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Maybe not bitcoin (due to a few issues, for example that you mine and find gold coint with cpu power which is a geek niche, I think coin should be purchased from dollar, euro, metals etc.) but something like this - done different - may have relevance in future, given the real economy is a joke like a video game lately, so let it be a video game officially.

Anyway the real issue of any pay or exchange thing is the law and lobbies who pay the governments who does the law. Whoever does not remember e-gold, read here:

http://en.wikipedia.org/wiki/E-gold

I remember every kind of illegal transaction was done using e-gold in 1990's, including non 2257 compliand adult sites, then the system became illegal and the guy who operate it stopped. And he's a good faith guy, but does not matter.

Ok next step it is: you mix egold with bittorrent you get a decentralized bitcon stuff, the money can't come from money launder at start because you create it with cpu power (this looks to me even less fair then who create coin by play in MMORPG's, at least online game money require human time = work to generate it?), but wekk, you can't stop this going on as well as you can't stop bittorrents. But govts can still put in jail whoever you catch using it, especially merchants - from the moment such system become popular.

One example, adult sites you pay with cointorrent or whatever you name it, or bigger operators who exchange goldbits with paypals or dollars - will be same if you support wikileaks with a biller - can't stop wikileaks but you can close all their processors, paypals and banks, so let the wikileaks be a bit coin thing itself, whoever (phisical people - not net traffic) is caught making big bit-transactions would get "Assanged" i.e. very bad life due to law, wh ocan be even updated just to fix the gap of P2P currency with some "P2P Money Launder Act" of 2012 or so.

So I think these systems can work for small number of geeks who find it fascinating, but if for some reason one of these systems become big in transactions and number of merchants (as it was egold) will be made illegal (just the fact you can't say for sure who is the sender, who is the receiver, and for what the transaction is made, make it illegal today) and if can't stop it as not centralized, the bigger merchants using it can be spanked hard enough to give up.

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Sunny Day

In the Depression, many small towns created Wooden Nickles, as the townsfolk needed to buy & sell, but there was no cash.
In the 70's & 80's somebody (we'll call X), in a major city would start a barter currency. You agreed with someone to trade a service or goods. The advertising business was the model for this trading ads for restaurant meals. As with most transactions, you might have a trade imbalance, i.e. a car for x number of haircuts. If you didn't want haircuts, you took trade dollars. Transactions went through X for a 2% fee. You could also buy trade dollars. X always seem to print money for himself and counterfeiting was also a problem. These barter services usually folded in a year or two.
Then somebody had Real Dollars, that usually were in tourist or college towns. The idea was to show the money was helping to show money circulating in the town rather than hoarding or being spent out of town. But like Disney Money, people saved them for the pretty pictures on them. Real Dollars are gone, just like so many topless bars that printed their own currency.
As for BitCoins, I looked yesterday at a site that severely limited how many you could buy a month (probably they had a small supply). This makes it difficult if you need some to make a major purchase now. Other problem, since you really don't know who you're dealing with, opposed to PayPal or a postal address, they burn you, there's no recourse.
Lastly, the claim of there will be only 21,000,000 created. If BitCoin takes off, they will go up in value as more people need them. At some point they will become so valuable, most people can't afford them and the market will collapse or suddenly more will be created causing deflation.

_Richard_

cool shit.

MyBitcoin

The CPU power thing is only a clever way to fairly distribute the Bitcoins. There's really no other way to make a decentralized "mint". Plus, it's optional.

The real economy is a joke? I hear ya...

Also, you can buy/sell Bitcoins from a growing number of exchangers around the globe.

Here is a partial list of them:

bitcoinusa.com (USA / ACH and wire payments)
britcoin.co.uk (UK / Linked to online banking?)
bitcoin4cash.com (Canada / Cash in the mail)
bitcoin2cc.com (Global.. convert Bitcoins into a virtual VISA card)
nanaimogold.com (Money order, Liberty Reserve, HD Money, and a ton more)
coincard.ndrix.com (convert Bitcoin into PayPal / Pizza.. yes! Pizza! lol)
coinpal.ndrix.com (PayPal -> Bitcoin. They only do very small amounts at a time, apparently)

I completely agree, and I remember e-gold. On a side note: did you see what happened to Liberty Dollar?

I can't see how just running the application would imply you are a criminal. A court wouldn't be able to prove that you even moved a cent with the application. It's like that by design.

Also, it seems like governments can bend/twist almost any law to throw any of us in jail for any reason now.

"The more corrupt the state, the more numerous the laws." - Tacitus

Funny you would mention that. Check this out: http://www.pcworld.com/businesscente...u rrency.html (Could the wikileaks scandal lead to a new virtual currency).

