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Amir Taaki Answers Your Questions About Bitcoin 262
Is the gold rush over?
by curunir
With BitCoin limited to a pre-determined amount and the difficulty of mining new BitCoins, it seems that this gives a huge advantage to people who got into BitCoin early and have already amassed a considerable amount of BitCoins. Is this true and, if so, do you think this disincentive will undermine BitCoin's ability to become more popular since the majority of the population will have to work so much harder to obtain the currency?
Amir Taaki: It is certainly true that early adopters have been rewarded. I do not think these inequities will be more shocking than those in the real world. Any guesses as to how this will play out is pontification. However, I don't think anyone has proposed a working model for a decentralized secure digital currency where such a thing would not happen. Overall, I believe the properties of this currency will significantly add to the wealth of all peoples, especially those less well off.
Crypto-Anarchism?
by conner_bw
I argue that bitcoin is interesting because it's a locked currency, with a known maximum, and a timeline for that maximum based on contemporary crypto math and radical ideas. There is clearly well thought out timeline for adoption and disruption. It's not just "Cool, new money!" Are you a crypto anarchist, or similar?
A.T.: Yes, I myself am a crypto anarchist. However, not everyone on my team has the same political ideologies and we do not try to push our ideologies on each other. In fact, we have all seen our ideologies change over time with the awareness of new knowledge and information. Ideologies should not be a point of contention, especially when we all see the immense prolific value of a more efficient means of commerce.
If not, then is this another Tulip craze [wikipedia.org] and all these news stories and bitcoin currency exchange services being hyped heavily the last month machinations for profiteering?
A.T.: I do not advocate that people speculate on bitcoins. In fact I actively advocate against that because those who are new to bitcoin might see it as just that, a 'craze.' I do however think that the properties of bitcoin are clearly advantageous over the current means of commerce. Although bitcoin is still underdeveloped, everything visible in the modern world can be adapted using bitcoins as a backbone. This will result in all the services of today's world (clearing houses, security, fraud protection, interest bearing accounts...) continuing to be offered, but with far less overhead.
Austrian Acceptance
by MyFirstNameIsPaul
I have found that the Austrians have a hard time accepting the idea of a digital currency. The core of their argument seems to be that digital currencies are not made up of something that had value before being a medium of exchange, such as gold and silver. When I counter to them that BitCoin is made up of code and people pay money for things like video games, they argue that the video game would have to be the thing valued, not the computer code. How do you deal with these kinds of objections?
A.T.: Gold is not a currency in my mind. It is a store of value. I would not want to go to buy bread from my local store and shave off some gold from a bullion and take out a scale and wait for an acid test to be performed. Gold is backed by real world properties.
Bitcoin is backed by the fact that is has unique properties as well:
- Decentralized
- No bank holidays
- International
- No concept of borders
- Divisible
- True micro-transactions possible (new markets feasible)
- New privacy model
- Private identity yet transparent
- Secure
- You do not have to trust merchant sites (Sony - Playstation) to protect your data
- Fast Transactions
- No Charge backs
Useful Calculations?
by Bodhammer
Is there any way to make the calculations more useful (i.e. Boinc) and
still maintain the same level of difficulty in the computations? It just
seems so wasteful to run Bitcoin at this time.
A.T.: Our world's current infrastructure depends on paying employees, building
large buildings, paying for heat, electricity, transportation, lawyers,
courts, judges, policemen, government bureaucracies, armies and much
more. Doesn't it seem wasteful to rely on tedious and sometimes
ambiguous real world laws with a lot of overhead instead of mathematical
laws?
When merchants started accepting bitcoins, verifiers (because miners is
a misnomer) started to see that their generated coins were worth
something. They became competitive and found ways to do the same
calculations cheaper which provided security for the network and verified the
transactions. Verifiers found out that running these hashing algorithms
on one's GPU was far more energy efficient than running them on one's
CPU. Specialized software was later constructed for these purposes. Some
keep their machines under dry ice. In the not so distant future,
hardware FPGAs will be specially designed for this verification process.
The advantages of bitcoin exist because it is an inherently more
efficient and less wasteful system. The reward for minting a block, provides a
healthy competition that causes the energy cost to be driven down.
Additional privacy layers and smartphones?
by DriedClexler
Is there any serious development underway to make the privacy more
robust? There has been talk of "Bitcoin laundry," where large pools swap their
coins around between each other to make it harder to connect a coin/address
with an owner. But for this to seriously work, it needs a lot more people to be
involved in it, and it has to be integrated in a way that's secure (against
someone just keeping coins in the middle of a shuffle) and transparent to the user
(so they don't have to think about the new addresses they generate, or
which coins are optimal to send where for the maximum shuffle). How soon can
we expect something like this? Also, how soon will smartphones be able to handle this with the same
ease as desktops and notebooks?
A.T.: A bitcoin laundry already exists. The volume on it is very low, but if demand
increases in the future then such a service is trivial to setup.
A mixing service (as they're called) requires a large volume and therefore a
persistent demand.
Smartphones can already use bitcoin :) An Android version of the command line Bitcoin was
compiled. Additionally one can use an online wallet service (or a bitcoin exchange) to store their bitcoins.
Lost/forgotten bitcoins?
by algorimancer
One thing that concerns me is the fixed maximum number of bitcoins.
Lets say people acquire bitcoins, but the amount isn't enough to worry about,
so they never use them, or perhaps their computer crashes and they don't have
a backup. My understanding is that these bitcoins are permanently lost
from the economy of bitcoins. Over time, the total supply would begin to
dwindle, presumably pushing up the value of those that remain, until people
become frustrated at the small supply and are motivated to move to a new
system, then bitcoin is abandoned. In the real world this happens with dollar
bills, but the government can compensate for this by creating more. Is this
issue addressed in some fashion?
A.T.: The supply of bitcoins is 21 million. The supply of money is infinite. A
bitcoin can currently be divided to 8 decimal places. The loss of
bitcoins in the future may lead to some deflation however I expect it to
be insignificant. In the very long term, even if there was only 1
bitcoin theoretically in circulation, running the world economy would
not be a problem. There exists only 6 MBTC in circulation at this moment.
Extreme instability of Bitcoin vs. USD
by Limerent Oil
Why would any merchant IN THEIR RIGHT MIND want to deal
with Bitcoin? With the insane USD-to-Bitcoin exchange-rate gyrations
happening lately, why would any serious retailer even bother, when the value of Bitcoin vs. USD could change by 50% or more in just a few hours?
A.T.: As liquidity increases transaction costs decrease. If there was already
an appropriate clearing house in place, a merchant would be able to
automatically accept bitcoins and liquidate them to dollars. In the same
way that people who use the internet are not all cognizant of the
communication protocols they are using, I foresee the possibility of
merchants offering their products in USD, EUR, GBP, and customers
purchasing those products in their local currency. And the underlying
mechanism which facilitates this transfer is the bitcoin. Bitcoin would
provide these same services that payment services, credit cards or banks
do but with much less cost to the merchant and customer.
What about the lack of inflation?
by Cyberax
It's long known that economic growth is severely stunted without some measure of inflation. Adopting bitcoins for the global economy would
mean that policymakers lose control on money supply, and while there are advantages in this, disadvantages far outweigh them. Additionally,
adopting a global currency standard will deny governments ability to influence currency rates robbing them of yet another way to control the economy. Is there any plan to solve this? Maybe a system of independent bitcoin 'roots' operated by governments would help?
A.T.: Ben Friedman has released a lot of work on E money and how it will affect the future and how governments will adapt. The truth is
that the government will still have monopolies on much of the operations
of the economy such as fractional reserve banking and the issuing of
licenses which allow banks to lend money.
Aspirations
by slim
What are your aspirations for the currency? Do you hope for it to be near-ubiquitous — used by corner shops and mainstream merchants like Amazon? Or are you happy to see a parallel economy grow, as a niche
thing? Or something else?
A.T.: I have lofty dreams of a world where people can send money abroad
without having to pay 20+% in many cases to rip offs like western union.
Where people can raise funds through services like paypal but not have
their accounts arbitrarily frozen. Where citizens in developing nations
who already oppose their government do not have to pay for wars of
genocide out of their own pockets as was the case in ex-Yugoslavia where
authoritarian control over the money supply helped finance a terrible
war and bring about the worst hyper-inflation in Europe since WWII.
Bitcoin in some form is going to be adopted whether it is used as a unique currency, a payment system or as a clearing house. Our aspiration for bitcoin is to provide competition to the current system making everything cheaper for all. It's about cutting the middleman, democratising money and handing back power to people.
Will governments let it survive?
by merdaccia
We live in a world where the supply and movement of money are
controlled by governments, central banks, money laundering laws, and financial institutions. How can BitCoin survive in this world? Middle men like
banks stand to lose a fortune in fees and exchange rates, governments stand
to lose a fortune in taxes if they can't track money movement, and the
black market stands to gain a silent way to move value. For BitCoin to gain adoption, some major retailers need to start supporting it, but given
the above risks, what stops a government from telling companies in its jurisdiction that they can't accept it?
A.T.: The US is not the world. If their government forces everyone to continue
to use typewriters in lieu of computers and pay through the nose, they
can. New and better technology, especially when it is revolutionary,
does threaten archaic models and practices. Hopefully there will not be
contention. My team is already in contact with SWIFT which has operated
for 30 years and is the backbone of international money transfer for
over 9000 banks. Many forward thinkers see the advantages of bitcoins
but it is easy to understand how those perhaps well-intentioned but not
well-versed in what bitcoin is can promote FUD.
