Julian Assange and Bobby Fischer might argue with you about the reach of the U.S. Supreme Court in the EU. While not direct jurisdiction, they can still make your life miserable. Why EU governments put up with that stuff is another story though.
I'll point out that simplifying the tax code might just make it necessary for churches to pay taxes, so your example may not fly in a situation like that. Furthremore, if a CEO would get fired from his job (for whatever reason that might be), the company could always take those homes, automobiles, and other items away from him.... or he would be forced to pay taxes on all of that if he kept those items. That sounds like one heck of a nasty source of control that a board of directors would have over the life of a CEO that I think few CEOs would be willing to put up with.
As I said, by simplifying the tax code it would point out those who are cheating the system much more clearly. Warren Buffet might even be paying the same tax rate (if not more) than his secretary.
As I said, having the hashing algorithms become compromised would be long process... something that would be identified years before it becomes a serious problem. Yes, it would cause a major series of updates for people who try to use hashing for security and I will agree that it would impact far more than just Bitcoin. None the less, it is a potential vector of attack to the protocol beyond simply getting a majority of the computing power. That was my point in the first place that there was at least a potential even if unlikely vector that could compromise Bitcoin as protocol.... and more importantly cause massive inflation for a short period of time.
You need to study up on your Bitcoin protocols some more. Such an attack as you are suggesting here simply wouldn't work on a mathematical basis. You need to have the following to get such a system to work:
The public key(s) with the wallet holding the bitcoins. Yes, keys, as in there may be more than one "wallet" holding the coins.
The private security key(s) for those same wallets of those holding the keys.
The public key of the receiver of the money
a time-date stamp for the transaction
While there are public keys here, unless the government or evil hacker has all of this down exactly, such a hack simply won't work. This "evil hacker" would need to take nearly the age of the known universe using existing hardware to be able to hack just one of these "redirected" packets... by which time the person who attempted to send the money will have received an e-mail saying the money never made the trip to the intended recipient so he sends off another payment into the system... and the original payment is cancelled. Yes, you can cancel transactions before they get incorporated into a work unit.
What is stopping this kind of attack is pure mathematics, and was thought up in the original design of the protocol. At best all a government can do is to perform a denial of service attack by flooding the network with bogus packets and transactions that will be rejected by miners. Any mining group that attempts to inject bogus transactions like this will have their workunits rejected.... thus they won't get credit for getting the work unit and will lose not only the mined bitcoins but also any transaction fees in that work unit.
To sum this up, your suggested "evil hack" simply won't work. Want to try another theory on how Bitcoins are vulnerable?
Actually, America did elect a politician to become President who did exactly like you said: do nothing and let companies fail.
His name was Calvin Coolidge.
Some have said that his policies are what caused the Great Depression, but you can judge that for yourself. He did face a pretty strong recession during his tenure as President and simply let companies fail. For myself, I wish Obama had done just that, as it would have improved his golf handicap (not that it needs much help) and he likely would have a lock on this election.
For many years people thought the MD5 hash algorithm was secure, but eventually a flaw was found that could crack that hash. See also http://en.wikipedia.org/wiki/MD5#Security
You don't necessarily need the "wallet file" but you do need to be able to reconstruct it. This is all theoretical, but assuming that the current algorithm being used for Bitcoin had a similar mathematical vulnerability where you could crack a wallet some time in the future with ordinary computers in under a minute of effort, some of the older wallet files might be compromised. Don't go thinking that such things are flawless.
If the issues with MD5 are any sort of precedent, there will be some warning in the community of software developers world-wide that the Bitcoin hash algorithms may be compromised, and some substitute will be found to hopefully improve the situation. It would be strongly recommended in that situation to move your bitcoins to a new wallet, but that doesn't stop older wallets to be harvested in some fashion. The processing power to crack these "unspent" coins may not be nearly so high as you may think. It would be a mad dash though to "harvest" as many of these older wallets as could be found as such a vulnerability is found.
If quantum computers become common and high-Qbit computers (aka 500+ Qbits entanged together as a unit) are enabled, I would imagine that Shor's algorithm would be applied to older wallets and some sort of quantum encryption would thus be applied to future bitcoin transactions. This is a known vulnerability in the current structure of Bitcoin. As a practical matter, this is something you really don't need to worry about as such computers would not likely be built any time in mine or your lifetimes, but it is still something that could happen. Other problems might come up too.
If you are a software engineer I would suggest that you help in trying to review the source code for the reference client and try to understand the protocol for yourself. Since that software package is in an open source license and the protocol is somewhat documented, that is something you can realistically do and even recompile the source code yourself, and even create your own root block or use the test chain (a separate chain of blocks that don't have nearly so many miners working on them and is being used for testing the protocol and mining clients).
The proof is in that protocol and a competent software engineer can evaluate a great many of these claims including a solid review of the hash protocols. I've done that myself and for my own satisfaction... and even helped to write up a significant part of the current "official" specification document that I derived from the original source code that Satoshi wrote. If you really want to get into the specification, which by definition is no bull because it is the working document that engineers need to work from in order to implement the protocol, you can look here:
The rest of that website has several other documents that are extremely useful for learning about Bitcoins, and I would highly recommend reviewing it, although it is written by and for software developers and not mere mortals. The FAQ is especially useful: ahref=https://en.bitcoin.it/wiki/FAQrel=url2html-18813https://en.bitcoin.it/wiki/FAQ>
I wish that the Wikipedia page on Bitcoin was a bit more useful and could go into the technical issues related to how Bitcoin works, and there is the Bitcoin wiki that sort of explains some of the issues and be able to answer your question a little more completely. The problem with your request is that trying to put together such a no-nonsense paper on Bitcion with full references and done in a manner that could pass muster with a major scholarly journal takes a considerable amount of time... usually much more than those who really understand the protocol are willing to put forward into writing. Wikipedia should be such a page, but it really isn't up to speed on that...and I've tried to stay away from writing on Wikipedia about this topic because of potential conflict of interest issues and what would be considered "original research".