As long as there are countries that don't make it illegal, it will survive. You could just host your sites in a freer country and keep accepting Bitcoins as payment.

Plus, you have to keep this in mind: they have bigger fish to fry. "They" seem to be more concerned with copyright infringement anyway.

MyBitcoin

I'm assuming that you were trying to use CoinPal. That service is very new. Also, they are still trying to keep fraud down to a minimum so they limit how many Bitcoins you can buy per week.

The problem with accepting reversible transactions (PayPal / Credit Cards) a non-reversible currency such as Bitcoin is a big one.

Example: Fraudsters can rush in with stolen PayPal/CC numbers and run away with Bitcoins. Bitcoins can't be charged back, but PayPal/CCs can! The fraudsters convert the Bitcoins into a bank wire and run off with the money.

We call this a "soft" to "hard" money problem. It's no different than selling something on ebay, shipping it, only to find that the buyer decided to chargeback later and rip you off. It's an ongoing problem that doesn't just affect Bitcoin.

Most exchangers only accept non-reversible forms of money for this very reason. Most exchangers accept wires, money orders, liberty reserve, cash in the mail (I'm serious), cash in person, various pre-loaded cards that you can buy from 7-eleven/wal-mart, and many others. Of course you can always mine them into existence, but that process is very very competitive now.

Is there recourse with PayPal? Also, anyone who has been through a lawsuit will tell you that it solves nothing.

Anyway, due diligence is always required. Don't buy from people that have a horrible track record, and limit your exposure to risk. If it's too good to be true, it probably is. You know "the drill".

I'm glad that you made this statement. It's a very common question.

Bitcoins are divisible to 8 decimal places. If demand for Bitcoins is excessively larger than the 21,000,000, it is not a problem at all.

Sunny Day

The trading chart at Mt. Gox shows Bitcoins have dropped in value from about $.80 to $.60 in just the past 48 hours. A 25% loss of value! So much for stability.

MyBitcoin

That doesn't prove anything.

The market capitalization is only ~$4 million dollars right now. This is the operating economy of a small town. You can't compare it to the currency of the country of Sweden, for example.

It is true that the exchange rate can be volatile at times. You have to keep in mind that this is still a fairly new currency. Usually the rate seems to hover around $0.75 per Bitcoin most of the time. What happened yesterday was an anomaly (someone probably sold a LOT of them all at once) and the price quickly recovered.

cam_girls

recovered = everyone lost money right?

Lint

R E C O V E R E D. Can't you read, you schizophrenic fuck?

MyBitcoin

I'm glad to see that I'm not the only one who is frustrated with that guy.

Sunny Day

The Mt Gox dark pool allows you to buy or sell large quantities of BTC without moving the market.

You can mark any buy or sell order with a value over $1000 as being in the dark pool.

Orders in the dark pool don't show up on the order book.

There are 2 types of dark pool orders.
Dark pool and Normal - Can be filled either partially from the normal orders or the dark pool.
Dark pool Only - Can be filled only by other dark pool orders or a single normal order that is larger than the dark pool order. This means that if there is a single normal order that would fill the dark pool order both will be filled.

MyBitcoin

You pasted that from their website.

What is your point exactly?

cam_girls

OK I see that it could actually work now.

You forgot to mention a bitcoin is divisible down to $0.00000001BC

So even though you have to pay the select group of miners to join the economy, AND there is only $21,000,000BC maximum, these 2 variables work in tangent!

i.e. say 10,000,000 people use bitcoins, then the average persons wallet would have only $2BC!

So $1BC might be worth $1,000US in the future!

Or $1US = $0.001BC

So there's a DISTRIBUTION PHASE and a CONSISTENT CURRENCY PHASE say in 3 to 10 years time.

A bit like the population mining gold and minting our own coins.

I think I would have gone with $21 BILLION Coins, or we might end up using MicroBitCoins instead!

eroticsexxx

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MyBitcoin

I'm pretty sure I did mention that. MyBitcoin.com's system is divisible to 0.00000000001 BTC internally (11 instead of 8 decimal places), BTW. Just "food for thought".

The entire world won't use Bitcoin all at once.

If we totally max out 21 million coins I'm sure competing cryptocurrencies will appear to fill that void. The mining process will begin anew, and we'll see auto-exchangers pop up all over to trade between Bitcoin and 'NewCoin'.

DiF0r

I'm richer for 0.05 BitCoins WoHooo :D

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Zyber

How can we be sure that bitcoin is not a botnet itself?

Zyber

There is a lot of regulation already.
http://ec.europa.eu/internal_market/...y/index_en.htm
http://eur-lex.europa.eu/LexUriServ/...09L0110:EN:NOT

And US has its fair share too..