Regulatory compliance?
by molo
For those of us interested in developing financial services using
bitcoin, how have you dealt with regulatory issues? It seems like the SEC and
FINRA in the US would not be keen on unregistered broker-dealers and agents
and owners not having the legally required Series 7 and Series 24 certifications. Have you sought the UK equivalent certifications? The requirements of lawyers, accountants, certifications etc. seem to put
a very high capital cost on starting a legitimate business offering services
in this space.
A.T.: As well as being a developer, I own and operate www.Britcoin.co.uk (the
UK exchange site). My team has been in negotiations for a long time now
with lawyers and regulators. There is no regulatory process or
restrictions now on the running of such services. Non-regulated sectors
rarely seek out regulation. However, when it comes to bitcoins, I
believe the sooner they are regulated the better. If their regulation is
pushed by those who understand what bitcoins are then we may be able to
regulate them in the best way possible and show the world they were not
created for illegal practices. The sooner they are regulated, the sooner
users can have legal assurances that merchants are liable for their
operations. The negligence seen at MTGox would never have happened in a
regulated market.
Although the FSA have not made any official statement about bitcoins. We
at www.britcoin.co.uk are hoping that we can show to the proper
authorities that indeed we have recorded our history of transactions.
That all the money in our users accounts is accounted for. This process
would dispel the FUD surrounding bitcoins and allow the people of the
world to enjoy the freedoms and wealth of bitcoins that much sooner.
Tax avoidance and illicit trading
by slim
Some "benefits" of Bitcoin, from one perspective, appear to be that
its cash-like properties lend themselves to tax avoidance (making
transactions without declaring them), illicit trading (e.g. drugs or prostitution)
and money laundering. Do you view this as a positive, a negative, or neutral? If you view it
as a problem, how can the problem be mitigated?
A.T.: Most new technologies can be used for good and bad. Of course I do not
condone or agree with the use of Bitcoins for illegal purposes.
However, I really want people to understand one thing. The
criminalization of Bitcoin would not stop the illegal activity that
surrounds it. In fact, it would help those who use it as a means of
engaging in illegal activity by not regulating the purchasing and
selling of bitcoins. Criminalization would only stop people from
enjoying the tremendous and fruitful benefits of such a system, it would
hinder the social good. Regulation would allow the proper authorities to
find and charge those who use bitcoins for illegal activities.
Britcoin.co.uk has kept a clear record of the exchanges which have gone
on. Every single transaction is recorded and we are happy to open our
books to the proper authorities. We are aggressively advocating and
promoting the legalization and regulation of the exchanges.
Bitcoins offer massive potential for positive social change. It would be a sad thing to see Bitcoins outlawed due to ignorance or reactionary feelings. If you outlaw Bitcoin then the illicit trades will still continue, perhaps even proliferate, but the good would disappear.
Kings used to raise capital in order to wage wars. They required popular support before they were able to fund their wars. A common tool in modern day authoritarian regimes is currency manipulation in order to fund their wars of genocide (e.g Milosevic in the 90s). Bitcoin democratises governments.
Quantum Computing?
by SanityInAnarchy
Are there plans to deal with quantum computing, or with any of the algorithms used being compromised?
A.T.: If SHA256 or ECDSA was ever cracked, we'd have far bigger problems to worry about than bitcoin being destroyed. I suspect that there won't be any overnight switch, giving everybody enough time in order to adjust the current system to any changes.
The internet wasn't built perfect. But years of reshaping/patching/incremental design have shaped it into a workable network. Bitcoin will too undergo this transformation with time as it ages.
(More from the call for questions:)
is there ever going to be a bitcoin bank? ... The idea that if you lose or destroy or whatever your computer and lose all
your money isn't going to make the general public accept this.
A.T.: Bitcoin now stands at its early stages. It's the kernel of the software stack that will eventually exist for this financial system. Other services and software utilising Bitcoin will exist. A common view is where Bitcoin acts as an automated clearing house between all these user facing services in the future.
Bitcoin's protocol itself will need to be extended in order for it to grow. As the network expands, block sizes could become impossible large once it rivals the transaction volume of a comparable service like VISA or Paypal. To have lightweight clients that don't need to process these large GB sized blocks new protocol commands like a txmatch regex would need to be introduced in order that clients don't need to process the entire block data.
The point to Bitcoin is that you can choose your own level of trust in an external service. One of our group's members, Patrick Strateman, came up with a scheme whereby a wallet could be recovered algorithmically using an email and a password. In the future I expect savings accounts where retrieving the money is an arduous proccess. Then we can go further to where a person has all their funds in a trusted service like with email today- how many people run their own mail servers?
What markets do you think will be the first to most aggressively adopt bitcoins as their currency?
What insights can you offer as to why the US government is having a hostile
reaction to bitcoins?"
What kinds of competing P2P currencies are in development, and how will their
deployment affect the valuation of bitcoins?
A.T.: Immediately as liquidity improves in exchanges, the best use for Bitcoins will be individuals transferring funds between countries without fees. Our group has a lot of interest from mobile sectors because of the potential as a micropayment system. Currently now in Africa, people use mobile credit as a form of currency to transfer funds across borders, but that's usually less than ideal.
The US government isn't a homogenous entity, and one senator (possibly funded by bankers) made a false claim on Bitcoin- calling it a scheme for drug trafficking networks. It may simply be due to reactionary misunderstanding like the people in Yahoo Finance calling Bitcoin a Ponzi scheme invented by bankers. That's why our group is aggressively pursuing press in order to dispel these myths.
Terminology
If we eventually use Bitcoin in everyday life, say, in the supermarket, how will
we deal with prices in fractions of a Bitcoin? What terminology might we use for
something priced at 0.00000005 Bitcoins?
A.T.: The accepted 'standard' is to use SI prefixes. 0.005 BC would be 5 mBC.
Here come the regulators ...
How will your business change when countries regulate exchanges? How do you ensure your exchange isn't being used for illicit purposes (to avoid
being shut down by government authorities)?
A.T.: It is our goal (and has been for months) to get legal legitimisation. Our organisation has been aggressively seeking FSA regulation here in the UK for Britcoin. Our hope is that when governments do come to look at Bitcoin, they will see a long running, honest, legal exchange with open books. By having something in the law books about Bitcoin, it sets a positive legal precedent in the future and puts us as the policy makers rather than a bunch of old 60 year banker types.
Our exchange complies with the UK Know Your Customer laws which ensures it's not being used for illicit activity. We keep detailed transaction records and run regular audit logs to look for missing funds.
But eventually, one would want to use BitCoins to pay for legal services. My
question is; how do you get to that point? Why would a legitimate business
accept a currency that is used almost exclusively for illegal means? What is the
strategy to convince mainstream businesses that BitCoins have a purpose in the
main web, as well?
A.T.: The illicit markets are a very small part of Bitcoin yet the most sensationalist. I can see how one would think Bitcoin is purely for illegal trade if I didn't know better.
Check out the list of merchants.
Full and open disclosure: how many bitcoins do you currently own?
A.T.: 32 BC. At one point I had 6000, but I'm a bad hoarder. Everytime Bitcoins would double (and I'd have $2k), I'd donate half my wealth to other free software developers. Then recently I was going to wait until I had $4k, but the price went down and I'm very bad at holding onto cash :)
But that doesn't bother me at all. We have our group of free software developers developing Bitcoin itself and other related projects. Funds are coming in and we're growing. The goal is to this as a sustainable operation paying developers working on Bitcoin fulltime.
What are the advantages of bitcoin?
One problem I see with bitcoin is it offers very little over what we currently
have. If I want to perform an online transaction using my computer, unless I am
buying something illegal, then there are already companies which offer products
for me to use. If I want to make an anonymous purchase in person, I would easily
use cash.
Bitcoin seems to suffer from a lack of portability, which makes me wonder, what
"need" is bitcoin catering to? What do I do in my day-to-day life that bitcoin
will help me do such that as some point, bitcoin becomes irreplaceable and
achieves de facto permanency?
A.T.: Sending funds abroad is time consuming, expensive and difficult. Recently I tried sending funds to a Polish bank from the UK- the bank was closed and I waited until Monday. Requiring me to be in person at the bank, the woman was unable to enter the Polish L looking character into her terminal. I had to aquire an internet banking code to do it online. Waited 3 days, logged in and the internet banking form didn't work. In the end, I ended using a friend to aquire Bitcoins and use the Polish exchange bitomat (we never use Britcoin ourself).
I wanted to donate funds to the excellent Symphony of Science musician. I went to fill in the Paypal form, spent 10 mins signing up to an account, entering all my very personal details and my card was rejected. In the end I got him to accept Bitcoins and donated directly without paying fees to Paypal.
Sony recently was hacked. Millions of accounts were leaked. If they were using Bitcoins then the addresses people donated to would be known to the attacker. Not my private keys which enable said attacker to spend my cash.
With commerce, everything becomes cheaper. Bitcoin vastly reduces the overhead needed for fees. We no longer require staff sitting inside banks pressing numbers on a keyboard since the system is automatically backed by mathematics and cryptography, not laws and people.
Not Answered... (Score:5, Funny)
How do I combat the shakes when 24 hours pass without a Bitcoin article on /.?
Re:Not Answered... (Score:2)
Re:Not Answered... (Score:4, Funny)
I've got a question (Score:3, Funny)
Re:I've got a question (Score:2, Funny)
It certainly wasn't paid with bitcoins, thats for sure.
Re:I've got a question (Score:4, Insightful)
Math, Cryptography, Economics???
All nerd based things wrapped into one item.
Basically nothing new (Score:3)
So in short, lots of rationalization for having spent lots of time working on this with nothing of real substance to get people to actually use it.
Re:Basically nothing new (Score:2)
Re:Basically nothing new (Score:4, Insightful)
USD are also a lot more popular. This is actually important: there's 300 million people who will do work for you if you offer them a certain quantity of pieces of paper called "US dollars".