The "environmentally friendly" claim is something that is a huge stretch of the imagination, particularly in light of how bitcoin mining is performed, and the "no transaction fee" is a complete farce that simply isn't true.
Fast transfers is relative... as it can take up to a couple of hours for some transactions to get processed (although usually it happens in less than a half hour). I suppose that is "fast" in the sense that international bank transfers can sometimes take several days to clear and be completed. On the other hand, you can transfer via PayPal and take just a few minutes or make a "point of sale" purchase at Wal-Mart in just a few seconds. Of course unmentioned in that situation is that a store really is issuing you temporary credit until those transactions actually get processed.
Security is also somewhat dubious, but it is protected by a hash algorithm that the National Security Agency is using and at the moment is considered to be cryptographically sound on a mathematical basis. Then again, do you trust the NSA? I mean that seriously and not in a tinfoil hat way, but it is a question to legitimately ask.
Divisibility does have a limit, but that limit will likely not be exhausted for a great many years or decades, as the smallest "unit" is of such low value as to be laughable right now. I think it is a billionth of a bitcoin (I'd have to review my notes, but it is something like that) so the claim is still roughly true. If you are buying something of substance like even an old-fa
The only real issue with the "volume drying up" is that the individual unit of exchange might become so valuable that it can't be subdivided. The actual quanta of a single bitcoin is still rather worthless at the moment but in theory if massive deflation of the currency were to occur, that smallest fraction of a bitcoin might be impossible to further subdivide.
This was talked about on the Bitcoin forums, where in theory the protocol could be extended to recognize additional fractions of a bitcion, but it was dismissed as a problem.... just like those who set up IPv4 thought 4 billion network addresses would be impossible to exhaust.
The compelling reason to use Bitcoins is when other currency systems have become ineffective... usually through massive hyperinflation (as may happen to U.S. dollars or euros) or a collapse of the economic system altogether.
There still is gold, silver, and other commodities that can be used as media of exchange. Still, other bonuses that happen with Bitcoins or other related currencies is that you can transmit them electronically without a central authority verifying that transaction. That is the huge advantage of Bitcoins, and why it is being used at all.
There is no real need for court systems, legal tender laws, or even "the law" to enforce the value of a Bitcoin. It is worth whatever you think it is worth, just like an ounce of gold is what you think it is worth. If you can convince somebody that a brand new car is worth an ounce of gold, that is its value. Ditto if they think it is only worth the value of a loaf of bread. BTW, the same thing applies to other money including a dollar or a euro.
A court system is useful in terms of preventing fraud or enforcement of a contract where one person has filled their part of the contract (aka paid the money, performed some sort of service or delivered a product) and another person has not lived up to their end of the agreement. That has nothing to do with the value of money or even what kind of instrument you are using for that money. A judge may not recognize Bitcoins as the medium of exchange in their court room, or in other words they may require you to use something like U.S. dollars or the local currency (whatever it may be) to settle the case, but that doesn't change the ability to enforce the contract. Then again it is entirely up to the judge himself to decide what is legitimate in that situation, which very well may include payment in Bitcoins to settle the debt.
The only real difference with taxes is that the government will threaten to take your life (ultimately... there are several steps before that) if you refuse to pay those taxes for whatever amount that government sees fit as a very arbitrary amount. Usually most people value their life as something more valuable than an ounce or two of gold, so they would gladly give that up to a government. That doesn't make armed robbery any more palatable or for that matter any more honorable that it is being done in the name of the law, but that is precisely what is going on with any sort of taxation. Of course in regards to taxes, "other people will accept it" too.
I don't understand the irrational fear of the current presidential administration to letting companies go bankrupt. If a company is so poorly managed that they can't earn even a nominal profit to stay in business and meet expenses, they shouldn't be in business. Sometimes the government can screw things up to make it hard or impossible for a business to stay solvent, but I would have to presume that was the intention of those government policies in the first place if any of those politicians were thinking with half a brain. Why it makes sense to tax an organization that is being subsidized is beyond me. Why not save the government bureaucrats who end up being counter productive to society (not to mention corruption potential at each point when money changes hands) and have the government get out of the way?
The equivalent of fractional reserve currency in the equity market is the naked short. In other words selling shares of a company you don't even have in the first place, on the presumption that eventually you need to buy those shares back. The difference is that you are loaning money you don't really have.
I do agree with you that an economy which lacks fractional reserves (like an equity market that limits or prohibits naked shorts) will generally not face a liquidity crises except in the very rare situation where there simply is a lack of currency from which to engage in transactions. This can happen when the units of exchange are too valuable (like requiring the minimum transaction to be a kilogram of gold) or if you are in a situation where there simply isn't money at all to be used and people are simply looking for something to be used as a medium of exchange.
My experience in those situations with a lack of liquidity is that a medium of exchange will eventually be found if it is needed. POW prison camps in World War II famously used cigarettes as a medium of exchange, and there have been historical examples of people using playing cards for similar purposes.
