Money doesn't grow on trees.
May 18, 2011 2:23 PM Subscribe
Bitcoin is a peer-to-peer digital currency. Trading at eight dollars this week—and being used to pay for everything from freelance programming jobs to magic mushrooms—it has been described as “the most dangerous open-source project ever created” and “an unambiguous challenge to the government monopoly on the power to print money.” Estimated at over 20 petaFLOPS the Bitcoin network is currently the fastest virtual supercomputer in the world.
- Official Wiki (FAQ)
- Wikipedia
- Original proposal (PDF) by Satoshi Nakamoto
- Market Analysis
- Bitcoin Forum
- Block Explorer
You know who else had:
“an unambiguous challenge to the government monopoly on the power to print money.”
Bernard NotHaus
posted by rough ashlar at 2:28 PM on May 18, 2011 [1 favorite]
“an unambiguous challenge to the government monopoly on the power to print money.”
Bernard NotHaus
posted by rough ashlar at 2:28 PM on May 18, 2011 [1 favorite]
“an unambiguous challenge to the government monopoly on the power to print money.”Okay, this is just ridiculous. There is no government monopoly on the ability to print "money". Anything from Casino chips to walmart gift-cards are a type of currency. Anyone can create their own currencies if they want too.
As long as you don't mislead people into thinking that your currency is backed by the government, you're not breaking any laws.
posted by delmoi at 2:30 PM on May 18, 2011 [16 favorites]
BitCoint has moved out of phase one ("generate bitcoins while it is still computationally inexpensive to do so") and into phase two ("sell your free bitcoins to people dumb enough to think they're worth something").
I look forward to phase three.
posted by nmiell at 2:30 PM on May 18, 2011 [21 favorites]
I look forward to phase three.
posted by nmiell at 2:30 PM on May 18, 2011 [21 favorites]
Does this mean Wachovia/Wells Fargo is going to lose out on Mexican drug cartel money transfers?
posted by BrotherCaine at 2:31 PM on May 18, 2011 [1 favorite]
posted by BrotherCaine at 2:31 PM on May 18, 2011 [1 favorite]
I don't look at this a new currency so much as a new commodity that's easily traded.
posted by nutate at 2:32 PM on May 18, 2011 [3 favorites]
posted by nutate at 2:32 PM on May 18, 2011 [3 favorites]
Hit me in memail if you have some shrooms for sale.
posted by furiousxgeorge at 2:32 PM on May 18, 2011 [10 favorites]
posted by furiousxgeorge at 2:32 PM on May 18, 2011 [10 favorites]
3. Profit?
posted by pompomtom at 2:32 PM on May 18, 2011 [1 favorite]
posted by pompomtom at 2:32 PM on May 18, 2011 [1 favorite]
Duh... everybody knows that phase 3 is always PROFIT
posted by Hairy Lobster at 2:33 PM on May 18, 2011
posted by Hairy Lobster at 2:33 PM on May 18, 2011
Damn you pompomtom!
posted by Hairy Lobster at 2:33 PM on May 18, 2011
posted by Hairy Lobster at 2:33 PM on May 18, 2011
I still don't understand how this works. You can run a computer algorithm to generate the currency, and then people pay you money for it? Why would you pay someone money to waste electricity?
posted by demiurge at 2:33 PM on May 18, 2011 [6 favorites]
posted by demiurge at 2:33 PM on May 18, 2011 [6 favorites]
I look forward to phase three.
Short bitcoin against all other legitimate currencies. Wait for collapse. Profit.
posted by T.D. Strange at 2:33 PM on May 18, 2011 [3 favorites]
Short bitcoin against all other legitimate currencies. Wait for collapse. Profit.
posted by T.D. Strange at 2:33 PM on May 18, 2011 [3 favorites]
"In normal economies, newly minted money is handed out by a central bank in return for some asset. In Bitcoin the money is randomly allocated over time. This is an advantage for early adopters who, on average, receive more 'free money' than late adopters."
posted by Perplexity at 2:33 PM on May 18, 2011 [1 favorite]
posted by Perplexity at 2:33 PM on May 18, 2011 [1 favorite]
The reporting on this is all ridiculously over the top for something so dull and innocuous.
posted by Stagger Lee at 2:34 PM on May 18, 2011
posted by Stagger Lee at 2:34 PM on May 18, 2011
Dear God, they monetized Progress Quest.
posted by theodolite at 2:34 PM on May 18, 2011 [56 favorites]
posted by theodolite at 2:34 PM on May 18, 2011 [56 favorites]
Sounds like a digital form of a trade exchange.
meh
posted by randomkeystrike at 2:34 PM on May 18, 2011
meh
posted by randomkeystrike at 2:34 PM on May 18, 2011
Performance art sure got weird.
posted by 2bucksplus at 2:35 PM on May 18, 2011 [17 favorites]
posted by 2bucksplus at 2:35 PM on May 18, 2011 [17 favorites]
Well, sure you can just trade your Bitcoins for goods or services, but a much better idea would be to become a broker- buy them now and wait for the value to go up. In fact, it's such a good idea that people will be asking you how they can become brokers as well! You can help here too- just sell them some of your Bitcoins, as well as instructions on how to operate a brokerage and recruit new...
...hold on a sec, some guys are knocking down my door with a battering ram...
posted by TheWhiteSkull at 2:36 PM on May 18, 2011 [4 favorites]
...hold on a sec, some guys are knocking down my door with a battering ram...
posted by TheWhiteSkull at 2:36 PM on May 18, 2011 [4 favorites]
CRYPTONOMICON REFERENCE
posted by synaesthetichaze at 2:36 PM on May 18, 2011 [21 favorites]
posted by synaesthetichaze at 2:36 PM on May 18, 2011 [21 favorites]
The proof-of-work also solves the problem of determining representation in majority decision making. If the majority were based on one-IP-address-one-vote, it could be subverted by anyone able to allocate many IPs. Proof-of-work is essentially one-CPU-one-vote. The majority decision is represented by the longest chain, which has the greatest proof-of-work effort invested in it. If a majority of CPU power is controlled by honest nodes, the honest chain will grow the fastest and outpace any competing chains.Which means it would be super-easy for the government to get control of the currency.
The other problem with bitcoin (reading the PDF) is that there is zero privacy. Every transaction is knowable not just by the government, but, if I'm reading this right everyone on the network? Or do you have to 'know' the key before checking for double spending?
posted by delmoi at 2:36 PM on May 18, 2011
Once they have an exchange rate with flax script, eGold, and quatloos, then we can talk.
posted by fifteen schnitzengruben is my limit at 2:36 PM on May 18, 2011 [2 favorites]
posted by fifteen schnitzengruben is my limit at 2:36 PM on May 18, 2011 [2 favorites]
Short bitcoin against all other legitimate currencies. Wait for collapse. Profit.You would have to find someone willing to lend you bitcoin.
posted by delmoi at 2:38 PM on May 18, 2011
I didn't believe it at first either, but Bitcoin seems to my feeble mind to have good cryptographic magic behind it, which explains why people are rewarded for doing seemingly useless mathematics using their processors - they are discovering the cryptographic keys that form the basis of the currency.
I also think it will inevitably increase in value as more Paultards/Randbots become aware of its existence. Some day after that it will be replaced by something incompatible and become worthless.
(If anyone is trying to do stuff with bitcoin.exe, please note that you have wait to download all the chunks before you can receive a bitcoin.)
By the way, they made a serious mistake by calling them "Bitcoins" instead of "Galactic Credits"
posted by East Manitoba Regional Junior Kabaddi Champion '94 at 2:42 PM on May 18, 2011 [4 favorites]
I also think it will inevitably increase in value as more Paultards/Randbots become aware of its existence. Some day after that it will be replaced by something incompatible and become worthless.
(If anyone is trying to do stuff with bitcoin.exe, please note that you have wait to download all the chunks before you can receive a bitcoin.)
By the way, they made a serious mistake by calling them "Bitcoins" instead of "Galactic Credits"
posted by East Manitoba Regional Junior Kabaddi Champion '94 at 2:42 PM on May 18, 2011 [4 favorites]
The other problem with bitcoin (reading the PDF) is that there is zero privacy. Every transaction is knowable not just by the government, but, if I'm reading this right everyone on the network?
That's correct, however there are ways to preserve anonymity by sending your money to a service that redistributes it randomly.
posted by howlingmonkey at 2:43 PM on May 18, 2011
That's correct, however there are ways to preserve anonymity by sending your money to a service that redistributes it randomly.
posted by howlingmonkey at 2:43 PM on May 18, 2011
Apparently, the biggest flaw is that if more than 50% of the Bitcoin clients are fraudulent, it destroys the whole trust system. However, as the number of legit clients increases, that 50% figure becomes unrealistic to obtain.
posted by East Manitoba Regional Junior Kabaddi Champion '94 at 2:45 PM on May 18, 2011
posted by East Manitoba Regional Junior Kabaddi Champion '94 at 2:45 PM on May 18, 2011
synaesthetichaze beat me to it, so I will fall back on my second choice:
FLOOZ REFERENCE
posted by ErikaB at 2:46 PM on May 18, 2011 [1 favorite]
FLOOZ REFERENCE
posted by ErikaB at 2:46 PM on May 18, 2011 [1 favorite]
The other problem with bitcoin (reading the PDF) is that there is zero privacy. Every transaction is knowable not just by the government, but, if I'm reading this right everyone on the network?
The recommendation is to use a new address for every transaction. That seems to preserve anonymity because you can't associate transactions.
posted by East Manitoba Regional Junior Kabaddi Champion '94 at 2:46 PM on May 18, 2011
The recommendation is to use a new address for every transaction. That seems to preserve anonymity because you can't associate transactions.
posted by East Manitoba Regional Junior Kabaddi Champion '94 at 2:46 PM on May 18, 2011
Apparently, the biggest flaw is that if more than 50% of the Bitcoin clients are fraudulent, it destroys the whole trust system. However, as the number of legit clients increases, that 50% figure becomes unrealistic to obtain.Yeah, but like I said, not necessarily for the government.
posted by delmoi at 2:47 PM on May 18, 2011
Also, I bet you could implement this algorithm in hardware. Hmm...
posted by delmoi at 2:49 PM on May 18, 2011
posted by delmoi at 2:49 PM on May 18, 2011
Also, I bet you could implement this algorithm in hardware. Hmm...
The crazy people on the Bitcoin forums already beat you to it.
posted by cellphone at 2:50 PM on May 18, 2011
The crazy people on the Bitcoin forums already beat you to it.
posted by cellphone at 2:50 PM on May 18, 2011
Can someone please explain the cryptography aspect in detail for hashtards like me?