Re:Basically nothing new (Score:2)
USD are also a lot more popular. This is actually important:
You are right...it is very important. It is important that people perceive their money has value. The USA measures this perception and calls it the Consumer Price Index [wikipedia.org] (CPI). But perceptions can quickly change and destroy economies [wikipedia.org].
Re:Basically nothing new (Score:2)
Hell, a lot more than that, since banks across the world will give you most any other currency at a fairly standard rate for those pieces of papers called US dollars.
So really, its more like a few billion peoples. Just some of them will ask for a bit more to cover the fees and inconvenience.
Re:Basically nothing new (Score:2)
Yes, I was speaking conservatively. Even as a fanzine editor in the 1980s in Australia [davidgerard.co.uk], I accepted USD cash.
Re:Basically nothing new (Score:3)
Of course! Try buying weed with a friggin' Bitcoin.
Re:Basically nothing new (Score:3)
*cough* [gawker.com]
Re:Basically nothing new (Score:2)
Compare BTC to US Dollars, which likewise have "nothing of real substance". The big difference I can see is that one can pay tax in USD.
You can pay tax in BTC the same way you can pay tax in euros... simple conversion... Anyone who tried to claim euros are worthless because form 1040 requires dollars would be laughed at.
Re:Basically nothing new (Score:3, Insightful)
Re:Basically nothing new (Score:2)
A bank will convert euros to dollars. I don't know of any bank I can convert from bitcoin to dollars, thus, to me it's worthless.
OK, for the sake of argument, since you insist for some reason that the money changers who do exist, do not exist, I will humor you. If they're worthless, and you have a hundred thousand of them, because they're worthless, give those worthless things to me. To me, they're worth a couple bucks a piece because I can quite trivially (trivially for me, because I can use google) turn each into dollars or any other currency I desire.
I am tempted to create a BTC receiving address and post it in this thread so all the naysayers who insist "everyone knows they're worthless" can make me rich by giving me worthless BTC.
Re:Basically nothing new (Score:2, Funny)
Re:Basically nothing new (Score:2)
LOL best summary of the opposition to BTC I've seen in awhile.
Re:Basically nothing new (Score:5, Insightful)
It's not worthless in the sense that you can't find a sucker to sell it to today. It's worthless in the sense that eventually the supply of suckers will run out, and you're running the risk of getting stuck with bitcoins that have no other value. (Of course the same thing can happen with national currencies...but if it does, it means that the nation that issued the currency has collapsed, and if you're a resident of that country then you've got bigger things to worry about. Even a solid gold-based currency might not be tradeable for food or medicine or weapons.)
It helps if you notice that it's like every other pump-and-dump scheme:
Con Artist 1: I'll buy a bitcoin from you for $1.
Con Artist 2: OK, here it is. Actually, I think I'll buy it back from you for $2!
Con Artist 1: OK, here it is. Will you sell it back to me for $4?
Con Artist 2: Absolutely!
Victim: Wow, the value of bitcoins has quadrupled in the past few minutes! They seem like a wise investment! Can I get in on the action?
Con Artist 1: Sure! In fact, I'll sell you as many bitcoins as you want for only $3.50 each. That's below the market rate.
Victim: What a bargain! I'll take a thousand!
Con Artist 1: Done!
Victim: So, who wants to buy bitcoins? The bidding starts at $8 each!
Con Artists 1 & 2: My, my, look at the time! We must be going!
Confidence is the only thing backing any currency (Score:2)
What exactly backs bitcoin besides "Some guy" in an IRC channel?
The only thing that backs ANY currency is the belief that it has value. While I think bitcoins are ridiculous, ill-concieved and overhyped concept, they have as much value as people believe they do in exactly the same way as the dollar or the euro. A currency is useful because we believe others will accept it as a proxy good that can be easily exchanged for other good. There are very good reasons to believe that the dollar or the euro will continue to be valued by others (including network effects and taxing authority among others) but at the end of the day any value they have comes down to confidence.
Re:Basically nothing new (Score:3)
The Euro is becoming worthless because it is poorly backed by the EU. The USD is becoming worthless because it is poorly backed by the US Government.
Nonsense. They are being knowingly devalued as via quantitative easing in an (so far successful) attempt to guarantee a money supply sufficient to stave off economic Armageddon. Let's keep our fingers crossed.
Those currencies and the Bitcoin are backed by essentially "nothing."
The USD and EUR are backed by the relevant governments' ability to levy tax. The BC is backed by the "proof of work" expressed as blocks. In turn, both taxes and proof of work require resources and labour to be realised.
The difference is that the Bitcoin system will reach a maximum number in circulation.
Which is one reason Bitcoins cannot substitute for money. They are collectables.
If you have one bitcoin, it does not become "worth less than it was" because new coins are flooding the market.
Yes, eventually (ie. when production ceases) the price of a collectable, eg Picasso paintings, is demand driven.
OTOH, for money to work, its supply must, over the long term, match economic growth (or such growth will be throttled by deflation). This is how metallic standards persisted for so long, ie. mining activity was more or less a reflection of the general productivity of an economy. Only with the development of the advanced economies of the C19th did this relationship break down, thus necessitating, after a series of severe currency crises, the advance to modern fiat currency.
The community of buyers and sellers, like all economies ...
As an aside: Not all economies are free market economies. [In the limited sense of the term 'free market,' ie. that buyers and sellers are free to enter the market and to determine between each other the price of exchange without unnecessary charges being levied on the exchange.] More commonly (from an historical perspective) prices were fixed by law. Nor is it unknown for specified transactions to be limited to specified classes of participants.
will determine the relationship between bitcoins and real goods (price) and that price will remain rather stable
Stable?! Assuming they catch on (big IF), their price will be stable only in the absence of economic or population growth (of either sign).
unless governments try to criminalize transactions ...
Oh come now you are just being paranoid. Surely governments would never [wikipedia.org] interfere with attempts to set up non-sovereign currencies. No never! [wikipedia.org]
Re:Basically nothing new (Score:3)
Normally, when we speak of a currency being "backed", we mean that there is some commodity for which you can exchange that currency (e.g. gold). What does it mean to say a currency is "backed" by a country or organisation? It means that that country is the only one with the ability to issue that currency and inflate it away to worthlessness.
False.
National currencies are backed by legal tender laws. People who owe taxes in the nation issuing a currency can pay those taxes with the legal tender currency and usually ONLY with that currency. Debts, sales, and many other forms of contract involving monetary payment are typically only enforceable in that nation as payable in the national currency. A government "backs" a currency by assuring that there are widely shared uses for that currency and that currency alone.
With bitcoin, no one at all has that ability, which is one step better.
You misspelled "worse."
Not that inflating a currency to worthlessness is a good idea, but the fact that such a power is out there and could be used helps keep economies moving. If Pete Peterson, the Koch Brothers, Matty Moroun, and other holders of big piles of dollars could trust that those dollars would never lose value, they would have no incentive to put them to work in any way. At least now, those scumbags are shelling out to control the political system to maintain a deflationary (read: permanently depressed) economy and unavoidably pumping some of their dollars out in salaries for their shills.
Less cynical:
People with big piles of cash can put it in T-bills and brokered FDIC-insured deposits and actual big piles of cash and be sure of having the same number of dollars plus a tiny bit more next year, and their capital will be useless to the economy at large. If they are concerned that inflation will erode the value of their dollars, maybe they will put money into Aa-rated munies and corporate bonds, uninsured money market funds, and blue chip stocks, to get a little edge on inflation. A little more inflation, and some of them will make riskier investments that actually stand a chance of yielding returns well above inflation and as a handy side-benefit actually fund real economic expansion and creation of value. The bottom line: a "rock solid" currency is a disincentive to risk taking and real investment, while "soft" money encourages the idle rich to put their money to work for real.
Shorter:
People with money fear inflation, people with debt love it, people with crazy great ideas need it.
Bitcoin does suffer from a low user base, which is a separate problem.
It is also an inherent and permanent problem. There's no rational incentive to pay for anything in BTC that can be paid for in inflatable currencies, except at times when BTC valuation is in a bubble, when there's no reason for vendors to accept BTC as payment at "market" exchange rates. Because BTC are mathematically destined to face deflation in the long run, there's a permanent bias towards saving them whenever one can spend inflation-prone money instead. A hoarding incentive built into the currency works against its adoption.
The worst aspect of BTC is that people like Amir Taaki are central to its promotion. People who may truly have a religious devotion to "Crypto-Anarchism" but are either themselves absurdly ignorant of basic economics or are engaged in conscious fraud of the ignorant. His response to the question about the advantages of BTC was a couple of edge case anecdotes about foreign exchange and online commerce and an unsupported assertion that BTC will mean lower fees. As a matter of objective fact, most people never have any need to send money in a foreign currency, and his PayPal tale of woe is deceptive: you don't need a PayPal account to give money to someone who accepts PayPal only, because you can treat PayPal like a normal credit card acceptance syste
Re:Basically nothing new (Score:2)
Re:Basically nothing new (Score:3)
Anyone who tried to claim euros are worthless because form 1040 requires dollars would be laughed at.Only a man made of hay would claim that. But, if you have a positive quantity on line 76 of your IRS Form 1040, it doesn't matter if you want to pay your US tax bill with Euros, diamonds, or your left kidney: it won't work. You have to exchange the appropriate amount of whatever you've got into U. S. Dollars.
Same with Bitcoins. And from that limited perspective, Bitcoins are no more immediately valuable than a trunk full of aluminum cans or a suitcase full of Pound notes. You pay your debts to the government in the properly-denoted currency demanded by that government, or you rot in jail.
