Major Bitcoin Exchange Ceases Operation 208
First time accepted submitter Sabbetus writes "On Monday the CEO of prominent Bitcoin exchange Tradehill announced that they are shutting down. Ars Technica ran a story on this stating that 'After Monday's news, the currency's value fell from $5.50 to $4.40, a decline of 20 percent.' Tradehill is returning all funds and meanwhile their competitors are fighting over who gets Tradehill's customers."
Bizarre and Confusing Summary (Score:5, Informative)
Not sure where that came from, didn't find it in the Ars article. At the end they mention Mt. Gox being the only other exchange ... so there's one competitor. They didn't mention anything about fighting over customers.
Furthermore the third sentence in the Ars article was suspiciously absent from the summary:
He has pledged to open a new site once these issues have been resolved.
As well as the explanation of why all this happened (lack of proper money transmission licensing). I've asked this many times before but how do you track illegal purchases on BitCoin [slashdot.org] when, by definition, it claims to be an anonymous payment solution?
Quite simply put, no BitCoin exchange -- neither Tradehill nor Mt. Gox -- is going to be able to comply with the Bank Secrecy Act [wikipedia.org].
Re:Bizarre and Confusing Summary (Score:4, Funny)
Re:Bizarre and Confusing Summary (Score:4, Insightful)
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No. In todays industry, those "to big to fail", don't. Their losses are replaced by printing more money so they can pay their bonuses, and have another shot at craps.
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Like this one?
http://www.amazon.com/Big-Short-Inside-Doomsday-Machine/dp/0393072231 [amazon.com]
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There are any number of valuable things that your landlord would be unlikely to accept as payment. Carbon nanotubes, for instance. So, Bitcoin is not (yet? ever?) a viable currency, but that doesn't mean it doesn't have value.
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Are you saying there's a short supply of idiots? Because my experience says otherwise.
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By your definition, idiots can successfully use bitcoin as a currency, but only because they don't realize how "silly" it is.
When you think about it, that's a *really* odd thing to state.
If you mean that bitcoins have no intrinsic value, then you'd be right. But that's true of currencies in general these days. No one uses gold coins as currency any more.
If you actually have a specific criticism if bitcoin other than "silly", I'd be interested to hear it.
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I'm surprised they didn't get a federal bailout.
Re:Bizarre and Confusing Summary (Score:4, Insightful)
The Act only applies to the US though. Many places you can host an exchange. Never heard of tradehill though, so can't tell where they were based.
One of the nice things about bitcoin is that there are no real borders for it. You can trade on any exchange in the world, and use the currencty anywhere without restrictions (so a bit like cash, but without limits on how much you can take out the country, or currency conversion fees, etc...).
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Also we're not talking about a Bitcoins to seashells exchange here; we're talking about a Bitcoins to USD exchange. Any such exchange must perform transactions with other banks that operate with USD. Guess where a majority of those USD-handling banks are located?
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Really? The government controls *.co.uk? No, I didn't think they did.
All they 'control' are the silly generic domains that are too overpopulated to be useful anymore anyway. The rest of the world could rather quickly tell the US to go fuck themselves are far as DNS is concerned.
Other countries run root servers too.
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While many of the root servers are operated outside the US, it is ARIN that assigns them the space in the root server namespace, and delegates the root server cache. And ARIN is as American as apfelstrudel.
Nothing except it (a) being incredibly stupid to do so, and (b) the politicians being unaware prevents the US from retracting root servers they don't like from the rest of the world.
There were a couple of attempts at creating a parallel DNS world not touchable (remember alternic, anyone?), but they neve
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TOR is an http packet router The Onion Router) [wikipedia.org] and therefore is unrelated to DNS. You could argue that DNS is irrelevant bu then you would be forced to remember 50.17.218.130 instead of example.co.bs and imagine how fun that would be.
Also an only IP solution would still be scrutinized by the IANA (and regional entities) since IP isn't decentralized.
One more thing: if DNS would go down hosting costs for your blog would go up (as in sky high) because you would need a dedicated IP for it instead of a shared on
Re:Bizarre and Confusing Summary (Score:5, Insightful)
Technically true but in practice any institution that touches dollars ends up being bound to obey US law if it wants access to the international financial system.