The final chapter of this current economic episode has not been written yet, so it is dubious to try and make any sort of suggestions as to how inflation is going to pan out. Now that the Federal Reserve is doing perpetual quantitative easing (they aren't even using terms like QE-2 any more) it is even harder to say what will end up happening with all of that extra money. The point is that there is no historical comparison to suggest what might happen... other than to look at the Weimar Republic in Germany. That isn't exactly comforting if you are claiming that a substantial increase in inflation won't be happening.
I certainly wouldn't use the word "heroic" about the lazy attitude that the Fed has taken to manipulating the economy. Ben Bernanke is making the presumption that high housing prices is a good thing. Is it wise to be diverting so much of the economy into buying real estate and building homes? The American people don't think it is a wise thing right now... sort of the reason why housing prices has gone down. The "mortgage crises" was mainly a crises in the banks themselves, not anything dealing with those who held mortgages. Possibly a small extent to those who wanted to borrow money to buy a home, but tight credit rewards those who save up the money to buy instead.
One interesting point about the price of oil: If you compare how many gallons of gasoline or even raw crude you can purchase for an ounce of silver or gold, you would find that oil prices have been pretty much flat or even deflationary. It is only if you compare the price of those products in dollars or euros do you see any inflation at all.
I've always though that the programmed maximum was silly, but largely irrelevant. There already are competing distributed alternate currencies to Bitcoin that use other allocation systems, so it is largely meaningless as well.
The real threat to inflation will be the large number of Bitcoins in clients that are being hoarded but not used (often because somebody lost their wallet, their computer crashed, or had bitcoins and stopped using them), and if some alternate system can hack at those old hashes to "release" those bitcoins into the market suddenly. That wouldn't impact "current" transactions that would presumably be protected with updated hash algorithms, but if algorithms used in the past had a defect (like the MD5 hashes... to give an example... or they were protected with ROT-13), those could be "hacked" and used. It doesn't change the total number of coins in the system, but it could be the equivalent of finding a Spanish galleon and flooding a local market with a large amount of gold.
If the government makes some money, they can refuse to give it to you and they can go after those who have a license to spread that money around if that license is abused according to the government. There is a vested self-interest on the part of banks to follow regulations as their privileges (like fractional reserve lending) would be revoked if they don't play those games.
The question here is because Bitcoin is a distributed currency that no single person or central server can be arrested or have their power disconnected, it would by necessity require a widespread criminal approach which involves mass arrests. That would also require implicit popular support for such regulations as well, so it can't be arbitrary either.
Some centralized alternative currencies like Liberty Dollars or e-Gold have been confiscated by the U.S. federal government in recent years. Their problem was the centralized repositories that could be raided and captured. About the only equivalent to that with Bitcoins are the major exchange businesses which trade Federal Reserve Notes and other currencies for Bitcoins.
Arguably consumption of alcohol increased during the 1920's and 1930's when prohibition was constitutional. It also took a constitutional amendment in order to make it illegal as well... something that may also be a problem for Bitcoins in terms of regulations being technically unconstitutional except through a gross perversion of the interstate commerce clause. 1st amendment rights may apply as well.
Then again, since when has the U.S. Supreme Court ever cared about individual rights like the 1st amendment, much less the 9th amendment?
Give me a list of activities, disapproved of by authorities, which have become shut down or marginalised in the last decade.
About the only thing which comes to mind is blasphemy of Allah and his Prophet (aka the god of Islam and Mohammed), mentioning that Tibet is an occupied independent nation, that Taiwan really is an independent nation with its own foreign policy, and that Tiananmen Square has been anything but a peaceful tourist backdrop in the 20th and 21st Centuries.
And of course the dismissal that anything serious or newsworthy happened in Libya on September 11th of this year... but that is just censorship on the part of major media outlets and not really internet censorship.
I would be very curious about how any sort of regulation could be effectively enforced. Sure, some bone-headed government might try to do something like say only banks can be using this software legally or something equally stupid. And you thought the war on drugs produced a bunch of nightmare problems.
Any sort of regulation would just push this kind of activity underground, and there would be most definitely a financial incentive to keep doing this 'underground" away from any sort of regulatory control. Either that or as you suggest the "official" clients would have a huge amount of risk and the "black" clients would be the safe and secure ones that anybody with brains would be using anyway.
I would dare say trying to attack the network with more computer power is a losing proposition. First of all, any prolonged attempt at applying computing power to the network will be noticed by anybody involved (especially the major mining groups). Indeed it is often discussed when some new group goes on-line with a large batch of servers in a quest for mining work units.
It should also be noted that the Bitcoin network is currently so large that you would have to invest an insane amount of money to "capture" the network. That would need to be for reasons other than merely profit. Hint: Ordinary users like you or me are unlikely to get Bitcoin work units with an ordinary computer any more. You simply need to have a few thousand servers just to hope to occasionally get a work unit. Possibly a major government might be able to cause mischief, but that would be true only as long as one major government decided to get involved.
As for the network itself and having the government identify who is using the software.... yeah that could be a problem. Perhaps they might check certain port id numbers, but you could easily disguise ports in a number of ways to hide the network. Running through Tor is hardly the only solution. That doesn't even stop a "sneaker net" option for distributing information either... and yes you can use Bitcoin via sneaker net. From that you can do dead drops and all sorts of spycraft in terms of how you spread transaction information. Bitcoins can be as dark of a black market as has ever existed in human history.