Re:Basically nothing new (Score:2)
Anyone who tried to claim euros are worthless because form 1040 requires dollars would be laughed at.Only a man made of hay would claim that. But, if you have a positive quantity on line 76 of your IRS Form 1040, it doesn't matter if you want to pay your US tax bill with Euros, diamonds, or your left kidney: it won't work. You have to exchange the appropriate amount of whatever you've got into U. S. Dollars.
Same with Bitcoins. And from that limited perspective, Bitcoins are no more immediately valuable than a trunk full of aluminum cans or a suitcase full of Pound notes. You pay your debts to the government in the properly-denoted currency demanded by that government, or you rot in jail.
So what exactly is your point? I'm, frankly, mystified how that could even remotely be relevant.
Lets do the standard /. procedure here: ....
1) I have a cloth bag at home with a handful of euro coins in it from last time I visited southern Ireland.
2) I can't pay my taxes with euro coins.
3)
4) I will rot in jail and/or Profit!!!!
I think we're missing a little something in step 3...
A trunk full of UK pound notes should be able to pay most reasonable tax bills, there's dozens of old fashioned brick and mortar places to convert into $ within a reasonable drive, at a huge transaction cost and general agony of course. Aluminum cans, maybe not much value there, and there's only a handful of places within a reasonable drive that take them, at least with little hassle although they don't pay market rates either. BTC? A zillion individuals and a zillion "companies" on the entire internet will trade with you, way easier than either example. BTC are waaaaaaay more liquid than a trunk of pound notes or recycled cans.
Exchange rate risk and liquidity (Score:2)
You can pay tax in BTC the same way you can pay tax in euros... simple conversion... Anyone who tried to claim euros are worthless because form 1040 requires dollars would be laughed at.
Sure you can convert bitcoins. However you also are exposing yourself to significant exchange rate risk and probably liquidity risk. I can exchange any currency but not every currency is equally desirable. Just because I can use bitcoins doesn't necessarily make it a good idea. Euro's aren't worthless because they require exchanging but there is a very real cost and some very real risks to exchanging currencies.
Re:Basically nothing new (Score:2)
The big difference I can see is that one can pay tax in USD.
More importantly, you can be arrested and lose your property if you refuse to pay your taxes, and you need to use USD to do so. Nobody is punished for not having BTC, but people can be punished for not having USD, which creates some serious imbalance in the demand for BTC.
Re:Basically nothing new (Score:2)
More importantly, you can be arrested and lose your property if you refuse to pay your taxes, and you need to use USD to do so. Nobody is punished for not having BTC, but people can be punished for not having USD, which creates some serious imbalance in the demand for BTC.
If your one and only contact with the economic system is paying taxes, you need to get out more.
If the $ were exclusively used to pay taxes, it would be fairly worthless, people would burn cash in the winter to keep warm, or use it as toilet paper. In that situation it would seem pretty trivial to find someone who does business with the govt to trade some BTC for some cash-firewood.
Re:Basically nothing new (Score:2)
If the $ were exclusively used to pay taxes, it would be fairly worthless, people would burn cash in the winter to keep warm, or use it as toilet paper.
I never said the only thing USD was useful for was paying taxes. However, at least in theory anything that BTC can be used for USD could also be used for; yet there are things that USD can be used for (settling debts with the government, paying fees to the government, etc.) which BTC cannot be used for. There is therefore an imbalance in demand, at least among US users of BTC.
Re:Basically nothing new (Score:3)
It's not just taxes, it's any other form of debt. So, the landlord has to take USD for the rent, and the CC company. It's unlikely that we'll get to the point where you can't use them to buy groceries. Your utilities by law have to take USD as payment for service.
I'm not aware of anybody that requires bitcoins where there isn't a viable alternative.
Re:Basically nothing new (Score:3)
Compare BTC to US Dollars, which likewise have "nothing of real substance". The big difference I can see is that one can pay tax in USD.
I see this claim a lot, but I think it is a little bit backwards. The value of the USD isn't in that they can be used to pay tax, it is that they are backed by the US Government, which imposes (and enforces) taxes. That is, while they are not backed by gold or some other set commodity, they are backed by the taxes collected by the US Government. So by extension, USD are backed by all of the physical goods produced, services rendered, and real estate owned in the U.S.
This is of course a simplification and not entirely accurate, but I think it makes a lot more sense than saying something is valuable because you can pay taxes with it.
Re:Basically nothing new (Score:3, Insightful)
Compare BTC to US Dollars, which likewise have "nothing of real substance". The big difference I can see is that one can pay tax in USD.
Nonsense.
Don't get me wrong, I think this BC thing is worthless and it is only a matter of time (and not too much) before it fails. And if it were to fail, issues like having a maximum limit of currency issued is a BAD (in capital letters) idea.
Having said that, the value of US $ is (almost) unrelated to taxes. If it was only useful for taxes, you would work just enough to have US $ for the taxes and then spend two-thirds/half the year in holiday. Hey, if you didn't work at all you wouldn't earn money and you would not have to pay taxes, then!
The US $ is useful to pay for goods and services from people who want US $. Period. In most countries (probably the USA too), you cannot sell anything if it has not a price in the national currency (you can accept foreign currency if you want to, but you are forced to accept the national currency). And even if legally you are not forced to do so, you'll need US $ for living there and buying the goods and services you need for your bussiness, so in the end you will need US $, you will want US $ and US $ will have a value to you.
In USA, UK pounds or EU euro notes have still value. Why? Because it is known that UK/EU produces things of value that can be exchanged for these notes. Even if you are not interested in these things, it will not be difficult to find someone who is, either directly or through a bank. Since the correlation between the amount us US$ in circulation, EU € in circulation, goods produced in USA and goods produced in EU is somewhat stable, you can relationship in its value can be stablished, and you can say x EU € = y US $.
The trouble with bitcoins is that knowing what can be purchased with bitcoins is little, not very known and probably unstable. To add to that, I doubt there is a single item that can be purchased with BC but cannot be purchased with US $ / € / Pound, whatever. So, the value of BC is based only in the public perception without any production base behind. The moment there is any doubt, the offers for goods in BC will disappear or show a drastically worse exchange rate, and exchanging BC for US $ will worse every day. Finally, a couple hundreds of investors will end with all the BC in the world but nobody will give them a cent for those.
Non-answers (Score:2)
The "why would anyone accept bitcoin given its instability" question was admittedly a bit inflammatory, but it would have been nice if he'd even made an attempt at answering it.
When the market doesn't have enough volume to smooth out wild gyrations like over the past few weeks it's completely unacceptable for real world use...
He did answer (albeit badly) (Score:2)
His "solution" was that merchants should just instantly move into and out of BitCoins on currency exchanges so that the swings were not an issue. And somehow using these currency exchanges will magically be cheaper than Visa/MC/ACH.
Unanswered inevitable followup: Why would anybody go through that much trouble instead of just trading in their desired currency to begin with? And who pays to run these currency exchanges?
Re:He did answer (albeit badly) (Score:3)
To be fair, it is hard to be more expensive than Visa/MC/ACH. Also, one would work on some money that isn't the desired currency if the other party is willing to work such currency. If you can exchange it imediately, why would you refuse a currency that isn't your preferred one (maybe add a small amount for conversion, but not refuse).
I never expected Bitcoin to get where it is, and I don't expect it to go much further. But I was wrong once...
It's Ioo lilliquid (Score:3)
The BTC exchange volumes are still far too low for a sane merchant to accept; the bid/ask spread and intra-day volatility is far too high. So, I'd accept my BTC, wait the required 10 minutes before I can turn it around (the BTC FAQ talks about this), and then end up collecting several percent less (or more) actual currency than I priced for. And that's if I implement totally dynamic pricing feeding off the data feed of my preferred exchange.
And Visa/MC provide far more services than just transfer. I guess for a more fair comparison would be the ACH system, which runs $0.25 and up per transaction.
Needs economists (Score:3)
The bitcoin effort needs the involvement of some economists with experience studying and understanding currencies, not just techies. It could also use some PR and marketing people, with all the bad press they've been getting lately for their poorly crafted currency system.
It sounds like they have the technology stuff reasonably well figured out, but they have utterly failed on the economics and marketing side of things.
I suspect that bitcoin needs to be replaced with a new system that has the advantages of the current without the raging disadvantages, re-branded without the negative associations of bitcoin, and work to make sure they don't fuck up again.
Re:Needs economists (Score:2)
"It could also use some PR and marketing people"
Please, for the love of $DEITY, no more PR and marketing people at /..
Re:Needs economists (Score:2)
The bitcoin effort needs the involvement of some economists with experience studying and understanding currencies
Funny how mainstream economists connect currency with banking and government, and how they advocate the role of governments and banks in regulating and stabilizing currency.
I suspect that bitcoin needs to be replaced with a new system that has the advantages of the current without the raging disadvantages
Most digital cash systems call for a bank to issue the digital currency in exchange for physical currency. I would like to see those systems more widely deployed, although I get the feeling that the current banks would not be too enthusiastic about introducing an electronic payment system that deprives them of transactions fees.
Re:Needs economists (Score:4, Informative)
The guy in our group (Donald Norman) that handles the business side of things is well educated in finance and economy. He's been deeply looking into that for a while now and has been communicating with Ben Friedman. Our group has for a long time been in contact with an economics professor, Adam Bragar. He's been specifically following and studying Bitcoin from an economics perspective too.
Re:Needs economists (Score:2)
I have the nagging suspicion that your comment was code for "they need to turn bitcoin into an inflationary currency but don't realize it because they're so economically illiterate".
