Euros (not covered under this law btw), gold, or shoes.
This ruling only applies to those who do the actual exchange between USD and Bitcoin in amounts over $1000/day not to those using their services. If everyone accepts Bitpay (or critical mass), eventually the merchants using Bitpay will able to buy everything they need in Bitcoin and won't need to convert. When they all reach that conclusion everyone will just be paying and accepting Bitcoin.
Some bring up taxes, but if you are paid entirely in bitcoin and you buy everything with Bitcoin, you don't currently owe any taxes. Taxes only become a factor if you cash out at a profit.
Which aspect of unregulated currency exchange is akin to murder again? For every useful law you can point to I can point to another one that is a bad idea.
This is a good thing all in all. The government has given a nod to Bitcoin. Stated it intends to treat it like any other foreign currency. And will work from the assumption that controlling and tracking USD is a good way to maintain control.
Slashdot Mirror
"As it stands in the real world in 2013, currency, by definition is pseudo-anonymous."
There is nothing in the definition of currency that assures it is anonymous. In the US cash is far from anonymous. Large cash withdraws and deposits are tracked. The same for combinations of withdraws and deposits that add up to large transactions. Bills have embedded metallic strips so that any notable quantity of cash is immediately detectable by security or police. Large cash purchases are similarly noted. Also cash may no longer be used in most cases to rent transportation, or a hotel room anonymously. Bitcoin definitely improves on all these situations except for the rentals.
"anonymity is not always the optimal situation for every transaction (nor law enforcement)."
Anonymity is usually optimal for transactions where payment can't be reversed. Most of the rest can be better solved with escrow or a deposit in escrow than current methods. As for law enforcement, I think you'll find that most people don't favor trading privacy or freedom simply for the sake of making law enforcement easier. In practice you wouldn't want law enforcement to always be effective. With imperfect law enforcement, it is those who break the law repeatedly who usually eventually get caught. With perfect law enforcement you'd imprison pretty much the entire population at some point. Additionally, with judicial oversight (a warrant) law enforcement in a bitcoin world could often identify your bitcoin addresses by examining your phone/computer and that would reveal your full transaction history.
There is a third option, government can control the bad things people sometimes do with currency. For instance, you can outlaw contract killing without actually controlling currency. You can outlaw fraud without direct control of currency.
There has to be control of currency for it to function but that control can come from an innate property of currency rather than government. For instance, control is needed to prevent counterfeiting. Bitcoin needs no government, or since this mechanism is peer to peer you could say it is performed by a direct democracy the supersedes national governments. Similarly, a set of rules that dictate the nature of exchanges is needed. Again, Bitcoin provides a reasonable set of rules consistent with a right to property.
What Bitcoin cannot do is provide rules for behaviors that might involve currency. That is where government is needed. But policing requires controlling people, not currency.
The big difference between a government controlled currency and bitcoin in the end is that no government controlled currency can ever be suitable for inter-government exchange and interaction or even international exchange. The reason is that governments can manipulate to their advantage. For instance look at the trade advantage china gives itself by under-valuing it's currency relative to the dollar. Look at the way Japan manipulated their currency to increase in value after fukishima. Or the way the US creates billions of dollars worth of inflation in secret bank loans each year that aren't visible even to congress let alone the people or other nations. A currency like Bitcoin is suitable in this sort of global arena.
If Bitcoin survives long enough I expect we will see that government control takes the form of nations mining and protecting the network to prevent anyone, including one another, from reaching >51% control.
How is this interesting? The parent tosses out a verbal attack on the GP without providing any basis for his claim that the GP is profoundly ignorant.
Or are the points just coming from idiots who buy into the two party mentality and are give up mods to any hint of a slam against "them."
Fox Newsers and CNNers. You are ALL profoundly steeped in ignorance!!!