Keep in mind that there are other checks on work units as well, and one of the other dirty little secrets is that not only do you need to get the majority of the CPU cycles to "capture" the network, but you also need to get the "vast majority" of the clients who are monitoring and processing completed work units to accept those work units. It isn't a 50% rule necessarily, but if most of the clients don't recognize the packets as valid for a variety or reasons, it doesn't matter if you have a valid hash... they simply won't be accepted into the chain. If there is a backlog of transactions not getting into work units, it is possible to build checks in the network to start rejecting work units which aren't incorporating at least a portion of that backlog.
The example was to show that trusting any sort of fungible asset (including Facebook shares) is all relative and that anything as an investment or even being used for money will fluctuate in price. The Facebook example is how something thought rock sold or even priced low (as was thought the day before the IPO) turned out to be not so good.
The original poster knows that Facebook did drop 25% in one day. That was in fact his point.
That is sort of true. Anybody who has a public bitcoin address (aka they've published the hash key on a public location like a web site) can have the money traced not just to that number but also where that money has gone. For example, when the EFF was taking donations in Bitcions, it was possible to know exactly how much money they received in donations.
That said, you can through a "secure channel" transmit the Bitcoin address and it would be much, much harder to track.
Interplanetary transactions are a bit harder of a problem to deal with though, because of time delay problems related to the speed of light. Bitcoin mining on Mars seems to be unlikely to happen, although it could present some interesting issues.
The one real ongoing expense with the Model S (and most electric vehicles) besides changing/rotating the tires is the replacement of the battery pack after about 5-7 years. While Tesla has done an amazing job with its battery pack and stretches the life out of those Li-ion batteries, they do need to be exchanged/replaced.
If you are lucky, you would likely junk the car (sell it to the used car market) and just buy a new car, but replacing that battery pack is a fairly expensive proposition and shouldn't be ignored. It depends on how many miles (aka gallons of gasoline) that are used on the vehicle. For people who have about an hour or so commute to and from work every day during the week and put on 50k miles per year, the cost in electricity would be trivial compared to the gasoline fuel costs.
On the other hand, if the car belongs to a shut-in senior citizen who puts on about 50 miles in a week if they are lucky and less than 2k miles for a whole year (I know more than a few people in that situation.... their cars are practically brand-new looking even after 10 years of ownership)... the fuel savings would be trivial. Sadly, the battery packs would still need to be replaced if it was an electric automobile. My point here is that your savings really depends on how you use the vehicle.
I have two vehicles myself, where one is a general small high-efficiency commuter car that I use if I need to make a long trips or for general running around town (it works fine for a trip to the grocery store), but another much larger vehicle that I use for those kind of trips like to Home Depot. And you can rent vehicles for a fair bit cheaper than you can from Home Depot from a much larger number of places if that is something you really want to do.
Besides, if you are the kind of person who has a large boat or the need to haul around a trailer, you will likely have a vehicle to live that kind of lifestyle. For myself, I think it is stupid that the government screws things up to force people into living a particular lifestyle, but at the same time you need to realize that not everybody needs a huge pickup truck. I usually borrow a vehicle belonging to a friend if my larger vehicle (a full-sized fan) doesn't do the job, and occasionally rent a U-Haul.
It isn't as bad as you are making it out to be here.
I think the price is ridiculous because I can buy a decent car for a lot less than that, that's all.
Buying at that price make no economic sense; and that's one of the metrics I use when selecting an automobile. Pretty much that simple.
Again, this is likely a car you would never buy even if it was strictly an ordinary internal combustion engine vehicle with the same kind of engineering and styling. What you think is a decent car would likely not be a luxury sedan that would be purchased by a well-paid professional (aka full-partner lawyer or senior physician with an established practice). That is the market which Tesla is targeting.
This is even a pretty reasonable strategy where Tesla is trying to skim off the boutique market of well heeled customers that are less concerned about price but more concerned about creature comforts. The market for buyers of those kind of automobiles is rather small (just a few thousand cars at the high end... which is where they were selling the Roadster). The Model S is admittedly the next tier down from the very high end cars, but then again Tesla seems to have a factory which can ramp up production considerably as well as expand if necessary.
Trying to build this mass consumer automobile you are expecting them to make takes an insane amount of capital... which is one of the reasons why America has had only three auto manufactures for many decades. Frankly it is amazing that Tesla was able to not only design these vehicles but get through the whole U.S. Department of Transportation certification process to get these vehicles into serial production. Few other companies making electric automobiles have been able to get that accomplished, including the "big boys" like General Motors.
Hopefully this Model S will start to sell in the range of 20k-50k vehicles per year for a couple of years.... which will give Tesla the cash needed to expand and get those cheaper vehicles you are hoping for. This is an issue purely of economics, where the margins needed to build the lower price cars are much thinner and simply need a much larger volume of production in order to make a profit.
In terms of energy independence, coal is at least something you can get from parts of the world that aren't ready to blow up into open warfare. On top of that, you actually have a smaller environmental footprint generating the same amount of power from a large-scale coal plant than you would from a couple thousand automobiles.
On top of that, you aren't stuck with just one source of supplying that energy as almost anything which can turn a generator shaft is all you need to generate electricity. As an excuse for why you shouldn't buy an electric automobile, complaining about the "carbon footprint" of a coal power plant is about as lame as it gets. If you don't like coal plants, encourage policy makers (aka your state legislature or municipal power operators) to try alternative energy generation techniques.