In that case, I would suggest that, more than an economist, Bitcoin's developers need an ethicist nearby. You know, someone who can tell them that, "Hey, you got everyone involved in this currency on the promise of a very specific rate of money supply growth. If you default on this promise you made to every user, you are an asshole, no matter what your economic rationalization."
Why is it that no one can get an inflationary currency up and running without horribly defaulting a previous promise or custom? Hm...
Screw inflation; needs stability. (Score:2)
Screw an inflationary currency and all those pro/con arguments. I'd settle for one that was vaguely stable. I can tell you about how much [insert product or service here] 1USD will buy tomorrow. I haven't the least flipping clue how much a BitC is worth tomorrow because it's a niche, illiquid, broken-by-design, proof-of-concept. And as I've made a zillion posts on Slashdot pointing out, a "global currency" that must experience many orders of magnitude of deflation in order to be something other than a toy is worthless.
They screwed up the BitC expansion curve, and screwed it up badly. And it's fatal to the currency.
Huh? (Score:4, Insightful)
1) The expansion curve has nothing to do with the volatility BTC is currently experiencing; that's because it's a new currency with an uncertain future (in terms of who will accept it later).
The expansion curve has everything to do with BTC's issues. The poorly-chosen curve guarantees deflation if the currency is going to expand to a level where the net value of every BTC in existence is more than a trivial, useless, quantity. Expected deflation triggers hoarding. Hoarding triggers illiquidity. Illiquidity triggers volatility.
2) People's expectations of a nascent currency's volatility are way too high. Any new currency is going to be that way! This expectation is effectively ruling out any new currency that can't get its volatility down to that of the USD immediately -- which means you're against any new currencies that don't start with some stabilizer. (Btw, no you can't tell me how much gasoline a USD will buy tomorrow.)
When the Euro was introduced, nothing even remotely like this volatility occurred. Nothing like this: http://bitcoincharts.com/charts/chart.png?width=1228&m=mtgoxUSD&k=&r=60&i=&c=0&s=&e=&Prev=&Next=&v=1&cv=0&ps=0&l=0&p=0&t=S&b=&a1=&m1=10&a2=&m2=25&x=0&i1=&i2=&i3=&i4=&SubmitButton=Draw& [bitcoincharts.com] That's a chart that I'd expect to see with a pump-n-dumped penny stock or a fad like Beanie Babies. Not a serious means of value transfer.
This is a problem with the currency, not "people." If the currency was more liquid because of a better chosen expansion curve, it would not be an issue. (BTW, I can say that my USD will purchase 93-octane gas at around $3.90 to the gallon tomorrow in my area. I can say that with error bars of around 2%, barring some major swing in the world oil markets that have nothing to do with currency valuations. I can make no such statement about BTCs.)
3) Inflation and deflation are caused by changes in *expectation* of the growth the money supply. That is, it's only unexpected money shocks that change the price level/inflation rate. Bitcoin has broadcast how many there will be at all points in time, eliminating this uncertainty. This means that there will be no unexpected growth (though their could be unexpected velocity, liquidity, or acceptance level), and so the limited (final) quantity of bitcoins is *already priced in*.
So you won't have a scenario where, in 20xx, people say, "golly, they just stopped minting bitcoins, now they're suddently ultra scarce so we have to bid MORE MORE MORE for them." No: everyone will price in this event well in advance of the termination of growth.
At current prices, the total number of BTCs, after every single one has been mined many years from now, is roughly $303M (at current supply levels, it's much smaller, but I'm trying to cut the BTC some slack here.) For a currency that seeks worldwide adoption as an alternative to Visa/MC, this is, to be blunt, puny. Last year, Visa ran $5.4T in payments. If BTCs achieve the pathetic ubiquity of Discover (not accepted most places, little international presence), they managed to transact about $100B. If every BTC in existence at the end of BTC creation changed hands twice a week (which would be an unheard of currency velocity for an economy with a vaguely stable currency... the USD's velocity is approx. once a month.), the currency would have to deflate by a factor of 30 to reach $100B. (At the velocity of the USD, it would have to deflate by a factor of 240-ish.) Because it would have to deflate so much to be useful, it's unlikely to ever actually do so. T
Re:Needs economists (Score:4, Interesting)
The bitcoin effort needs the involvement of some economists with experience studying and understanding currencies, not just techies.
Have you visited the Bitcoin forums? Quite a few economists there. Also, high profile magazines, such as The Economist [economist.com], have written about it from the point of view that Bitcoin is, in the very least, a highly interesting experiment. No mention of any built-in economic failures there.
I don't understand the knee-jerk reaction that everyone here gets each time Bitcoin is mentioned. Almost every time it's accompanied misconceptions about USD being backed or otherwise thinking that something which is currently valuable (such as gold) is somehow guaranteed to always be that way.
No, I don't have anything invested in Bitcoins, and I wouldn't want to store much value in it until it has stood the test of time, and the implementations are more robust. I was shocked when I found out the private keys are stored locally in an unencryped file - that's a f***ing travesty.
But I do find the concept fascinating.
Re:Needs economists (Score:4, Insightful)
"Have you visited the Bitcoin forums? Quite a few economists there."
I have visited the bitcoin forums. The stupid, it burns.
Not all the posters, no. But it seems to be a mix of people with a moderate understanding of economics coloured with an extreme libertarian bias, people who have no idea about economics at all, conspiracy theorists and folks who are heavily 'invested' in bitcoin screaming at other people to shut up.
I also think a crypto currency is cool, and an interesting idea. I think the hard quantity limit and fixed creation rate are dumb as hell, and I think what's going on right now is a bubble. I think it's a bubble not just because of the way the price has been moving around, but because there is virtually no genuine economic activity in bitcoins. Almost the entire bitcoin economy is built on exchanges and speculation, there's very little real, actual stuff you can buy with it.
Add to that the hoarding factor, that means people are hanging on to vast swathes of bitcoins as an investment, and what you have is an investment into something with no inherent worth but a lot of inherent scarcity. You don't really have a currency or medium of exchange though.
Oh, and then there are the inactive early blocks, the 25% or so of the current total of bitcoins that are thought to be in the hands of one or two people, who stand to have control over a quarter of the entire BTC wealth if it takes off... not a recipe for stability, nor a recipe for people like me to feed 'real' cash into the system to enrich them.
So why do people like me get mildly angry about it? I think it's because firstly it looks like a missed opportunity. Bootstrapping a crypto currency is a fantastic thing to do. Bootstrapping one with the properties of bitcoin is just a disappointment.
Also the fanclub drives me mad.
The Flow of Money Problem (Score:5, Interesting)
However, I really want people to understand one thing. The criminalization of Bitcoin would not stop the illegal activity that surrounds it.
Well, I think you're jumping to conclusions if you thought that the idea is to halt the drug trade and prostitution rings by illegalizing BitCoins. I think the question was really asking how you feel about BitCoins enticing and extending illegal activities. Allow me to provide a real world example. A person I knew in a small town high school was making yearly trips to the nearest metropolis with his stash of cash, purchasing drugs from many sources and then driving back and dealing them. At some point this stash became $15,000 and on his last trip he made his first stop to pick up some mushrooms from a woman who had been compromised by police. As he pulled away, they picked him up and found some shrooms but also $14,000. Now, he went to jail for six months for drug possession but also the very large sum of money. They were able to prove that he was a dealer and was en route to make more purchases. If he had had BitCoins, he merely would have kept a wallet on his phone then transferred the cash to the woman and could have denied the whole transaction had taken place and was clueless about the shrooms in his car. Would they have been able to make anything stick?
Criminalization would only stop people from enjoying the tremendous and fruitful benefits of such a system, it would hinder the social good.
Not if the bad elements of society enjoy those "fruitful benefits" much more than the rest of society. All the old organized crime tactics like protection rackets suddenly become virtually untraceable when you can demand the money be sent to an anonymous BTC handle and then move it again. The flow of cash is a seriously important element in detecting and prosecuting crime and the anonymity of a currency destroys that. Corporate embezzlement becomes easier, drug dealing becomes easier, funding terrorism becomes easier, etc. Someone could steal my bank account information and pilfer money from me tomorrow but at least the bank would be able to trace it. Who traces the stolen wallet files? Sure the bank charges an overhead but they provide a service that is more secure than a mattress store.
You seemingly sweep the bad under the carpet and talk about only the good. This is a double edged sword and it's insulting for you to deny it.
We are aggressively advocating and promoting the legalization and regulation of the exchanges.
You keep saying this but you fail to provide any details on how this will be done. When transactions are anonymous, how in the hell does this happen?
Kings used to raise capital in order to wage wars. They required popular support before they were able to fund their wars. A common tool in modern day authoritarian regimes is currency manipulation in order to fund their wars of genocide (e.g Milosevic in the 90s). Bitcoin democratises governments.
That is so bizarre, you're all for the regulation and legalization of exchanges ... are you seriously that daft that you don't think the government is going to tax that which it regulates? You can't eat your cake and have it too. How will we fund schools and libraries and roads if everyone's going through BTC? How will we even know that everyone's going through BTC? I cannot fathom how you expect this to work!
I understand the good points of this experiment but I'm insulted by how quickly you try to pull the wool over everyone's eyes.
Re:The Flow of Money Problem (Score:2)
Same way they got Al Capone, tax evasion. Dude has no non-BTC income, dude spends $250K/yr on non-BTC "things" resulting in Big Trouble.
There seems to be this peculiar idea that BTC is untraceable ... Not so. Once you have proof of who owns an address, you got them. Yes, you can make as many addresses as you want, just like you can make as many real world dead drops as you want. But once someone takes the bait...
Comment removed (Score:2)
Re:The Flow of Money Problem (Score:2)
If he had had BitCoins, he merely would have kept a wallet on his phone then transferred the cash to the woman and could have denied the whole transaction had taken place and was clueless about the shrooms in his car. Would they have been able to make anything stick?
