The Bitcoin Strikes Back 344
smitty777 writes "Slashdot readers are no doubt informed of the infamous crash of Bitcoin. In fact, its demise was followed closely here. Wired has a recent article tracking Bitcoin's climb out of chaos. Valued at $17 before the crash, it had lost 90% of its value due to the hacking incident, down to a low of $2. It climbed back up to $3 in December, and is currently valued at $4. From the article: 'Bitcoin boosters have traditionally suggested that Bitcoin is an alternative to [the world's] currencies. But we'll suggest an alternative explanation: that Bitcoin is not so much an alternative currency as a "metacurrency" that allows low-cost and regulation-free transfer of wealth between nations. In other words, Bitcoin's major competitors aren't national currencies, but wire-transfer services like Western Union.' Still, Bitcoin has significant obstacles to overcome, such as covert mining, criminal uses, and other security issues."
Amir Taaki of the Bitcoin Consultancy (who did an interview here a while back) disputes the reasoning and the conclusions in the Wired article.
Criminal uses? (Score:5, Informative)
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Regular wallets can not be stolen with a computer program. Stealing money from a bank account is possible for a program, but there are ways to recover it after the fact, unlike with bitcoin.
Re:Criminal uses? (Score:4, Informative)
Regular wallets can not be stolen with a computer program. Stealing money from a bank account is possible for a program, but there are ways to recover it after the fact, unlike with bitcoin.
err, no. the banks are willing to *refund* the "electronic" money that is stolen, by replacing it with another lot of "electronic" money. and neither the police nor the bank of england (or whatever) will print you another bank note with the same serial number, will they?
so all that's required to "emulate" the present situation is for someone to set up an online bitcoin bank, and to offer the same "insurance" against theft as regular banks. of course, that means that they will need to charge for the service, and will need to be happy with the massive fluctuation in the currency. actually what would happen is that that bank would bitch like hell that it was your fault and that you didn't have the right anti-virus updates, and would delay the insurance claim just like any other bank.
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The general reckoning is that the biggest theft from online bitcoin "banks" was the work of the owner, who did a runner shortly thereafter, so that doesn't actuallly help much.
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The money replacing that which was stolen is coming out of someone else's pocket.
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precisely. just like in "real life" with "real" money. you know - the stuff that is printed on-demand with no link to reality? (read senator ron paul's book "end the fed")
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It's the difference between assault rifles with silencers and armor piercing rounds, compared to regular hunting rifles. Both can be used for criminal purposes, but one is particularly well suited to those purposes while only having minor benefits for legal purposes.
I'm not saying bitcoin should be illegal, since the criminal purposes aren't nearly as dangerous as those involving high powered weaponry, but it is an obstacle that would need to be dealt with if the people behind bitcoin want it to actually g
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Both can be used for criminal purposes, but one is particularly well suited to those purposes while only having minor benefits for legal purposes.
I don't know, assault rifles can be very useful - especially when the bunnies fight back - I don't know where they get their armament, but with the whole 'pop up out of a hole, spray the attackers, dive back down the hole and show up at another one' tactic, they can really decimate my team. Bunnies - they're a lot more hard core than that cute+fuzzy image!! It's a good idea to enlist a few former SEALs to lead the penetration tem, just to assure you can get through their lines and into the inner sanctum.
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assault rifles with silencers and armor piercing rounds
Those aren't compatible requirements. Silencer requires a heavy, slow (subsonic) bullet. An armor-piercing round requires all the speed you can get (E=mv^2)
regular hunting rifles. Both can be used for criminal purposes, but one is particularly well suited to those purposes
I don't know which one, though. If one gangster wants to kill another gangster, the best he can do it with is a hunting rifle - he can take the target out from half a mile and e
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Silencers can be used on supersonic ammo. You still get a loud noise, but it's quiet enough that you don't need ear protection, which would be a plus if you're trying to rob a bank or something. And really, that's even true with subsonic ammo. The whisper quiet silenced guns used in movies are a Hollywood invention.
Also, the idea of a gangster sniping a victim from a safe distance is laughable. These guys typically don't know how to hold a pistol, and get all their gun handling techniques from crappy ac
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yes. a friend of mine pointed out that bitcoin would not be considered a "serious currency" until you could buy drugs and pay for sex with it. then he found out that there is a web site that accepts bitcoin payments and will mail you some drugs, anywhere in the world. all that's left now is to find an intelligent and enterprising prostitute willing to understand and accept bitcoin, and we'll know that bitcoin has come of age, hurrah!
Re:Criminal uses? (Score:4, Informative)
But they're not completely untraceable.
http://reason.com/blog/2011/06/01/buy-illegal-drugs-anonymously
Yes, you're probably safer than using a credit card, but it's never going to be as safe as paying in cold hard cash.
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It's still safer than cash, which can't be traded through a proxy on a public wifi AP. The transactions are traceable only to meaningless, untraceable usernames.