Like, why does it become more "computationally expensive" to mine BitCoins as more are made? What exactly does the hash represent?
posted by J.D. Eightyseven at 2:51 PM on May 18, 2011
Like, why does it become more "computationally expensive" to mine BitCoins as more are made? What exactly does the hash represent?
posted by J.D. Eightyseven at 2:51 PM on May 18, 2011
Estimated at over 20 petaFLOPS the Bitcoin network is currently the fastest virtual supercomputer in the world.
It's the fastest one that quotes a number in public. I'm pretty sure it's not the fastest.
posted by GuyZero at 2:51 PM on May 18, 2011 [3 favorites]
It's the fastest one that quotes a number in public. I'm pretty sure it's not the fastest.
posted by GuyZero at 2:51 PM on May 18, 2011 [3 favorites]
Anonymous money transactions are very shady, the law will be all over it once the child-pornos and dealers start using it.
posted by stbalbach at 2:52 PM on May 18, 2011
posted by stbalbach at 2:52 PM on May 18, 2011
I look forward to phase three.
apparently, we're already on phase/stage four :P
posted by kliuless at 2:56 PM on May 18, 2011 [15 favorites]
apparently, we're already on phase/stage four :P
Stage 1: Bitcoin does not exist. Stage 2: Bitcoin exists, but is worthless. Stage 3: Bitcoin exists, and is used by strange and desperate weirdos and geeks. Stage 4: Bitcoin is used by Slashdot readers, perhaps slightly less desperate. (You are here.) Stage 5: Bitcoin is used by criminals. Stage 6: All Bitcoin exchanges are shut down by USG. Stage 7: Bitcoin exists, but is worthless. Stage 8: Bitcoin does not exist.cheers!
posted by kliuless at 2:56 PM on May 18, 2011 [15 favorites]
I think it's fascinating. Our current global economy is validated by the assumed trust of the governments and experts who testify that said governments are making fair policies. Money is created by these governments; the earlier you get in (like say, 200 years ago) you're good to go.
This system is validated by the assumed correctness of the mathematics, and the "early adopter" benefit is described up-front as a bona-fide feature.
One thing is for sure, this will test the crap out of SHA-256. The way I understand it is that to generate coins, you have to repeatedly hash a block until you get a result lower than a given threshold. This threshold decreases over time and is enforced by the trust network. Since we assume the result of a crypto hash has a uniform distribution (i.e. basically random) it takes longer and longer to find a value that satisfies the constraint as it decreases.
posted by RobotVoodooPower at 2:59 PM on May 18, 2011 [7 favorites]
This system is validated by the assumed correctness of the mathematics, and the "early adopter" benefit is described up-front as a bona-fide feature.
One thing is for sure, this will test the crap out of SHA-256. The way I understand it is that to generate coins, you have to repeatedly hash a block until you get a result lower than a given threshold. This threshold decreases over time and is enforced by the trust network. Since we assume the result of a crypto hash has a uniform distribution (i.e. basically random) it takes longer and longer to find a value that satisfies the constraint as it decreases.
posted by RobotVoodooPower at 2:59 PM on May 18, 2011 [7 favorites]
I bet that the old dead tree trunk that has been floating around in Crater Lake for the past 100+ years is controlling Bitcoin.
posted by NoMich at 3:00 PM on May 18, 2011 [12 favorites]
posted by NoMich at 3:00 PM on May 18, 2011 [12 favorites]
Not that I think it will really work, as your average jury member will immediately think "child molester" when the first expert witness takes the stand to explain how it works.
Also if these things ever assume significant value, you can be sure bitcoin-snarfing rootkits will be common (if they aren't already).
posted by RobotVoodooPower at 3:03 PM on May 18, 2011
Also if these things ever assume significant value, you can be sure bitcoin-snarfing rootkits will be common (if they aren't already).
posted by RobotVoodooPower at 3:03 PM on May 18, 2011
On what legal basis would bitcoin exchanges likely be acted against?
posted by elektrotechnicus at 3:05 PM on May 18, 2011
posted by elektrotechnicus at 3:05 PM on May 18, 2011
If you look at the list of available retailers/places to spend bit coins it's not exactly the most reputable sites on the web. THta says more to me than all the crypto-chat on earth.
posted by Keith Talent at 3:06 PM on May 18, 2011 [3 favorites]
posted by Keith Talent at 3:06 PM on May 18, 2011 [3 favorites]
Guaranteeing that governments will be upset at this currency seems like a selling point to folks who are still stuck in adolescent rebellion (ditto with "Dude! We can buy drugs with it!").
Telling me it's a currency that I can't use to pay rent, groceries or trade in at any bank is not a selling point for most of the population.
Maybe they just need Glenn Beck to advertise them or something...
posted by yeloson at 3:06 PM on May 18, 2011 [2 favorites]
Telling me it's a currency that I can't use to pay rent, groceries or trade in at any bank is not a selling point for most of the population.
Maybe they just need Glenn Beck to advertise them or something...
posted by yeloson at 3:06 PM on May 18, 2011 [2 favorites]
If nobody has mentioned this, there seems to be some interest from the CIA.
posted by Ad hominem at 3:07 PM on May 18, 2011 [2 favorites]
posted by Ad hominem at 3:07 PM on May 18, 2011 [2 favorites]
On what legal basis would bitcoin exchanges likely be acted against?Well, first of all it's not really an exchange, it's a P2P network. So shutting it down wouldn't be any easier then shutting down bittorent.
But, presumably bitcoin exchanges that convert bitcoin into actual cash would be subject to ordinary banking regulations.
posted by delmoi at 3:07 PM on May 18, 2011
The Big U!
posted by quin at 3:09 PM on May 18, 2011 [1 favorite]
posted by quin at 3:09 PM on May 18, 2011 [1 favorite]
And let me be the first to ask the obvious question; how can I use this to make me fabulously wealthy beyond the fevered imaginings of the richest kings?
Because I'm tired of this work shit, ya know?
posted by quin at 3:11 PM on May 18, 2011 [4 favorites]
Because I'm tired of this work shit, ya know?
posted by quin at 3:11 PM on May 18, 2011 [4 favorites]
let me be the first to ask the obvious question; how can I use this to make me fabulously wealthy beyond the fevered imaginings of the richest kings?
I'm pretty sure the answer involves slicing and dicing bitcoin loans and making sure they're all AAA rated regardless of the actual content of the new securities, and then having the US government bail you out once they all go bad at once...
but how to get there from here? I have no idea.
posted by hippybear at 3:15 PM on May 18, 2011 [13 favorites]
I'm pretty sure the answer involves slicing and dicing bitcoin loans and making sure they're all AAA rated regardless of the actual content of the new securities, and then having the US government bail you out once they all go bad at once...
but how to get there from here? I have no idea.
posted by hippybear at 3:15 PM on May 18, 2011 [13 favorites]
I'm more inclined to agree with the folks calling Bitcoin a scam, personally.
posted by Nelson at 3:20 PM on May 18, 2011 [8 favorites]
posted by Nelson at 3:20 PM on May 18, 2011 [8 favorites]
Can someone explain what the point of alternative currencies is? This Wikipedia article says one advantage is that they stimulate the local economy, since you can't use them everywhere. Great, so why would I want to own alternative currency X, that works like USD except it's accepted in far fewer places?
But then again, people buy store gift cards, which seems utterly idiotic to me. So what do I know.
posted by Triplanetary at 3:20 PM on May 18, 2011 [2 favorites]
But then again, people buy store gift cards, which seems utterly idiotic to me. So what do I know.
posted by Triplanetary at 3:20 PM on May 18, 2011 [2 favorites]
A bitcoin user trolled one of the few email groups I follow. The whole fiasco left a bad taste in my mouth, but I'm probably not in the bitcoin target market anyways.
posted by drezdn at 3:20 PM on May 18, 2011
posted by drezdn at 3:20 PM on May 18, 2011
One should definitely read the thread Nelson linked above. I agree with many of the criticisms leveled at Bitcoin, but scam is the wrong word.
posted by cell divide at 3:22 PM on May 18, 2011
posted by cell divide at 3:22 PM on May 18, 2011
If nobody has mentioned this, there seems to be some interest from the CIA.
Well, sure, if you can buy magic mushrooms with bitcoins, evil people could use this as a way to get around banking and business regulations placed on terrorist nations like Iran and Syria. Except unless if it's Halliburton and friends, in which case, carte blanche!
posted by Blazecock Pileon at 3:25 PM on May 18, 2011
Well, sure, if you can buy magic mushrooms with bitcoins, evil people could use this as a way to get around banking and business regulations placed on terrorist nations like Iran and Syria. Except unless if it's Halliburton and friends, in which case, carte blanche!
posted by Blazecock Pileon at 3:25 PM on May 18, 2011
"In normal economies, newly minted money is handed out by a central bank in return for some asset. In Bitcoin the money is randomly allocated over time. This is an advantage for early adopters who, on average, receive more 'free money' than late adopters."
Isn't this pretty much the definition of a pyramid scheme?
posted by empath at 3:26 PM on May 18, 2011 [13 favorites]
Isn't this pretty much the definition of a pyramid scheme?
posted by empath at 3:26 PM on May 18, 2011 [13 favorites]
Also, in what way is the currency better than World of Worldcraft gold pieces or Eve Plex cards? That's pretty much my go-to comparison for new currencies.
posted by empath at 3:28 PM on May 18, 2011
posted by empath at 3:28 PM on May 18, 2011
Isn't this pretty much the definition of a pyramid scheme?
Yeah, that and the confusing, scuzzy, over the top, dramatic reporting just screams scam.
posted by Stagger Lee at 3:30 PM on May 18, 2011
Can someone explain what the point of alternative currencies is?
The reason to use a local currency, aside from how some of them exchange for 90 cents on the dollar so you get a 10% boost to your purchasing power when you use them... is that they help to illustrate more clearly to the casual consumer how consumer dollars circulate within a local population and support that locality.
Using a local currency keeps the dollars you spend local. They generally are only able to be spent at businesses which don't ship their profits to a large parent company, so by their very nature they bolster small businesses which have a local focus. By emphasizing spending on businesses which are locally owned and operated, you're keeping money in the local monetary ecosystem and the more money which stays local, the healthier the local economy is.
The best way to use local currency is to have a mixture of local and Federal currency at your disposal, and to use the bills you have in your possession to help steer you toward spending locally when you can, possibly eschewing larger corporate purchases when you have the chance to spend your money locally. That a lot of the local currencies come with a 10% purchasing power advantage over the Federal currency helps offset a lot of the possible price differential you could find between bigger businesses and local small businesses.