"The science of economics"
I can only assume this all tongue in cheek since there is no science of economics, economics is about as far from a science as you can get. I've never yet known all the major economists to agree on anything and they neither predicted nor avoided the greatest depression in history. Here in the US we are still in an economic depression today... one caused by the financial models of the economists. We are far from out of the woods and a total global economic crash still isn't out of the realm of possibility.
Arguably this is fixed by returning to a deflationary currency (like the world used successfully for thousands of years) that solves the problems the old deflationary currency could not, that there wasn't enough to go around as the value of the smallest units exceeded the value of small daily purchases and saving it compounded the problem by artificially reducing circulation, by being infinitely divisible. That is why just about every cryptography geek (which means some of the top math geeks around) is quite excited about it.
"bitcoin takes it back to gold-standard, sort of. which i find huge problems with"
There are problems with the gold standard but I believe in the "sort of" aspect of Bitcoin you'll find the answers. Mostly the answer is found in the fact that gold is finitely divisible. Bitcoin is not. Having a fixed total amount that will be created makes it deflate like gold but unlike gold it is infinitely divisible so there will always be a unit small enough for the practical trade of small values and enough units of value to go around.
Unless people hit some sort of mental ceiling. I wish exchanges would automatically shift the decimal for the price displayed at $10 if the price holds for a few days. So BTC reaches $10. You shift to Bittenths priced at $1. If they reach $10. You display Bitcents priced at $1. So the price of the current Bitcoin unit is never more than $10. Similarly your wallet should be displayed in the current unit. So if you had 1 BTC before you now have 10 Bittenths valued at $7 each.
It's purely psychological but even knowing all that it impacts me. It feels like investing $145 should get me more than 2 measily Bitcoin. But if it gets me 20 units of coin each worth $7. That seems reasonable.
Governments are trivial to make. All you have to do is declare one to be. People might not accept it, but on the other hand, they might, and if they do, that is the beginning of your own government.
What you are proposing isn't the end of Bitcoin but the start of BTC2. It is highly doubtful that everyone would jump ship to 2 overnight and it is quite likely people would trade both for quite some time.
The beauty of Bitcoin is in the objects it attempts to achieve not the method it uses. If a better algorithm comes along that is a good thing we could call the replacement Cheetos for all I care. It doesn't even matter if some people go broke in the transition. Life will just keep chugging on.
Yes but if the Bitpenny is practically used like the dollar today that means 1 BTC is worth $100. This solves the same problem. We always have enough units of value to cover the volume of transactions being conducted in Bitcoin. Doing so indicates the economy has grown. If you do that by adding currency you create units by stealing value from all the existing currency units and then picking and choosing who to give them to. If you do that with a fixed amount of currency and create new units through division then you increase the value of the existing currency and thereby make using the smaller units feasible. The value is given to those who already hold currency instead of taken from them.
If the Bitcoin market continues to grow there will come a time when very few people are wealthy enough to have an entire whole BTC in their wallet.
"but they're not something that it makes sense to stash in your mattress as a hedge against inflation"
Actually they are. Bitcoin handles the problem of having enough value units by being highly divisible. So where inflationary currencies produce more currency bitcoin simply divides into smaller units for the typical transaction. At $70 for a BTC that already is no longer a full BTC. A typical transaction is likely a tenth of that or a few hundredths of that. Inflation requires central banks to loan out the new currency and figure out who to give it to. Deflation automatically distribute the value to the existing holders of currency. That actually seems bad to the super wealthy who think inflation drives people to spend money rather than needing to buy things driving people to spend money! Where inflation drives people to spend by making them never quite have enough, deflation bribes them. At some point that large chunk of BTC is worth so much how can you afford to not spend it? It doesn't do you any good just sitting there and there are always going to be more risky ventures that could yield more BTC than simply sitting on it.
The speculators can drive the price up or down beyond reason at a given moment just like they can on any market (Bitcoin speculation markets are no more or less random than any other market) and as volume goes up volatility should go down. But over the course of time Bitcoin will go up. So it is perfect for stashing under you mattress.
