BitCoin, the Most Dangerous Project Ever? 858
Jamie found a followup to the bitcoin story we've been following awhile. The article talks about the untraceable, un-hackable nature of BitCoin. They can't be locked down like PayPal, and the article predicts that governments will start banning them in the next 18 months.
Re:Tabloid trash (Score:1, Informative)
You do realize that that "precedent" was set in the US Constitution, right? Congress has the sole authority to coin money. Oh right, this is cpu6502 who is nothing but an idiot troll. Post some more prisonplanet and infowars stories for us. Those are highly amusing.
Re:Not over the top at all! (Score:5, Informative)
And how is the world economy going to function with a currency that maxes out at 21 million?
Let's pretend for a moment that no other digital currencies will be created - bitcoin will be it.
I'm not sure whether bitcoin will work out or not, but who cares what the absolute upper limit is to the currency? The software currently supports 2 decimals and the bitcoin themselves support division into "bitdust" of 1/100000000 bitcoin. So there are 2.1 quadrillion individual units. That ought to do us. There are perhaps 55 trillion "dollars" out there in the world. That's 1/4 of the economy so you need roughly 220 trillion dollars for the world economy. We use two decimal places with dollars, so the smallest unit is actually a penny. That's 22 quadrillion pennies to make the world go round.
Re:Even after reading TFA (Score:5, Informative)
I still have no clue what this 'bitcons' are. Can anyone give an explanation not stepped in sensationalism?
Simply put, it's a form of digital cash. Its main advantage is that it's a peer-to-peer thing, so there's no central authority (aka PayPal or Visa) to shut it down, or to block payments from anyone to anyone for political purposes. For instance, there's no way to prevent someone from donating to Wikileaks if they want to. Like cash, there are no chargebacks, which is either an advantage or disadvantage depending on your point of view. The cryptology makes it rather secure and prevents people from issuing a double-spend, or "writing a bad check" so to speak.
There are a few other aspects, such as low transaction fees and its status as a deflationary currency, and backing up the wallet file because suddenly you are your own bank and are in charge of your own security, but you don't need to know much about that unless you're interested in learning more.
At the moment, it's more of an experiment or proof-of-concept, though it's rapidly expanding beyond that. It's a currency in that it has value because people believe it to have value and are willing to exchange it for goods and services. The market is somewhat shallow at the moment, but it's growing all the time. An interesting project to watch, at the very least.
Re:Not untraceable. (Score:4, Informative)
In the UK, you have to be registered with the Financial Services Authority, or the equivalent in another EU/EEA country to run such a service. Paypal for example is registered with the Luxembourg authorities. So as far as I can see, it is already illegal here.
Re:Tabloid trash (Score:2, Informative)
BACK ON TOPIC: If the Congress is the only one allowed to coin money,
What if? It's plainly stated in Article 1 Section 8 under the Powers of Congress:
To coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures;
That's about as clear as can be.
how come the state legislatures and banks of the 1800s continued printing their own money?
Because Congress allowed them to do so since *drum roll* they have the power to relegate that authority. The Federal Government decided to print the money itself when the banks were no longer living up to the promise of exchanging bank notes of silver and gold.
And why can't States and Bitcoin or other banks do the same today?
Because Congress says they can't? Because Congress has sole authority over minting and regulating money? Is your skull really this thick?
Re:Tabloid trash (Score:5, Informative)
Re:Tabloid trash (Score:5, Informative)
The guy who was printed Liberty Coins (99% pure silver) has been told he's no longer allowed to do it.
Yeah, because he tried to make them look like official US currency. They say LIBERTY across the top like official US coins, they say "Trust in God" rather that "In God We Trust" - but it's rather close. They have a bust of Lady Liberty like official US coins, and they say USA across the bottom.
Disney has been printing money for decades and the government does not stop them because they are clearly not US currency. Using a bunch of US national symbols on your coin is probably going to invite Treasury attention.
Re:Tabloid trash (Score:4, Informative)
It is clear from the quote that Congress can coin money, but there is nothing there to prevent anyone else from doing so, which is what this discussion is about.
Sure there is. Article 1 Section 10:
No State shall...coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts;
And since the power to mint currency doesn't fall to the people under Amendments 9 or 10, it is exclusively Congress's authority. Not to mention the long-standing statutory law.
Re:Not over the top at all! (Score:5, Informative)
Bitcoin is a P2P currency that could topple governments, destabilize economies and create uncontrollable global bazaars for contraband.
I don't want to rain on the guy's parade (or do I?), but governments don't combat "uncontrollable... bazaars for contraband" by eliminating the currency used in said bazaars, they do it by sending heavily-armed soldiers to break up the party.
Re:Tabloid trash (Score:5, Informative)
It is pretty sad when national symbols are for the exclusive use of a private entity.
That's not what happened at all. The problem was that someone made some very deceptive currency. That they happened to do it by using national symbols is not really germane.