It's basically a political choice about how you spend your money, reinforced with a symbol (the local currency) which lets the businesses know you've made your choice consciously.
Either you buy into the concept or you don't. As with all currency, there's a bit of faith involved in its use.
posted by hippybear at 3:34 PM on May 18, 2011 [9 favorites]
The reason to use a local currency, aside from how some of them exchange for 90 cents on the dollar so you get a 10% boost to your purchasing power when you use them... is that they help to illustrate more clearly to the casual consumer how consumer dollars circulate within a local population and support that locality.
Using a local currency keeps the dollars you spend local. They generally are only able to be spent at businesses which don't ship their profits to a large parent company, so by their very nature they bolster small businesses which have a local focus. By emphasizing spending on businesses which are locally owned and operated, you're keeping money in the local monetary ecosystem and the more money which stays local, the healthier the local economy is.
The best way to use local currency is to have a mixture of local and Federal currency at your disposal, and to use the bills you have in your possession to help steer you toward spending locally when you can, possibly eschewing larger corporate purchases when you have the chance to spend your money locally. That a lot of the local currencies come with a 10% purchasing power advantage over the Federal currency helps offset a lot of the possible price differential you could find between bigger businesses and local small businesses.
It's basically a political choice about how you spend your money, reinforced with a symbol (the local currency) which lets the businesses know you've made your choice consciously.
Either you buy into the concept or you don't. As with all currency, there's a bit of faith involved in its use.
posted by hippybear at 3:34 PM on May 18, 2011 [9 favorites]
Isn't this pretty much the definition of a pyramid scheme?
No no no, if you really diagram it out it looks more like a triangle.
posted by furiousxgeorge at 3:34 PM on May 18, 2011 [5 favorites]
No no no, if you really diagram it out it looks more like a triangle.
posted by furiousxgeorge at 3:34 PM on May 18, 2011 [5 favorites]
20BTC, same as in town.
posted by quonsar II: smock fishpants and the temple of foon at 3:35 PM on May 18, 2011 [5 favorites]
posted by quonsar II: smock fishpants and the temple of foon at 3:35 PM on May 18, 2011 [5 favorites]
Isn't this pretty much the definition of a pyramid scheme?
There are 6.2 million bitcoins in existence. There will only ever be 21 million bitcoins in existence, and once the file on your hard drive that says "I have this many coins" is lost, those coins are gone forever. The early adopters are definitely making out, but let's say you have a widget for sale for 5 bitcoins today. Tomorrow, you could make it worth 6 bitcoins, knowing that there are more people out there who want a piece of the bitcoin pool. The "bottom" of said pyramid tends to make out.
posted by mark242 at 3:35 PM on May 18, 2011
There are 6.2 million bitcoins in existence. There will only ever be 21 million bitcoins in existence, and once the file on your hard drive that says "I have this many coins" is lost, those coins are gone forever. The early adopters are definitely making out, but let's say you have a widget for sale for 5 bitcoins today. Tomorrow, you could make it worth 6 bitcoins, knowing that there are more people out there who want a piece of the bitcoin pool. The "bottom" of said pyramid tends to make out.
posted by mark242 at 3:35 PM on May 18, 2011
While I'm certain that this is a pyramid scheme, I'm less certain that fiat money is not a pyramid scheme. And in the latter case, those at the top of the pyramid can manipulate the supply of bricks. Pyramids can be very large indeed and benefit a lot of people above the base.
posted by East Manitoba Regional Junior Kabaddi Champion '94 at 3:42 PM on May 18, 2011 [2 favorites]
posted by East Manitoba Regional Junior Kabaddi Champion '94 at 3:42 PM on May 18, 2011 [2 favorites]
One of the clever things about Bitcoin is the built-in early adopter bonus. I think that it has potential as an anonymous transaction mechanism, mainly thanks to the US government's views on online gambling. Not so much as a store of value though. One thing that does puzzle me is how it will scale considering that each node has to have the whole transaction history of the system.
posted by atrazine at 3:43 PM on May 18, 2011
posted by atrazine at 3:43 PM on May 18, 2011
Don't know much about economics and I can't make any educated predictions about the (complicated) future of Bitcoin, but it looks like it's increased in value by 600% in the past month and a half, which screams "bubble" to me.
posted by lostburner at 3:54 PM on May 18, 2011 [2 favorites]
posted by lostburner at 3:54 PM on May 18, 2011 [2 favorites]
If someone who didn't know much about crypto (but knows computer-y things and managed to finish a math undergrad) wanted to understand this bottom to top, what would be a good place to start?
posted by weston at 3:56 PM on May 18, 2011
posted by weston at 3:56 PM on May 18, 2011
My drug dealer only takes cash.
posted by klangklangston at 3:59 PM on May 18, 2011 [2 favorites]
posted by klangklangston at 3:59 PM on May 18, 2011 [2 favorites]
My drug dealer only takes cash.
SWIM bought 2CI using bitcoins.
posted by atrazine at 4:02 PM on May 18, 2011 [1 favorite]
SWIM bought 2CI using bitcoins.
posted by atrazine at 4:02 PM on May 18, 2011 [1 favorite]
Wow! I could make $1.78 per month mining bitcoin on the fastest machine in the house.
I wonder what that would cost in electricity? (Answer: Nothing. My machine is so ancient that it is coal-fired. From dawn to dusk, six workers shovel the fuel into its firey belly simply for the luxury of turning all that energy into crytpographic hashes.)
posted by SteelyDuran at 4:02 PM on May 18, 2011 [3 favorites]
I wonder what that would cost in electricity? (Answer: Nothing. My machine is so ancient that it is coal-fired. From dawn to dusk, six workers shovel the fuel into its firey belly simply for the luxury of turning all that energy into crytpographic hashes.)
posted by SteelyDuran at 4:02 PM on May 18, 2011 [3 favorites]
This is a scam, not in the sense that it was intended to be a scam, but in the sense that its an economics product built by geek engineers with apparently no understanding of basic economics.
Nelson's quora link is essential for anyone thinking of investing in this product. Its a bad idea built by people without a clue. Virtual currencies are not new, and there are several useful ones which used to be more developed than this one (linden dollars and somewhat illegitimate eve online/WOW credits spring to mind) - not to mention whatever eastern MMORPG developers have created.
Overall, Bitcoin strikes me as the next OpenID - a bad idea, attractive to paranoid geeks, with no real world benefits.
posted by Another Fine Product From The Nonsense Factory at 4:06 PM on May 18, 2011 [5 favorites]
Nelson's quora link is essential for anyone thinking of investing in this product. Its a bad idea built by people without a clue. Virtual currencies are not new, and there are several useful ones which used to be more developed than this one (linden dollars and somewhat illegitimate eve online/WOW credits spring to mind) - not to mention whatever eastern MMORPG developers have created.
Overall, Bitcoin strikes me as the next OpenID - a bad idea, attractive to paranoid geeks, with no real world benefits.
posted by Another Fine Product From The Nonsense Factory at 4:06 PM on May 18, 2011 [5 favorites]
This is interesting, as it has me actually thinking about alternative currencies as opposed to the usual, valuable metal alternative currencies made by far-right libertarians, which incidentally are only good at one gun shop and the business that mints them.
This sounds much more thought out, although I'm not expecting great things. Maybe some elements of a high tech currency like this would make it into future practices for government currencies, but this just doesn't seem to have much going for it, especially with the whole built in deflation and difficulty for exchanging it with established currencies.
posted by mccarty.tim at 4:07 PM on May 18, 2011 [1 favorite]
This sounds much more thought out, although I'm not expecting great things. Maybe some elements of a high tech currency like this would make it into future practices for government currencies, but this just doesn't seem to have much going for it, especially with the whole built in deflation and difficulty for exchanging it with established currencies.
posted by mccarty.tim at 4:07 PM on May 18, 2011 [1 favorite]
For those that would like some free Bitcoins (Bitmills, actually, 1/1000 of a Bitcoin), visit the game that I am developing, Dragon's Tale. It's a casino MMORPG - you level up by gambling, and it's based 100% on Bitcoins.
There are soldier statues in the game - click on one and you may find a 10 Bitmlll gift. It's immediately withdrawable - no playthough or other typical casino nonsense.
Of course I hope that people will use the gifts to try all the novel games within Dragon's Tale, and deposit Bitcoins to play additional and higher-stakes games. But Bitcoin hunters are welcome, and I'm happy to provide your first real Bitcoins. If you see me in-game (I play the character Di), give me a shout.
Dragon's Tale is available for Windows, OSX, and Linux, and can be found here: http://www.dragons.tl
posted by Teppy at 4:11 PM on May 18, 2011
There are soldier statues in the game - click on one and you may find a 10 Bitmlll gift. It's immediately withdrawable - no playthough or other typical casino nonsense.
Of course I hope that people will use the gifts to try all the novel games within Dragon's Tale, and deposit Bitcoins to play additional and higher-stakes games. But Bitcoin hunters are welcome, and I'm happy to provide your first real Bitcoins. If you see me in-game (I play the character Di), give me a shout.
Dragon's Tale is available for Windows, OSX, and Linux, and can be found here: http://www.dragons.tl
posted by Teppy at 4:11 PM on May 18, 2011
I wouldn't describe bitcoin's current $8 price as a "bubble" per se, more likely a "pump & dump", probably by the Compute4Cash guys.
I'm personally an enormous fan of bitcoin, but most likely it'll see see absolutely gruesome growing pains, like almost every radical project. There will however be real people experiencing real financial pain in bitcoins' case, especially anyone that buys in now.
As a rule, you should never buy bitcoins when they're worth more than the computer time it takes to mine them. Yes, that computer time increases as more people start mining, but ..
posted by jeffburdges at 4:15 PM on May 18, 2011
I'm personally an enormous fan of bitcoin, but most likely it'll see see absolutely gruesome growing pains, like almost every radical project. There will however be real people experiencing real financial pain in bitcoins' case, especially anyone that buys in now.
As a rule, you should never buy bitcoins when they're worth more than the computer time it takes to mine them. Yes, that computer time increases as more people start mining, but ..
posted by jeffburdges at 4:15 PM on May 18, 2011
On what legal basis would bitcoin exchanges likely be acted against?
Title 18 section 1960, unlicensed money transmission business.
posted by anigbrowl at 4:21 PM on May 18, 2011
Title 18 section 1960, unlicensed money transmission business.
posted by anigbrowl at 4:21 PM on May 18, 2011
Thanks for your answer to my question "why local currencies", hippybear. As you say, it's about your faith, ideology, and symbolism. I thought of them purely in economical terms. It all makes more sense now.
posted by Triplanetary at 4:28 PM on May 18, 2011
posted by Triplanetary at 4:28 PM on May 18, 2011
SWIM bought 2CI using bitcoins.