It is actually the short to mid-term where you can get burned. If you buy Bitcoin today it is fairly certain you'll be ahead at some point in the future even if you have to hold it till the next reward cut in 2016. I don't keep many eggs in any basket but I wouldn't dump the BTC I have even if the market crashed back to $5.
Having good government and having good currency do not require government to control currency.
"where they have a legitimate gripe that resonates across the masses, you get revolutions. where they have loony complaints that leaves people rolling their eyes, you get cranks"
That would make Bitcoin a revolution.
That is one route for now. Another is the simple loophole, buy stick of gum for $140, comes with 2 free BTC. But I really see it as matter of time before a decentralized P2P exchange is setup.
I've already figured out the basic mechanism. Bitcoin allows multisign wallets. So one signer is the network, one signer the seller (whoever has BTC), the last is the buyer (USD, EURO, Paypal, etc). As soon as a buyer and seller are matched (not just amounts, but payment type and associated escrow term) a wallet is generated that requires 2 of the three sigs for a transaction. The BTC side the transaction is placed in the wallet. When the buyer sends payment his client signs off. When the seller receives he signs off and the funds are released to the buyer. If the seller does not sign off before the end of escrow his signature and that of the network are used to transfer the funds to randomly selected "miners" which are processing transactions and escrow reviews, etc.
So the buyer has the assurance that the money is really there before sending anything. The seller has the assurance that the buyer has no potential upside from screwing him. And if things do go south, at least the BTC the seller is out goes to someone making the network run rather than the asshole who burned him.
The classified ads in the newspaper are a registry of tax evaders that exists out in the open, any seller listed on there would be an easy target for the cops to go after for tax evasion.
Party B would never need to sue Party A. The network would reject the fake transaction and it would never become part of the publicly viewable audit log. If you present the relevant address any judge could verify a transaction or lack of one along with anyone else who cared to.
The anonymity that people talk about with Bitcoin comes from the fact that there is nothing to indicate who any particular address is controlled by. The actual flows of coins between the addresses are all public record. That is why people use coin tumblers. With a coin tumbler you can get Bitcoin back out that is unrelated to the coin you put in. Even then, large transactions and conspicuous sums can be used for forensic accounting.
"What exactly stops the government from coming up with some other collection of numbers with different properties and claiming that they are also bitcoins?"
Other people agreeing with them? The "properties" of a Bitcoin aren't secret. Claiming something is a Bitcoin isn't something a person does, it is something a computer does. There is a complete transaction trail for every coin back to the moment it was mined including the ability to verify that it qualified at the moment it was mined and every client has a copy of it. When you send me a coin that trail is audited repeatedly by third party miners only becomes part of the audit trail with enough verification.
Every hacker and cryptographer and their dog has been trying to find a way to do what you suggest for the past four years (though most have already given up) and the best they've found is a theoretical way that requires controlling >51% of all mining power. A government that was willing to spend enough money might be able to do that (there is more demand than mining hardware as it stands so you can't just throw money at it) but the community can tell if someone actually has >51% of the mining power.
"You have a bitcoin. Great! Now how do you know that it's unique? The transaction was signed? Fine. But how do you know that it was legit before you received it?
;)
No matter how you slice it, there must be a central authority to indicate which are real, and which are false. A hack there can cause all flavors of theft, fraud, and forgery. If you have no central authority, then you risk fracturing your money supply at the exchange level, with each exchange becoming its own authority."
Having come up with a decentralized P2P solution to this problem is the reason people are so excited about this Bitcoin thing.
Every piece of every Bitcoin ever to exist has a transaction trail from it's point of origin to the current address at which it resides. Verifying these trails is what miners do. It isn't simply that you send me some bitcoin and I trust it or I trust the hash. You send me Bitcoin and the network begins validating the transaction from the point it was mined to you to me over and over again with it eventually becoming part of that trail.