Re:Bizarre and Confusing Summary (Score:5, Insightful)
I disagree. As long as an exchange keeps identity records for all of its business and for all of the address endpoints it creates, it'd probably be able to comply with US Treasury Department regulations. Bitcoin isn't anonymous. Things only start to get murky once you are moving bitcoins around off an exchange, but that's not the exchange's problem.
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I mine one block of 50 BitCoins. I use that that block to get 50 $5 Sears gift certificates (redeemable in-store) through BTCBuy. I redeem them (CA, ME, MA, and MO all require stores to cash out gift certificates with $5 or less on them) in-store for cash.
More realistically (and less likely to arouse suspicion from a salesdrone), I would just take a $250 gift cert and actually buy something I needed at Sears; but the protest-of-last-resort from the naysayers always runs along
Re:Bizarre and Confusing Summary (Score:5, Informative)
Quite simply put, no BitCoin exchange -- neither Tradehill nor Mt. Gox -- is going to be able to comply with the Bank Secrecy Act [wikipedia.org].
Totally not true. They have to record cash transactions for negotiable instruments. They have to report cash transactions over $10,000. Most of them did not deal in cash at all, but in credit or debit cards and paypal, all of which is easily recorded. The act makes no mention of tracking the negotiable instruments (bitcoin) after they are sold.
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Re:Bizarre and Confusing Summary (Score:5, Interesting)
Mt. Gox being the only other exchange
MtGox is the only exchange bigger than TradeHill, but there are lots of smaller exchanges: https://en.bitcoin.it/wiki/Category:Exchanges [bitcoin.it]
Quite simply put, no BitCoin exchange -- neither Tradehill nor Mt. Gox -- is going to be able to comply with the Bank Secrecy Act.
First, Bitcoin is pseudonymous, not anonymous. Second, the important part: while it's very difficult to positively identify who sent you some Bitcoins, the exchanges know exactly who receives them, trades them back and forth to fiat currencies, and then sends them back out. They have names and bank account numbers, or they're using fiat payment services that have bank account numbers. Know Your Customer is not a problem for most exchanges.
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Bitcoin is perfectly anonymous.
Bitcoin exchanges like Tradehill and MtGox are not anyonymous.
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Bitcoin is as anonymous as an advertiser clickstream. It's quite possible to correlate individuals from their transactions [blogspot.com], and the transactions are out in the open for all to see.
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I can send Bitcoins to people from a random address and all they will only know how much, when, and from what address.
You'd have to trace transactions backward to the originating address to find out where the money truly came from, and the ultimate originating source is always the miners.
For you to track anyone on Bitcoin you'd have to know their address. But anyone can generate a new address whenever they want.
I myself had dozens back when I was mining Bitcoins.
You can trace all transactions to addresses
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You can trace mined coins to specific IP addresses if you are careful with how you listen to the packets and try to find out which computer gave you the packet first. If you had several computers tracking this information, it would be possible to identify down to a small number of users who actually mined some Bitcoins, and from that if any Bitcoins were co-mingled with those mined coins to be able to further identify what other addresses might be used by that person who also is mining coins.
Still, attempting to do that is a real technical challenge and you would need the resources of something like the U.S. federal government to pull that off, plus a whole bunch of data mining and active participation in the Bitcoin network... and it still gives wiggle room for plausible deniability on the surface. If there was a particular set of transactions that such data mining was looking for, you can still be tracked.
On the other hand, if you were very paranoid about such things you could set up manual connections for routing Bitcoin data to only trusted nodes (by your own definition... not some random list in other words), and hopefully even they are being just as paranoid about random connections "to the outside world".
IF you control all nodes, AND you KNOW you control all the nodes, then you can track the transaction to the IP ADDRESS of the MINER or TRANSACTION INITIATOR.
You cannot track the transaction to an individual person. An IP address is not a person. A Bitcoin address is not a person.
Furthermore, it's laughable to think that anyone can control all of the nodes to make this possible.
And if that scenario ever did occur, you could just avoid routing directly to those nodes (as you mentioned).
If the government wan
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Except to use cash, you have to go out in public. You know, where there are often cameras. And most stores don't take kindly to people walking in wearing ski masks and gloves to conceal their faces and fingerprints.
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Hmm. I thought Trade Hill was going down, and the company behind it was putting up a new, compliant website by the end of the month...
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AHA! Proof that you actually read the article AND Jered's original post to the bitcointalk forum announcing the change. Tradehill is closing so that a new platform can be built from the developer team.