What kind of hippy ass nerd drug is that? The guy selling me stepped on coke at the end of the bar is definitely not taking bitcoins.
posted by geoff. at 4:42 PM on May 18, 2011
What kind of hippy ass nerd drug is that? The guy selling me stepped on coke at the end of the bar is definitely not taking bitcoins.
posted by geoff. at 4:42 PM on May 18, 2011
Russ Roberts of George Mason U interviews Gavin Andresen on an EconTalk podcast.
posted by quadog at 5:20 PM on May 18, 2011
posted by quadog at 5:20 PM on May 18, 2011
The best arguments I have yet found against Bitcoin as a plausible store of value:
Tyler Cowen, arguing that as Bitcoins have no inherent worth, the velocity of Bitcoin assets will increase without bound, because why hold Bitcoin, when you can trade it for something else, like diamonds or Picassos?
A young economist arguing that unlike nationally issued currency, you don't have to pay your taxes in Bitcoin, and you don't have to accept them as payment for a debt.
Also, not an argument, but funny: Fake Simon Peyton-Jones on non-terminating definitions of value.
So, my strongest rejoinder is to point out the example of Rai stones. Rai stones were used as currency on the island of Yap for hundreds of years. They weigh four tonnes! Rai stones were almost useless – they weren't even moved when they 'changed hands' – and yet the system survived until the quarries became inaccessible.
Some of the arguments against Bitcoin that I've heard here remind me of arguments against cryonics (there are good arguments for cryonics not working, but they're heard infrequently, because somehow everyone's a five second expert on the subject). Bitcoin exchanges are not money transmission businesses, because they don't transmit money. Nor is the NYSE a money transmission business. Exchanges buy and sell goods (or 'goods'). In this case the good is Bitcoins (soon to be followed by Bitcoin futures, options etc.). Bitcoins do not have the same failure mode that killed Beenz, Flooz etc.: the value of a Bitcoin does not depend on a central issuer that guarantees its exchange value. Neither would a government ban be fatal in the same way: again, the lack of a single guarantor/issuer subject to a single legislative code means that no single government can kill Bitcoin.
My biggest gripe against Bitcoin is that the 2*10^16 FLOPS now being used to generate them is being used to solve problems of no utility other than the creation of Bitcoins. If an online currency were available that had the same distributed generation and pseudonymity, but in which that same currency could be used to purchase the same compute power that generated the currency, then that would very neatly solve the problem of lack of a final use value for computational money.
posted by topynate at 5:29 PM on May 18, 2011 [5 favorites]
Tyler Cowen, arguing that as Bitcoins have no inherent worth, the velocity of Bitcoin assets will increase without bound, because why hold Bitcoin, when you can trade it for something else, like diamonds or Picassos?
A young economist arguing that unlike nationally issued currency, you don't have to pay your taxes in Bitcoin, and you don't have to accept them as payment for a debt.
Also, not an argument, but funny: Fake Simon Peyton-Jones on non-terminating definitions of value.
So, my strongest rejoinder is to point out the example of Rai stones. Rai stones were used as currency on the island of Yap for hundreds of years. They weigh four tonnes! Rai stones were almost useless – they weren't even moved when they 'changed hands' – and yet the system survived until the quarries became inaccessible.
Some of the arguments against Bitcoin that I've heard here remind me of arguments against cryonics (there are good arguments for cryonics not working, but they're heard infrequently, because somehow everyone's a five second expert on the subject). Bitcoin exchanges are not money transmission businesses, because they don't transmit money. Nor is the NYSE a money transmission business. Exchanges buy and sell goods (or 'goods'). In this case the good is Bitcoins (soon to be followed by Bitcoin futures, options etc.). Bitcoins do not have the same failure mode that killed Beenz, Flooz etc.: the value of a Bitcoin does not depend on a central issuer that guarantees its exchange value. Neither would a government ban be fatal in the same way: again, the lack of a single guarantor/issuer subject to a single legislative code means that no single government can kill Bitcoin.
My biggest gripe against Bitcoin is that the 2*10^16 FLOPS now being used to generate them is being used to solve problems of no utility other than the creation of Bitcoins. If an online currency were available that had the same distributed generation and pseudonymity, but in which that same currency could be used to purchase the same compute power that generated the currency, then that would very neatly solve the problem of lack of a final use value for computational money.
posted by topynate at 5:29 PM on May 18, 2011 [5 favorites]
demiurge : I still don't understand how this works. You can run a computer algorithm to generate the currency, and then people pay you money for it? Why would you pay someone money to waste electricity?
You miss the point - Generating blocks doesn't count as the raison d'etre of BitCoins, just the initial means of producing the currency. You can think of it as gold miners vs using gold coins as a form of currency; The former do the work, and get paid handsomely for their work; but not every participant in a gold-based economy mines their own gold.
The mining just gives you the raw materials for the currency. Actual use gives that material a value in relation to the rest of the world.
delmoi : The other problem with bitcoin (reading the PDF) is that there is zero privacy. Every transaction is knowable not just by the government, but, if I'm reading this right everyone on the network? Or do you have to 'know' the key before checking for double spending?
Every transaction, you can trace back to its original block (which you can trace back to the very first block). As far as privacy goes, you can use a different wallet (aka "account number") for every single transaction pair. Tracing a transaction to a given human would require controlling the vast majority of the BitCoin network at the time the transaction happens, nothing less.
kliuless : Stage 6: All Bitcoin exchanges are shut down by USG
On what grounds? If you plan to bring up Liberty Dollars as an example, you need go no further than the name itself. BitCoins don't pretend to have value in terms of US Dollars, they exist entirely separate from Dollars. Also unlike US dollars, they don't exist solely in the US, they span the globe in ways the Dollar and Euro could only dream of (Not to say they have more strength than either of those - Yet).
anigbrowl : Title 18 section 1960, unlicensed money transmission business.
IANAL, but that appears to have more to do with wire fraud than alternative currencies.
jeffburdges : I wouldn't describe bitcoin's current $8 price as a "bubble" per se, more likely a "pump & dump", probably by the Compute4Cash guys.
Nope - More like "Slashdot Effect".
Realistically, it has traded in the USD$0.50-$1.00 range for over a year now, and in the dollar+ range since February (the last time it hit Slashdot - Notice the spike, and where it stabilized shortly after for an idea of its new "real" value). Buying at USD$8, yeah, I'd call pretty dumb; But using it within an order of magnitude of par with the Euro, well, you could do worse (like investing in US Treasuries between now and August).
posted by pla at 5:39 PM on May 18, 2011
You miss the point - Generating blocks doesn't count as the raison d'etre of BitCoins, just the initial means of producing the currency. You can think of it as gold miners vs using gold coins as a form of currency; The former do the work, and get paid handsomely for their work; but not every participant in a gold-based economy mines their own gold.
The mining just gives you the raw materials for the currency. Actual use gives that material a value in relation to the rest of the world.
delmoi : The other problem with bitcoin (reading the PDF) is that there is zero privacy. Every transaction is knowable not just by the government, but, if I'm reading this right everyone on the network? Or do you have to 'know' the key before checking for double spending?
Every transaction, you can trace back to its original block (which you can trace back to the very first block). As far as privacy goes, you can use a different wallet (aka "account number") for every single transaction pair. Tracing a transaction to a given human would require controlling the vast majority of the BitCoin network at the time the transaction happens, nothing less.
kliuless : Stage 6: All Bitcoin exchanges are shut down by USG
On what grounds? If you plan to bring up Liberty Dollars as an example, you need go no further than the name itself. BitCoins don't pretend to have value in terms of US Dollars, they exist entirely separate from Dollars. Also unlike US dollars, they don't exist solely in the US, they span the globe in ways the Dollar and Euro could only dream of (Not to say they have more strength than either of those - Yet).
anigbrowl : Title 18 section 1960, unlicensed money transmission business.
IANAL, but that appears to have more to do with wire fraud than alternative currencies.
jeffburdges : I wouldn't describe bitcoin's current $8 price as a "bubble" per se, more likely a "pump & dump", probably by the Compute4Cash guys.
Nope - More like "Slashdot Effect".
Realistically, it has traded in the USD$0.50-$1.00 range for over a year now, and in the dollar+ range since February (the last time it hit Slashdot - Notice the spike, and where it stabilized shortly after for an idea of its new "real" value). Buying at USD$8, yeah, I'd call pretty dumb; But using it within an order of magnitude of par with the Euro, well, you could do worse (like investing in US Treasuries between now and August).
posted by pla at 5:39 PM on May 18, 2011
Wow! I could make $1.78 per month mining bitcoin on the fastest machine in the house.
If you're generating Bitcoins on that Windows box under your desk, you're wasting your time. You want to be using a GPU.
posted by twirlip at 5:48 PM on May 18, 2011
If you're generating Bitcoins on that Windows box under your desk, you're wasting your time. You want to be using a GPU.
posted by twirlip at 5:48 PM on May 18, 2011
there are good arguments for cryonics not working, but they're heard infrequently
Such as, you can't bring corpses back to life, and draining someone's fluids and freezing them doesn't change that?
posted by designbot at 5:49 PM on May 18, 2011 [5 favorites]
Such as, you can't bring corpses back to life, and draining someone's fluids and freezing them doesn't change that?
posted by designbot at 5:49 PM on May 18, 2011 [5 favorites]
Bwithh : why should Joe Public trust the likes of Anonymous more than the likes of the Federal Reserve?
Well, because "Anonymous" doesn't have "inflation" built into the damned system as the means by which they profit from us using their currency?
In fact, BitCoins function as an inherently deflationary currency.
And toppling governments and destabilizing economies may sound cool in theory to breathless "technotarians" but in practice there's all kind of awkwardness.
Awww, you mean the governments of the world can't count on funding their wars with self-issued fiat currency anymore? Boo hoo, perhaps a few more young men will see their 25th birthday as a result.
posted by pla at 5:52 PM on May 18, 2011
Well, because "Anonymous" doesn't have "inflation" built into the damned system as the means by which they profit from us using their currency?
In fact, BitCoins function as an inherently deflationary currency.
And toppling governments and destabilizing economies may sound cool in theory to breathless "technotarians" but in practice there's all kind of awkwardness.
Awww, you mean the governments of the world can't count on funding their wars with self-issued fiat currency anymore? Boo hoo, perhaps a few more young men will see their 25th birthday as a result.
posted by pla at 5:52 PM on May 18, 2011
Such as, you can't bring corpses back to life, and draining someone's fluids and freezing them doesn't change that?