In order to have even the tiniest minute fraction of fake Bitcoin you'd have control >51% of all the mining power. The more people mining, the harder that feat is to accomplish. The Bitcoin network can determine if someone actually has >51% btw.
I don't know about the conspiracy. It is odd that so many are openly hostile toward Bitcoin. I can see why people find it compelling and would want others to adopt it but I'm sure I see why anyone would have an interest in actively discouraging it other than entrenched financial abusers. None of those are conspiracies. Government currency manipulation, bank nickel and diming, and VISA conflicting business interests aren't secret or open for debate they are public and obvious facts that aren't denied by the relevant parties.
I don't see any particular reason any of the aforementioned parties wouldn't engage in astroturfing. The government has actually published strategies for misinformation campaigns of this sort. Private commercial interests make no secret of doing these things either. What do you think a viral marketing campaign is? Actually you are a bit of a nutjob if your faith in the powers at be is so strong that you think they don't have these conflicting interests or engage in these sort of misinformation campaigns since they openly admit to doing all of the above.
"the only thing I find at fault there is that he actually collected some bitcoins at some point"
I find no fault there. I've made quite a few purchases with Bitcoin and made a tidy profit mining at one point.
You don't trust the Bitcoin currency. Fine. But why the open hostility toward someone else who does?
How about murder, genocide, malaria, and monsanto!
I can name all sorts of bad things that aren't unregulated currency exchange too.
Cartels use roads. Obviously those are akin to murder by your standard. I hear they wrap kilos in cellophane. Must we should regulate that too eh? This argument is as misguided as blaming drugs for the actions of the cartels.
If murder is what you aren't okay with you only outlaw one thing, murder and your investigative techniques should be targeted to have the least impact on those who aren't committing murder as possible. Currency regulation is about the least targeted method imaginable. If the pesky rights of everyone else are making it difficult to catch some murderers... too fscking bad. Last I checked murder isn't a significant cause of death merely a significant cause of fear.
There is such a strong anti-bitcoin sentiment on Slashdot. It makes no sense to me.
Usually it seems like people cling to one of a few false ideas.
Pyramid - Bitcoin is not a pyramid. In pyramids value flows one way. Pyramids don't work because you need an ever growing base at the bottom. In Bitcoin value does not flow one way. A few early investors who gambled by keeping the rewards of their early efforts will eventually cash out, hopefully at a gain, but that just amounts to more coin being in circulation. Circulation is the key word. Value flows in a circle with Bitcoin. Bitcoin depends on products and services being introduced to keep it flowing not on an infinitely growing base of people.
Ponzi - Bitcoin is not a Ponzi. In Ponzi schemes a controller uses subsequent investments to pay make believe interest to early investors to solicit new investment. Bitcoin's value is not based on investment. Bitcoin has no innate value anymore than the USD does. It's mathematical tricks are about making it counterfeit proof not making it rare or valuable. A bitcoin represents a unit of buying power of goods and services. That isn't an easy thing to measure but lets pretend we know there is a total of 1 million dollars worth of goods and services in the Bitcoin economy (that won't change for simplicity) and there are 1 million bitcoins. Now lets say 10% of the coins are lost permanently. Now the remaining 900,000 coins still have to represent 1 million dollars. They've just deflated. Yes there is interest gained by someone who held on to their coins but it isn't fake or imaginary it came from the value represented by the lost coin. Sooner or later the early investors are rewarded and yes their profits come out of the pool of goods and services in the Bitcoin economy but provided they do it slowly enough for the market to bear there is nothing wrong with that. Their coins just slowly seep into common circulation and the economy continues to operate. The economy is driven by goods and services, not investors. Bitcoin is a currency not an investment. You can speculate on a currency but speculation is gambling not investment, whether it be speculation on stocks, commodities, currency or anything else.