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It's only untraceable if I only brought ATI video cards, web hosting, and marijuana for the rest of my life.
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Why would you need to go through an exchange?
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Right, so the "problem" is on the USD end of the transaction.
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I bought an e-cig. That worked out well. Add it to the list.
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I also sell vinyl decals, photography, and graphic design. My wife sells hair accessories, custom handbags, and lingerie. We take Bitcoin both in person and online.
Re:Criminal uses? (Score:4, Interesting)
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You lose money in the short term. That is why these businesses are in the practice of converting enough to meet expenses to a more stable store of value ASAP. They are taking a risk for the perceived benefit of being established already if bitcoins ever become widely popular.
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Back in my home country, a good 20 years ago, when we got payed in our own currency, we switched most of it to gold, USD and DM, almost daily. I live in Europe now, but have much more money so EUR volatility too becomes important and I still need to diversify, though not constantly. Maybe it's because I'm a maths guy, but I don't see the difference in volatility coefficient as a fundamental problem. Your local currency may lose value too, but usually more slowly.
If you are a merchant that wants to accept Bi
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I'm boycotting Bitcoin in the hopes that it will fail and be replaced by another similar currency so that I can get in early and pick up vast wealth during the initial gold rush. Because mining Bitcoins gets harder as time goes on early adopters have a huge advantage and there is little reason for anyone who comes along later to participate in the system unless Bitcoin has some other advantage to them (e.g. untraceability).
Re:Criminal uses? (Score:5, Funny)
"It's only untraceable if I only brought ATI video cards, web hosting, and marijuana for the rest of my life."
i fail to see the problem
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Houses and cars aren't anonymous. But I do agree with what you meant.
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Not to mention both your car and your house have paperwork.
A title, and a deed, respectively.
Re:Criminal uses? (Score:5, Funny)
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Re:Criminal uses? (Score:5, Insightful)
Re:Criminal uses? (Score:5, Informative)
Many child porn sites and contraband trading sites on darknets take payment in bitcoin.
OMG! OMG! Think of the children!
There is no such thing as 'child porn sites' that take any payment. One must be a child molester and deliver 'original content' in order to be accepted in trading rings. This is well documented by the police and explain the difficulty for them to infiltrate the child pornography networks. eg: They will not rape a child to be accepted and gather evidence.
You are full of shit. Thank you for contributing to the set back of, freedom enabling, anonymous money usage by spreading disgusting FUD.
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There is no such thing as 'child porn sites' that take any payment.
Really?
Feds: 100 Arrested in Child Porn Bust [go.com]
Re:Criminal uses? (Score:5, Informative)
That's what the police originally - and sensationally - claimed. Of course, it turns out that not only was the vast majority of Landslide Productions' business in legal pornography, but even then a lot of the payments to them were fraudulent and carried out by scammers who were funneling money from stolen credit card details through fake porn sites that used Landslide Productions as their payment provider. The police then went and withheld the evidence of credit card fraud to make their cases stronger...
Re:Criminal uses? (Score:5, Informative)
Intro note for the folks who will ask "How do you know this stuff?" - I did some "e-commerce investigative lead development" for the Internal Revenue Service before I recently retired. As a result, I know a lot more about the way porn is sold online than I need or want to. Most porn companies just want to pay their taxes, minimized as far as their accountants can manage, and be left alone. On this particular sub-topic I can provide some insight.
Landslide was active from, per your link, 1997 to 1999. That was back when pictures of naked kids that were perfectly legal in some countries were considered porn in other countries. From a U.S. legal perspective, Landslide helped those markets equalize and that is, to be sure, facilitating the sale of child porn. The view from the producing countries was that U.S. puritanism was killing a small industry that was providing cash that fed, clothed, sheltered, and educated people who were badly in need of help. They couldn't understand why we criminalize pictures of what they could see just by going to the beach on a warm summer day.
The amount of actual, nobody-could-possibly-argue-to-the-contrary child porn showing adults raping little kids that was sold with the assistance of Landslide was insignificant to nonexistent. Some of their customers possessed bad materials and you'll note that in your link the phrasing of the police spokesman ("During an Operation Avalanche search, we found a collection of videotapes...") makes it clear that the unambiguously bad stuff they found wasn't sold via Landslide but was merely found in the possession of Landslide customers. The Landslide bust, more than anything else, gave the police probable cause to execute search warrants on the customers. Making up the lists of customers, getting the warrants, and executing them was a separate action from the Landslide bust; it was called Operation Avalanche. There's nothing in the linked article to indicate that the real CP uncovered during Avalanche was actually sold by Landslide but it's pretty clear from the way the article is written that either the author or the LEO sources from which the info was obtained would like the reader to confuse these two and not realize that they were separate operations.