No.
posted by topynate at 5:53 PM on May 18, 2011
No.
posted by topynate at 5:53 PM on May 18, 2011
Gibson was eight - orbital banking is where the real money is.
posted by newdaddy at 6:03 PM on May 18, 2011
posted by newdaddy at 6:03 PM on May 18, 2011
Right. He was right.
posted by newdaddy at 6:03 PM on May 18, 2011 [1 favorite]
posted by newdaddy at 6:03 PM on May 18, 2011 [1 favorite]
Tyler Cowen, arguing that as Bitcoins have no inherent worth, the velocity of Bitcoin assets will increase without bound, because why hold Bitcoin, when you can trade it for something else, like diamonds or Picassos?
Well, none of those has any inherent worth either, so…
posted by kenko at 6:12 PM on May 18, 2011 [1 favorite]
Well, none of those has any inherent worth either, so…
posted by kenko at 6:12 PM on May 18, 2011 [1 favorite]
Wonderful. Yet another place to be broke.
posted by jonmc at 6:14 PM on May 18, 2011 [2 favorites]
posted by jonmc at 6:14 PM on May 18, 2011 [2 favorites]
As long as you must settle your taxes in dollars on wages and sales you will unable to escape te governments money. Go ahead sell your services in bitcoins, just be sure wages ad appropriate sales taxes are collected and paid in dollars. Also because the value of your bitcoin increase relative to the dollar when your did yur services ad when
you sold them, you will owe some capital gains (another 15%).
Also what happens when coins just sit there in someone's lost wallet file? Arn't coins going to just vanish over time from backup failures, users who abandon the system? Entropy is going to really fuck this up.
posted by humanfont at 6:20 PM on May 18, 2011 [3 favorites]
you sold them, you will owe some capital gains (another 15%).
Also what happens when coins just sit there in someone's lost wallet file? Arn't coins going to just vanish over time from backup failures, users who abandon the system? Entropy is going to really fuck this up.
posted by humanfont at 6:20 PM on May 18, 2011 [3 favorites]
I would guess it's the bright idea of a group of Golgafrinchans after that whole leaf thing didn't work out.
posted by joannemullen at 6:23 PM on May 18, 2011 [2 favorites]
posted by joannemullen at 6:23 PM on May 18, 2011 [2 favorites]
Entropy is going to really fuck this up.
If the universe were to get a tattoo, it would be this.
posted by cortex at 6:25 PM on May 18, 2011 [37 favorites]
If the universe were to get a tattoo, it would be this.
posted by cortex at 6:25 PM on May 18, 2011 [37 favorites]
humanfont : As long as you must settle your taxes in dollars on wages and sales you will unable to escape te governments money.
You only need to bother with the government's extortionate scheme known as "taxation" as long as "you" get traceably paid. Quick - Does "16kggdhAMbE8FZQpNcDwzG3tdGxy11Tdwm" live in the US? Does it need to pay income taxes to the US government? How about "1C2dbcE7jSHuDDJaA7EV2sohQJNgjbHY6X"? Hey, whaddya know, both of those, and an effectively infinite number of other random-looking addresses, go to me.
/ Feel free to send all those BTC you don't want to those addresses. And don't worry about "them" tracking the transactions back to me, I can forward anything you send to me to a quintillion other addresses (also "me"), effectively laundering them with zero effort. ;)
Also what happens when coins just sit there in someone's lost wallet file? Arn't coins going to just vanish over time from backup failures, users who abandon the system? Entropy is going to really fuck this up.
One of two aspects of the "deflationary" nature of this currency. You can divide a single bitcoin (more accurately, a single block-of-currently-50-BTC) as finely as necessary. If 99.9999% of the bitcoins ever produced vanish with lost wallets, we'll just use μBTC instead.
posted by pla at 6:42 PM on May 18, 2011 [1 favorite]
You only need to bother with the government's extortionate scheme known as "taxation" as long as "you" get traceably paid. Quick - Does "16kggdhAMbE8FZQpNcDwzG3tdGxy11Tdwm" live in the US? Does it need to pay income taxes to the US government? How about "1C2dbcE7jSHuDDJaA7EV2sohQJNgjbHY6X"? Hey, whaddya know, both of those, and an effectively infinite number of other random-looking addresses, go to me.
/ Feel free to send all those BTC you don't want to those addresses. And don't worry about "them" tracking the transactions back to me, I can forward anything you send to me to a quintillion other addresses (also "me"), effectively laundering them with zero effort. ;)
Also what happens when coins just sit there in someone's lost wallet file? Arn't coins going to just vanish over time from backup failures, users who abandon the system? Entropy is going to really fuck this up.
One of two aspects of the "deflationary" nature of this currency. You can divide a single bitcoin (more accurately, a single block-of-currently-50-BTC) as finely as necessary. If 99.9999% of the bitcoins ever produced vanish with lost wallets, we'll just use μBTC instead.
posted by pla at 6:42 PM on May 18, 2011 [1 favorite]
CRYPTONOMICON REFERENCE
posted by synaesthetichaze
Ahem. Wrong Stephenson book guys. The Baroque Cycle is the one that's actually about monetary policy.
/End Neal Stephenson Pedant
posted by stratastar at 6:50 PM on May 18, 2011
posted by synaesthetichaze
Ahem. Wrong Stephenson book guys. The Baroque Cycle is the one that's actually about monetary policy.
/End Neal Stephenson Pedant
posted by stratastar at 6:50 PM on May 18, 2011
ANATHEM!
posted by stratastar at 6:50 PM on May 18, 2011
posted by stratastar at 6:50 PM on May 18, 2011
Yet, nobody knows if all those bitcoins actually went out of circulation, or if they're just being held quietly, making their value less certain, pla.
There is also the issue that bitcoins must reside inside some bank that lends them out if they're to generate interest. I'm afraid that'll nuke their anonymity for most people.
We need a peer2peer application that handles bidding & such to challenge ebay too.
posted by jeffburdges at 6:56 PM on May 18, 2011 [1 favorite]
There is also the issue that bitcoins must reside inside some bank that lends them out if they're to generate interest. I'm afraid that'll nuke their anonymity for most people.
We need a peer2peer application that handles bidding & such to challenge ebay too.
posted by jeffburdges at 6:56 PM on May 18, 2011 [1 favorite]
jeffburdges : Yet, nobody knows if all those bitcoins actually went out of circulation, or if they're just being held quietly, making their value less certain, pla.
Have we dredged up the last gold-laden Spanish Galleon? Do we know that a solid-diamond meteor won't hit Manhattan next December, spreading diamond-chunks over a few hundred mile radius of densely populated land? Do we know that some random college student won't discover an inkjet-printable 90% efficient solar cell next week, obliterating the oil economy almost overnight?
For that matter, nobody knows if the US will remain solvent after August. I've already hedged against the asshats in Congress letting us default and rendering us a 3rd-world economy; Can you say England or China or the EU won't do the same next year?
Most fiat currencies depends on the trust of the People, in people we know as some of the worst liars and thieves amongst us. I'll trust a fixed amount of GPU time over Newty G any day.
posted by pla at 7:07 PM on May 18, 2011 [1 favorite]
Have we dredged up the last gold-laden Spanish Galleon? Do we know that a solid-diamond meteor won't hit Manhattan next December, spreading diamond-chunks over a few hundred mile radius of densely populated land? Do we know that some random college student won't discover an inkjet-printable 90% efficient solar cell next week, obliterating the oil economy almost overnight?
For that matter, nobody knows if the US will remain solvent after August. I've already hedged against the asshats in Congress letting us default and rendering us a 3rd-world economy; Can you say England or China or the EU won't do the same next year?
Most fiat currencies depends on the trust of the People, in people we know as some of the worst liars and thieves amongst us. I'll trust a fixed amount of GPU time over Newty G any day.
posted by pla at 7:07 PM on May 18, 2011 [1 favorite]
How can I use this to make me fabulously wealthy beyond the fevered imaginings of the richest kings?
Well, I had a rather crackpot idea. Someone mentioned the whole "deflationary" nature of the currency, so this won't work for long (?). You could buy bit-coin en masse and then resell it later on an exchange like Mt Gox- look at that little chart there. Buy low, sell high? This would probably mess things up though.
Still, kind of tempted to put a twenty in and experiment.
posted by Askiba at 7:25 PM on May 18, 2011
Well, I had a rather crackpot idea. Someone mentioned the whole "deflationary" nature of the currency, so this won't work for long (?). You could buy bit-coin en masse and then resell it later on an exchange like Mt Gox- look at that little chart there. Buy low, sell high? This would probably mess things up though.
Still, kind of tempted to put a twenty in and experiment.
posted by Askiba at 7:25 PM on May 18, 2011
You only need to bother with the government's extortionate scheme known as "taxation" as long as "you" get traceably paid. Quick - Does "16kggdhAMbE8FZQpNcDwzG3tdGxy11Tdwm" live in the US? Does it need to pay income taxes to the US government? How about "1C2dbcE7jSHuDDJaA7EV2sohQJNgjbHY6X"? Hey, whaddya know, both of those, and an effectively infinite number of other random-looking addresses, go to me.
Many also have tangible assets like real estate or a car. Licenses and taxes are imposed in those items. Also your empoyeer must file a W-2 or 1099. A company working with yours will need a federal EiN number. Sone if those transactions get reported. Should your scheme to avoid paying income taxes be discovered the you are facing some serious jail time.
posted by humanfont at 7:31 PM on May 18, 2011 [1 favorite]
Many also have tangible assets like real estate or a car. Licenses and taxes are imposed in those items. Also your empoyeer must file a W-2 or 1099. A company working with yours will need a federal EiN number. Sone if those transactions get reported. Should your scheme to avoid paying income taxes be discovered the you are facing some serious jail time.
posted by humanfont at 7:31 PM on May 18, 2011 [1 favorite]
So since Paypal is apparently shutting down people selling BitCoins, what's the current method of converting USD to BitCoin?
You can buy them directly from someone in #bitcoin-otc on freenode, though I have not bought any myself. You can also go through an exchange like MtGox, but they charge transaction fees.
posted by howlingmonkey at 7:49 PM on May 18, 2011
You can buy them directly from someone in #bitcoin-otc on freenode, though I have not bought any myself. You can also go through an exchange like MtGox, but they charge transaction fees.
posted by howlingmonkey at 7:49 PM on May 18, 2011
You only need to bother with the government's extortionate scheme known as "taxation" as long as "you" get traceably paid. Quick - Does "16kggdhAMbE8FZQpNcDwzG3tdGxy11Tdwm" live in the US? Does it need to pay income taxes to the US government? How about "1C2dbcE7jSHuDDJaA7EV2sohQJNgjbHY6X"? Hey, whaddya know, both of those, and an effectively infinite number of other random-looking addresses, go to me.