You actually read the article and its source material. You are an embarrassment to the Slashdot community. :-)
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Bitcoin never claimed to be an anonymous payment solution. In fact every single payment (along with sender and recipient address) ever made is visible in the very public block chain.
People who don't understand bitcoin claimed it was an anonymous payment solution.
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As I understand it all you needed was a swapping service, you put a coin in and get a different coin back. It's a little more complicated to avoid correlation and timing attacks and such, but that's the basic idea.
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So that everyone clea
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After Silk Road started picking up steam the currency jumped to its bubble peak of $30+ USD. I'm sure I wasn't the only one who noticed the timeline there.
I think the $30 spike was more likely caused by an influx of noobs who found out that their GPU could print money.
Re:Bizarre and Confusing Summary (Score:4, Funny)
Nope. Because Bitcoin is not a scheme whereby people use newcomers money to pay people who have been in the scheme longer. In fact, Bitcoin does not ask people for money at all.
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Then every successful corporation is a pyramid scheme.
Bitcoin's still around? (Score:5, Funny)
I thought that Bitcoin must have ceased operating when there stopped being a slashdot story about them every day.
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We stopped getting bitcoin articles when Taco left.
Yeah, yeah, correlation is not causation ... but it sure is sufficient cause to suspect causation.
Re:Bitcoin's still around? (Score:4, Funny)
You think that Taco left because of a lack of bitcoin articles?
Whatever editor was in to them sold them (Score:2, Insightful)
That's my bet. One (or maybe more) of the Slashdot staff was in to bitcoins. They mined them, bought them, whatever. So they had an interest in getting people in to them so the value would go up and they could make money. Now they are out of it so they don't give a shit, no reason to pimp it anymore.
Plus it was a fad, and its time has come and gone. While it isn't dead, the days of "big money" are gone. It lost a shit ton of value, the miners aren't making much, etc, etc. The virtual gold rush is over, so i
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Wow (Score:2)
Who didn't see that coming?
/snark
Oh well. (Score:2, Redundant)
Major? (Score:4, Interesting)
Tradehill was never a major Bitcoin exchange.
MtGox is the only one anyone ever used. Tradehill was started by some guy who got mad that MtGox was raking in the cash. He started throwing out accusations about security holes, the owner (of MtGox) not actually having all of the BitCoins backing his market, etc. Then he threw up Tradehill and it was shit.
All Bitcoin exchanges are shit. They're for speculators. Bitcoin as a currency is fine, and it will be fine if every exchange dies off.
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"and it will be fine if every exchange dies off."
Except for the fact that there will be no way to acquire bitcoins?
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"and it will be fine if every exchange dies off."
Except for the fact that there will be no way to acquire bitcoins?
By that logic there would be no way of acquiring US dollars either.
Without exchanges, you acquire Bitcoins in exchange for goods and services. It's money. Earn it.
But there are exchanges (Score:5, Insightful)
Many of them. The US dollar is traded on all international currency markets and for a small scale, any bank will convert them. If it weren't, it wouldn't be very useful. If I pay someone in Europe in US dollars they are ok with that because they can convert them to Euros, which is what they need to do their business. If they couldn't, if US dollars were non-convertible, they'd be non-useful.
Also you have the problem that next to nobody accepts and deals in bitcoins directly. It isn't a functional currency. The US Dollar, the Euro, the Yen, these are all functional currencies because a lot of people will accept them as such. You can buy goods with them, pay taxes with them, etc. I cannot name a single thing I'd want to buy, a single place I shop at, that takes bitcoins. As such if they aren't convertible, they are worthless.
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Sure, it would only be used by a tiny niche of enthusiasts. So what? It has to start somewhere, and even if it didn't grow from there it could live on as a functional niche currency.
Speculation is all the Bitcoin has (Score:2, Insightful)
All Bitcoin exchanges are shit. They're for speculators. Bitcoin as a currency is fine, and it will be fine if every exchange dies off.
Without speculation, Bitcoin is worthless. The only reason anyone has ever accepted Bitcoin as payment for anything is because they believe they can redeem Bitcoin for some other currency later on -- something which there is never any guarantee of (compare to private currencies that are backed by national currencies). This is in stark contrast to national currencies like dollars, which people must have if they intend to pay their taxes (which they must do if they intend to legally own property, hold a j
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How can I short this currency?
Re:Speculation is all the Bitcoin has (Score:5, Informative)
How can I short this currency?