There's dubious LEO-spawned "look how we're making the world a better place" PR-spew designed to demonize a couple of folks who ran a credit card processing service. There's also facts. Please stop confusing the two.
tl;dr - GP was basically right. There are always (literally, in the entire world, counting the WWW, .onion sites, and Freenet) one or two "child porn sites" that take payment but they never survive long. They're a statistical blip. It is essentially correct (and, often, perfectly correct) to say that such sites do not exist, deliberately misleading LEO press releases notwithstanding.
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You actually have this backwards. Every Bitcoin transaction is necessarily public information permanently. It's impossible to make a hidden transaction in Bitcoin. The issue with Bitcoin is that it's pseudonymous, so you can't, without out-of-band information, which physical person lines up with which Bitcoin identities.
You've no idea what you're talking about (Score:5, Informative)
Bitcoin is the most traceable "currency" in the world. It's just that bitcoin accounts don't have names attached, making them less tracable than bank account transfers, credit cards, etc., but certainly you can trace them, and ask the first legit possessor how they obtained them.
There should probably be an anti-fraud protocol that attempts to trace the paths of fraudulently transferred bitcoins. You could establish "super" civil rights protections around it that complied with the tightest civil liberties rules in various countries, much like wikileaks did for journalism, but ultimately provided a sensible framework for ex-post-facto dispute resolution.
Mod parent UP please! (Score:5, Informative)
Bitcoin transactions are very traceable and there is no indirection or anonymization built into the software. The GP doesn't know what he is talking about.
Re:Criminal uses? (Score:5, Interesting)
True but bitcoins are completely untraceable
Ok, so here's how Bitcoin works:
Bitcoins aren't really a thing you can have. Even the physical "bitcoins" [casascius.com] you can buy aren't really coins. They're just private keys that are allowed to sign transactions on behalf of accounts that have a non-zero balance.
The only reason why people talk about Bitcoin as being untraceable is that anyone can create accounts, and there aren't necessarily names attached to accounts, but it would be too hard for authorities with warrants to catch you if they suspected you. The entire transaction history is still there, forever, for everyone to see! [blockexplorer.com]
Re:Criminal uses? (Score:5, Informative)
False. Why don't you read their reasoning itself rather than make up ideas?
(this from someone - me - thinks the whole bitcoin system is a worthless construct)
https://www.eff.org/deeplinks/2011/06/eff-and-bitcoin [eff.org]
Propaganda (Score:5, Insightful)
The speculators push the price up, pay for press releases and stories, put up blogs talking about how awesome Bitcoin is... then they get out as soon as it starts selling for enough. They've done it once, judging from this article they're doing it again, are people going to fall for it again?
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Yeah it's gonna pop soon. Those who trade them should start shorting them. The crashes are always hard.
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'Bitcoin boosters have traditionally suggested that Bitcoin is an alternative to [the world's] currencies. But we'll suggest an alternative explanation: that Bitcoin is not so much an alternative currency as a "metacurrency" that allows low-cost and regulation-free transfer of wealth between nations. In other words, Bitcoin's major competitors aren't national currencies, but wire-transfer services like Western Union.'
Sounds more like they're saying get in and out as quickly as possible, do not keep wealth or speculate on bitcoins, just push money in and let someone somewhere else convert the coins back into real money ASAP.
That's pretty much the opposite of what speculators want (The proposed use is highly liquid so harder to bubble).
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They've already had one bubble (a quite marvellous one, straight out of the text books). I think at this point there are many disillusioned "investors" that want out. Some people even claim they invested all their savings [falkvinge.net] in bitcoin. That's gotta smart right now.
As long as they can lure new people with money into the system, they can dump slowly dump their coins without crashing the market again.
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yes of course they will "fall for it", because people are running automatic programs which offer exchange of money for bitcoins and vice-versa.
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Crash course in laize faire capitalism.
I'm a bitcoin speculator, I believe in the value of the currency and the extrication of the information world from the policed world.
The truth about bitcoin is that significantly more money has been invested in bitcoin than the current total value of the currency. This is not because it's a ponzi scheme, it's because it has opponents. People who are willing to lose money to keep out other investors and drive the price down. Who? Well obviously I can't tell for sure but
Re:Propaganda (Score:4, Informative)
Miners dont make the network;
Actually, it is the miners that literally make the network.
Building a case... (Score:4, Interesting)
Pay attention to what is going on here, because you will start to see it in other areas as well.
The establishment (through the media) is attempting to build a consensus that Bitcoin is not a legitimate currency, but a "money transfer service". "Money transfer" is a service that carries with it the implication of guarantee against loss of value during that transfer. It is a regulated industry.
By branding Bitcoin a "money transfer service" in the eyes of the public, powerful banking interests will then be able to begin loading Bitcoin down with regulations. Large Bitcoin institutions may even go along willingly. Regulations create monopolies, and monopolies bring higher rents.
This is the classical method in which the free market is subverted by government regulation, and creeping nanny-statism benefits large, risky centralized corporate interests at the expense of main street. It is the prisoner's dilemma in action. So pay attention as it plays out.