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Julian Assange and Bobby Fischer might argue with you about the reach of the U.S. Supreme Court in the EU. While not direct jurisdiction, they can still make your life miserable. Why EU governments put up with that stuff is another story though.
I'll point out that simplifying the tax code might just make it necessary for churches to pay taxes, so your example may not fly in a situation like that. Furthremore, if a CEO would get fired from his job (for whatever reason that might be), the company could always take those homes, automobiles, and other items away from him.... or he would be forced to pay taxes on all of that if he kept those items. That sounds like one heck of a nasty source of control that a board of directors would have over the life of a CEO that I think few CEOs would be willing to put up with.
As I said, by simplifying the tax code it would point out those who are cheating the system much more clearly. Warren Buffet might even be paying the same tax rate (if not more) than his secretary.
As I said, having the hashing algorithms become compromised would be long process... something that would be identified years before it becomes a serious problem. Yes, it would cause a major series of updates for people who try to use hashing for security and I will agree that it would impact far more than just Bitcoin. None the less, it is a potential vector of attack to the protocol beyond simply getting a majority of the computing power. That was my point in the first place that there was at least a potential even if unlikely vector that could compromise Bitcoin as protocol.... and more importantly cause massive inflation for a short period of time.
You need to study up on your Bitcoin protocols some more. Such an attack as you are suggesting here simply wouldn't work on a mathematical basis. You need to have the following to get such a system to work:
While there are public keys here, unless the government or evil hacker has all of this down exactly, such a hack simply won't work. This "evil hacker" would need to take nearly the age of the known universe using existing hardware to be able to hack just one of these "redirected" packets... by which time the person who attempted to send the money will have received an e-mail saying the money never made the trip to the intended recipient so he sends off another payment into the system... and the original payment is cancelled. Yes, you can cancel transactions before they get incorporated into a work unit.
What is stopping this kind of attack is pure mathematics, and was thought up in the original design of the protocol. At best all a government can do is to perform a denial of service attack by flooding the network with bogus packets and transactions that will be rejected by miners. Any mining group that attempts to inject bogus transactions like this will have their workunits rejected.... thus they won't get credit for getting the work unit and will lose not only the mined bitcoins but also any transaction fees in that work unit.
To sum this up, your suggested "evil hack" simply won't work. Want to try another theory on how Bitcoins are vulnerable?
Actually, America did elect a politician to become President who did exactly like you said: do nothing and let companies fail.
His name was Calvin Coolidge.
Some have said that his policies are what caused the Great Depression, but you can judge that for yourself. He did face a pretty strong recession during his tenure as President and simply let companies fail. For myself, I wish Obama had done just that, as it would have improved his golf handicap (not that it needs much help) and he likely would have a lock on this election.
For many years people thought the MD5 hash algorithm was secure, but eventually a flaw was found that could crack that hash. See also http://en.wikipedia.org/wiki/MD5#Security
You don't necessarily need the "wallet file" but you do need to be able to reconstruct it. This is all theoretical, but assuming that the current algorithm being used for Bitcoin had a similar mathematical vulnerability where you could crack a wallet some time in the future with ordinary computers in under a minute of effort, some of the older wallet files might be compromised. Don't go thinking that such things are flawless.
If the issues with MD5 are any sort of precedent, there will be some warning in the community of software developers world-wide that the Bitcoin hash algorithms may be compromised, and some substitute will be found to hopefully improve the situation. It would be strongly recommended in that situation to move your bitcoins to a new wallet, but that doesn't stop older wallets to be harvested in some fashion. The processing power to crack these "unspent" coins may not be nearly so high as you may think. It would be a mad dash though to "harvest" as many of these older wallets as could be found as such a vulnerability is found.
If quantum computers become common and high-Qbit computers (aka 500+ Qbits entanged together as a unit) are enabled, I would imagine that Shor's algorithm would be applied to older wallets and some sort of quantum encryption would thus be applied to future bitcoin transactions. This is a known vulnerability in the current structure of Bitcoin. As a practical matter, this is something you really don't need to worry about as such computers would not likely be built any time in mine or your lifetimes, but it is still something that could happen. Other problems might come up too.
If you are a software engineer I would suggest that you help in trying to review the source code for the reference client and try to understand the protocol for yourself. Since that software package is in an open source license and the protocol is somewhat documented, that is something you can realistically do and even recompile the source code yourself, and even create your own root block or use the test chain (a separate chain of blocks that don't have nearly so many miners working on them and is being used for testing the protocol and mining clients).
The proof is in that protocol and a competent software engineer can evaluate a great many of these claims including a solid review of the hash protocols. I've done that myself and for my own satisfaction... and even helped to write up a significant part of the current "official" specification document that I derived from the original source code that Satoshi wrote. If you really want to get into the specification, which by definition is no bull because it is the working document that engineers need to work from in order to implement the protocol, you can look here:
https://en.bitcoin.it/wiki/Protocol_specification
The rest of that website has several other documents that are extremely useful for learning about Bitcoins, and I would highly recommend reviewing it, although it is written by and for software developers and not mere mortals. The FAQ is especially useful: ahref=https://en.bitcoin.it/wiki/FAQrel=url2html-18813https://en.bitcoin.it/wiki/FAQ>
I wish that the Wikipedia page on Bitcoin was a bit more useful and could go into the technical issues related to how Bitcoin works, and there is the Bitcoin wiki that sort of explains some of the issues and be able to answer your question a little more completely. The problem with your request is that trying to put together such a no-nonsense paper on Bitcion with full references and done in a manner that could pass muster with a major scholarly journal takes a considerable amount of time... usually much more than those who really understand the protocol are willing to put forward into writing. Wikipedia should be such a page, but it really isn't up to speed on that...and I've tried to stay away from writing on Wikipedia about this topic because of potential conflict of interest issues and what would be considered "original research".