Right over here: https://bitcoinica.com/ [bitcoinica.com]
Be careful. Volatility cuts both ways.
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I believe MtGox was working on options trading for BitCoin and one would assume they might allowed short trading. If not, then just buy a Put option at the current price (that ought to be cheap right?) and then at some later date come in and cover your Put at the presumably lower price, or sell your Put, which is usually a better deal than exercising it.
However, I wouldn't recommend shorting it at this point. Once the dump story dujour moves on, it will probably move back to
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The only reason anyone has ever accepted Bitcoin as payment for anything is because they believe they can redeem Bitcoin for some other currency later on
This is demonstrably false. There's a considerable demographic in the Bitcoin community who don't like that the speculators have eclipsed the commerce side, and who would very much prefer if they could trade it back and forth as an isolated currency rather than having everyone think of it as a proxy for dollars.
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There's a considerable demographic in the Bitcoin community...who would very much prefer if they could trade it back and forth as an isolated currency
Unless they live outside the jurisdiction of any effective government, they will have to find at least enough of some nation's currency to pay their taxes (which in some nations includes taxes on transactions made using Bitcoin, which cannot themselves be paid using Bitcoin). I sincerely doubt that these users live under such circumstances, and even if they did, they would also have to find a way to generate electricity and connect to the Internet without incurring any costs other than Bitcoin, which is
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they will have to find at least enough of some nation's currency to pay their taxes
Just because you're using Bitcoins doesn't mean you have to use ONLY Bitcoins. There's no reason it can't exist as a niche currency.
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There's no reason it can't exist as a niche currency
OK, I'll grant that -- Bitcoin might live on as an obscure, niche currency with extremely limited utility. Not even the black market users will stick with it in that case, and perhaps people will realize that there are more effective digital cash systems out there that could be deployed in a way that benefits society (not just the black market).
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On the other hand I think it will be exchangeable to dollars for the foreseeable future, regardless of what the island-currency niche wants. As long as there's another group that DOES want it exchangeable, they'll find a way.
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and so over the long term we should expect Bitcoin's value to decline.
That too is speculation. It's just speculating on the downside. :)
Bitcoin's value is almost entirely due to speculation.
I agree, but I want to contrast it with your earlier statement...
Without speculation, Bitcoin is worthless.
... which which I disagree.
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All Bitcoin exchanges are shit. They're for speculators. Bitcoin as a currency is fine, and it will be fine if every exchange dies off.
Without speculation, Bitcoin is worthless. The only reason anyone has ever accepted Bitcoin as payment for anything is because they believe they can redeem Bitcoin for some other currency later on
Wrong. People accept Bitcoin because they believe they can also use it for goods and services.
Just like every other currency in existence.
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NYSE was never a major stock exchange. ... Then he threw up NASDAQ and it was shit.
NYSE is the only one anyone ever used. NASDAQ was started by some guy who got mad that NYSE was raking in the cash.
All stock exchanges are shit. They're for speculators.
FTFY. :)
what an exchange actually means (Score:2)
A real exchange (e.g. like the CME) has the following important property: all participants have the exchange as an economic counterparty, not each other. That is you take on the credit risk of the exchange, which is presumably better than any individual participant.
This means that if X trades with Y on the CME, and X (as a broker) goes bankrupt before the money settles, the CME will pay Y, and then attempt to get money back from X. This actually matters sometime (cf MF Global). The exchange then has stand
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On most of the Bitcoin exchanges, X and Y deposit their respective funds (say, USD for X and BTC for Y) into their account on the exchange. During a trade the exchange immediately transfers X's USD to Y's account and Y's BTC to X's account, less fees on both sides. IE, trades are settled instantly and withdraws may be performed immediately (though the usual banking delays exist on the fiat side, and received BTC take about an hour to confirm).
Legally the exchange happens between X and Y, and the exchange i
But the protocols are still intact (Score:5, Insightful)
The loss of Tradehill and the security breaches of other exchanges disrupted the confidence in using Bitcoin, but the protocols remained intact. I see this as a testament to the design of the system, even though a fundamental quality for any currency is the confidence of its users.
As a Bitcoin lurker (I've never owned anything more than 2 BTC), I've been intensely fascinated in the potential of this "currency." Without belaboring the great qualities of a decentralized currency, it has attracted a speculative class of users that have rushed into centralized exchanges using nervous money transmission providers. The irony is not lost on me.