Limited Supply - Fiat currency inflates. If you need more units of value you just create more of it. Bitcoin deflates. Fiat is infinitely growable, Bitcoin is infinitely divisible. The only difference is the direction you move the decimal, moving it in either direction results in a 10 fold increase in the total number of value units. There is a limit of total Bitcoin blocks but there isn't a limit on the total possible value units. Currently the Bitcoin network agrees to recognize 8 decimal places. That can be increased but every bitcoin mined gives 10^8 units of value. If bitcoins were USD each 1 BTC would represent 10^6 or 1 million USD (leaving two places for cents). The Bitcoin supply is limited to 22 million BTC, so if the Bitcoin economy ever needs more than the equiv of 22 million million USD worth of value units an updated client that recognizes a 9th decimal place with increase that total supply by 10 provided more than 50% of those using Bitcoin vote for the extension by applying the update. There is plenty of Bitcoin and there is no theoretical limit on the amount of value units.
Deflation - If you've read the above you already know why deflation doesn't create money out of thin air. You might also realize that where inflation creates a need to give out the new money somehow deflation simply spreads it evenly among everyone who has money in proportion to the money they have. But some believe you need inflation to prevent people from simply hoarding currency. This is simply backwards thinking. Mostly this view is held by those have an abundance of wealth and thus have no need to spend most of it. Inflation and deflation do not drive an economy they are driven by it. People needing goods and services are what drive people to spend currency or to work for currency. If someone is saving or hoardin
My bad. Slashdot hid the AC and made it look like you were replying to me.
Exactly. People are always looking for what they need Bitcoin for right now. Bitcoin fortunately has managed to find enough answers for that so far but the benefits if Bitcoin gains critical mass are astounding.
Bitcoin has the potential to be a universal currency that no government and can seize or freeze. No company can trick you into a subscription with fine print and make you pay. No vendor can force you to put a debt before buying food for your family because the bank or government supports them over you.
This is all good for the people. No more charge backs, and no more ability for merchants to pull funds from your account without getting authorization every single time. No more US creating money through hidden inflation. No more China artificially reducing the value of it's currency.
The current schemes burn honest consumers, merchants, banks, traders, and even governments. For every advantage gained by manipulating the system in some way there is somewhere else they get burned. A value exchange medium that isn't controlled by anyone, is global, can't be seized, can't be manipulated, and can be exchanged instantly and easily is ultimately a good thing for everyone.
"I somehow doubt that (but if they'd do, then gov't'd just regulate Amazon in this regard)"
Well no they wouldn't. They just released a statement saying they intend to apply no more regulation to Bitcoin than any other foreign currency which Slashdot has somehow turned into a bad thing.
The ruling clearly states that you do not fall under regulation if exchanging Bitcoin or Bitcoin for goods. It only comes into play if you personally (not using an exchange) trade coins for dollars. Despite the spin this is a statement the government has no plans to attack bitcoin, not that it is attacking.
No you didn't. Bitpay did and on behalf of themselves (in order to purchase inventory from their supplier, amazon, to supply their customer, him) not him. The net result if that if I offer to pay you to mow my lawn you know you can spend that coin buying things from Amazon. It doesn't really matter to the Bitcoin economy if the thing you buy with Bitcoin is USD, or Euros (not covered under this law btw), gold, or shoes.
This ruling only applies to those who do the actual exchange between USD and Bitcoin in amounts over $1000/day not to those using their services. If everyone accepts Bitpay (or critical mass), eventually the merchants using Bitpay will able to buy everything they need in Bitcoin and won't need to convert. When they all reach that conclusion everyone will just be paying and accepting Bitcoin.
Some bring up taxes, but if you are paid entirely in bitcoin and you buy everything with Bitcoin, you don't currently owe any taxes. Taxes only become a factor if you cash out at a profit.
"Also all those laws about murder?"
Which aspect of unregulated currency exchange is akin to murder again? For every useful law you can point to I can point to another one that is a bad idea.
This is a good thing all in all. The government has given a nod to Bitcoin. Stated it intends to treat it like any other foreign currency. And will work from the assumption that controlling and tracking USD is a good way to maintain control.
This is good for Bitcoin.