The "environmentally friendly" claim is something that is a huge stretch of the imagination, particularly in light of how bitcoin mining is performed, and the "no transaction fee" is a complete farce that simply isn't true.
Fast transfers is relative... as it can take up to a couple of hours for some transactions to get processed (although usually it happens in less than a half hour). I suppose that is "fast" in the sense that international bank transfers can sometimes take several days to clear and be completed. On the other hand, you can transfer via PayPal and take just a few minutes or make a "point of sale" purchase at Wal-Mart in just a few seconds. Of course unmentioned in that situation is that a store really is issuing you temporary credit until those transactions actually get processed.
Security is also somewhat dubious, but it is protected by a hash algorithm that the National Security Agency is using and at the moment is considered to be cryptographically sound on a mathematical basis. Then again, do you trust the NSA? I mean that seriously and not in a tinfoil hat way, but it is a question to legitimately ask.
Divisibility does have a limit, but that limit will likely not be exhausted for a great many years or decades, as the smallest "unit" is of such low value as to be laughable right now. I think it is a billionth of a bitcoin (I'd have to review my notes, but it is something like that) so the claim is still roughly true. If you are buying something of substance like even an old-fa
The only real issue with the "volume drying up" is that the individual unit of exchange might become so valuable that it can't be subdivided. The actual quanta of a single bitcoin is still rather worthless at the moment but in theory if massive deflation of the currency were to occur, that smallest fraction of a bitcoin might be impossible to further subdivide.
This was talked about on the Bitcoin forums, where in theory the protocol could be extended to recognize additional fractions of a bitcion, but it was dismissed as a problem.... just like those who set up IPv4 thought 4 billion network addresses would be impossible to exhaust.
The compelling reason to use Bitcoins is when other currency systems have become ineffective... usually through massive hyperinflation (as may happen to U.S. dollars or euros) or a collapse of the economic system altogether.
There still is gold, silver, and other commodities that can be used as media of exchange. Still, other bonuses that happen with Bitcoins or other related currencies is that you can transmit them electronically without a central authority verifying that transaction. That is the huge advantage of Bitcoins, and why it is being used at all.
There is no real need for court systems, legal tender laws, or even "the law" to enforce the value of a Bitcoin. It is worth whatever you think it is worth, just like an ounce of gold is what you think it is worth. If you can convince somebody that a brand new car is worth an ounce of gold, that is its value. Ditto if they think it is only worth the value of a loaf of bread. BTW, the same thing applies to other money including a dollar or a euro.
A court system is useful in terms of preventing fraud or enforcement of a contract where one person has filled their part of the contract (aka paid the money, performed some sort of service or delivered a product) and another person has not lived up to their end of the agreement. That has nothing to do with the value of money or even what kind of instrument you are using for that money. A judge may not recognize Bitcoins as the medium of exchange in their court room, or in other words they may require you to use something like U.S. dollars or the local currency (whatever it may be) to settle the case, but that doesn't change the ability to enforce the contract. Then again it is entirely up to the judge himself to decide what is legitimate in that situation, which very well may include payment in Bitcoins to settle the debt.
The only real difference with taxes is that the government will threaten to take your life (ultimately... there are several steps before that) if you refuse to pay those taxes for whatever amount that government sees fit as a very arbitrary amount. Usually most people value their life as something more valuable than an ounce or two of gold, so they would gladly give that up to a government. That doesn't make armed robbery any more palatable or for that matter any more honorable that it is being done in the name of the law, but that is precisely what is going on with any sort of taxation. Of course in regards to taxes, "other people will accept it" too.
I don't understand the irrational fear of the current presidential administration to letting companies go bankrupt. If a company is so poorly managed that they can't earn even a nominal profit to stay in business and meet expenses, they shouldn't be in business. Sometimes the government can screw things up to make it hard or impossible for a business to stay solvent, but I would have to presume that was the intention of those government policies in the first place if any of those politicians were thinking with half a brain. Why it makes sense to tax an organization that is being subsidized is beyond me. Why not save the government bureaucrats who end up being counter productive to society (not to mention corruption potential at each point when money changes hands) and have the government get out of the way?
The equivalent of fractional reserve currency in the equity market is the naked short. In other words selling shares of a company you don't even have in the first place, on the presumption that eventually you need to buy those shares back. The difference is that you are loaning money you don't really have.
I do agree with you that an economy which lacks fractional reserves (like an equity market that limits or prohibits naked shorts) will generally not face a liquidity crises except in the very rare situation where there simply is a lack of currency from which to engage in transactions. This can happen when the units of exchange are too valuable (like requiring the minimum transaction to be a kilogram of gold) or if you are in a situation where there simply isn't money at all to be used and people are simply looking for something to be used as a medium of exchange.
My experience in those situations with a lack of liquidity is that a medium of exchange will eventually be found if it is needed. POW prison camps in World War II famously used cigarettes as a medium of exchange, and there have been historical examples of people using playing cards for similar purposes.
