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.
Tabloid trash (Score:5, Insightful)
Re:Tabloid trash (Score:5, Funny)
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Now you're just being sensationalist. TBH, it reminds me of something from the Daily Mail.
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Re:Tabloid trash (Score:5, Funny)
What a badly written sensationalist story. It's like something from the Daily Mail
Oh, in that case without even reading it I know that they'll be some evil dreamed up by the rest of Europe that will be widely used by terrorists and will enable lots of immigrants to sneak into the UK and live a life of luxury funded by the toils of the UK taxpayer.
Am I right?
Re:Tabloid trash (Score:5, Funny)
Re:Tabloid trash (Score:4, Funny)
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And they're high in cholesterol.
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But mostly the good kind.
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Oh I don't know. The guy who was printed Liberty Coins (99% pure silver) has been told he's no longer allowed to do it. Now that the precedent is set, the US government can shutdown Bitcoin or any other form of non-Reserve currency.
Re:Tabloid trash (Score:5, Funny)
The guy who was printed Liberty Coins (99% pure silver)
No wonder ink cartridges cost so much.
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I'm more surprised that not only did we make a guy out of printed Liberty Coins, but then we forbade him from doing it. If he's 99% pure silver as the OP suggests, maybe its a health thing?
Haha
Is silver bad when it gets inside of you?
Oh no - don't remind me of the whole 'colloidal silver' alternative medicine thing...
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Depends on what you mean by bad. Colloidal silver is considered a "health drink" by some, however, imbibing too much or taking it too frequently causes your skin to turn a very noticeable grey. It is called argyria. [wikipedia.org]
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Colloidal silver is considered a "health drink" by some, however, imbibing too much or taking it too frequently causes your skin to turn a very noticeable grey.
Yes, and carrot juice is also considered a "health drink" by some, however, imbibing too much or taking it too frequently causes your skin to turn a very noticeable yellow. It is called carotenemia [medscape.com].
Yet carrots are still generally considered to be healthful.
Note that both conditions are purely cosmetic and neither is actually harmful to you, other than to your social life. And the solution to either of them is simply to avoid consuming excessive amounts of that substance before it starts making your skin cha
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Hence why I said before your skin changes color.
The main difference between them is that the silver basically doesn't seem to ever leave the body whereas the yellow stuff from the carrots does, slowly. So for the silver dose, it's basically the cumulative life-long amount that really matters, whereas with the carrots a diet that frequently includes carrots is still fine as long as you don't consume excessive amounts of them.
Re:Tabloid trash (Score:4, Insightful)
I think the issue was more with the fact that the person was trying to pass these coins off as legal tender.
Re:Back on-topic... (Score:5, Insightful)
Bartering is still taxed the same as income in every state I know of, and still counts as income for federal income tax purposes. E.g., if you give me a sheep for fixing your PC, I just had a taxable event at the prevailing market rate for one sheep. This is true whether it's goods or services that are exchanged. It does allow for some wiggle room in your valuation perhaps, but everything's negotiable anyway, so there's not much advantage over bartering. OTOH, it may be a bit easier to get your money back than to get your sheep back when you find out that the grain I exchanged was spoiled. Additionally, being left with a pot full of BitCoins when the music stops is like having a jug full of babysitter tokens -- absolutely worthless if nobody else wants them. The same is true of any fiat currency of course, or even backed currency if the underlying asset becomes worthless. The difference is that the full faith and credit of the US government probably carries a bit more weight than the full faith and credit of an anonymous internet startup. For now, anyway.
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I've always found it interesting that bartering taxation shows your time is worth money to the IRS at a market rate when calculating for one side of a transaction, but not the other. Shows pretty clearly how it's based on accounting tricks, rather than actually being about "income."
Dental services for taxidermy services? Looks like you both made income on that deal by giving time worth nothing (your own) for time worth something (the other guy's). Oh, and you can't say that your time has deductible value, e
You're an idiot. (Score:3)
Being minted under "the authorization of the U.S. Mint" does not make them legal tender! The mint simply gave them permission to make commorative coins that look like antique legal tender.
Citation needed.
Seriously... just about anything you say, "Jane Q. Public", needs to be followed with a citation from now on. Since you obviously don't know what the hell you're talking about most of the time, and you follow people around trolling them.
No actually... I'LL provide the citation, since I know for a fact that you're wrong. Fuck you and your shit. Here. Straight from the U.S. Mint itself. Bullion coins from the U.S. Mint IS LEGAL TENDER.
http://www.usmint.gov/downloads/mint_programs/am_eagles/Ame [usmint.gov]
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That precedent was set 150 years ago when the U.S. stopped letting states and banks print their own currency.