What's the harm if they hadn't? I'm sure you can come up with a better example, and I'm sure I don't speak for the entire Bitcoin community, but I really don't see the point in the "war on drugs".
And I have to imagine they would've been able to make it stick. They could prove he spoke to the woman, or they could gather enough circumstantial evidence... Or are you suggesting they'd have an easier time if he'd used cash? Unless they're going to intercept the cash and get his fingerprints, I don't see it. happening.
All the old organized crime tactics like protection rackets suddenly become virtually untraceable when you can demand the money be sent to an anonymous BTC handle and then move it again.
You can't trace it via the money, sure, but you can trace it via the act itself, just as above.
Who traces the stolen wallet files?
This is a serious downside. There is nothing in Bitcoin, currently, which resembles a bank. Money in your wallet.dat is more or less like cash in your pocket, or stuffed into your mattress. Act accordingly.
I realize this is a huge problem for most people. For me, it's an advantage -- while I'm responsible for keeping wallet.dat secure, I can do so in a way that I can't with most banks.
We are aggressively advocating and promoting the legalization and regulation of the exchanges.
You keep saying this but you fail to provide any details on how this will be done. When transactions are anonymous, how in the hell does this happen?
This bit here is why I replied at all.
Bitcoin transactions are anonymous, meaning I can send any amount of bitcoins (that I actually have) to any address, and it's hard for anyone to figure out that I did it, or even build a profile by watching me, since the receiver address is likely generated for that purpose, and I'll have multiple sender addresses.
But this in no way implies that exchange transactions need to be anonymous. If you buy a Bitcoin with a dollar, the associated Bitcoin transaction may not be traceable, but the dollar transaction will, which means the exchange (at the very least) will be able to see where your dollar came from and where it went, and will certainly have a record of something like "User A bought this many Bitcoins from user B, where user A transferred from this bank account, and user B transferred to this bank account." In practice, the exchanges use things like Dwolla (not PayPal, since PayPal doesn't allow anything to do with Bitcoin), but that's still in the realm of being able to trivially trace bitcoins bought and sold for real money.
This shouldn't be surprising to you, since these transactions are as much dollar-based (or GBP-based, etc) transactions as they are Bitcoin transactions.
Pure Bitcoin transactions are much more difficult to trace. You may be able to see that I bought this many BTC for this much USD from this person, but you'll have a much harder time figuring out who I sent it to or what I spent it on. Still, if I wasn't actually buying things with Bitcoins, it's very possible -- look at exchange A to see which account I received the BTC into, watch a transaction for the same amount leave that account and go to another account, and see someone sell coins from the second account at exchange B, and you can piece the story together as "Looks like this person used Bitcoin to send this amount of money to this other person, who immediately cashed it."
That is so bizarre, you're all for the regulation and legalization of exchanges ... are you seriously that daft that you don't think the go
Re:The Flow of Money Problem (Score:2)
I think there's an underlying assumption in your writing: that there is no inherent good in people so they will evade taxes or sell drugs if given the chance. As for myself, I don't think that's true of the majority...
And if the majority supports it, why should it be illegal? Making the unjustified assumption that govt exists to support its people, rather than the real world implementation which is the other way around.
Re:The Flow of Money Problem (Score:4, Informative)
Actually, becoming a tax evader is very easy. Start buying and selling random stuff for profit - and 'forget' to pay taxes on that. BAM! - Tax evader. It really is that simple. And If you buy N bitcoins and sell them a week later for twice the amount, you will have to declare your income and pay taxes on it. If you don't you are a tax evader. End of story.
Didn't discuss issues of being unregulated (Score:2)
There where many questions regarding the fact that it is an unregulated currency. Unless you are a pretty staunch Friedmanist, you acknowledge that governments have to regulate markets and manipulate currency to keep the economy running (and stop pump and dump schemes etc.).
Since bitcoin seems to be completely resistant to any manipulation, it seems that governments not only can't do nasty big-brother type things, but also can't do the kinds of things we need it to do to stop depressions. I am disappointed to these issues being completely skirted.
Re:Didn't discuss issues of being unregulated (Score:2)
Since bitcoin seems to be completely resistant to any manipulation
Except that a single compromised account on an exchange caused severe devaluation:
http://www.engadget.com/2011/06/22/compromised-account-leads-to-massive-bitcoin-sell-off-eff-recon/ [engadget.com]
Re:Didn't discuss issues of being unregulated (Score:2)
Since bitcoin seems to be completely resistant to any manipulation
Except that it's highly affected by manipulation, as the recent Mt. Gox debacle proved. Everything about this dude's answers look like hand-waving and talking points.
Re:Didn't discuss issues of being unregulated (Score:2)
but also can't do the kinds of things we need it to do to stop depressions.
Currently they seem uninterested or unwilling or unaware of how to do those things ... Seems a fine distinction to be worried about, regardless of reason, they aren't doing it.
Re:Didn't discuss issues of being unregulated (Score:2)
Thanks for nothing, Amir (Score:2)
I was thankful that my question was selected despite it not having been modded up:
But then in his reply, he just repeats back what I just told him, and then said it "will be trivial". Well, no, they've tried, and it's not trivial now, because it needs a concerted effort, both for user involvement, and in new coding. Total blow-off answer! See for yourself:
If you're going to pick a question, actually answer it, "Amir". If I wanted to talk to a wall, there are four already around me.
"Doesn't it seem wasteful" ? (Score:5, Insightful)
So let me get this straight - to pay people for doing productive things, like the physical labor to build and maintain the infrastructure bitcoins implicitly rely on - electrical power being among the most trivial when you think about it - is wasteful?
News flash dickhead - unless you've growing your own food with handmade tools and living in a hut you build yourself from materials you gathered yourself, you are sitting near the top of a MASSIVE pyramid of laborers, designers, artisans and technicians. All your "success" comes at a price of tens of thousands of other individuals doing their job. You just called all that wasteful.
Hell, the computer he's using probably has a hundred thousand sets of fingerprints on it - from the guy who dug the earth for the raw materials to the guy who dropped the box on his doorstep (because fuck knows he probably never leaves the house, which itself took a small army to make possible).
=Smidge=
no, no, and... no (Score:2, Flamebait)
The responses are assertion after assertion without substantiation.
Overall, I believe the properties of this currency will significantly add to the wealth of all peoples, especially those less well off.
Why especially the less well off? Are they particularl known for having the sort of computing knowledge not to have a keylogger installed and their money stolen?
Ideologies should not be a point of contention, especially when we all see the immense prolific value of a more efficient means of commerce.
What is efficient about the way bitcoins are processed?
Although bitcoin is still underdeveloped, everything visible in the modern world can be adapted using bitcoins as a backbone.
What about government market regulation to prevent widespread pump-and-dump, plundering, etc.? Your argument is as complete as, "Everything in the world would be better if I were just promoted to benevolent dictator for life."
(clearing houses, security, fraud protection, interest bearing accounts...) continuing to be offered, but with far less overhead.
What overhead?
Gold is not a currency in my mind. It is a store of value.
In what sense is it not a currency? In what sense is currency not a store of value? Gold is not a yellow elephant; it is a blue dolphin.
Bitcoin is backed by the fact that is has unique properties as well:
Backed in what sense? And half the properties are wrong or meaningless:
Decentralized
How do I use bitcoin without a computer and a network? Who owns and regulates the hardware factories and the networks?
No bank holidays
Are you ill? I just gave 50p to someone last Sunday.
International
Unlike the Euro, I guess the bitcoin can be used (that's used, as in because everyone has electricity and a satellite dish and shit) in the middle of sub-Sarahan Africa, or something, yes?
No concept of borders
Aren't you asking for regulation?
Divisible
Who controls how divisible it is? Put another way, why can't I give you 0.0000000000000000000000000000000000001 of a bitcoin toward repayment of a debt?
True micro-transactions possible (new markets feasible)
As opposed to... fake ones?
New privacy model
That's certainly true. Everyone has to have the security knowledge of a bank.
Private identity yet transparent
Get your head out of the clouds a moment and examine what happens when you buy something over the Internet. How many ways can your identity be traced?
Secure
Stop it.
You do not have to trust merchant sites (Sony - Playstation) to protect your data
I don't anyway. If they are storing CC details in the clear and someone steals it, guess who isn't picking up the tab?
Fast Transactions
I think the computing power required in verifying a bitcoin transaction in an environment where the whole world uses bitcoins is going to just slightly exceed the current system.
No Charge backs
And here comes the libertarian caveat emptor bullshit we were all waiting for.
Oh, this is all too painful... maybe I'll read the rest if I can muster the energy.
A really stupid smart guy (Score:2)
I do not advocate that people speculate on bitcoins.
Which matters not the tiniest bit. Speculation inevitably occurs with any and every commodity, including currencies. Speculation is inevitable.
As liquidity increases transaction costs decrease. If there was already an appropriate clearing house in place, a merchant would be able to automatically accept bitcoins and liquidate them to dollars.
There is more to transaction costs than mere liquidity. Furthermore he neatly avoids the problem of exchange rate risk.
Gold is not a currency in my mind. It is a store of value. I would not want to go to buy bread from my local store and shave off some gold from a bullion and take out a scale and wait for an acid test to be performed. Gold is backed by real world properties.
??? Talk about a strawman. I don't think anyone was claiming gold was a currency, and even if it was the ONLY thing that gives ANYTHING value is the belief by both parties in an exchange that it does have value. If people believe bitcoins or gold or US dollar have value then they do. If they do not believe they have value then they do not. Bitcoin is little different than any other secondary market commodity. I can conduct transactions using Magic The Gathering cards as currency if the other party will accept them.