The final chapter of this current economic episode has not been written yet, so it is dubious to try and make any sort of suggestions as to how inflation is going to pan out. Now that the Federal Reserve is doing perpetual quantitative easing (they aren't even using terms like QE-2 any more) it is even harder to say what will end up happening with all of that extra money. The point is that there is no historical comparison to suggest what might happen... other than to look at the Weimar Republic in Germany. That isn't exactly comforting if you are claiming that a substantial increase in inflation won't be happening.
I certainly wouldn't use the word "heroic" about the lazy attitude that the Fed has taken to manipulating the economy. Ben Bernanke is making the presumption that high housing prices is a good thing. Is it wise to be diverting so much of the economy into buying real estate and building homes? The American people don't think it is a wise thing right now... sort of the reason why housing prices has gone down. The "mortgage crises" was mainly a crises in the banks themselves, not anything dealing with those who held mortgages. Possibly a small extent to those who wanted to borrow money to buy a home, but tight credit rewards those who save up the money to buy instead.
One interesting point about the price of oil: If you compare how many gallons of gasoline or even raw crude you can purchase for an ounce of silver or gold, you would find that oil prices have been pretty much flat or even deflationary. It is only if you compare the price of those products in dollars or euros do you see any inflation at all.
I've always though that the programmed maximum was silly, but largely irrelevant. There already are competing distributed alternate currencies to Bitcoin that use other allocation systems, so it is largely meaningless as well.
The real threat to inflation will be the large number of Bitcoins in clients that are being hoarded but not used (often because somebody lost their wallet, their computer crashed, or had bitcoins and stopped using them), and if some alternate system can hack at those old hashes to "release" those bitcoins into the market suddenly. That wouldn't impact "current" transactions that would presumably be protected with updated hash algorithms, but if algorithms used in the past had a defect (like the MD5 hashes... to give an example... or they were protected with ROT-13), those could be "hacked" and used. It doesn't change the total number of coins in the system, but it could be the equivalent of finding a Spanish galleon and flooding a local market with a large amount of gold.
If the government makes some money, they can refuse to give it to you and they can go after those who have a license to spread that money around if that license is abused according to the government. There is a vested self-interest on the part of banks to follow regulations as their privileges (like fractional reserve lending) would be revoked if they don't play those games.
The question here is because Bitcoin is a distributed currency that no single person or central server can be arrested or have their power disconnected, it would by necessity require a widespread criminal approach which involves mass arrests. That would also require implicit popular support for such regulations as well, so it can't be arbitrary either.
Some centralized alternative currencies like Liberty Dollars or e-Gold have been confiscated by the U.S. federal government in recent years. Their problem was the centralized repositories that could be raided and captured. About the only equivalent to that with Bitcoins are the major exchange businesses which trade Federal Reserve Notes and other currencies for Bitcoins.
Arguably consumption of alcohol increased during the 1920's and 1930's when prohibition was constitutional. It also took a constitutional amendment in order to make it illegal as well... something that may also be a problem for Bitcoins in terms of regulations being technically unconstitutional except through a gross perversion of the interstate commerce clause. 1st amendment rights may apply as well.
Then again, since when has the U.S. Supreme Court ever cared about individual rights like the 1st amendment, much less the 9th amendment?
Give me a list of activities, disapproved of by authorities, which have become shut down or marginalised in the last decade.
About the only thing which comes to mind is blasphemy of Allah and his Prophet (aka the god of Islam and Mohammed), mentioning that Tibet is an occupied independent nation, that Taiwan really is an independent nation with its own foreign policy, and that Tiananmen Square has been anything but a peaceful tourist backdrop in the 20th and 21st Centuries.
And of course the dismissal that anything serious or newsworthy happened in Libya on September 11th of this year... but that is just censorship on the part of major media outlets and not really internet censorship.
I would be very curious about how any sort of regulation could be effectively enforced. Sure, some bone-headed government might try to do something like say only banks can be using this software legally or something equally stupid. And you thought the war on drugs produced a bunch of nightmare problems.
Any sort of regulation would just push this kind of activity underground, and there would be most definitely a financial incentive to keep doing this 'underground" away from any sort of regulatory control. Either that or as you suggest the "official" clients would have a huge amount of risk and the "black" clients would be the safe and secure ones that anybody with brains would be using anyway.
I would dare say trying to attack the network with more computer power is a losing proposition. First of all, any prolonged attempt at applying computing power to the network will be noticed by anybody involved (especially the major mining groups). Indeed it is often discussed when some new group goes on-line with a large batch of servers in a quest for mining work units.
It should also be noted that the Bitcoin network is currently so large that you would have to invest an insane amount of money to "capture" the network. That would need to be for reasons other than merely profit. Hint: Ordinary users like you or me are unlikely to get Bitcoin work units with an ordinary computer any more. You simply need to have a few thousand servers just to hope to occasionally get a work unit. Possibly a major government might be able to cause mischief, but that would be true only as long as one major government decided to get involved.
As for the network itself and having the government identify who is using the software.... yeah that could be a problem. Perhaps they might check certain port id numbers, but you could easily disguise ports in a number of ways to hide the network. Running through Tor is hardly the only solution. That doesn't even stop a "sneaker net" option for distributing information either... and yes you can use Bitcoin via sneaker net. From that you can do dead drops and all sorts of spycraft in terms of how you spread transaction information. Bitcoins can be as dark of a black market as has ever existed in human history.