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.
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Exactly. To try to claim that this [tqn.com] was not purposefully designed to fool people into think it's official currency is laughable.
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, Funny)
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.
I think that the difference between this and other digital currencies is that bitcoin is totally decentralized. The US Government will be able to shut down bitcoin approximately as easily as they can shut down file sharing. As in, not very easily.
Still, I don't think bitcoin will become much of a thorn in the rump of any government-issued currencies. It has a pretty steep learning curve, and it doesn't really provide any benefit over government-issued currencies for 99.99% of the population. I think the only types of people who will bother learning how to use bitcoin would be, in decreasing order of value to society: privacy nuts, criminals, or economists.
Re:Tabloid trash (Score:4, Insightful)
That depends solely on its adoption and acceptance. If everyone accepts bitcoin, it becomes a currency implicitly and intrinsically. One that has no central authority that can be controlled.
In that scenario, it literally wrests control of currency away from the government and banks. Neither the government nor the banks like that very much. Conspiracy theorists will tell you that Kennedy was assassinated for the executive order that would have ended The Fed. In other words, wresting control of US currency away from the banks got Kennedy killed. You can actually disbelieve that if you like, and it won't matter. I'm skeptical of it myself. But again, it doesn't actually matter.
This article is not sensational. It is true. The last guy who tried to move in on the government/banks' business of currency control was sent to prison for life for doing it. It is U.S. law that nobody else gets to make currency. It is a criminal act. That is a fact. The interesting question is, why? The first order answer is, well you can't have everybody making their own, it's too much of a PITA to exchange, so everybody does need to agree on one. But why did we pick one that is controlled by the US government? Well it was our central authority, obviously, our government should control our currency. The real problem is, it doesn't. The Fed does.
You mean people who believe in democracy, as in of the people, for the people, and by the people? As the recent bank bailout just taught us, the current system is "Of the people, for the wealthy top 2% and by the wealthy top 2%" as secured by vastly greater sums of money (which is used to exert political power). There is no conspiracy, just corruption of government by power. In this instance, that power is wealth. And that wealth is in the form of USD. Bitcoin, if it gained global acceptance would effectively supplant that power, wresting all power from those that are wealthy in USD and give it to those that are wealthy in Bitcoin, which is a distributed currency, with no central authority. Which is the soul of democracy.
Try thinking outside the box next time, it's way more fun, even if it's a bit loony and gets you sent to Gitmo.
Re:Tabloid trash (Score:5, Insightful)
That depends solely on its adoption and acceptance. If everyone accepts bitcoin,
My entire point is that you need to just stop right there. Why would everyone start to accept bitcoin? It's complicated, and it offers zero advantage over federal reserve notes to 99.99% of people.
The rest of your post is a hypothetical scenario that could occur if bitcoin gains acceptance. But I'm not going to grant you that any of your hypothetical will occur until you give at least some semi-plausible scenario where bitcoin might someday gain attention outside the realm of privacy nuts, criminals, and economists.
As the recent bank bailout just taught us, the current system is "Of the people, for the wealthy top 2% and by the wealthy top 2%" as secured by vastly greater sums of money (which is used to exert political power).
Do you have any idea just how much your life would suck right now had it not been for the banking system bailout? I'm not talking about Bill Gates's life; I'm talking about your life. Just read up on previous liquidity crises where the federal government did not step in, and look at what happened to the common man like you and me.
Try thinking outside the box next time, it's way more fun, even if it's a bit loony and gets you sent to Gitmo.
I don't know what the hell you're talking about here, and neither do you.
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"My entire point is that you need to just stop right there. Why would everyone start to accept bitcoin? It's complicated, and it offers zero advantage over federal reserve notes to 99.99% of people."
Unless you are, much like myself, sick and tired of not having a say in our economy short of what we purchase. You underestimate the allure of "stickin' it to tha Man".
"Do you have any idea just how much your life would suck right now had it not been for the banking system bailout?"
Do you have any idea how much
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Do you have any idea just how much your life would suck right now had it not been for the banking system bailout?
It would have sucked only a fraction as bad as it will now eventually suck. All they've done is kick the can down the road and made the bubble even bigger. Nothing was fixed, just delayed.
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.
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Re:Tabloid trash (Score:4, Insightful)
Remember the "precedent" where record companies had exclusive rights to distribute recorded music?
The Congress is about to discover the same lesson regarding technology that refuses to be regulated.
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:Tabloid trash (Score:5, Informative)
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I think most people are going after funny, but funny points don't count towards karma :*(
We need a separate "funny" system.