Good luck with that!
posted by empath at 7:53 PM on May 18, 2011 [6 favorites]
Good luck with that!
posted by empath at 7:53 PM on May 18, 2011 [6 favorites]
Most fiat currencies depends on the trust of the People, in people we know as some of the worst liars and thieves amongst us.
That's not really what fiat currencies depend on. They depend on the fact that they are backed by a government who can enforce it's authority with guns.
When BitCoin gets an army and police force, I'll consider using its money, until then, I'll go with the currency that I can pay taxes with.
How can I use this to make me fabulously wealthy beyond the fevered imaginings of the richest kings?
Apparently the gullibility of gold bugs and teaparties is a bottomless resource, ripe for the plucking. When this ponzi goes belly up, start the next one.
posted by empath at 7:57 PM on May 18, 2011 [4 favorites]
That's not really what fiat currencies depend on. They depend on the fact that they are backed by a government who can enforce it's authority with guns.
When BitCoin gets an army and police force, I'll consider using its money, until then, I'll go with the currency that I can pay taxes with.
How can I use this to make me fabulously wealthy beyond the fevered imaginings of the richest kings?
Apparently the gullibility of gold bugs and teaparties is a bottomless resource, ripe for the plucking. When this ponzi goes belly up, start the next one.
posted by empath at 7:57 PM on May 18, 2011 [4 favorites]
I don't understand, pla; I get paid by the US Government. What advantage would this have? I want people to pay taxes to the federal government.
posted by Lord Chancellor at 8:27 PM on May 18, 2011 [3 favorites]
posted by Lord Chancellor at 8:27 PM on May 18, 2011 [3 favorites]
ErikaB FLOOZ REFERENCE
I bought a book once with some free flooz. It was a wacky scheme, but hey, I got a free book out of it.
posted by i feel possessed at 8:50 PM on May 18, 2011
I bought a book once with some free flooz. It was a wacky scheme, but hey, I got a free book out of it.
posted by i feel possessed at 8:50 PM on May 18, 2011
Everything delivered on the internet should be free anyway, so why not a fake currency to help people adjust to it?
posted by Brian B. at 8:53 PM on May 18, 2011 [2 favorites]
posted by Brian B. at 8:53 PM on May 18, 2011 [2 favorites]
the government's extortionate scheme known as "taxation"
what
posted by dixiecupdrinking at 8:53 PM on May 18, 2011 [1 favorite]
what
posted by dixiecupdrinking at 8:53 PM on May 18, 2011 [1 favorite]
The cost of electricity is perhaps the real problem. The difficulty of finding hashes is proportional to the network's ability to find hashes, which is rising fast as more users join and specialized hardware becomes more common.
So it's sort of an arms race, and he who has access to the most free CPU cycles and electricity will be able to mine more coins. Guessing that most of those electrons will come from someone's mom's house, employer, or university (or botnet).
posted by RobotVoodooPower at 9:13 PM on May 18, 2011
So it's sort of an arms race, and he who has access to the most free CPU cycles and electricity will be able to mine more coins. Guessing that most of those electrons will come from someone's mom's house, employer, or university (or botnet).
posted by RobotVoodooPower at 9:13 PM on May 18, 2011
Do we know that a solid-diamond meteor won't hit Manhattan next December, spreading diamond-chunks over a few hundred mile radius of densely populated land?
You don't even need that. If DeBeers unleashed its stockpile of diamonds out of enlightened self-interest, all of those shiny rocks would be worth very little on the market. Much like diamonds, bitcoins are worth what the market is willing to pay.
This bitcoin thing is still an interesting experiment to watch.
posted by ryoshu at 9:19 PM on May 18, 2011
You don't even need that. If DeBeers unleashed its stockpile of diamonds out of enlightened self-interest, all of those shiny rocks would be worth very little on the market. Much like diamonds, bitcoins are worth what the market is willing to pay.
This bitcoin thing is still an interesting experiment to watch.
posted by ryoshu at 9:19 PM on May 18, 2011
If DeBeers unleashed its stockpile of diamonds out of enlightened self-interest, all of those shiny rocks would be worth very little on the market.
QFMFT. Diamonds aren't valuable. It's the manipulated market which makes them valuable.
posted by hippybear at 9:28 PM on May 18, 2011
QFMFT. Diamonds aren't valuable. It's the manipulated market which makes them valuable.
posted by hippybear at 9:28 PM on May 18, 2011
Much like diamonds, bitcoins...
Manipulated market. Controlled release of supply. Marketing that makes each into a story about the recipient's place in the world and future.
...dollars...
posted by weston at 10:34 PM on May 18, 2011
Manipulated market. Controlled release of supply. Marketing that makes each into a story about the recipient's place in the world and future.
...dollars...
posted by weston at 10:34 PM on May 18, 2011
I don't understand, pla; I get paid by the US Government. What advantage would this have? I want people to pay taxes to the federal government.
Pla is an anarchist.
Diamonds aren't valuable.
Nothing is valuable except thinking makes it so, with the possible exceptions of food water and shelter. DeBeers us a cartel which is artificially controlling the supply of diamonds. But a shift in fashion towards, say, ruby engagement rings or engagement necklaces or something else could easily fuck 'em, and there's not much they could do about it but run more commercials with shadows making out.
posted by Diablevert at 10:41 PM on May 18, 2011 [2 favorites]
Pla is an anarchist.
Diamonds aren't valuable.
Nothing is valuable except thinking makes it so, with the possible exceptions of food water and shelter. DeBeers us a cartel which is artificially controlling the supply of diamonds. But a shift in fashion towards, say, ruby engagement rings or engagement necklaces or something else could easily fuck 'em, and there's not much they could do about it but run more commercials with shadows making out.
posted by Diablevert at 10:41 PM on May 18, 2011 [2 favorites]
It's the manipulated market which makes them valuable.
It's the marketing that makes them valuable. There are already simulants on the market for 1/10th-1/20th the price that are optically indistinguishable from mined diamonds.
posted by BrotherCaine at 2:20 AM on May 19, 2011
It's the marketing that makes them valuable. There are already simulants on the market for 1/10th-1/20th the price that are optically indistinguishable from mined diamonds.
posted by BrotherCaine at 2:20 AM on May 19, 2011
Bitcoins are not a good candidate to replace the US Dollar. Bitcoins, however, are an incredibly viable competitor to Gold and Diamonds.
Gold is something dug out of the ground, and we largely have dug most of it out of the ground. This activity is inherently wasteful, why is gold preferred over other currencies such as the dollar? Gold is believed to be a compact store of value that is not controlled by a nation-state which is impossible to counterfeit. That is its fundamental value proposition. Bitcoins are viable because they fulfill the EXACT same value proposition as gold while providing lower holding costs (a private key can be fit on a sheet of paper no matter its quantity) as opposed to a massive gold vault which is difficult to transport. Bitcoins are so easy to transport, you could share your bitcoin address while holding the actual key in a safe deposit box -- you could receive payments even without touching your key in the aforementioned safe deposit box, others would just have to make the payment on the P2P network. This is a far superior way to transact over gold. Imagine the massive impact of being able to receive money that is 100% in your control (no banks) without taking any action whatsoever on your part. This is big. It makes smugging gold to money centers or remittances to 3rd world countries via Western Union look quaint. Its downsides are similar to gold and diamonds, and there is a reason why our currencies are no longer backed in gold.
The US Dollar's value in controlling the amount of investment and risk that everyone takes through interest rate policy and money supply is unmatched and cannot be replicated using Bitcoins in a viable manner without a huge amount of waste. Inflation is good and encourages the optimal point of investment. Bitcoins cannot create inflation without huge amount of social waste (one could argue that this waste is viable even if Bitcoins were the dominant currency). If one were to continue issuing bitcoins much after the 21 Million Bitcoins are issued, at let's say a 2% rate of inflation per year, this creates a material hit to global GDP if Bitcoins were the dominant currency. Why would this happen? If Bitcoins became the dominant global currency, a 2% inflation rate means that 2% of all money in the world is given to those who dump money into computing hardware and electricity to compute Bitcoin blocks as it'd be profitiable to do so. Is it worthwhile to dump 2% of global GDP (more or less depending on the velocity of money) on electricity that is wasted? What if inflation needs to increase to force more spending? There's no way to manage that. One could argue that 2% global waste and the inability to force inflation is a reasonable cost, but I remain unconvinced.
Gold and diamonds have the same problem. Gold requires an incredible amount of money to mine and it's difficult to control the amount of gold that is mined (gold inflation). When I look at Bitcoins, I see it as the successor to gold, and there is a non-zero tail risk of Bitcoins succeeding by replacing gold, creating a massive sell-off in gold. It's slim, but those transporting gold or diamonds in toothpaste across the borders to Switzerland or Luxembourg may reconsider their methods in the future.
posted by amuseDetachment at 2:28 AM on May 19, 2011 [2 favorites]
Gold is something dug out of the ground, and we largely have dug most of it out of the ground. This activity is inherently wasteful, why is gold preferred over other currencies such as the dollar? Gold is believed to be a compact store of value that is not controlled by a nation-state which is impossible to counterfeit. That is its fundamental value proposition. Bitcoins are viable because they fulfill the EXACT same value proposition as gold while providing lower holding costs (a private key can be fit on a sheet of paper no matter its quantity) as opposed to a massive gold vault which is difficult to transport. Bitcoins are so easy to transport, you could share your bitcoin address while holding the actual key in a safe deposit box -- you could receive payments even without touching your key in the aforementioned safe deposit box, others would just have to make the payment on the P2P network. This is a far superior way to transact over gold. Imagine the massive impact of being able to receive money that is 100% in your control (no banks) without taking any action whatsoever on your part. This is big. It makes smugging gold to money centers or remittances to 3rd world countries via Western Union look quaint. Its downsides are similar to gold and diamonds, and there is a reason why our currencies are no longer backed in gold.
The US Dollar's value in controlling the amount of investment and risk that everyone takes through interest rate policy and money supply is unmatched and cannot be replicated using Bitcoins in a viable manner without a huge amount of waste. Inflation is good and encourages the optimal point of investment. Bitcoins cannot create inflation without huge amount of social waste (one could argue that this waste is viable even if Bitcoins were the dominant currency). If one were to continue issuing bitcoins much after the 21 Million Bitcoins are issued, at let's say a 2% rate of inflation per year, this creates a material hit to global GDP if Bitcoins were the dominant currency. Why would this happen? If Bitcoins became the dominant global currency, a 2% inflation rate means that 2% of all money in the world is given to those who dump money into computing hardware and electricity to compute Bitcoin blocks as it'd be profitiable to do so. Is it worthwhile to dump 2% of global GDP (more or less depending on the velocity of money) on electricity that is wasted? What if inflation needs to increase to force more spending? There's no way to manage that. One could argue that 2% global waste and the inability to force inflation is a reasonable cost, but I remain unconvinced.