Keep in mind that there are other checks on work units as well, and one of the other dirty little secrets is that not only do you need to get the majority of the CPU cycles to "capture" the network, but you also need to get the "vast majority" of the clients who are monitoring and processing completed work units to accept those work units. It isn't a 50% rule necessarily, but if most of the clients don't recognize the packets as valid for a variety or reasons, it doesn't matter if you have a valid hash... they simply won't be accepted into the chain. If there is a backlog of transactions not getting into work units, it is possible to build checks in the network to start rejecting work units which aren't incorporating at least a portion of that backlog.
The example was to show that trusting any sort of fungible asset (including Facebook shares) is all relative and that anything as an investment or even being used for money will fluctuate in price. The Facebook example is how something thought rock sold or even priced low (as was thought the day before the IPO) turned out to be not so good.
The original poster knows that Facebook did drop 25% in one day. That was in fact his point.
So you want the 40% of tax revenues to be paid by individuals on their personal income taxes instead?
If it means that I get paid 60%-80% more... sure, why not?
Simplifying the tax code helps everybody as it makes criminals obvious and screws over the honest much less.
That is sort of true. Anybody who has a public bitcoin address (aka they've published the hash key on a public location like a web site) can have the money traced not just to that number but also where that money has gone. For example, when the EFF was taking donations in Bitcions, it was possible to know exactly how much money they received in donations.
That said, you can through a "secure channel" transmit the Bitcoin address and it would be much, much harder to track.
Interplanetary transactions are a bit harder of a problem to deal with though, because of time delay problems related to the speed of light. Bitcoin mining on Mars seems to be unlikely to happen, although it could present some interesting issues.
The one real ongoing expense with the Model S (and most electric vehicles) besides changing/rotating the tires is the replacement of the battery pack after about 5-7 years. While Tesla has done an amazing job with its battery pack and stretches the life out of those Li-ion batteries, they do need to be exchanged/replaced.
If you are lucky, you would likely junk the car (sell it to the used car market) and just buy a new car, but replacing that battery pack is a fairly expensive proposition and shouldn't be ignored. It depends on how many miles (aka gallons of gasoline) that are used on the vehicle. For people who have about an hour or so commute to and from work every day during the week and put on 50k miles per year, the cost in electricity would be trivial compared to the gasoline fuel costs.
On the other hand, if the car belongs to a shut-in senior citizen who puts on about 50 miles in a week if they are lucky and less than 2k miles for a whole year (I know more than a few people in that situation.... their cars are practically brand-new looking even after 10 years of ownership)... the fuel savings would be trivial. Sadly, the battery packs would still need to be replaced if it was an electric automobile. My point here is that your savings really depends on how you use the vehicle.
I have two vehicles myself, where one is a general small high-efficiency commuter car that I use if I need to make a long trips or for general running around town (it works fine for a trip to the grocery store), but another much larger vehicle that I use for those kind of trips like to Home Depot. And you can rent vehicles for a fair bit cheaper than you can from Home Depot from a much larger number of places if that is something you really want to do.
Besides, if you are the kind of person who has a large boat or the need to haul around a trailer, you will likely have a vehicle to live that kind of lifestyle. For myself, I think it is stupid that the government screws things up to force people into living a particular lifestyle, but at the same time you need to realize that not everybody needs a huge pickup truck. I usually borrow a vehicle belonging to a friend if my larger vehicle (a full-sized fan) doesn't do the job, and occasionally rent a U-Haul.
It isn't as bad as you are making it out to be here.
I think the price is ridiculous because I can buy a decent car for a lot less than that, that's all.
Buying at that price make no economic sense; and that's one of the metrics I use when selecting an automobile. Pretty much that simple.
Again, this is likely a car you would never buy even if it was strictly an ordinary internal combustion engine vehicle with the same kind of engineering and styling. What you think is a decent car would likely not be a luxury sedan that would be purchased by a well-paid professional (aka full-partner lawyer or senior physician with an established practice). That is the market which Tesla is targeting.
This is even a pretty reasonable strategy where Tesla is trying to skim off the boutique market of well heeled customers that are less concerned about price but more concerned about creature comforts. The market for buyers of those kind of automobiles is rather small (just a few thousand cars at the high end... which is where they were selling the Roadster). The Model S is admittedly the next tier down from the very high end cars, but then again Tesla seems to have a factory which can ramp up production considerably as well as expand if necessary.
Trying to build this mass consumer automobile you are expecting them to make takes an insane amount of capital... which is one of the reasons why America has had only three auto manufactures for many decades. Frankly it is amazing that Tesla was able to not only design these vehicles but get through the whole U.S. Department of Transportation certification process to get these vehicles into serial production. Few other companies making electric automobiles have been able to get that accomplished, including the "big boys" like General Motors.
Hopefully this Model S will start to sell in the range of 20k-50k vehicles per year for a couple of years.... which will give Tesla the cash needed to expand and get those cheaper vehicles you are hoping for. This is an issue purely of economics, where the margins needed to build the lower price cars are much thinner and simply need a much larger volume of production in order to make a profit.
In terms of energy independence, coal is at least something you can get from parts of the world that aren't ready to blow up into open warfare. On top of that, you actually have a smaller environmental footprint generating the same amount of power from a large-scale coal plant than you would from a couple thousand automobiles.
On top of that, you aren't stuck with just one source of supplying that energy as almost anything which can turn a generator shaft is all you need to generate electricity. As an excuse for why you shouldn't buy an electric automobile, complaining about the "carbon footprint" of a coal power plant is about as lame as it gets. If you don't like coal plants, encourage policy makers (aka your state legislature or municipal power operators) to try alternative energy generation techniques.