Re:Building a case... (Score:5, Interesting)
Wow you've confused yourself by going into too many layers of libertarian paranoia. How the hell could Bitcoin be regulated or policed? Places operating on the web would just move to darknets and that would be the end of that.
Re:Building a case... (Score:4, Insightful)
One could make the same argument for the Internet. But now we have SOPA, which has a real chance of passing. It is true that SOPA will not actually stop piracy, and likely not even make a significant dent in it. But for the average person, the Internet will become a significantly more regulated and diverse place. Censorship masquerading as copyright enforcement.
There used to be (and mostly still is) a regime had censorship masquerading as media consolidation with the resultant centralized control over distribution. Sure, you can say anything you want, but your ability to reach an audience is gated by people who have a vested interest in making sure certain ideas aren't heard.
Regulation doesn't have to be absolute in order to succeed as a tool of social and economic control. It just has to be successful enough to make not following it seem like something only unsavory people do.
I don't necessarily agree with the grandparent. But I don't think his or her paranoia is unwarranted.
Re:Building a case... (Score:4, Insightful)
If the US governement wanted to they could put a lot of pain on bitcoin. For example they could go after the financial transactions with offshore bitcoin exchanges (just as they now go after financial transactions offshore online poker sites). They could announce that anyone caught running an unlicensed bitcoin exchange was open to prosecution and that authorised exchanges were only to accept coins whose history could be traced back to either an authorised miner or to before the introduction of the rules. They could further introduce laws stating that authorised miners and exchanges were required to keep transaction records including bitcoin addresses, that using or operating a "mixing service" was a felony and so on..
Personally I think the reason they haven't done any of this yet is that bitcoin is too small for them to care. Afaict there are currently just under 8 million bitcoins in existence (and some unknown proportion of those bitcoins have been rendered irretrievable as the associated keys are lost) at $30 per bitcoin that gives a theoretical "market cap" of arround $240 million. The actual amount of money involved is probablly a hell of a lot smaller than the aforementioned theoretical market cap.
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Well yes, if you were both dumb enough to declare it on your tax returns as income; or were incredibly unlucky, were investigated by HMRC and they didn't completely screw it up.
Re:Building a case... (Score:4, Interesting)
The only "nanny-statism" we have is the government treating the corporations like badly spoiled children, giving them the biggest portions and the best bits. Catering to their needs and desires. Letting them make the rules (yes, including the regulations).
For the rest of us, there's actually less "nanny-statism" than there was twenty-five years ago.
On a related note, did you know there are fewer government workers today than there were during the Reagan Administration in the 1980s, despite the fact that there are about 100 million more Americans today?
Re:Building a case... (Score:5, Funny)
And that's just step one! Next they'll use their bitcoin monopoly to buy fluoride to put in the water supply, corrupting our precious bodily fluids!
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I don't care what the establishment is saying. From the day I found out about Bitcoin, crunched some numbers and made sense of it all, it seemed to me like a self-defeating system. The fact that are limited "coins" but exponentially increasing miners, combined with the fact that the current value of a coin is less than the cost of electricity to mine it, and has been for a long time now, have already doomed this concept beyond recovery.
The only good to come of this, is if I ever meet someone who blew a wa
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Miners are moving from GPUs to FPGAs right now, just as they went from CPUs to GPUs early last year. Thus, for lead adopters the electricity cost of mining a bitcoin is a lot less than its current value on the market.
The next step, if Bitcoin survives, is most likely sASIC and then ASIC.
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There is no set "cost of electricity". If less people mine, it will become easier (cost less) to generate the coins.
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The whole "money for nothing" bullet point means there is no shortage of suckers jumping on the bandwagon. Just like people were launching countless random crap blogs a decade ago, in the hopes of raking in beaucoup AdSense bucks (and failing), those same suckers are deploying half-baked mining clusters.
The very fact that a Bitcoin's trade-in value is inversely linked to popularity means this system has absolutely no hope of getting anywhere. It does not represent actual value, because the only way you ca
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By branding Bitcoin a "money transfer service" in the eyes of the public, powerful banking interests will then be able to begin loading Bitcoin down with regulations.
um... how?
Oh, give it up already, it was a niche quirk (Score:3, Insightful)
What was the peak (notional) value? A few tens of millions of dollars? That's just noise. A few nerds, pimps and pushers got all excited, played with it for a while, then got bored. The number of bitcoin nodes has been dropping steadily even before the Bit Sploit, and that's coming from the true believers on the bitcoin forums.
Sure, it's fun to discuss the theory, but can we please stop pretending that it was or could ever be a real currency used by actual folks.
That's how money works (Score:5, Insightful)
It has value because we pretend it does.
So stop pretending about the US $, then.
Re:That's how money works - a shared hallucination (Score:5, Interesting)
"It has value because we pretend it does."
absolutely true!
fiat currencies are just as much a shared hallucination as bitcoin.
at least bitcoins may provide more privacy...
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And at least USD is actually useable to buy a car and house.