I do agree, even *if* he was/is correct, it shouldn't have been modded that way.
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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.
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All of that revolves around the definition of "money". The Liberty Dollar guy had the issue of calling the coins "dollars" and the stated goal of having them be an alternate currency.
Lots of places mint their own, local "silver rounds". They just make sure to call them "tokens" or "rounds" or some such and don't even hint that they are dollar-equivalents.
There is nothing in the Constitution that prevents anyone from accepting alternate forms of payment. As a business owner in the United States, I can acc
Re:Tabloid trash (Score:5, Interesting)
There are alternatives other than "is legal tender" and "is worthless." A thing is worth whatever people will pay for it. If some people start accepting bitcoins as payment, other people will be willing to pay money for bitcoins in order to use them as payment -- particularly if the exchange rate is favorable. Once people realize that they can thereby sell their bitcoins for money to those people, more people will be willing to accept them as payment.
This has nothing to do with its status as legal tender. Canadian dollars are not legal tender in the US, but if someone on the US side of Niagra Falls wants to operate a store and list all the prices in US and Canadian dollars and accept either one as payment, is that illegal? Even assuming it is, if they put a vending machine in the lobby where you can exchange Canadian dollars for US dollars and then spend the US dollars, does it result in any practical difference, or do anything someone couldn't do with bitcoins?
But none of it matters until they reach critical mass. People will only buy them if vendors accept them, and vendors will only accept them if people are buying them. The problem is how you get one to happen in significant numbers before the other.
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Canadian dollars are not legal tender in the US, but if someone on the US side of Niagra Falls wants to operate a store and list all the prices in US and Canadian dollars and accept either one as payment, is that illegal?
No because the shop keeper can simply take the Canadian currency and exchange it for US currency at a local bank. Any store can do the same thing with any currency that is accepted. They can also refuse to accept currency over a certain denomination. And that's the trick with bitcoin. A few online retailers might be accepting it, but most are not and I don't know of any brick-and-mortar stores that are.
It's funny how everyone here is acting like BitCoin is this super important thing that is gaining wide
Re:No shit (Score:4, Interesting)
"It is a pretty clear cut case."
Please explain the fake money at Chuck E Cheese and other places that have arcade games, then. It's intended for use as current money (geared to be accepted by CURRENT coin collecting and vending machines, it also weigh the same and is similarly-sized to our currency, for the purpose of compatibility with current machines.)
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BitCoin "coins" aren't made of metal or allows. IANAL, but it seems pretty clear to me that particular law doesn't apply.
Written by a used car salesman? (Score:4, Insightful)
TFA reads more like an advertisement for BitCoins than an news article.
Article Has a Very Strange Conflict (Score:3, Interesting)
Each owner transfers the coin to the next by digitally signing a hash of the previous transaction and the public key of the next owner and adding these to the end of the coin. A payee can verify the signatures to verify the chain of ownership.
Then it says:
Of course, since bitcoin transactions are untraceable, you would have zero recourse if you sent a dozen bitcoins to someone for a couple of tabs of LSD. Just like you might lose your $10 if you gave it to a kid in the school yard for a dime bag and he never came back.
Well, which is it?
... computational complexity? They serve absolutely no purpose with no possible side usages (like gold). The only purpose they serve is being a resource in contention. So what happens when people just decide to stop contending for it?
I first read about BitCoins on Slashdot a while ago and what intuition I have seems to wager there's a lot of Catch-22s with this pseudo-fiat currency. I mean the value is derived from scarcity but is also tied to what
I think that the title of this article being "BitCoin, the Most Dangerous Project Ever?" is a crude attempt at a self fulfilling prophecy as it's no danger unless people start to use it and actually value the BitCoins at their trading rate. I liked the section titled "BitCoins in Real Life" that says:
In the next year you’ll hear about people in casinos in Vegas buying and sell bitcoins for cash and casino chips.
Riiiiight. I somehow doubt that.
I think this amounts to some very smart people engaging in a cute little experiment that will experience initial success as those with GPU farms get some of this novel currency. But it can never grow very large because you need a pretty expensive infrastructure even to handle BitCoins and the only interests it serves will be those industries that want easy untraceable ways to exchange value for illegal products or to avoid taxation. And once that's exhausted, I suspect it will flounder.
Does anyone honestly think the promise of protection from inflation will cause people to ask for their paycheck in BitCoins?
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Does anyone honestly think the promise of protection from inflation will cause people to ask for their paycheck in BitCoins?