Tradehill's departure and what I believe will be an eventual international agreement hobbling Bitcoin's biggest exchange Mt. Gox in Japan (a la UBS in Switzerland), due to tax evasion, ought to serve as a cautionary note to Bitcoin users. Money transmission is a confiscatorially regulated practice. Bitcoin's best hope ought to be transactions as decentralized as the protocol it uses.
Lurkers such as I can only hope of an ecosystem or application so widespread, so diversified, secure enough, and easy to use before Bitcoin can be considered useful to most internet users. I dream of a decentralized Facebook knock-off (e.g. diaspora*, etc.) with a Bitcoin client built in, making currency transmission as simple as tossing a dollar to a friend to buy a cup of coffee. Perhaps even at a coffee shop with patrons casually swapping US$ and BTC as they play chess or read.
Why Bitcoin is doomed (Score:4, Insightful)
Useful digital cash systems involve a central issuing authority like a bank or government, that can accept old tokens and produce "fresh" tokens of equal value. Having such a central authority is not a bad thing:
It is a good thing that nobody is obligated to use BItcoin to pay their debts, because:
So there you have it.
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Re:Why Bitcoin is doomed (Score:4, Insightful)
they have already begun by taking the mining out of the default client
This makes the scalability problem even worse, since it forces you to reuse older tokens, which have already grown because of their use in previous transactions. This is not a problem that you can just hack your way around, it is a fundamental limitation of digital cash systems. Note that on the very page you linked to, they attempt to sidestep this problem by claiming that hard drive sizes will grow to accommodate their needs, which I seriously doubt unless Bitcoin remains an obscure payment system.
The black market already holds its own to the deman for national currency and the black market is growing with time - it is very likely that within the next decade or two it may outpace the regulated one. With half the world's population already employed in the black market it is not much of a stretch to think that you don't need a government to back a currency, if the incentives are right for the market to protect it itself.
It is very much a stretch to think that money can exist without government backing. If the black market stopped using national currencies, they would be forced to switch to a currency backed by some other large, powerful organization to enforce payments, and that organization would be a de facto government. Money is only valuable within some enforcement structure, which is the role that a government plays; even when banks issue currency, they rely on governments to enforce debt payments.
And you could say by the same metric that trade in physical goods, whether coins or paper bills have been a 'necessary' component ...until the digital banking started to take over in the 80's or so. Just because something has always been part of the economy does not mean that it is necessary. That is a correlation vs. causation error in thinking.
Except that we still trade in physical goods (and even if all currency were digital cash, you would still trade in physical goods -- you need food, clothing, etc.), and we have had paper transactions managed by banks for centuries (which have simply moved computers, which are more efficient record keeping systems).
At a basic level, credit is necessary in any economy because people with the skills needed to complete a task do not always have the resources needed for that task. A farmer might not have enough money to buy the fertilizer he needs for a particular growing season, a cook might not have the resources needed to start a restaurant, etc. At an even more fundamental level, you might need to work before you are able to pay the soldiers that protect you from a hostile enemy, but those soldiers need to be paid while they are busy protecting you; taxes themselves are a form of debt, and governments cannot function without tax revenue.
The unfortunate thing about Bitcoin is that people have come to associate Bitcoin with digital cash. There are plenty of other digital cash systems that have all of Bitcoin's advantages without the serious disadvantages; those systems use a bank or other token issuing authority to renew tokens that have long transaction chains (thus avoiding the scalability problem) and are easy to back with a national currency, or perhaps to use as a national currency. Anarchists may not like the idea of a bank having power over currency, but that is just how currencies work: some central authority must back the currency. I am personally a big fan of digital cash, since it would solve a lot of the security problems that we see with debit and credit cards, but because of the various crypto battles and patents in the 90s digital cash never did take off.
Re:Why Bitcoin is doomed (Score:4, Informative)
which have already grown because of their use in previous transactions
This isn't actually true. Coins don't keep getting split into smaller and smaller portions forever. Every time you spend it takes several old coins and combines them into (usually) two new ones: 1, the payment you make, and 2, your "change" (which goes back in your wallet). The previous inputs are permanently combined and no longer needed going forward. The current software does not yet actually implement it, but obsolete coins CAN be "pruned" entirely, facilitated by the Merkle tree.