Guess which one I prefer: The anonymous, p2p, super cool hi tech bitcoin, or the currency that I can use to purchase goods and can be paid by an employer with?
Re:That's how money works - a shared hallucination (Score:4, Interesting)
I should have clarified that I think Bitcoin intrinsically lacks qualifications for a currency capable of buying a car.
For instance, a break through in prime factorization (or however bitcoins are created) that is kept secret could mean that someone generates a ton of money out of thin air, which are impossible to identify apart from normal bitcoins (as they would be legitimate bitcoins). Think the counterfeiting problem, except a breakthrough here means an exponentially bigger problem.
Further, the problem of the wildly fluctuating prices: why would I want to store money in a currency whose value can wildly fluctuate from $17 ea, to $2, to 4, all in the span of a year? Why would a bank want to give out loans in a currency when they could end up receiving far less than they loaned out? Why would I want to loan from them when my debt could skyrocket in price?
Further, I can think of very few usecases for the anonymous features of Bitcoin. Every scenario I can think of involves activity that is internationally illegal (ie, money laundering). How would you like seeing Big Corp, Inc have $1B in bitcoins from venture funding, then "losing" $500 mil to "unforseen contingencies", and knowing there is no possibility of tracing what happened? Hmmm, doesnt sound so good now does it?
And my understanding is that we moved away from a gold standard precisely so that we could regulate the economy to some degree by controlling the flow of money. We gave up the stability of having some real-world backing (gold) so that we could have more flexibility. Bitcoin has the worst of both worlds: its "backing" is a mathematical function, the supply is uncontrollable, and its value is unstable. Wooo, where can I sign up?
Re:That's how money works - a shared hallucination (Score:5, Informative)
For instance, a break through in prime factorization (or however bitcoins are created) that is kept secret could mean that someone generates a ton of money out of thin air, which are impossible to identify apart from normal bitcoins (as they would be legitimate bitcoins).
They're created through brute forcing SHA256 hashes to meet a specific criteria. As the global hashrate rises, a difficulty factor is automatically adjusted to keep generation constant at 300 per hour.
If you invent an inexpensive piece of hardware that can push several orders of magnitude more SHA256 hashes per joule, you will successfully capture a disproportionate percentage of those 300 coins per hour. You do not get to generate unlimited coins - you just asymptotically approach 300/hour.
In fact, this has already happened: hashing used to be done on CPUs at about 10-20 MHash/s per core; then the RadeonHD happened. Suddenly some people had access to hundreds / thousands of "cores" (they're vector processors, practically miniature Crays for $200 a pop for this problem), pushing 500-1000 MH/s per GPU. Hashrate surged by orders of magnitude as people bought 58xx and 59xx cards as fast as they could make them, and difficulty rose in lockstep. End result: CPUs are now irrelevant and Radeons are marginally profitable if you have cheap power. It wasn't a problem.
It's also easy to switch to a new proof-of-work if someone completely breaks SHA256.
There are some significant weaknesses in Bitcoin, but this isn't one of them.
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If you invent an inexpensive piece of hardware that can push several orders of magnitude more SHA256 hashes per joule, you will successfully capture a disproportionate percentage of those 300 coins per hour. You do not get to generate unlimited coins - you just asymptotically approach 300/hour.
On the other hand, if you can push significantly more SHA256 hashes than the rest of the Bitcoin network you can rewrite history in a way that lets you spend the same Bitcoins multiple times. (There's also a subtle security flaw in some versions of the Bitcoin software that allow you to spend other people's Bitcoins if you can do this. This should be impossible due to the ECDSA signatures in transactions, but for speed reasons the software doesn't actually bother to check them under certain circumstances.)
Re:That's how money works (Score:4, Insightful)
The value of the US $ is in the fact that it's accepted at millions of places, not just in the US but around the world. Yes, it might only have a set value because we allow it to, but the real difference between it and BitCoin is the number of people willing to allow that set value. Personally i wouldnt accept any payment in BitCoin today, because i have no reasonable use for it as-is, and the exchange rate to another currency is nowhere near stable enough to be sure my balance doesnt become worthless overnight.
BitCoin doesn't have the momentum to be a viable fiat currency yet - look at the problems the Euro is currently suffering, and that's bing pushed by governments and huge financial institutions, did anyone really think BitCoin had a better chance?
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Most people businesses will only accept one currency. That doesn't really impact the others.
The Euro is having trouble because of concerns about it's issuers. Bitcoin doesn't have any.
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The Euro is in trouble in Europe because it doesn't have a single government controlling it, but rather 17 different Eurozone country members with different economic circumstances. What is suitable for Germany in the one extreme isn't suitable for Greece at the other extreme. I'm not sure exactly when the Euro will collapse (revert back to Marks, Drachma, Pseta and so on), but it will.
Yes there is a similar difference in the economies of the 55 or so states, territories and districts in the US that use the
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Those words you typed only have meaning because we all "pretend" they do.