If you do you better not hope many other people do unless you want to take a significant pay decrease due to the dearth of bitcoins.
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Re:Magic: The Gathering (Score:4, Funny)
That's actually a very good example of a "pseudo-currency".
(Lawn)
I once bought a pizza from Papa Ginos with two Sengir Vampires. (The register guy agreed to repay the pizza out of his own pocket.)
(/Lawn)
The fascinating thing there is how Wizards "tricked itself" by misreading how certain cards form gamebreaker combos. So then they embarked on an elaborate "currency value adjustment" program, aka Type 2. (With all the spinoffs etc. In my areas "1.5" and "Legacy" and so on were never very popular.)
By being relegated to "Type 1" All those power cards were effectively cordoned off into a backwater, and lost most of their effective value. Then as the years rolled on, once cards left Type 2, they also dropped in value like a stone.
What's to keep the BitCoin administration (does that make sense?) from "adjusting" it later to suit some agenda?
Re:Article Has a Very Strange Conflict (Score:5, Interesting)
I agree the article is badly written. Transactions take place between public keys. As a public key is just a big random number, they are essentially "anonymous" unless the key is linked to your identity somehow - for example, because somebody you traded with told the police "I sent X coins to Eldavo John and he used address Y".
That's why it's better described as pseudo-nonymous rather than fully anonymous. It's possible to break the anonymity if people co-operate. I'd say it provides about as much privacy as the regular internet does. An IP address is basically private to regular citizens. If you represent law enforcement and turn up at a bunch of companies with the right paperwork you can make everyone work together and the privacy of the IP address falls.
Well, to handle Bitcoins today all you need to do is install and run the software from bitcoin.org. It runs just fine on regular servers, desktops and even laptops - hardly expensive infrastructure. If the system takes off and traffic levels reach PayPal levels, running it on a laptop won't be feasible anymore, you'll need some kind of high end server. If the system really takes off and starts matching VISA, a node would have to be distributed and might take a rack of machines. It never really gets infeasible because there is a "lightweight mode" in which the resource requirements are much lower and the security properties are slightly weakened. In this mode it's quite possible to run the system on a smartphone. Your device is independent, but if somebody is able to overtake the networks hashing power it can be made to believe anything. Right now that's 1-2 terahashes/sec, not something that's going to be beaten by anything except rich, sophisticated organizations (big tech companies or governments).
But I think your question/pondering is more about whether Bitcoin has value beyond mischief. I think it clearly does, otherwise I wouldn't be working on it ;) The existing electronic payments system isn't that great, really. To pay for something instantly over the internet today you have to use credit cards. Wiring money is an alternative but due to outdated banking systems it's extremely slow, money moved this way often moves slower than a physical truck would even though the transfer is actually electronic. It's also quite expensive.
Credit cards have a bunch of problems for both buyers and sellers. For sellers the biggest problems are chargebacks and the costs of taking part in the system. It's really hard to handle chargebacks. Big companies use sophisticated risk analyses to try and spot unusual behavior, smaller companies just bump the price of everything by 10% to handle the fact that some payments just won't happen. The costs of taking part are also a problem. You can't just install some software on your web server and go. Credit card details are basically big passwords, but in an inconvenient form that you can't change and that every merchant you buy things from must be given. Unsurprisingly, this is totally insecure even with the PCI auditing process that is intended to ensure merchants keep CC data safe. See the recent Sony breach for an example.
Credit cards aren't really great for buyers either. Whilst chargebacks are useful, you can't opt-out of the ability in order to get lower rates from the merchant, or set up some other kind of escrow scheme. For another, the system is very inflexible. Whilst you can theoretically take steps to secure your CC credentials better on your end, the fact that you share them with anyone you buy things from makes such effort mostly worthless. Finally they are kind of inconvenient. Despite being one big password you usually have to type in several long, hard to remember codes and
How does it actually work? (Score:5, Insightful)
Why is it that every explanation of bit coin, including your attempt, is incoherent. Given it can't be explained I think it's a scam.
I have many questions in part because the basic schema is not clear. I've watched the videos and read the sites. But there just is no explanation that makes a whole coherent sum and there are contradictions when you piece the various explanations together.
1) On a torrent network, not every node knows where all the slices are. Not all nodes are in communication. Thus what happens if I sent 30 bit coins to Amy and then I sent the exact digital copy of those coins to Brad who is on a network remote from Amy. It sounds like Amy will query the local network to see if I own the coins and so will Brad. But because those queries never intersect on the same node both appear to be valid when in fact I just copied the money. Later on perhaps the system can't reconcile two people owning the same coins but by then I'm gone.