Gold and diamonds have the same problem. Gold requires an incredible amount of money to mine and it's difficult to control the amount of gold that is mined (gold inflation). When I look at Bitcoins, I see it as the successor to gold, and there is a non-zero tail risk of Bitcoins succeeding by replacing gold, creating a massive sell-off in gold. It's slim, but those transporting gold or diamonds in toothpaste across the borders to Switzerland or Luxembourg may reconsider their methods in the future.
posted by amuseDetachment at 2:28 AM on May 19, 2011 [2 favorites]
To clarify if you're not familiar with Bitcoins, Bitcoins will be inflated via computing Bitcoin Blocks (current payout of around ~50 bitcoins per block made out of thin air) until we reach 21 Million Bitcoins. After that there will be zero inflation as no more Bitcoins will be produced. One could theoretically modify the Bitcoin code (with nearly all existing Bitcoin users making the switch, a virtual currency rebasement) so that there would be 2% inflation for example, but there are no plans to do so, and it'd be unlikely to occur. So as it stands, Bitcoins have zero ability to create inflation to discourage hoarding after the 21 Million Bitcoins are produced. Precious metals face the exact same problem which is why they are no longer the unit of measurement of industrial production, but precious metals remain a popular unit of currency in certain sectors (areas of high transaction costs like rural India or illegal activities).
posted by amuseDetachment at 3:05 AM on May 19, 2011 [1 favorite]
posted by amuseDetachment at 3:05 AM on May 19, 2011 [1 favorite]
oh and also, just as a point of reference on the 'gaming' of the hugely inertial, but increasingly disconnected from reality, fiat currency/central bank architecture -- with USTs as 'quality' (or 'safe') collateral -- of the global financial system that we currently are in possession of, which some would describe as 'socially useless activity': How to Make Money in Microseconds
posted by kliuless at 4:04 AM on May 19, 2011
Look at a whole day’s trading, and market participants can usually tell you a plausible story... Look at trading activity on a scale of milliseconds, however, and things seem quite different.of course taking everything onto the balance sheet (B/S) of USG to weigh USD/BTC, on the one hand USG has seal team six for example (oto, arbitrary arrest), meanwhile mr. lee's greater hong kong burbclave franchulate phyle or whatever has ... wikileaks? (and, otoh, anonymous ;) you be the judge!
When two American financial economists, Joel Hasbrouck and Gideon Saar, did this a couple of years ago, they found strange periodicities and spasms. The most striking periodicity involves large peaks of activity separated by almost exactly 1000 milliseconds: they occur 10-30 milliseconds after the ‘tick’ of each second. The spasms, in contrast, seem to be governed not directly by clock time but by an event: the execution of a buy or sell order, the cancellation of an order, or the arrival of a new order. Average activity levels in the first millisecond after such an event are around 300 times higher than normal. There are lengthy periods – lengthy, that’s to say, on a scale measured in milliseconds – in which little or nothing happens, punctuated by spasms of thousands of orders for a corporation’s shares and cancellations of orders. These spasms seem to begin abruptly, last a minute or two, then end just as abruptly.
Little of this has to do directly with human action. None of us can react to an event in a millisecond... The periodicities and spasms found by Hasbrouck and Saar are the traces of an epochal shift. As recently as 20 years ago, the heart of most financial markets was a trading floor on which human beings did deals... The deals that used to be struck on trading floors now take place via ‘matching engines’ ... The matching engines of the New York Stock Exchange, for example... a giant new 400,000-square-foot plain-brick data centre in Mahwah, New Jersey, 30 miles from downtown Manhattan. Nobody minds you taking photos of the Broad Street building’s striking neoclassical façade, but try photographing the Mahwah data centre and you’ll find the police quickly taking an interest: it’s classed as part of the critical infrastructure of the United States.
[...lucid description of high frequency 'algo' trading and the flash crash last may...]
As Steve Wunsch, one of the pioneers of electronic exchanges, put it in another TABB forum discussion, US share trading ‘is now so complex as a system that no one can predict what will happen when something new is added to it, no matter how much vetting is done.’ ... Systems that are both tightly coupled and highly complex, Perrow argues in Normal Accidents (1984), are inherently dangerous. Crudely put, high complexity in a system means that if something goes wrong it takes time to work out what has happened and to act appropriately. Tight coupling means that one doesn’t have that time. Moreover, he suggests, a tightly coupled system needs centralised management, but a highly complex system can’t be managed effectively in a centralised way because we simply don’t understand it well enough; therefore its organisation must be decentralised. Systems that combine tight coupling with high complexity are an organisational contradiction...
posted by kliuless at 4:04 AM on May 19, 2011
also btw keep in mind the cycles of trust in government that, er, govern whether specie or credit is ascendant...
posted by kliuless at 4:21 AM on May 19, 2011
posted by kliuless at 4:21 AM on May 19, 2011
Plenty of valid criticisms have been levied here, but one of the most interesting things about the design of bitcoin is how it prevents inflation. There is no central banking authority that can fabricate more money and dilute the value of currently held bitcoins. Prices may still fluctuate, but this system seems designed to prevent manipulation of the currency. There are many compelling arguments for why governments should exert control over the monetary system, but the examples where they mismanage this responsibility are legion.
An inflation-proof currency appeals to my sense of justice but it might not be good macro economic policy. But then, I have doubts if anyone really understand macro economics.
posted by dgran at 6:03 AM on May 19, 2011
An inflation-proof currency appeals to my sense of justice but it might not be good macro economic policy. But then, I have doubts if anyone really understand macro economics.
posted by dgran at 6:03 AM on May 19, 2011
An inflation-proof currency appeals to my sense of justice
Why should it appeal to your sense of justice? An inflation-free environment completely hoses people who are in debt.
posted by empath at 6:21 AM on May 19, 2011 [2 favorites]
Why should it appeal to your sense of justice? An inflation-free environment completely hoses people who are in debt.
posted by empath at 6:21 AM on May 19, 2011 [2 favorites]
hippybear's remarks on local currencies make me think of the scrip sold in my parent's neighborhood in the Twin Cities.
Local businesses accept the scrip at face for purchases, but non-profits like parishes and school groups sell it and keep part of the price. It also offers help with tuition and other features that they have added since I last looked: www.stpaulscrip.org
posted by wenestvedt at 6:39 AM on May 19, 2011
Local businesses accept the scrip at face for purchases, but non-profits like parishes and school groups sell it and keep part of the price. It also offers help with tuition and other features that they have added since I last looked: www.stpaulscrip.org
posted by wenestvedt at 6:39 AM on May 19, 2011
Bitcoin is most likely to continue for a very long time as a complement to traditional currencies
People keep saying this, but I haven't seen any reason why anyone would actually buy this. You might as well trade magic cards or comic books, imo.
posted by empath at 6:45 AM on May 19, 2011 [1 favorite]
People keep saying this, but I haven't seen any reason why anyone would actually buy this. You might as well trade magic cards or comic books, imo.
posted by empath at 6:45 AM on May 19, 2011 [1 favorite]
If they could get the online gambling industry to adopt it, things would get interesting pretty fast. I suspect this won't pass the smell test in its current form though, too much insider advantage in the creation of it.
posted by Brian B. at 6:58 AM on May 19, 2011
posted by Brian B. at 6:58 AM on May 19, 2011
I love the fact that due to a bug, one person was able to mint 92 billion bitcoins out of thin air. Cue the developers scrambling to patch the bug and asking people to upgrade their client so it would ignore the falsely made coins.
That being said, I got $10 invested in this, so it better not fail!
posted by ymgve at 7:08 AM on May 19, 2011 [2 favorites]
That being said, I got $10 invested in this, so it better not fail!
posted by ymgve at 7:08 AM on May 19, 2011 [2 favorites]
"In normal economies, newly minted money is handed out by a central bank in return for some asset. In Bitcoin the money is randomly allocated over time. This is an advantage for early adopters who, on average, receive more 'free money' than late adopters."A pyramid scheme implies exponential growth, for one thing. For another, you don't have to actually pay anything to join. And all you get is this virtual currency, not any real money.
Isn't this pretty much the definition of a pyramid scheme?
That said you would have to be crazy to do any illegitimate business with bitcoins, because there is no privacy.
They weigh four tonnes! Rai stones were almost useless – they weren't even moved when they 'changed hands' – and yet the system survived until the quarries became inaccessible.I head what happened was an explorer found out about this and used modern technology to mint the stones cheaply causing massive inflation.
Well, because "Anonymous" doesn't have "inflation" built into the damned system as the means by which they profit from us using their currency?Which is actually a bug, not a feature. It encourages hoarding, just like with gold, which makes it OK for storing value but pretty bad to actually run an economy. Most of these goldbugs and FED haters are just mad that the fed and central banks are issuing currency designed to run an economy, crazy shack dwelling libtards who want to hoard cash and never spend it. And actually, that's not even true as the Fed and ECB are actually being way to paranoid about inflation.
In fact, BitCoins function as an inherently deflationary currency.
posted by delmoi at 7:22 AM on May 19, 2011
Could we all agree to meet back here in five years and see how Bitcoins are faring? I think the grandiose concerns about inflation, deflation, and military or government action are fascinating but entirely overblown. It seems much more likely that after the hype is over and the current hucksters finish turning their nonces into dollars, the whole Bitcoin enterprise will just fade away, a half-remembered dream of cryptoanarchy.
If I were a betting man, I'd bet $1000 worth of BitCoins against your $1000 worth of gold that Bitcoin will seem as irrelevant as Flooz in five years.
posted by Nelson at 7:31 AM on May 19, 2011 [3 favorites]
If I were a betting man, I'd bet $1000 worth of BitCoins against your $1000 worth of gold that Bitcoin will seem as irrelevant as Flooz in five years.
posted by Nelson at 7:31 AM on May 19, 2011 [3 favorites]
An inflation-free environment completely hoses people who are in debt.
So?
There is an option - not go into debt.
posted by rough ashlar at 7:48 AM on May 19, 2011
So?