The blockchain will still undergo a lot of growth if more people begin using Bitcoin (since the currency base will be divided between more wallets, and there will be greater numbers of recent transactions that are not yet pruned), but it doesn't geometrically expand forever. When Bitcoin stabilizes at a certain level of market saturation the blockchain will also stabilize in size.
Whether that will be a reasonable and manageable size is still an open question.
all of Bitcoin's advantages without the serious disadvantages; those systems use a bank or other token issuing authority
I want to know that the central bank won't just start issuing more currency and devalue mine.
I want to send money to Wikileaks, but all the banks are forbidding it.
I want to pay someone over the internet without Mastercard or Paypal or whoever taking a 2% cut.
There is no other currency that currently has ALL of those advantages of Bitcoin. Some of the advantages are inherently incompatible with centralized, bank-operated currencies. It also has a long and substantial list of disadvantages too - no argument there. But on the whole it simply has a different set of tradeoffs than any other currency, and so it (or one of it's descendants; I don't expect Bitcoin is going to be the last word in decentralized e-currency) will be relevant for some time.
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The blockchain will still undergo a lot of growth if more people begin using Bitcoin (since the currency base will be divided between more wallets, and there will be greater numbers of recent transactions that are not yet pruned), but it doesn't geometrically expand forever. When Bitcoin stabilizes at a certain level of market saturation the blockchain will also stabilize in size.
Which implies that Bitcoin is not secure. Somewhere, the storage or bandwidth require must grow with the number of transactions that any token is used in in any secure digital cash system, regardless of how the token is manipulated. If that is not the case, then either the system does not provide anonymity, or it does not provide security against doubt spending (I suspect the former in the case of Bitcoin).
I want to know that the central bank won't just start issuing more currency and devalue mine.
That's nice, but if your money supply cannot grow then your economy is going to have problems.
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Tradehill were the good guys (Score:5, Informative)
Tradehill was probably the best-run Bitcoin exchange. They didn't steal customer funds, like some of the other defunct Bitcoin services. [betabeat.com] They didn't go down much. They didn't have a monthly crisis [thebitcoinsun.com] like Mt. Gox. (formerly Magic, the Gathering Online Exchange. Really.) If Tradehill does in fact return all customer funds, at least they shut down honestly.
A basic problem with Bitcoin is that the ability to irrevocably transfer funds to anonymous parties is the scammer's dream. Bitcoin is thus a scammer magnet. Just about every known financial scam was replicated in the tiny Bitcoin world, from fake banks [globalstandardbank.com] to fake stock exchanges [glbse.com] to Ponzi schemes. [bitponzi.net]
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That seems a little unfair. It'd be equally valid to say that a scammers dream is an electronic payments system that allows purchases to be made with only a fixed password, which must be given to anyone who accepts payments, which isn't connectable to any kind of second factor and in which the costs of fraud get sunk by the merchants (who can't do anything about it) rather than banks or end users, thus ensuring the party continues endlessly. How many credit card details can be bought on the black market aga
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Re:Oh! The huge manatee! (Score:5, Funny)
And not a single fuck was given that day.
If everyone actually stopped fucking for a day, that would be huge news. (To everyone other than you)
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Weed? Give me a break, the biggest political attack on Bitcoin so far is because you *can* buy weed with it.
Buying most of these online might not work for you, but for what it's worth, one of my friends buys beer online with the coins he mines. Belgian Flavours shop accepts Bitcoin AFAIK. You can buy PCs and all kinds of electronics for sure. Not sure how competitive the prices are though, at the worst case you can buy vouchers for more popular sites. Smokes, yes, there are a multitude of shops for tobacco
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Bitcoin is a perfectly good idea.. I use it regularly to exchange currencies, someone in one country buys bitcoins with his local currency and sends them to me, i then convert them to local currency. Doing this with bank transfers or paypal has massively higher fees for me.
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You're not that far off the mark.
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Bitcoin is a decentralised computer currency designed by self-righteous Ayn Rand-reading nerds who despise looters and parasites like, er, you. It is used to purchase Internet services, illegal drugs and pictures of naked women holding video cards.
Bitcoin works by an emergent synergy of cryptography, peer-to-peer, anonymity, anarchism, libertarianism, wasting stupendous quantities of electricity, the marketing department at NVidia, the enduring exchange value of tulip bulbs and doing all of this instead of
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At AMD, not NVidia. Unless someone wrote a miner that works on NVidia GPU recently ?
