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The Almighty Buck News

BitCoin, the Most Dangerous Project Ever? 858

Posted by CmdrTaco
from the beware-the-coin-man dept.
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.
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BitCoin, the Most Dangerous Project Ever?

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  • Tabloid trash (Score:5, Insightful)

    by kentrel (526003) on Monday May 16, 2011 @09:33AM (#36139458) Journal
    What a badly written sensationalist story. It's like something from the Daily Mail
    • by torgis (840592) on Monday May 16, 2011 @09:37AM (#36139484) Journal
      Welcome to /. where the motto is "Badly written sensationalist stories, like something from the Daily Mail."
      • by StikyPad (445176)

        Now you're just being sensationalist. TBH, it reminds me of something from the Daily Mail.

      • Here I thought it was, "Badly Written Sensationalist Stories for Nerds, Stuff Like Something from the Daily Mail That Matters.
    • by Coisiche (2000870) on Monday May 16, 2011 @09:45AM (#36139558)

      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: (Score:2, Troll)

      by cpu6502 (1960974)

      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.

      • by _0xd0ad (1974778) on Monday May 16, 2011 @09:46AM (#36139568) Journal

        The guy who was printed Liberty Coins (99% pure silver)

        No wonder ink cartridges cost so much.

      • by ildon (413912)

        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)

        by MightyYar (622222) on Monday May 16, 2011 @10:09AM (#36139796)

        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.

        • Exactly. To try to claim that this [tqn.com] was not purposefully designed to fool people into think it's official currency is laughable.

  • by DontBlameCanada (1325547) on Monday May 16, 2011 @09:38AM (#36139492)

    TFA reads more like an advertisement for BitCoins than an news article.

  • First it says:

    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?

    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 ... 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 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?

    • 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.

    • by delineal (1970468)
      Agreed. As you said, it only has value while people choose to contend for it. It reminds me of Magic: The Gathering... The cards only have value while people choose to care... as soon as people stop caring, they become relegated to the realm of collector's items... valued by a few but not the masses.
      • by TaoPhoenix (980487) <TaoPhoenix@yahoo.com> on Monday May 16, 2011 @10:19AM (#36139900) Journal

        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?

    • by IamTheRealMike (537420) <mike@plan99.net> on Monday May 16, 2011 @10:04AM (#36139738) Homepage

      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.

      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.

      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

      • by goombah99 (560566) on Monday May 16, 2011 @10:56AM (#36140236)

        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?

        • by elewton (1743958)

          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

        • by IamTheRealMike (537420) <mike@plan99.net> on Monday May 16, 2011 @11:28AM (#36140582) Homepage

          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.

          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.

        • by slim (1652)

          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

        • by ais523 (1172701)

          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

    • by Sycraft-fu (314770) on Monday May 16, 2011 @10:30AM (#36139992)

      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.

  • Every client has a complete list of all transactions... how can they be called untraceable?

    • by harks (534599)
      They are tracable to a hash of a signature. I don't think these hashes are easily traceable to a person.
      • by AHuxley (892839)
        A digital http://en.wikipedia.org/wiki/Informal_value_transfer_system [wikipedia.org] for the rest of us?
        A few 10's or 100's of users put in x coins, y coins exit the system for a person or group ect.
      • by MightyYar (622222)

        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

    • Re:Untraceable? (Score:5, Insightful)

      by Creepy (93888) on Monday May 16, 2011 @10:01AM (#36139708) Journal

      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).

  • by digitaldc (879047) * on Monday May 16, 2011 @09:41AM (#36139524)
    "Bitcoin is a P2P currency that could topple governments, destabilize economies and create uncontrollable global bazaars for contraband."

    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.
  • by Random2 (1412773) on Monday May 16, 2011 @09:42AM (#36139526) Journal

    I still have no clue what this 'bitcons' are. Can anyone give an explanation not stepped in sensationalism?

    • by DanTheManMS (1039636) on Monday May 16, 2011 @09:55AM (#36139648)

      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.

  • by Cornwallis (1188489) on Monday May 16, 2011 @09:42AM (#36139532)

    BitCoin should be banned because we want our currency to be as safe and stable as the U.S. dollar.

    • Damn it! You made me spill my beer.

  • Not untraceable. (Score:4, Interesting)

    by Timmmm (636430) on Monday May 16, 2011 @09:43AM (#36139542)

    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)

      by jonbryce (703250) on Monday May 16, 2011 @10:03AM (#36139730) Homepage

      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)

        by IamTheRealMike (537420) <mike@plan99.net> on Monday May 16, 2011 @12:47PM (#36141414) Homepage

        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:

        monetary value as represented by a claim on the issuer which is: (i) stored on an electronic device; and (ii) accepted as a means of payment by persons other than the issuer

        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.

  • by jandrese (485) <kensama@vt.edu> on Monday May 16, 2011 @09:43AM (#36139546) Homepage Journal
    I could only read that article with the late night salesguy's "These collector coins can only go up in value!" voice, but the content of the article was all about how it's clearly a scam and the author is obviously in on it.
  • Huh? (Score:4, Insightful)

    by gstoddart (321705) on Monday May 16, 2011 @09:46AM (#36139566) Homepage

    How does "cannot be tracked" come from something in which:

    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.

    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.

    • 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

    • by wvmarle (1070040)

      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

      • by elewton (1743958)

        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.

  • In the majority of respects, Bitcoins are no different from cash, and that includes the anonymity and untraceability aspects -- anything that lets me get rid of Paypal and Visa shackles is undeniably a good thing! That said, maybe Bitcoins could be banned because with greater uptake (in the very distant future) they could undermine the US dollar as the reserve currency?
  • Say what? (Score:4, Interesting)

    by ath1901 (1570281) on Monday May 16, 2011 @10:04AM (#36139736)

    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)

    by Millennium (2451) on Monday May 16, 2011 @10:54AM (#36140224) Homepage

    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?

  • by mothlos (832302) on Monday May 16, 2011 @11:11AM (#36140396)
    This is not to say that all Libertarians are ignorant, but that Bitcoin appeals to Libertarian ideals and requires ignorance of how money works to be sold. Bitcoin has no in-built velocity. Taxing authorities won't accept them and having a fixed amount of them means that they don't have a debt-based life-cycle as does the money most of us claim ownership to. Also, even if Bitcoin were to take off, as demand for it increased, it would create its own valuation bubble where it becomes more valuable to hold the money than it does to invest it. Nobody would be able to borrow in Bitcoins at a reasonable rate of interest, real demand drops, then speculators are left holding a bunch of worthless digital currency. If you think that Bitcoin is a good idea, you are likely in need of an education in economics and accounting and need to lay off of the conspiracy theories.
    • Re: (Score:3, Insightful)

      by Anonymous Coward

      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

  • by Colin Smith (2679) on Monday May 16, 2011 @11:45AM (#36140770)

    Wait... that's exactly what they did.

     

  • May not work (Score:4, Interesting)

    by Animats (122034) on Monday May 16, 2011 @12:32PM (#36141246) Homepage

    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.

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