2) Suppose I send money to Alice. then a fraction of a second later Alice tries to send the same Money to Bob. How does Bob determine that Amy owns the coins? No node on BoB's network can validate my transfer to Alice.
3) the description has this trail of signed hashes being appended. Does this grow forever and can it be inverted to follow the money?
4) is each coin signed? or is it transactions?
5) if someone invents a way to make coins cheaply does this doom the system? What regulates the produciton rate? does this work if I have 1 million different user identities? if there is a central signing authority for this then what keeps this from getting cracked or printing their own money to flood the system?
6) what happens if botnets start mining?
how does this actually work, end to end, technically not operationally?
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1) and 2) are both examples of the double spending problem for cryptocurrencies, which is the very problem Bitcoin is trying to solve. A chain of transactions is maintained by every Bitcoin "miner" who performs proof of work on the transaction data. If they "solve" the block of transactions first, they are rewarded with the transaction fees and the BTC that are being issued until 21000000 is reached (50 per block, approximately every ten minutes.)
3) At the moment it grows forever. Useless data can be pru
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: (Score:3)
5) if someone invents a way to make coins cheaply does this doom the system? What regulates the produciton rate? does this work if I have 1 million different user identities? if there is a central signing authority for this then what keeps this from getting cracked or printing their own money to flood the system?
6) what happens if botnets start mining?
how does this actually work, end to end, technically not operationally?
As I understand it, no matter what the state of the art in technology used to mine bitcoins, market economics will drive the value of the coins to around the cost of the power/hardware/infrastructure to achieve it. Hence you could make a narrow profit margin by investing in high end computing for bitcoin mining, and no doubt some people will do that. For most people, trading for existing bitcoins is an easier/cheaper way to obtain them than mining.
They are just like gold in that respect. If you're a huge mi
Re: (Score:3)
Why is it that every explanation of bit coin, including your attempt, is incoherent. Given it can't be explained I think it's a scam.
I have many questions in part because the basic schema is not clear. I've watched the videos and read the sites. But there just is no explanation that makes a whole coherent sum and there are contradictions when you piece the various explanations together.
I'm not that much of a fan of BitCoin myself, but I think I know how it works. So here's my attempt to explain.
1) On a torrent network, not every node knows where all the slices are. Not all nodes are in communication. Thus what happens if I sent 30 bit coins to Amy and then I sent the exact digital copy of those coins to Brad who is on a network remote from Amy. It sounds like Amy will query the local network to see if I own the coins and so will Brad. But because those queries never intersect on the same node both appear to be valid when in fact I just copied the money. Later on perhaps the system can't reconcile two people owning the same coins but by then I'm gone.
Both people will publish the transactions, and when people try to update the transaction history, they'll (automatically) notice that the coins were double-spent. Over time, the "official" version of events will become the one that more computational effort goes into recording into the public record. Neither Amy nor Brad should rely on the transaction having been legitimate until enough confirmatio
I think it is just more attenion whoring (Score:5, Insightful)
The Bitcoin proponents seem to think this is some really amazing idea that is like Cryptonomicron come to life and think everyone else should get on board. The rest of the world thinks bitcoins are retarded and doesn't use them.
To me this seems like just more hype, but trying to go at it from a scare part: "Oh these things are so amazing and dangerous that the government will ban them!" Trying to play on people's love for things forbidden.
Of course it is also rife with problems, one of the biggest being the whole deflation thing. Deflation is something that strangles an economy badly. People want to spend as little as possible, since you get more for the same money in the future, which of course means there is little spending and little spending means little trade which means the economy goes to shit.
Anyone who is in love the idea of deflation because "My money will be worth more," need to go retake ECON 201 and learn what money really is and why we have it.
Any current that has built in deflation is a really. really, bad idea.
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Gold has real value because it does have actual uses (although the price of gold is seriously inflated by hoarding, compared to what it should be based on natural scarcity alone), and government run fiat money has value because the government requires you to pay your taxes in it. BitCoin has no inherent value at all.
I thought that the value of gold from an industrial point of view was only a small fraction of its current (or historical) cost. Mostly it is "pretty", and pretty rare. If everyone decided overnight that it was no longer desired beyond industrial uses, it would have a value down there with copper. If it only cost as much as copper then it would have a whole bunch of other industrial usage, but still, if the gold market collapsed, I doubt the recyclers would be paying that much for it.
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Untraceable? (Score:2)
Every client has a complete list of all transactions... how can they be called untraceable?
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A few 10's or 100's of users put in x coins, y coins exit the system for a person or group ect.