Why money has value (Score:3, Interesting)
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Even with the above reasoning, Bitcoin can still survive if there are enough situations where no currency is de jure standard and Bitcoin has a considerable advantage. Black market for sure, and gray market might be a good candidate for it.
In which case it would only take a digital currency system that does not suffer from Bitcoin's inherent scalability problem -- the fact that the computational resources needed for Bitcoin grow with the number of Bitcoin transactions, a fact that is inherent in all digital cash systems and that is typically resolved by means of a central issuing authority that can "renew" tokens -- to kill of Bitcoin. If the only advantage Bitcoin has is that it is a digital cash system, it is only a matter of time before
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A design that is resilient to regulation is needed in order to have the advantage in the first place,
Actually, the biggest advantage of digital cash is that it prevents an untrustworthy merchant from raiding customer accounts (e.g. if a merchant is compromised, credit card data could be used to make unauthorized payments). Anonymity is a secondary goal, and even anonymous payments do not free the parties in the system from regulation -- there is plenty of regulation on cash transactions, which offer a similar level of anonymity.
at least some sort of decentralization is practically a requirement
Yes, that is true -- the payments should be decentralized in a digital cas
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What you are really saying is "I don't believe in bitcoin". Other people do, however, to the tune of $40 million USD.
If you treat BitCoin as an experiment in electronic currency without a central bank, I would say it is worth it just to learn what works and does not work. Money has been getting ever more electronic over time, and we should have some idea how the fuck it works. Second Life is another experiment in electronic currency. It has a total money supply worth $27 million, convertibility back and
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but it's better to experiment and make mistakes on one of those, than, say, Greece.
True that working small is a good way to test. But the Greece analogy isn't very good. That wasn't about the form/format of money or the exchange thereof. That was about spending than you can afford and don't have the will to produce ... which is just as bad when you're on a barter system as when you're on a currency system. Entitlement mentality killed the Greek economy, not the ebb and flow around currency mechanisms.
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"Entitlement", as in "investors are entitled to have their gambling losses covered by taxpayer money"? Because that entitlement absolutely dwarfs any and all entitlements the common people in Greece received. And it's the same problem everywhere, including the US.
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Even if it wasn't a pump and dump scheme it was doomed to failure as a currency for one simple reason: Built in deflation.
The total number of bitcoins that can ever exist is finite, and as time goes on they get harder and harder to "mine". So as such, deflation is just built in to the currency, if it were ever adopted on a wide scale.
While this is something that plenty of Internet 'tards who have no understanding of economics think is great "The money I have will be worth more!" anyone who knows economics k
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Actually, I used to really like bitcoin and never thought most of the arguments against it held much water, since they mostly ignore that all the fiction in bitcoin is the same fiction in other currency. All currency is fake, because its all an abstraction. Nothing wrong with that.
However, the more I learned about it and dove into it...the more convinced I came of this simple fact... a currency wants deflation because currency isn't intended to be a savings instrument. People hoard gold. People hoarded bitc
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Sorry.... inflation.... not deflation. Inflation is good (up to a point).
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Consumer Electronics keep getting cheaper and cheaper. According to your deflation argument, no one would ever buy CE products.
The world economy currently relies on inflation. How's that working out, really?
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If Bitcoins were a national currency its population would be protesting... a 20% overnight drop would be business news if this currency had enough people caring it existed. These money-like substances always seem to fail resulting in no payout to those holding the bag. Nothing left to see here, move along.
Sure. But Bitcoin isn't a major reserve currency. It's current size is like a tiny stock, and volatility is expected at that scale.
Unlike the corporate micro-currencies (Beenz, Flooz, whatever), Bitcoin doesn't suddenly go under and not pay out. Bitcoin is volatile, but it's still liquid - if you want to trade back to dollars, you can do so at market rate on any of several dozen markets.
Bitcoin's not for you if you don't want to deal with volatility, but it has very different properties than any other cu
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Zimbabwe should switch to Bitcoin. A 20% overnight drop in their national currency would be a cause for astonished celebration.
Sounds interesting (Score:2)
Sounds interesting, but I don't find anything about it on the wikipedia pages related to Dwolla and Bitcoin that I googled for.
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the creators ... have long since turned their fake bitcoins into real spendable dollars
The public blockchain [blockexplorer.com] shows that the majority of coins generated in Bitcoin's first year have not moved.
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Recently, I would have to say that the exact opposite is the case. It remains fairly constant until some inflammatory and misleading article such as this one comes out.