Sending funds abroad is time consuming, expensive and difficult. Recently I tried sending funds to a Polish bank from the UK- the bank was closed and I waited until Monday. Requiring me to be in person at the bank, the woman was unable to enter the Polish L looking character into her terminal. I had to aquire an internet banking code to do it online. Waited 3 days, logged in and the internet banking form didn't work. In the end, I ended using a friend to aquire Bitcoins and use the Polish exchange bitomat (we never use Britcoin ourself).
Individuals almost never can exchange currencies more economically efficiently than a bank. Banks have transaction volume and can reap economies of scale. He made the transfer more efficient but made the currency exchanges much less efficient AND exposed the counter-party to significant exchange rate and liquidity risk. Whoever the counter-party was to this transaction was, they were an idiot.
Decentralized
Which can be a serious disadvantage when there are economic problems. I seriously doubt this fellow has any idea how bitcoin would escape a liquidity trap [wikipedia.org].
No bank holidays
No banks either which is most likely not actually a good thing. Despite their problems banks are invaluable for getting capital where and when it is needed. This is not to say that there aren't other mechanisms that can serve the function of a bank but bitcoin is in no way, shape or form an obvious improvement. There also is no lender of last resort if things go really wrong as they inevitably will.
International
Having traveled extensively internationally, I can assure you that there are lots of commodities including the US dollar that are accepted around the world.
No concept of borders
Borders have their advantages too. Doing away with them comes with some pretty significant problems.
Divisible
I can divide any other currency too. No improvement here.
True micro-transactions possible (new markets feasible)
Unproven. Any transaction has frictional costs and it bitcoin has not established a way it can avoid these. It might reduce some but they still exist and likely bitcoin would increase other costs.
New privacy model
New does not imply better or worse. There needs to be an actual advantage.
Already dated. (Score:5, Interesting)
This reads like it was written before the peak, the first crash, the Mt.Gox break-in and shutdown, and the second crash.
A sizable fraction of the Bitcoins in existence are now trapped at Mt. Gox (formerly Magic, The Gathering Online Exchange) which turns out to be two guys in Tokyo who are in way over their heads. Mt. Gox is trying to re-establish who owns which account. Since the names, email addresses, and hashed passwords of their customers have been published, this is difficult. No date has been given when trapped funds will be available. One thing that's now clear: don't keep any significant funds in any of these "exchanges". They're not banks. They are unregulated non-bank depository institutions.
Meanwhile, another exchange in Chile has taken up some of the slack, and the price of a Bitcoin has settled down around $14-15. At the beginning of June, it was around $8, and last week it spiked up to $30.
It's worth bearing in mind that the entire Bitcoin economy has less volume than a typical US supermarket. There's not much you can actually buy. Unless the volatility drops below 1%/day, there won't be. Merchants can't set prices in Bitcoins yet without a big exchange rate risk.
Bitcoins are a reasonable idea, but the Bitcoin financial ecosystem is far too flaky to take seriously.
In a shorter answer... (Score:3)
Step 1 - Look at everything you hate about credit card companies... now do the reverse of all of that.
Step 2 - Look at all the things you like about cash... now do all of that.
You now understand the goal of bitcoin. Even cash money systems have problems starting. Just look at confederate dollars.
Then again, you'd think the Secret Service would love a a counterfeit proof system and wish they could copy it somehow.
part three of three (Score:3)
If SHA256 or ECDSA was ever cracked, we'd have far bigger problems to worry about than bitcoin being destroyed
Yeah, the world was in chaos and turmoil with no currency system or economy whatever before SHA256 or ECDSA.
The internet wasn't built perfect. But years of reshaping/patching/incremental design have shaped it into a workable network. Bitcoin will too undergo this transformation with time as it ages.
You insult the people who built the Interent by comparing your little project with it. The Internet wasn't built to make a few people with awful PR skills rich. It was a resilient defence network, then an academic network, then a general communications tool. It is a network of autonomous networks, parts being built independently to make a useful whole. Bitcoin is a single, poorly-thought-out idea with one fairly routine mathematical feature.
Bitcoin's protocol itself will need to be extended in order for it to grow.
By me, right? This is a democratic thing, so I get to vote for the representatives who decide on monetary issues, just like with regular government, yes?
The point to Bitcoin is that you can choose your own level of trust in an external service.
That is the "point to" every social endeavour, including exchange of plain-ol' dollar bills.
Then we can go further to where a person has all their funds in a trusted service like with email today-
We could call it a "bank".
Bitcoin- calling it a scheme for drug trafficking networks.
So you're saying it's not for that? It shouldn't be for that? What objection do you have to that statement?
The accepted 'standard' is to use SI prefixes.
The accepted standard when dealing with currency you're trying to sell to the wider population is not to say things like "the accepted standard is to use SI prefixes". This is the real world, not the science lab.
Our organisation has been aggressively seeking FSA regulation here in the UK for Britcoin.
If the FSA even thinks about granting some sort of approval for bitcoin then I'll be giving up on this country entirely. The disease of caveat emptor libertarianism has already deregulated the financial industry to the point that the country's public and private financial affairs are neck-deep in the shit - if the same disease manages to weave its own currency into the system then sensible investors and workers ought to pack up and leave before the country collapses into depression.
The illicit markets are a very small part of Bitcoin
Prove it. Show me the records that bitcoin is supposed not to have.
Sending funds abroad is time consuming, expensive and difficult. Recently I tried sending funds to a Polish bank from the UK- the bank was closed and I waited until Monday. Requiring me to be in person at the bank, the woman was unable to enter the Polish L looking character into her terminal. I had to aquire an internet banking code to do it online. Waited 3 days, logged in and the internet banking form didn't work. In the end, I ended using a friend to aquire Bitcoins and use the Polish exchange bitomat (we never use Britcoin ourself).
Because of the number of Polish people in the UK there are a billion and one reasonably priced ways of sending money quickly to Poland. If you don't know any of them and don't know how to use the Internet to find any of them then I seriously question your competence. When Poland enters the eurozone it'll be even SWIFTer, and certainly free for individuals. You know, there's a reason why it's harder to send money to certain countries, and as countries develop and their financial systems become more secure, it becomes easier to send money to those places. Since you're clearly libertarian you won't be able
Re:Bitcoin explained (Score:2)
Though to be fair, that Amir is British and is actively seeking proper regulation gets him a lot of points in my mind :-)
Re:Bitcoin explained (Score:4, Informative)
I'm Amir Taaki from this article. You lump us all in as Ayn Rand right wing 'nerds'. Maybe you should google my nickname 'genjix'... then you can see my past history for the last 10 years working below minimum wage on free software, and my writings on Wikipedia about building a better future for all.
You're acting like politicians who smear there enemies by pointing at anyone they dislike and shouting 'TERRORISTS!'
We're all very diverse in the Bitcoin community, but we recognise the potential of this currency how others recognise the potential of something like Esperanto or Linux. Your Ad Homineum attacks on our personalities are counter-productive for any kind of sensible debate about the merits of this system.
Re:Bitcoin explained (Score:2, Troll)
"You're acting like politicians"
This is an unjustified plural. As I note above [slashdot.org], that you're personally actively seeking proper regulation for BTC gets you a lot of points in my mind.
But you put your hand on your personal equivalent of the Bible and tell me that most Bitcoin partisans are not accurately portrayed as above. I've read the forums. They're economically naive Internet libertoonians whose most exploitable resource is their unexamined privilege.
Re:Bitcoin explained (Score:2, Informative)
I just read one Bitcoin partisan (Robert Horning) arguing on Wikimedia foundation-l that Bitcoin would seriously continue past the existence of the Internet, computers and reliable electricity . I mean, what the actual fuck. People here react badly to Bitcoin advocacy because the quality of it is so consistently awful - that's what my undue cruelty to Bitcoin for cheap lulz is about.
Quite seriously - I work with programmers. They tell jokes about annoying Bitcoin advocates in the office. You seriously, seriously have to do something about the terrible advocates you have. The rest of the world really hates them.
Re:Bitcoin explained (Score:3)
Link of above claim: http://lists.wikimedia.org/pipermail/foundation-l/2011-June/066437.html [wikimedia.org]
Re:Bitcoin explained (Score:2)
It's all math, so clearly you have to etch out all the bits from your wallet file onto a stone tablet, no electricity required. :)
Re:Bitcoin explained (Score:4, Insightful)
working below minimum wage on free software
Working below minimum wage is when you have to go out and get a job to survive and you're so desperate that you take something below what even the state considers reasonable for your survival. Choosing to spend time on free software projects voluntarily because they happen to interest you is not "working below minimum wage" - it's a hobby.
my writings on Wikipedia about building a better future for all
Wikipedia is the ultimate Objectivist dystopia. And Wales may be a slimy embezzler but at least he doesn't deny his admiration for Rand, so you can't plead ignorance.
You're acting like politicians who smear there enemies by pointing at anyone they dislike and shouting 'TERRORISTS!'
That's only bad when "terrorist" isn't well-defined or when the target doesn't fit the definition. But when a group of people act as self-righteous Ayn Rand-reading nerds then it's perfectly acceptable to call them self-righteous Ayn Rand-reading nerds.
We're all very diverse in the Bitcoin community,
Why is it that every single oddball group uses the defence, "We're all very diverse"? You're as diverse as any group of people who think bitcoin is a good idea can be - and that's not very diverse.
but we recognise the potential of this currency how others recognise the potential of something like Esperanto or Linux.