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The hash is analogous to the serial number on a bill, only with bitcoin you know all of the other signatures that ever touched the currency. You don't even need a warrant to get this information - every client has it built in. It's like having wheresgeorge.com on every single bill in your wallet.
I don't know how difficult it will be for a government to track down the people who hold the keys, but as soon as they catch one guy with a key they will know every single transaction that key has ever made. If they
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Re:Untraceable? (Score:5, Insightful)
I believe they mean it is peer-to-peer, so there is no middleman, unlike something like PayPal where PayPal is the middleman, so it can't be traced unless you are there. In addition, if it doesn't save the "from" source after the transaction, there is no way to tell where the money came from.
Seems like it would make money laundering and tax evasion easy. Of course, there is an easy way to fix that as far as drugs go - make all drugs legal and tax them, then spend the money that went into enforcement on education (like Portugal did).
Uncontrollable global bazaars for contraband... (Score:5, Insightful)
I hate to tell you this, but this has already happened with regular-government issued legal tender.
Look at druglord Mexico, most 3rd-world countries, and the US with its billion-dollar Wall Street bailouts and ponzi schemes. Bitcoin would be a little late to the game.
Even after reading TFA (Score:3)
I still have no clue what this 'bitcons' are. Can anyone give an explanation not stepped in sensationalism?
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.
Comment removed (Score:5, Funny)
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Damn it! You made me spill my beer.
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Fiat currencies are backed by a promise that the government will accept them. There is a demand for US dollars because people in the USA need them to pay taxes, so if you have US dollars then you can trade them with people in the USA for goods or services.
Commodity-backed currencies are similar. If a currency is backed by gold, then the issuing organisation promises to exchange the currency for some fixed quantity of gold. One Pound Sterling, for example, used to be able to be exchanged for one pound
Re:Dangerous is right! (Score:4, Insightful)
Huh? We've had about a 21x multiple since 1913 and nothing like that since 2003.
Not untraceable. (Score:4, Interesting)
It's not untraceable, at least not easily. As I understand it, every user has a copy of the the complete history of every bitcoin. Every coin is explicitly traceable - much more so than cash. The only way in which it is untraceable is that you don't know which bitcoin identities correspond to which real-life identities. Unless you happen to run an exchange, or carry out transactions with known people.
The way around it is by using the http://bitcoinlaundry.com/ [bitcoinlaundry.com] which jumbles up the coins, but then you have to trust that they aren't actually run by the FBI/whatever.
I think the banning prediction is right though (although maybe not 18 months). If this becomes popular there's no way it will stay legal. The government will be able to stop it fairly effectively by shutting down exchanges.
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:Not untraceable. (Score:4, Interesting)
That's an interesting point. I looked up what the FSA has to say about this. The rules seem to be laid out in this document [fsa.gov.uk]. It defines e-money as:
Bitcoin satisfies both points 1 and 2 - but, note that this has to be a "claim on the issuer". Bitcoin does not have a specific issuer. The closest you might find are the miners, who create new currency, but I think a clever lawyer could argue even they are not really "issuers" because they cannot control how much money they create, and the money that is created is assigned to the miner not anyone else. It'd be more accurate to say miners are collectively rewarded by all of the systems participants for securing the network, with a de-facto agreement that finding a block rewards you with coins.
But even if you define a miner to be an issuer of the currency, Bitcoins do not represent claims on them. Miners have no obligations to accept Bitcoins in return for anything. There are no guarantees made by anyone that Bitcoins can be redeemed for anything in particular. For this reason I think it's unclear whether the FSA rules would apply. The rationale for the rules makes sense as long as the e-money issued is backed by something else, which was a pretty reasonable assumption until Bitcoin came along. The rule that says e-money issuers must have at least 1 million euros in liquid assets has no rational basis for miners however, as miners do not back the currency.
At any rate, this will be an interesting discussion between lawyers and regulators in coming years I'm sure. One thing to bear in mind is that it's not necessarily (as so often painted) an "us vs them" fight. One reason Bitcoin is interesting is that it lets people be more independent of banks. Politicans know that in the wake of the financial collapse there has been a crisis of trust and confidence in banks. Many ordinary people are quite disgusted with how bankers gambled with the system, were then bailed out and immediately went back to paying themselves massive bonuses. What's more whilst all politicians agree the system is broken, none of them have been able to propose convincing solutions. Basel 3 etc are incomplete at best. If Bitcoin is marketed well, it could easily be seen by seized by forward thinking politicians as a solution to over-reliance on banks, thus making their constituents happier.