Zyber

Cryptography
If I understand this right, the strength of this currency relies on the strength of the SHA-256 algorithm?

Why use SHA-256 and not for example SHA-512?

http://en.wikipedia.org/wiki/SHA-2

Could these algorithms be considered weak?

As an example OpenSSL produces a 1024 key as default. Many commercial SSL certificates require 2048 bit keys.

It looks like this entire economy relies on the cryptographical strength of the chosen algorithms. Am I right?

Modified client software
How does the Peer-2-Peer system work like? Is it like a democracy where the majority rules?
Lets assume that X amount of evil peers have modified the source code in their client software to ignore others winners claims for the 50 Bitcoins.

If there are enough of these rogue players (client nodes), then they would be able to rule that they are the rightful winners, and corrupt the concensus of the entire network.

It is based on voting power right? And nothing limits the number of clients? Each instance of the client software is a vote?

If I created 100 million virtual clients (with rogue software), I would be able to influence the entire economy? Or would I need to have 1 billion nodes?

Is there any mechanism which prevents fake nodes running fake software?

How does the mechanism work which prevents the same coin from being used twice?
Could that system be tampered with if 100 million fake nodes produce manipulated traffic?

MyBitcoin

Easy. It's open source. You can download and review the source code.

MyBitcoin

Instead of answering your technical questions until my hands are purple, I'll let this video explain it.

https://youtube.com/watch?v=XQPSwA2Itbs

(Starts at 0:42:00, explained by Steve Gibson from grc.com)

Zyber

Thanks for the video link.

I have watched it through and Steve Gibson explains this technically complicated system very well. It looks like a beautifully designed system - but not perfect.

Further I read the white-paper. Interesting reading.
http://www.bitcoin.org/sites/default/files/bitcoin.pdf

However, I did spot some weaknesses in the system design:

1. Partially centralized system. It depends on an IRC chat room.
   
   Quote:

   When you download the program it connects to a IRC chat room and that is how it learns about all the other nodes, or many of the other nodes https://youtube.com/watch?v=XQPSwA2Itbs&t=61m08s (1:01:08)

2. Trusting the integrity of bitcoin.org - a domain with contact privacy.
3. Trusting that the compiled .exe binaries match the open source code.
4. Single point of failure. Easy to block. The system uses port 8333. Remember the .xxx debate?
   
   Quote:

   you'd get much better connectivity if you do port-forwarding of port 8333 https://youtube.com/watch?v=XQPSwA2Itbs&t=79m09s (1:19:09)

5. System integrity gets worse over time. Depends on incentive for peers to "donate" CPU power.
   
   Quote:

   the way you make money is by processing transactions within the BitCoin system https://youtube.com/watch?v=XQPSwA2Itbs&t=49m01s (0:49:01)

   Quote:

   here's the deal. There will never, ever, ever be more than 21 million BitCoins created. https://youtube.com/watch?v=XQPSwA2Itbs&t=72m30s (1:12:30)

   Quote:

   For the first 210.000 blocks the value is 50 BitCoins per block. The next 210.000 blocks it is cut to half, to 25 BitCoins per block. Etc. https://youtube.com/watch?v=XQPSwA2Itbs&t=80m25s (1:20:25)

   Quote:

   creating coinage out of thin air by doing the work that makes the whole network go ... It is the work which needs to be done, the difficulty of the work that keeps bad guys from being able to spoof the system. https://youtube.com/watch?v=XQPSwA2Itbs&t=84m0s (1:24:00)

To sum it up. This system appears to be a bubble designed to have a limited lifespan.

The system will become more and more unstable as it matures, and once when all 21 million BitCoins have been created, people will stop mining for more coins as there are no more rewards. Without all the CPU power previously provided by the honest nodes - the integrity of the system will fail apart and anarchy will rise.

As the system bases its trust on which ever group has the most CPU power it is vulnerable for criminals using their enormous botnets (1 million+ zombies), governments using their super computers to sabotage the network, or giants such as Google using their immense computing muscles.

As this looks like a bubble it is a question of when people will start to cash out (converting their BitCoins to real currency). Maybe that is already what is happening right now?

The original idea of this system is beautiful but I wouldn't place my savings in it.

Lint

Please read: http://www.bitcoin.org/wiki/doku.php?id=transaction_fee

Zyber

Thanks. Very interesting.

After reading this I no longer think the system integrity will get worse over time.

Then it is only the single-point-of-failures which could cause trouble later on.
If someone blocks port 8333, takes over those the IRC chat rooms, replaces the DNS records for bitcoin.org, or the actual server, etc.