The fact is that bitcoin has some serious flaws that prevent it from gaining acceptance as an actual currency. Those flaws have nothing to do with the fact that, like all monetary systems, it's based off a shared agreement of value. The flaws have much more to do with an uncontrollable supply, a reliance on machines that not everyone has, the risk of losing your wealth in a computer crash, and so on.
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That's a foolish notion. All national currencies eventually are bound to the capital value of a country, it's land and resources. The currency drops in value when more is printed than the country is worth plus of course the manipulation of scum sucking pig currency speculators.
So you real value enemies are the nature of you reserve bank that defines how much of your currency is out there relative to the capital value of the country and of course shit eating currency speculators (the banks et al).
Stable
US $ has value because IRS requires payment in $ (Score:3)
The US $ is backed by guns. Domestically, by the IRS, which accepts payment only in $, even for bartered goods and labor. Internationally, by the U.S. military if an oil-producing country tries to go off the petro-dollar.
Granted, the US $ has no intrinsic value the way gold does, but there is more pretend going on with BitCoin than with the US $. Even with the pretend, I'm a fan of BitCoin due to its scarcity, anonymity, and
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I'm a fan of BitCoin due to its scarcity, anonymity, and digital transfer
- never mind the rest of your comment, but anonymity is not part of BitCoin operation.
Every client/server knows every single transaction that was ever transacted in BitCoins, that the exact opposite of anonymity. Any paper dollar, any piece of gold, any paper euro has more anonymity than BitCoin, BitCoin has none.
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Gold doesnt have any intrinsic value in the sense that you are using the word. It has intrinsic value in its usefulness (alloying, electronics, etc), but those are wholly out of line with its monetary value.
If we wanted to get all semantic and argue it, I could point out that a US dollar also has intrinsic worth, since I can write notes on it, and in the event of a global extinction event, the ability to transmit messages on paper would be of far more value than the ability to make gold-plated electrical c
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The gold deposit is actually pretty substantial; it's got a value equal to around 15-20% of the value of outstanding paper currency and coins.
Re:That's how money works (Score:4, Interesting)
The Remnibi, however, is exactly how you described, except that the military backing it up is a hell of a lot larger than the US's, and they've got the US' economy by the balls.
The Chinese military is not larger than the US military in 1:1 terms overall. Ground forces? Well yeah. Duh. How do they get their military anywhere? They never have. Their only aircraft carrier is an ancient retrofitted throwaway from Russia that is being used for training and experience.
The US military on the other hand, has been in Korea, Japan, all over the Pacific, Panama, France, Germany, Vietnam, Italy, etc. just in the last 100 years. Probably more places, but you get my point.
It's a rather pointless comparison. The US has much smaller ground forces but an incredibly larger ability to move those forces anywhere in the world. China cannot, and has not, moved its military anywhere farther than its own continent. The US could never even begin to hope to obtain a beachhead on Chinese soil, much less sustain actual ground conflict.
It's a stalemate. China could never move and protect ground forces to US soil without air and sea support at least as large as the US. The US does not have enough resources in both ground forces and sea/air support to do the same.
Nobody has anybody by the balls. It's just a bunch of bullshit the 1% likes to have us argue about because it distracts us from the larger problem. I'll let you figure out what that actually is.
Hint: Somebody has somebody else by the balls, but neither side is a country.
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I can assure you that as a *currency* Bitcoin is wonderful. I run Dragon's Tale [www.dragons] which is a cross between an MMORPG and a casino, and the game functions entirely in Bitcoins. Players routinely deposit anywhere from a few cents worth of Bitcoins to $100+ worth. Their account is credited immediately, they (and I) pay almost no transaction fees, there are no chargebacks to w
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In other words, you agree with the article that Bitcoin is useful as a money transfer service but not as a reserve currency. If it's easy to exchange but its value fluctuates a lot, the only reasonable use is to buy bitcoins with dollars and send them to somebody who immediately converts them back. In other words, to transfer funds.
But even that could be revolutionary. I'm on
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Their account is credited immediately
I hope you mean "within an hour or so". Otherwise someone's probably robbing your site with fake transactions already...
Who cares about "criminal" uses? (Score:2)
Bitcoin isn't a national currency. National laws don't apply.
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Agreed. Today's posting appears to be (yet another) attempt to manipulate Bit Coin prices. Whenever there's a bit of good publicity for Bit Coin (with the associated rise in price), you need only wait a day or two, and another posting will be made talking about some sordid array of illicit uses, and the price drops again.
Were it not for the constant misinformation that magically reappears with every one of these postings, I'd have no way to track them.
C'mon, Slashdot admins (Score:5, Insightful)
Please, PLEASE add "BitCoin" to the "Exclude stories by topic" /. site option.
Stability (Score:5, Insightful)
Yes, because relative value of a Bitcoin vs USD is really what's holding the currency back, and not, in fact, the massive price instability.