Yours for 3 easy payments of $19.95 (Score:5, Insightful)
Huh? (Score:4, Insightful)
How does "cannot be tracked" come from something in which:
It's been a while since I did anything in crypto ... but if you can verify the signatures, and they're now attached to the coin ... can you just confirm the signatures without knowing who signed it? If it's been signed with my public key, don't you need my public key to verify it?
It seems like either it's traceable, because you can see everyone who has ever held a given set of coins ... or it's not trustworthy because all you have is a signature which you don't necessarily trust because you have no idea where it came from, but you trust the cyrpto.
This sounds like getting cash that has a record of everywhere it's ever been, but maybe I'm missing something here. Won't these 'coins' get large over time as they keep getting signed and passed on? (And the amount of verification needed would get quite long, no?)
I don't think I'm all that interested in a virtual currency whose major benefit is that I can buy escorts and drugs on-line without anybody being able to trace it ... it just seems like there's more motivation for fraud in a system like this. And, it seems like something which is going to start coming under a lot of scrutiny.
I'm just not getting what need this is intended to fill ... and I'm not sure I understand how it's simultaneously untraceable and secure.
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I wondered the same thing. Here is what the Bitcoin website says.
Bitcoin "accounts" do not have people's names on them and do not have to correspond to individuals. Each balance is simply associated with a randomly generated public-private key pair and the money "belongs" to whoever has the private key and can sign transactions with it. The transactions that are signed using those keys also don't have to include names.
A Bitcoin address mathematically corresponds to a public key and looks like this:
15VjRaDX9
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You forgot the point about verification where you may verify where a coin has been, but not that it has not been "forked" somewhere down the line. I still really don't see how a coin could not be transferred twice. Have a coin, give it to Alice and sign it with Alice's key, now Alice has a very valid coin. Keep the original file of the coin, sign it with Bob's public key, and now Bob also has the same coin. Unless Alice and Bob start talking to each other comparing coins, how could they ever find out that t
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Enter Bitcoin, in which the transactions are stored in a block chain on multiple computers.
"Miners" are incentivised to process and store the transactions by small transaction fees and by the issuance of BTC itself.
You can indeed confirm the signatures belong to thee public key to which the Bitcoin had been assigned, as this is just a long alphanumeric string, with no necessary personal data.
Screaming for attention? (Score:2)
Say what? (Score:4, Interesting)
I thought they wanted to be funny but there was no punch line. If the article wasn't supposed to be funny, it must have been machine generated (like SCIgen). Statements like this give it away:
* Bitcoin is unstoppable without end-user prosecution.
What does that actually mean? Are standard coins and notes "stoppable" and "with end-user prosecution"? Could someone come up with a car analogy so I understand?
Umm... I'm confused (Score:3, Interesting)
Among other things, the article makes two claims about Bitcoin: one, that the coins are untraceable, and two, that because each transaction is cryptographically signed, you can verify the chain of ownership of any Bitcoins you are given.
Doesn't the second point contradict the first?
Bitcoin is a Fad for Libertarians who are Ignorant (Score:5, Insightful)
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Wow, I don't understand the hate here for Bitcoin. It is a very clever idea that is trying new ideas out
If it's worthless except as a ponzi scheme it deserves hate.
Should have been called iTulips (Score:4, Insightful)
http://en.wikipedia.org/wiki/Tulip_mania [wikipedia.org]
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http://en.wikipedia.org/wiki/Tulip_mania [wikipedia.org]
This comparisons fails in that Tulips were never truly scarce to begin with. Once traders realized the value in trading or growing Tulips, there was a gap of time in which people wanted more Tulips but the need could not be met, which caused them to rapidly gain value. Since tulips were scarce until more people could finish growing them to be sold. At which point they devalue to the point of nothingness.
This specific type of quick market inflation then crash is, by design, impossible with bitcoins. The su
Just like they banned gold and silver? (Score:3)
Wait... that's exactly what they did.
May not work (Score:4, Interesting)
This has been done before. See DigiCash [wikipedia.org], from 1990. "Clouds gather over Amsterdam as I ride into the city center after a day at the headquarters of DigiCash, a company whose mission is to change the world through the introduction of anonymous digital money technology. I have been inundated with talk of smart cards and automated toll takers and tamper-proof observer chips and virtual coinage for anonymous network ftps. I have made photocopies using a digital wallet and would have bought a soda from a DigiCash vending machine, but it was out of order. " - Wired, 1994. See the article for what went wrong.
