Bitcoins

[jh15]

I'd been lightly listening to steve gibson's bitcoin stuff, planning to re-listen, but missed the early boat.

I was planning on using bitcoin for my customers at some tie, but had Paypal available so didn't bother.

Now if Dave is listening, I'd gladly switch from my 2.00 per month paypal donation to eevblog to bitcoins, just tell me how.

[PeteInTexas]

All currency is based on confidence now.  If you can get a significant population to confide in your Java beans than it could be legitimate.

What they are offering is a transparent currency which can be closely monitored and controlled.  The appeal of bitcoin is its transparency.

Actually its the opposite- untraceable transactions is its main appeal.  And fiat money is not based on confidence- its based on law (something about "legal tender").

[PeteInTexas]

I hardly ever touch paper money these days.  I pay for things with a plastic card and everything is monitored/maintained through online banking.  Bitcoin is not much different in actuality.  It just has no tangible equivalent which gives rise to the problems with normal currency.

Actually, paying with plastic is just an accounting and transaction convenience.  Ultimately, paper money will get exchange at some point some where.

[jucole]

i dont understand what it is. a new concept i think, sometime its coin, and then its a p2p, and then computer processing power.

If you took Bitcoins and put them in a pan and boiled them for 2-3 days, what your left with is in essence just a file format of an open-source bit of software and trust.  Now the interesting part is how much is a Bitcoin actually worth?  now the term "coin" would lead you to believe it's a currency, when in reality it's not!  Bitcoin "coins" are more like shares in a piece of software or the Bitcoin brand.  The hype surrounding Bitcoin allow early adopters to make large sums of money from the later investors jumping aboard.

The p2p part is clever but flawed in that if any one bad person controlled 51% of the validation nodes etc,  they could potentially "cook" the books.

My view is if Bitcoin survives it will either be a contender for the next generation of Paypal, thus making the holders of the Bitcoins effectively the shareholders;  OR just a craze driven virtual currency version of  "The Pixel Millionaire" website!


Edit: some more interesting things...

Some people are selling hardware to specifically compute the SHA-256 hashes.
http://www.butterflylabs.com/

[MacAttak]

Actually, no. The Butterfly Labs hardware hasn't materialized yet. There are quite a few unhappy people right now who gave them "pre-order" money and haven't seen working hardware yet. There are other turnkey systems on the market now however which do work.

Also, it's not just a "file format and trust". It is trust in the mathematics behind modern cryptography. It is also trust that there is more incentive in keeping the system honest than there is in trying to cheat it. For the time being, that seems to be holding true. And for as long as governments are allowed to legislate fiscal policy (such as QE), these kinds of distributed trade networks will thrive.

They aren't "shares" any more than the currency in your own wallet. Owning a bitcoin doesn't confer any rights. You don't have a say in how the medium evolves. You aren't entitled to dividends, you don't get quarterly shareholder reports. It is simply a credit-based trading network. A step up from bartering. Just like modern banking systems, except instead of the fundamental trust being placed with corruptible bank officials, that trust is instead placed on computer science and mathematics and social behavior theory.

Similarly, the whole "51%" thing isn't correct. Simply controlling nodes isn't enough. And even if you did take over 51%, all that would do is bring the system to a halt due to lack of consensus. You would literally need to control the great majority of the network in order to pull off any "book cooking".

And about the comment about paper eventually trading hands - that just simply isn't true in the modern economy. Everything is a digital transaction. The amount of money that flows on a daily basis is impossible to move by physical means - and it would be impractically expensive to even try to. All-digital currency isn't as alien and scary as one might think.

[jucole]

Just like modern banking systems, except instead of the fundamental trust being placed with corruptible bank officials, that trust is instead placed on computer science and mathematics and social behavior theory.

And trust that your money in your Bitcoin exchange is safe.  The Bitfloor exchange website now reads..

2013.04.20
The bank has issued us a check for the remaining account balance. Once this check is received, we will be working to establish a way to return the remaining USD funds.
The ETA for receiving the check is around 10 days. Until then, we will be unable to make any further payouts. We are exploring various options for returning your funds.

It's ironic that a de-centralised currency such as Bitcoin relies on a centralised system to operate; no wonder the inventor/s didn't want to sign their name to it! ;-)

Similarly, the whole "51%" thing isn't correct. Simply controlling nodes isn't enough. And even if you did take over 51%, all that would do is bring the system to a halt due to lack of consensus. You would literally need to control the great majority of the network in order to pull off any "book cooking".

The thing is Dr Evil's single 51% node network wouldn't simply announce itself as such;  it might appear as friendly smaller independent cluster nodes which would be colluding to periodically cook the books as to not draw too much attention.

Some info from the Bitcoin Wiki...

An attacker that controls more than 50% of the network's computing power can, for the time that he is in control, exclude and modify the ordering of transactions. This allows him to:

    Reverse transactions that he sends while he's in control. This has the potential to double-spend transactions that previously had already been seen in the block chain.
    Prevent some or all transactions from gaining any confirmations
    Prevent some or all other miners from mining any valid blocks

With less than 50%, the same kind of attacks are possible, but with less than 100% rate of success. For example, someone with only 40% of the network computing power can overcome a 6-deep confirmed transaction with a 50% success rate.

[nitro2k01]

All currency is based on confidence now.  If you can get a significant population to confide in your Java beans than it could be legitimate.

What they are offering is a transparent currency which can be closely monitored and controlled.  The appeal of bitcoin is its transparency.

Actually its the opposite- untraceable transactions is its main appeal.  And fiat money is not based on confidence- its based on law (something about "legal tender").

You're both right in ways. All transactions are traceable. What's not necessarily traceable is the person behind the transaction, if appropriate measures are taken.