A chargeback free payment system like this could be interesting

Which system will win, the old banking system backed by weapons, or this new one backed by cryptography? Time will show..

Emil

If you cant trust it, just compile the binary file yourself from the source.

Why does it matter if bitcoin.org uses privacy for the domains? The source is out and the application doesn't need bitcoin.org to run.
You got the source, cant you just change the port?
If there would be a problem with ISPs blocking 8333, I dont think it would require much work before it used port 80 or some other port that they cant block.

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MyBitcoin

Bitcoin doesn't need IRC. It *can* use it to seed its list of peers. I run my clients with IRC switched off. I personally think it is a stupid way to seed the client.

Also, with one click you can make Bitcoin run on top of Tor so blocking port 8333 does nothing.

Emil

Bitcoin.

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MyBitcoin

The Bitcoin price has skyrocketed, due to it being in the news.

The current rate is 1 Bitcoin = $1.39

Some of the news exposure includes Forbes, and a few other places. Links are below:

http://techliberation.com/2011/04/20...ation-control/

http://www.forbes.com/forbes/2011/05...-currency.html

http://www.techdirt.com/articles/201...ong-term.shtml

http://digitalmedia.strategyeye.com/...form_ flattr/

http://unqualified-reservations.blog...rdization.html

MyBitcoin

Update: 1 Bitcoin is now $1.65 USD each now. Bitcoin is in the news almost daily now.

merina0803

sent to IRs tipline

rowan

Saw this on Bing just before.

Bitchin'!

Emil

Oh noes! IRS will take down the decentralized network by DDOSing every fucking computer in the network worldwide.. Right.

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Agent 488

very cool concept and wish you luck. going to need it.

Emil

$1.9 now, this is crazy.

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rowan

Peaked past $4 now...

I was going to buy $100 worth a couple of days ago to get my feet wet. Could have doubled my investment without doing a thing. FFFFFFFFFFFFFUUUUUUUUUUUUUU....

gir

anyone considering investing into bitcoin should consider this: current bitcoin price is bubble economy, completely related to bitcoin's news exposure.

real value (GPU power + electricity bill) is somewhere around $0.75 per BTC. this value will be always based on the current difficulty (essentialy the more people are generating coins, the more valuable it is).

so the only viable way to make money is to get few ati's and generate bitcoins away.
then sell it ot mtgox to speculating fools for quadruple its price.

generating is far from geeks niche anymore, you just need to invest few grand into the hardware.

as far as the security of the system goes for payments, its pretty tight and well thought out. in regards to speculation, mtgox is currently under massive DDOS, either by slashdot effect or more likely someone probably wanting to delay the bubble until he generates more coins.

secure P2P based bitcoin currency exchange is needed for speculation to be safe.

rowan

Would be cool if bitcoin mining involved practical use of a CPU/GPU, ie someone is actually paying real $ for crunching numbers and getting back a result. I guess that would be difficult to achieve without some sort of central authority confirming that work and releasing the value, which would go against the whole idea...

gir

given the fact that solving the blocks is used to ensure security of the the system, that would be the only practical use and considering you're paid 4x more than the power consumed it aint that bad either.

note that computing power at current difficulty lies at about 3.5 petaflops (5TFlop/5970 gives 1Ghash, the network is currently about 700ghash strong). incredible computing power is completely "wasted" for little e-currency already....

Emil

Yeah, I regret that I didn't bought some when it was down at $0.70.
I wonder why I didn't see it coming, Bitcoin was getting more and more exposure. Of course it would rise.

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Emil

Yes, too bad it couldn't be used for something useful like http://www.worldcommunitygrid.org .

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Emil

https://mtgox.com/ - Check out the price! Nearly $8 now! Wasn't it like $0.70 a couple of weeks ago? Daaaammmnnnn....

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Sunny Day

Value has bounced from $6 USD to $8 USD and back to to $6 then to $8. That's stable??? I's a game of Musical Chairs. True, I kick myself for not buying at $.08 USD, but in Musical Chairs, you never know when the game will end. Also with so few market makers, are you sure it's not a few manipulating a market??

Agent 488

Sunny Day

BitCoins in the last 48 hours have dropped from $7 to $6 and during that time had been at $5.50. Great stability.

DBS.US

The best salesmen always wear Black T Shirts

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marlboroack

Yeah till something fucking happens and there is no such thing as your money existing.

HomerSimpson

bitcoin bubble

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Emil

It have been up to $9.2.. It's about $8.6 now.
No, it isn't stable but it's very interesting to see where this goes. Bitcoin gain more popularity all the time and since the mining is becoming slow I guess the value will continue to raise on a very bouncy path.

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Emil

How do you feel now?

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