The soundness of Bitcoin's crypto doesn't seem to have been analyzed by third parties yet. There's nothing in Cryptologia or sci.crypt. Until there's agreement in the crypto community that it's sound, I'd be suspicious. There's also the problem that if the money resides on user PCs and smartphones, the usual attacks on those devices can steal it. Once stolen and used, there's no way to get it back.
Transactions are not very anonymous. If you spend a coin with a server, the server now knows your public key, and can associate it with any other identity information it has for you ( IP address, Facebook login, shipping address, etc.) If Amazon, eBay, Google Checkout, or Facebook accepted bitcoins, they'd be able to collect this info for a sizable fraction of the online world. Since your public key remains associated with the coin for at least the next few transactions, it's possible to follow the money.
Systems like this detect duplicate spending of the same item, but you can't tell if someone has a duplicate but unspent copy of your coins. So you don't know your money been stolen until you try to spend it.
There's also the technical problem that "new transactions are broadcast to all nodes". That won't scale.
Re:Not over the top at all! (Score:4, Funny)
And how is the world economy going to function with a currency that maxes out at 21 million?
And that 21 million won't be reached for another 130 years. Bitcoin is some sort of retarded joke.
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.
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There is a small problem that all those "dollars" aren't held in vaults until their owners retire, they're simply lent back out by the banks that hold them for people. In other words, you shouldn't hoard your bitcoins in your wallet, you should lend them to a bitcoin bank.
Yeah, I agree. Money is best used as a convenient stand-in for barter, not as an investment itself. And definitely not something to stuff in the sofa.
There is also the issue that speculative price spikes, like the current $7 one, retard their development as a practical currency, however high & long the speculators build the bubble, that's how far it must return and how long it'll take to do so.
It's impossible to say whether it is a bubble or not, but it doesn't matter. I don't get paid in bitcoins, I get paid in dollars. If I encounter a paypal-like situation where they accept bitcoins, I'd just buy enough bitcoins for that transaction and then spend them immediately... as a young currency that's all it is good for. In the long term, it might grow a
Re:Not over the top at all! (Score:4, Interesting)
Keynes has a classic statement in general theory, which is like "the good, fast, cheap; pick any 2" meme about programming.
a) adjustability (the ability of the government to manipulate interest rates for the common good)
b) stability (the currency trades at a stable level relative to other currencies)
c) convertibility (you can move easily between this currency and other currencies)
Pick any 2.
Our system is designed for (a) and (c).
Bretton Woods was (a) and (b)
Gold standard (or bimetalism which is what the US actually had for most of its history) is (b) and (c)
In a (b) and (c) system the government's involvement is helpful. The real problem for the "keep-the-government-out-of-my-money crowd" is they hate adjustability.
Why? You certainly agree you could have bonds in bitcoin? If I can have short term bonds that means I can have money market instruments. I can price stocks. I can have derivatives on those stocks and bonds.
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As for (b) you are misunderstanding stability. Gold based currencies are stable relative to one another not stable in terms of good prices. Stability in terms of goods is (a) not (b).
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.
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Yeah. Buy high and sell low. That'll get 'em.
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But if you had such an item you wouldn't give it away would you? Even though you personally will never use it. You would find a car trading community and sell it
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bitcoin is designed to have "diminishing returns" in terms of bitcoin generation. ie: the longer the project goes on, the fewer new bitcoins will be generated. This ignores that the longer the project goes on, especially if it is successful, the fewer bitcoins will usefully exist. ie: not just a counter that says how many bitcoins exist, but the number of bitcoins which are valid and usable, as opposed to being lost due to lost keys, etc.
You seem to forget the fact that Bitcoins are divisible to at least 8 decimal places. So even if there is only 1 bit coin in the world, it could be divided among millions of addresses.
Even if 1 BTC = 10,000 USD, I could buy something for .00001 BTC.
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.
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Unless there is a convent way to transfer it, it will remain worthless.
I assume you mean "convenient", since nuns aren't really relevant to the value of a currency.
If you google, you'll find services that will transfer US$ to/from your credit card in exchange for Bitcoins. Is that convenient enough for you?
You'll also find merchants who will send you PC components, or other goods, in exchange for Bitcoins.
I suspect you'd find people on the Bitcoin forums who pay their rent in Bitcoins.
Whatever they might be in the future, right now they are not "worthless".
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1. Coin ownership is determined by possession of the private key for that bitcoin address. If you don't have that private key, you can't sign a transaction using those coins, and thus can't spend them.
2. Because when you transfer coins, you announce that to everyone you are connected to, and they send it on to everyone they are connected to, etc. If you send out two transactions involving the same coins, everyone will be able to see that (you can determine the value held by each address by tracing through