Realistically, people don't want to use a currency that gains 1000% in value, then drops again, then up 200% in only a few months. Until you can pay your taxes in Bitcoin, you're going to have to convert money out of Bitcoin ASAP after getting it, to ensure you can actually meet future obligations, and that makes it a right pain to deal with.
Why the quoted price of Bitcoin doesn’t matt (Score:5, Insightful)
Bitcoin is a very new technology, even though the concept that it brings to life is decades old. The double spending problem has been solved; this means that it is possible to use a digital certificate to stand in the place of money and be sure that no one else can spend that certificate other than you as long as you hold it. This is an unprecedented paradigm shift, the implications of which are not yet fully understood, and for which the tools do not yet exit to fully take advantage of this new idea.
This new technology requires some new thinking when it comes to developing businesses that are built upon it. In the same way that the pioneer providers of email did not correctly understand the service they were selling for many years, new and correct thinking about Bitcoin is needed, and will emerge, so that it reaches its full potential and becomes ubiquitous.
Hotmail used familiar technologies (the browser, email) to create a better way of accessing and delivering email; the idea of using an email client like Outlook Express has been superseded by web interfaces and email ‘in the cloud’ that provides many advantages over a dedicated client with your mail in your own local storage.
Bitcoin, which will transform the way you transfer money, needs to be understood on its own terms, and not as an online form of money. Thinking about Bitcoin as money is as absurd as thinking about email as another form of sending letters by post; one not only replaces the other but it profoundly changes the way people send and consume messages. It is not a simple substitution or one dimensional improvement of an existing idea or service.
As I have explained previously, Bitcoin is not money. Bitcoin is a protocol. If you treat it in this way, with the correct assumptions, you can start the process of putting Bitcoin in a proper context, allowing you to make rational suggestions about the sort of services that might be profitable based on it.
If Bitcoin is a protocol and not money, then setting up currency exchanges that mimic real world money, stock and commodity exchanges to trade in it doesn’t make any sense. You would not set up an email exchange to buy and sell email, and the same thing applies to Bitcoin.
Staying with this train of thought, when you type in an email on your Gmail account, you are inputting your ‘letter’. You press send, it goes through your ISP, over the internets, into the ISP of your recipient and then it is outputted on your recipient’s machine. The same is true of Bitcoin; you input money on one end through a service and then send the Bitcoin to your recipient, without an intermediary to handle the transfer. Once Bitcoin does its job of moving your value across the globe to its recipient it needs to be ‘read out’, i.e. turned back into money, in the same way that your letter is displayed to its recipient in an email.
In the email scenario, once the transfer happens and the email you have received conveys its information to you, it has no use other than to be a record of the information that was sent (accounting), and you archive that information. Bitcoin does this accounting in the block chain for you, and a good service built on it will store extended transaction details for you locally, but what you need to have as the recipient of Bitcoin is money or goods not Bitcoin itself.
Bitcoin’s true nature is as an instant way to transmit money anywhere in the world. It is not an investment, or money itself, and holding on to it in the hopes that it will become valuable is like holding on to an email or a PDF in the hopes it will be come valuable in the future; it doesn’t make any sense.
Despite the fact that you cannot double spend them and each one is unique, Bitcoins have no inherent value, unlike a book or any physical object. They cannot appreciate in value. Mistaken thinking about Bitcoin has spread because it behaves like money, due to the fact it cannot be double spent. This fact however has masked Bi
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You sound smart. Do you think the price is gunna go up or down?
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Just kidding. That was an interesting read.
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In some cases, you have to wait up to seven days to receive a transfer of your fiat currency after it has been cashed out of your account from Bitcoins. Whilst this is not a fault of the exchanges, it represents a very real impediment to Bitcoin acting in its nature and providing its complete value.
Yes, this is a serious problem limiting the use of bitcoins. I don't see how the situation can be improved without improving the ability to quickly and reliably transfer fiat currencies between accounts.
Regarding the main point, using bitcoins to facilitate currency transfers. It seems to be a pointless middleman, if an exchange can do USD -> BTC -> GBP, then surely it can just do USD -> GBP and skip the bitcoin part completely.
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I found your post interesting, even though it appears to plagiarise this blog post [wordpress.com], but I'll give you the benefit of the doubt and assume it's your work.
Anyway, your point is sort-of valid. I too find Bitcoin far more interesting as a protocol than as a real currency, because as a currency it is flawed, but it is a substantial step forward in the application of cryptography to seemingly unrelated problems.
You posit Bitcoin as not-a-currency, but a protocol for the exchange of currency. This doesn't making s
Money transfer is actually feasible (Score:2)
While bitcoin has failed as a currency, it is true that it could be used for money transfer. If the receiving party cashes out regularly, there is not much risk involved, and the transfer itself is fast and cheap. The problem is with the cashing out part: just like Paypal or Mastercard refused to relay money to Wikileaks, bitcoin exchanges can also deny doing business with certain people. The advantages of P2P are lost when you want to get some money for your coins.