The Federal Reserve Bank (not the Treasury) are the ones you are talking about, and they are a private entity.
No they aren't. Their headquarters is a federally-owned building, their board of governors is appointed by the President of the United States and confirmed by Congress, and they enabled and subject to oversight by the US Congress. All profits are returned to the US Treasury. Hell, they even have a .gov web address. The member banks are private - is that what you mean? Or is it because they can make large decisions without congressional approval? That is by design, and Congress could change it in a single session - it doesn't make them "private", it makes them somewhat independent.
Re:Tabloid trash (Score:5, Informative)
You do realize that that "precedent" was set in the US Constitution, right? Congress has the sole authority to coin money.
What a crazy misinterpretation. If we assume your poor interpretation, no currency exists except US currency. The simple fact is, your post is absolute nonsense. The US Constitution grants sole authority to coin US CURRENCY. Non-US currency can freely be coin and exchange is even allowed. So long as bitcoins are not presented at legal US tender, the absolutely are constitutionally allowed; as are all other foreign currencies. As as far as I know, it is not illegal to coin non-US currency within US borders. As such, I can't see how bitcoin is illegal in any way so long as its not presented as US coined currency - and its not as far as I know.
Re:How does it actually work? (Score:5, Informative)
My explanation mostly focused on the problems of credit cards ;) Bitcoin can be explained. Lots of people understand it. I understand your reaction, but "this is complicated" does not imply "this is a scam".
Let me try and address your questions.
(1) Bitcoin is a P2P mesh network. All nodes know about all transactions because they are broadcast. This is similar to how routers on the internet know where to route packets: all participants maintain a shared data structure. So there are no transactions that "never intersect".
(2) This is a "double spend". The answer is that one of them will win. Because of how transactions are broadcast a delay between the transactions of only a second means the first is much more likely to win than the second. But if you were to try spending the same coin to two destinations simultaneously the network would become briefly confused and which one wins would be hard to determine. After a few minutes a block will be found and the confusion will be resolved: there will be a clear winner.
(3) You can see the "trail of hashes" (actually signatures) at the block explorer [blockexplorer.com]. Conceptually it grows forever. In reality it's possible to delete transactions that are old enough, though the software people use today does not implement this optimization. So storage requirements won't grow forever, they are proportional to the amount of outstanding coins waiting to be spent.
(4) Oddly enough there's actually no such thing as a bitcoin, in the system itself. Transactions combine and split value. For example a transaction may import 30 BTC and then have two outputs, one of 10 BTC and another of 20 BTC. Those outputs are now available for spending. You can see this in the block explorer which may make it clearer.
(5) Yes, like any currency the ability to forge perfectly dooms the system. Example: at one point South Africa had to recall and destroy all copies of a particular type of bank note because a Nigerian gang found a way to make perfect forgeries. Bitcoins can't really be "forged" as such because the way they are created is by a form of mutual agreement amongst all parties. The closest equivalent would be if elliptic curve cryptography was broken. ECC has been around since the 80s and is extensively peer reviewed. It's believed to be just as good as RSA. The production rate is regulated by the difficulty rules. Coins are distributed in type of lottery amongst the people who are securing the network with their hash power. This is where things get complicated and if you want to learn more about that I suggest you read Satoshis white paper.
(6) At current network speeds a botnet of around 500,000+ machines could delay payments from going through or re-order them, allowing reversal of transactions. It doesn't open the system to arbitrary changes like stealing other peoples coins or creating value out of thin air (exception: "lightweight mode" clients as I described before, but nobody uses them today). There are only a handful of botnets that large, mind you.
If you have further questions you could try Satoshis paper, IRC or the forums.
Re:so... (Score:4, Informative)
As I understand it -- and it's only a vague understanding -- the creation of bitcoins is a side-effect of administering the bitcoin transaction chain. So those systems are indeed doing useful work.
Re:Tabloid trash (Score:5, Informative)
Yes, zero advantage, for the overwhelming majority of people who are not privacy nuts, criminals, or economists.
One huge advantage you are missing is that BitCoin transactions cannot be taxed, or at least cannot be proven by the authorities to have taken place for the purposes of taxation.
How is that different from cash? If I give you a $20, no one will know it happened except for us.
All that talk about "control" of currencies, while having some merit, is far secondary to the primary issue: all the true global powers, financial and military both, are directly funded by taxation of some kind.
Are you actually serious here? As though government won't figure out how to tax us in the absence of sales tax or income tax? Well, several states have no income tax (the US didn't even have an income tax until the early 20th century) or no sales tax, but those states still have revenue. How? High property taxes (you gotta live somewhere), personal property taxes (gotta drive something), fees for services (driver's license, business license, etc.), etc.
Making taxation impossible would signal a seismic shift of power the likes of human civilization hasn't seen for a very long time.
Bitcoin does not, I repeat, does NOT make taxation impossible. It just means you'll pay different types of tax, but taxes you will pay.