Adoption of Esperanto was an interesting idea for cross-border communication which evolved into... everyone speaking English. Linux is and always was a pragmatic operating system project based on a Free software licence which has resulted in a very usable operating system. Bitcoin has... no redeeming feature whatever. It's not untraceable; it's not secure (unless you regard users' machines as less crackable than a bank's); it's not scaleable... so what is it, apart from a get-rich-quick scheme for its founders?
Your Ad Homineum attacks on our personalities are counter-productive for any kind of sensible debate about the merits of this system.
It is very important, in studying any human system, to examine the personalities of its leaders. It would be irrelevant ad hominem to dismiss you because you are, say, fat or Asian or whatever. But to consider bitcoin's political culture is entirely appropriate.
Re:Bitcoin explained (Score:3)
Working below minimum wage is when you have to go out and get a job to survive and you're so desperate that you take something below what even the state considers reasonable for your survival. Choosing to spend time on free software projects voluntarily because they happen to interest you is not "working below minimum wage" - it's a hobby.
Could also be that he's incapable of landing or keeping other jobs than http://i.somethingawful.com/u/elpintogrande/june11/eroticbitconchat.JPG [slashdot.org]">pimping 16 year olds and pump-and-dump schemes [bitcoin.org]. I wouldn't presume to know.
Re:Bitcoin explained (Score:2)
It's worth pointing out that even though Objectivists and Crypto Anarchists start out from very different moral perspectives, they tend to end up in similar places.
Power won't go away because it's a natural product of human relations. Our economy is a product of social and productive relationships in our society and having a p2p forex system won't fundamentally change anything.
It is nice to have an alternative to things like PayPal for international money transfer. However ,given the computing power that will eventually be required to run the bitcoin network and the requirement to convert bitcoins into local currency so one can pay ones taxes, etc, then it's looking more like you've just done the banks a massive favour by inventing a p2p forex system that enables them to cut costs for themselves.
Once the banks are in on this system I'm sure they'll quickly dominate it. They already operate as lawful, licensed cartels so it seems inevitable that using bitcoin, with its fixed supply, as an intermediary token for forex whilst still charging regular punters extortionate rates for daring to convert the things into real money would be top of their agenda.
Of course, if your concious of the fact that the established banks and their regulators are your mortal enemies then you stand a better chance of getting some sort of victory out of them. Regulation is required to stop national governments banning bitcoin under the pretext that it can be used for laundering, but you should still be very wary of the banking sector.
Re:Bitcoin explained (Score:2)
I'm going to agree with the AC below me, I'm tired of the GD bitcoin stories on /. Until payment with bitcoins becomes ubiquitous, like paypal is with online purchases, I don't need to see a story about it every few days. Until then I don't care.
Re:Bitcoin explained (Score:3)
Look to the right of your browser window.
You see that vertical bar with the arrows on it?
You can use that to do something called "scrolling".
Whenever you see the mean, nasty Bitcoin stories you can "scroll" past them instead of clicking on them like you seem to think you are forced to do.
Re:Bitcoin explained (Score:4, Funny)
Bitcoin...Esperanto or Linux.
Hm...
I see your point.
Re:Bitcoin explained (Score:2, Informative)
Holy crap, that other AC was right!
http://www.bitcoin.org/smf/index.php?topic=3066.0
Yep, that's Amir "Genjix" Taaki, pioneer of a revolution in currency, pimping out two 16-year old girls for 50 BTC/hour.
Re:Bitcoin explained (Score:2)
Will slashdot ever stop upmoding this copy/paste spam? It was kinda funny the first time it was posted. By now, most of slashdot has seen the joke multiple times already.
People, if you're into cryptography, infosec, parallel programming, economics, or finance, you will probably find bitcoin interesting. If you don't find it interesting, however, then don't click on bitcoin stories. And for the love of Bob don't paste tired old joke spam into such stories.
Re:Bitcoin explained (Score:2)
Maybe people keep modding it up because it keeps being relevant.
Just a thought.
Re:Bitcoin explained (Score:2)
Re:Bitcoin explained (Score:2)
Will slashdot ever stop upmoding this copy/paste spam?
That's funny, I have the same feelings about the non-stop spam of BitCoin stories on slashdot that seem to be programmed to appear no matter when I sign on in the hopes that the fad has finally passed.
To be fair, the 'pump' phase of pump-and-dump has not quite ended yet. However, the signs are starting to show that it is near. It doesn't matter if its stocks, commodities, or tulips. When the volatility begins to swing wildly like it currently is for bitcoins, the 'dump' phase is not far away.
Re:Bitcoin explained (Score:2)
Re:Bitcoin explained (Score:2)
I run the card to buy stuff and then I pay it off at the end of the month, am I missing something?
Re:Bitcoin explained (Score:3)
Re:+1 Comedy Gold (Score:4, Insightful)
I am amazed it took this long for someone to work out a way to mine and exploit unexamined privilege as a resource.
Re:And the criminals go (Score:3)
What amazes me is that people who understand the cryptography still do this stuff on Windows machines [newstechnica.com]. WHAT.
Re:Gold? (Score:2)
e-gold already exists (Score:2)
I can already have an e-gold (silver,platinum) debit card.
It automatically converts near the current spot price (minus a fee). The financial authorities have already been all over them.
Re:Gold? (Score:2)
Personally, I am not a fan of gold-backed currency and would choose to back digital cash with non-digital cash if I were to set up such a system. Still, although IANAL I do not see why a gold-backed digital cash system could not operate in compliance with the law.
Re:Gold? (Score:2)
Perhaps you can explain how you fit the gold into your intertubes when trying to send it to someone online...
Re:Jesus (Score:3)
Re:Jesus (Score:4, Insightful)
History is littered with the detritus of "inevitable ideas whose time has come" that weren't inevitable, and whose time hadn't come.
Is this type of system inevitable? No, I don't think so. In fact I think it has a lot of things actively working against it, not the least of which is the simple fact that it'll be hard for the government to trace, tax, and control this new currency, and the government is the only one with the guns and laws to enforce adoption of a fiat currency, so you've just alienated the very organization whose support you desperately need to be able to break out of the small niche you're occupying.
Do I really, really think this is not going to happen in my lifetime? There will always be naive simpletons willing to buy into the delusion that this sort of thing will catch on "any day now." I don't think that means that this is going to happen in my lifetime.
A steady drumbeat of articles flogging this pyramid scam is not "expressing a general interest," it's beating a dead horse.
Re:Jesus (Score:2)
Re:Jesus (Score:5, Insightful)
The major difference is that credit cards and the computerization of banking didn't "replace" any currencies, they simply eased the circulation of standard fiat currencies around from bank to bank and account to account. They digitized the existing system, in other words.
There are *very* few use cases where Bitcoin offers substantial benefits above and beyond using something like a credit card, and most of those use cases are directly antagonistic to the governments and regulatory bodies who would need to embrace bitcoin to make it a truly viable standard beyond the niche market it currently occupies. Of the list of strengths Mr. Taaki cited, the only ones truly unique to Bitcoin (that could NOT be implemented in our current system) are the decentralization and privacy offered - both of which do nothing to entice a centralized regulatory body charged with overseeing, taxing, and monitoring the system to accomplish those goals, and in fact actively work against their accomplishment of those goals.
I'd also say that you could make a pretty solid argument that the majority of people who are buying into the Bitcoin hype at this point are the paranoid & the criminal (for whom a decentralized, anonymous transaction mechanism is appealing), or the excessively-nerdy folks with very fast computer rigs (who dream of making millions on something which bears all the hallmarks of a pyramid scheme).
Re:Theoretically 1 bitcoin in circulation??? (Score:3)
He's talking out his ass is how you explain it.
World economy - roughly 74 trillion GDP. 74,000,000,000.00 dollars - (source - Wikipedia)
1 bitcoin is divisible to 8 decimal places, giving 100,000,000 units of value (source - Bitcoin)
If 1 bitcoin were running the world economy, then the smallest unit of currency in our new world economy would be worth approximately 740 dollars. Good luck buying a cup of coffee or a pack of gum. And if you think gas prices are high today, good luck earning your .00000001 bitcoin/liter.
Re:Theoretically 1 bitcoin in circulation??? (Score:2)
Right now the divisibility of Bitcoin is 8 decimals. This can be extended if need be in the future. The placing of the decimal point is completely arbitrary.
There will be (in the future) only 21 million bitcoins, but currently there is 6 million. I tried to use the SI prefix mega to emphasise the fact of the decimal's placing to be arbitrary... But maybe it came out ambiguously. Internally 1 BC is stored as 100 000 000 in a 64 bit integer.
Ergo theoretically we could run the entire economy on a single bitcoin :)
Re:Theoretically 1 bitcoin in circulation??? (Score:2)
But I know that conspiracy theories are easy while reading is really hard.
Re:Theoretically 1 bitcoin in circulation??? (Score:2)
It's a conspiracy theory to suggest that a businessman might just be promoting his product/service/idea to make more money? Apple must love you...
He said that he had 6000, but each time the value increased by some amount he invested them in his idea. And today he says he has 32. What I certainly believe, then, is that he's a businessman who has put a lot of "money" into his idea and he wants to make an RoI.
But the "answer" is something I'll never know. He's obviously a shyster who can't even form a good argument, and I'd believe 32 as easily as I believe 1 or 6000. I also assume his exhange is operated by him out of his own pocket, so he never gets any more bitcoins.
Re:Why not just bind the value to the US $ (Score:2)
Monetary systems around the world learned long ago that tying your currency to something specific (ie gold) was a really bad idea, that's why the USD is no longer backed by gold.
Why make the same mistake again with a new currency?
Additionally, why would you want to tie your new currency to one that is worth less and less each day?
Re:More Bitcoin spam? (Score:3)
That's how I feel when game system posts come out. There are lots of topics that don't interest me, you don't see me cry each time an article gets posted.