"fair and balanced"? (Score:4, Insightful)
If you want to offer a contradictory viewpoint from a less-biased observer, that's fine. But if you go straight to the maximally biased source, it's suggestive that there isn't an unbiased source with that perspective in the first place. Maybe there is, but if so, use them. If not, don't bother with "balance".
Obstacles? (Score:4, Insightful)
So long as governments define myriad victimless activities and mere attempts to keep their prying nose out of your private financial transaction as "crimes," I would say Bitcoin's "criminal uses" are a feature, not an obstacle.
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Straw man.
I didn't say all financial transactions are okay. I specifically referred to "victimless activities." So long as the government tries to prevent people from engaging in victimless activities, it is, in my opinion, entirely ethical for people to find ways around their laws. And if people use those methods of evasion to engage in actually unethical activities, then they're simply compounding their bad behavior.
The fact that this currency can be used for truly unethical activities -- just like hard c
Bitcoin is too dinky to be a currency (Score:3)
Bitcoin can't compete with Western Union Money Transfer, let alone forex trading, because the total volume in bitcoins is tiny. Yesterday's Bitcoin volume was about $50,000. (Some days are higher, but that's mostly the same money trading back and forth. There are trading programs running.) If one business the size of a typical supermarket converted a day's receipts in Bitcoins to dollars, the Bitcoin market would crash.
Bitcoin is behaving like a penny stock. It crashed from $31 to $2, and now it's noodling around in the $2 to $4 range.
Anyone remember Beenz? Flooz? DigiCash? CyberCoin? This isn't the first try at a "digital currency". I suspect that someone will probably make this work, but that somebody will be Facebook. Apple, or a telco.
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Bitcoin can't compete with Western Union Money Transfer, let alone forex trading, because the total volume in bitcoins is tiny.
This post wont be read by anyone because its score is too low.
Speculation (Score:3)
Crash course in laize faire capitalism.
I'm a bitcoin speculator, I believe in the value of the currency and the extrication of the information world from the policed world.
The truth about bitcoin is that significantly more money has been invested in bitcoin than the current total value of the currency. This is not because it's a ponzi scheme, it's because it has opponents. People who are willing to lose money to keep out other investors and drive the price down. Who? Well obviously I can't tell for sure but it makes sense that the U.S. government, major hedge funds, and billionaire diversification wealth management services are involved. Why? Well first to maintain the value of existent wealth, if you have billions that's a level of money that you simply can't spend... you and your great great great great grandchildren will be wealthy... unless something changes. These people diversify into gold and resources when any chance of real social change comes on into the picture, these funds are geared to this... not profit.
But why not just buy it all up? Why drop the price and keep people thinking it's worth $4? Well the really terrifying thing for these groups is that people would have a realistic notion of how much money there is in the system. People, particularly middle class people, are aghast when they begin to understand how much conventional currency actually exists. There are hundreds of people who could pay you through your great great great great great great grandchildren (all of them) a good wage to bash your face against a wall. With a finite currency, you'd KNOW that you have less than 1/10,000,000,000 of total USD (assuming a solid retirement savings and decent home, for example). That spells rebellion against existent currencies.
How? Buy high, sell low. Not difficult, and surprisingly, not very expensive (especially when you can sell to yourself). And in addition make strategic sells when speculators buy large lots so that many of the high volume trades appear to be people unloading when in fact most of the transaction was people buying (50,000 price goes up 50c strategic sell right at the end of 2,000 and the overall price trade blip goes red) People are willing to accept the price on offer in most cases, there are always amounts trickling in from people who accepted donations, sold goods (for the current price), or are forced to give up their speculation for financial reasons. Speculators like myself are more than happy to buy in at the current value, and people who don't care (or know better) simply accept the exchange rated value as the actual.
I saw an example of this while watching the market on the 21st, when it went up to $4.50 and then dropped to $4 in less than 1 second, with a huge heap of available coins suddenly appearing, available in the evacuated space. It looked like the price had never moved.
Personally I think the brains have been stolen from again and again by the cult of personality and back door individualistic crony capitalism. We NEED our own capital pool, not just because of the many options bitcoins make available but because we'll never be free to create, invent and work together seamlessly if we can get backstabber by anyone with a hand in government, fiscal policy etc. Regulations have never helped us, the people buying change and directing the regulators have never been brains, they've always been the wealthy and the politicians. The ability to sabotage our and each other's projects is at the core of why billionaires struggle to get more billions, so they can fight one another. It takes time, effort, and brains to build something... it takes nothing to pull a fire alarm. The problem is people who think it takes a lack of ethics, they think that's a real thing, god help them.
Me and other speculators who really believe in bitcoin are holding on to our coins, and I imagine the pool of coins available to the people trying to lower their value is going down. In the coming weeks we'll see more and more articles of this nature. With even o
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On the contrary, several AV vendors already flag vanilla bitcoind as suspicious.
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I call it a bull trap or a dead cat bounce.