There is an option - not go into debt.
posted by rough ashlar at 7:48 AM on May 19, 2011
And I've heard a rumor that the bitcoin head is getting a check from the CIA - it seems he's a cheap as some of the journalists cited in the book The Mighty Wurlitzer. *
posted by rough ashlar at 7:51 AM on May 19, 2011
posted by rough ashlar at 7:51 AM on May 19, 2011
It seems much more likely that after the hype is over and the current hucksters finish turning their nonces into dollars, the whole Bitcoin enterprise will just fade away, a half-remembered dream of cryptoanarchy.
Yep. See also: second life 'real estate'.
posted by empath at 8:12 AM on May 19, 2011
Yep. See also: second life 'real estate'.
posted by empath at 8:12 AM on May 19, 2011
There is an option - not go into debt.Right, which makes it impossible for most people to start a business. Which is exactly why inflation helps the economy running.
The real problem, though is that no inflation makes it pointless to lend money. You don't have to invest it for it to keep it's value, and therefore, no one lends any money and the economy grinds to a halt.
posted by delmoi at 8:15 AM on May 19, 2011 [4 favorites]
I wonder if someone will be able to come up with a way to gamble without a central server.
For example, lets say two people want to make a wager that a random number from 1-0 will be greater or less then 0.5. So each side picks a binary string, they're XOR'd together and the resulting hash is used to make the random number.
Empath mentioned second life, a ton of the economy in second life was based on gambling, so when SL shut down gambling operations, the economy completely collapsed.
posted by delmoi at 8:21 AM on May 19, 2011
For example, lets say two people want to make a wager that a random number from 1-0 will be greater or less then 0.5. So each side picks a binary string, they're XOR'd together and the resulting hash is used to make the random number.
Empath mentioned second life, a ton of the economy in second life was based on gambling, so when SL shut down gambling operations, the economy completely collapsed.
posted by delmoi at 8:21 AM on May 19, 2011
There is an option - not go into debt.
...
I've suggested the same before and been told that most debt is a result of medical and educational expenses.
Basically. I guess I'll stop being so impulsive and getting sick anymore. Maybe if I'm persuasive enough, I can convince my friends to stop being disabled as well.
posted by yeloson at 8:33 AM on May 19, 2011 [3 favorites]
...
I've suggested the same before and been told that most debt is a result of medical and educational expenses.
Basically. I guess I'll stop being so impulsive and getting sick anymore. Maybe if I'm persuasive enough, I can convince my friends to stop being disabled as well.
posted by yeloson at 8:33 AM on May 19, 2011 [3 favorites]
delmoi : I wonder if someone will be able to come up with a way to gamble without a central server.
Well, it works as you vs the machine (so more like a slot machine), but it doesn't require any particular central server (other than one to run the game itself): Bitcoin Darts
Jenga : How do I move them from one computing device to another?
You can use the client to do a transaction possibly obfuscating the chain of ownership and increasing privacy
To add to that, you can also store them online at any of the exchanges, much like keeping your money in a bank rather than under you bed.
Diablevert : Pla is an anarchist.
In my youth, of the nonviolent type, yes. But I've since decided that we domesticated primates lack the capacity to live in harmony with each other without the threat of some outside agent (father, police, god) punishing us for behaving badly.
So more of a "governmental minimalist" these days. Cut it to the bone, and then keep going, but stop short of outright killing it.
posted by pla at 8:56 AM on May 19, 2011
Well, it works as you vs the machine (so more like a slot machine), but it doesn't require any particular central server (other than one to run the game itself): Bitcoin Darts
Jenga : How do I move them from one computing device to another?
You can use the client to do a transaction possibly obfuscating the chain of ownership and increasing privacy
To add to that, you can also store them online at any of the exchanges, much like keeping your money in a bank rather than under you bed.
Diablevert : Pla is an anarchist.
In my youth, of the nonviolent type, yes. But I've since decided that we domesticated primates lack the capacity to live in harmony with each other without the threat of some outside agent (father, police, god) punishing us for behaving badly.
So more of a "governmental minimalist" these days. Cut it to the bone, and then keep going, but stop short of outright killing it.
posted by pla at 8:56 AM on May 19, 2011
It seems Google was first off to make another client.
No, Google has not made a client. One single engineer who happens to work at Google has made another client. Bitcoin is not endorsed by Google in any way.
posted by ymgve at 9:10 AM on May 19, 2011
No, Google has not made a client. One single engineer who happens to work at Google has made another client. Bitcoin is not endorsed by Google in any way.
posted by ymgve at 9:10 AM on May 19, 2011
Also:
And here's one of the major shorcomings of the stock client. Taking a page from Microsoft Outlook isn't exactly the best idea when handling cash-equivalent currencies.
What do you mean, taking a page from MS Outlook? Do you mean storing stuff in the user's home folder, which is the recommended way of storing user data and done by 99% of properly made apps out there?
posted by ymgve at 9:15 AM on May 19, 2011
And here's one of the major shorcomings of the stock client. Taking a page from Microsoft Outlook isn't exactly the best idea when handling cash-equivalent currencies.
What do you mean, taking a page from MS Outlook? Do you mean storing stuff in the user's home folder, which is the recommended way of storing user data and done by 99% of properly made apps out there?
posted by ymgve at 9:15 AM on May 19, 2011
I could comb through the forums to learn the answers to these questions, but the point I'm making is that these basic ideas should be really, really obvious in their stock client.I bet you could get someone to pay you in bitcoins to add those features.
Well, it works as you vs the machine (so more like a slot machine), but it doesn't require any particular central server (other than one to run the game itself): Bitcoin DartsRight, a central server. I mean a game that people can play against each other without needing a central repository. This game (bitcoin darts) still needs the server to keep running. there's no guarantee that you'll get paid back after you pay in.
That said, just looking at the page one useful feature of bitcoin is notable: It's super easy to setup a payment system with them. You don't need to deal with complex hassles of setting up and connecting to a bank account to exchange them, so that has value.
It could work as a micropayment system for games.
posted by delmoi at 9:18 AM on May 19, 2011
pla writes "Have we dredged up the last gold-laden Spanish Galleon? Do we know that a solid-diamond meteor won't hit Manhattan next December, spreading diamond-chunks over a few hundred mile radius of densely populated land? Do we know that some random college student won't discover an inkjet-printable 90% efficient solar cell next week, obliterating the oil economy almost overnight?
"Most fiat currencies depends on the trust of the People, in people we know as some of the worst liars and thieves amongst us. I'll trust a fixed amount of GPU time over Newty G any day."
This is why any resource backed currency if doomed to failure or at least palying a bit part. Forces completely out of the control of the system fuck with the valuation of your currency. What happens when some bank holding 1% of the bit coins experiences a simple FBI raid ala the Steve Jackson Games raid. The value of the currency goes up with no actual increase in value. Like Berkshire Hathaway stock the ultimate result of currency being destroyed with no way of replacing it is smart hoarders owning enough for the exchange system to completely lock up. Shit at least when some ass hat tries to manipulate the chocolate market by hoarding chocolate he has to actually store the raw materials. The entirety of the Bitcoin market can fit in your pocket.
rough ashlar writes "There is an option - not go into debt."
Sounds like a disaster to me. If the two Steves can't get someone to lend them some money then Apple doesn't exist. Repeat ad nauseum hundreds of times with different players everyday.
odinsdream writes "I can only imagine the nightmare of tech support when people aren't just losing baby photos because they (through no fault of their own) don't realize the fragile nature of hard disk data storage."
And what do the poor who have no access to computers do? The bottom of society is completely fucked. What do you do when power is out for a couple weeks? Not spend any money? What do you do when your opressive goverment locks down internet access for a few years? Not spend money or split the currency internal to the network and external?
ymgve writes "What do you mean, taking a page from MS Outlook? Do you mean storing stuff in the user's home folder, which is the recommended way of storing user data and done by 99% of properly made apps out there?"
Recommended doesn't mean it's a good way of doing it. It just mostly works as a serious of backward hacks implemented as Microsoft systems evolved from unprotected DOS to what we have now.
posted by Mitheral at 9:27 AM on May 19, 2011
"Most fiat currencies depends on the trust of the People, in people we know as some of the worst liars and thieves amongst us. I'll trust a fixed amount of GPU time over Newty G any day."
This is why any resource backed currency if doomed to failure or at least palying a bit part. Forces completely out of the control of the system fuck with the valuation of your currency. What happens when some bank holding 1% of the bit coins experiences a simple FBI raid ala the Steve Jackson Games raid. The value of the currency goes up with no actual increase in value. Like Berkshire Hathaway stock the ultimate result of currency being destroyed with no way of replacing it is smart hoarders owning enough for the exchange system to completely lock up. Shit at least when some ass hat tries to manipulate the chocolate market by hoarding chocolate he has to actually store the raw materials. The entirety of the Bitcoin market can fit in your pocket.
rough ashlar writes "There is an option - not go into debt."
Sounds like a disaster to me. If the two Steves can't get someone to lend them some money then Apple doesn't exist. Repeat ad nauseum hundreds of times with different players everyday.
odinsdream writes "I can only imagine the nightmare of tech support when people aren't just losing baby photos because they (through no fault of their own) don't realize the fragile nature of hard disk data storage."
And what do the poor who have no access to computers do? The bottom of society is completely fucked. What do you do when power is out for a couple weeks? Not spend any money? What do you do when your opressive goverment locks down internet access for a few years? Not spend money or split the currency internal to the network and external?
ymgve writes "What do you mean, taking a page from MS Outlook? Do you mean storing stuff in the user's home folder, which is the recommended way of storing user data and done by 99% of properly made apps out there?"
Recommended doesn't mean it's a good way of doing it. It just mostly works as a serious of backward hacks implemented as Microsoft systems evolved from unprotected DOS to what we have now.
posted by Mitheral at 9:27 AM on May 19, 2011
Bitcoin just made me $346.35.
I heard about Bitcoin when it first started, and pretty much ignored it. When I saw the FPP in April, and saw that you could get some Alpaca socks for 35 bitcoins1, I figured I might as well see what this is all about. I downloaded the client, found a utility to put my GPU to use, and then realized that it would take weeks before I generated anything. I figured I'd let my computer run overnight for a day or two, and wouldn't you know it, I beat the calculator - I generated a "block" (50 bitcoins) over the weekend.
Finally, I could get my Alpaca socks. But when I looked at the exchange rate, I realized I could sell my 50 bitcoins for at least 50 USD. This was a much better deal that the socks, and it seemed like there was a lot of buzz that might improve the exchange rate. I've been sitting on my 50 bitcoins until I ran across this article now, and saw that the exchange rate was up to ~7 USD2. I could have played the market a bit and waitied to see what the rate did, but I just wanted to cash out with minimal fuss, so I headed over to Mt. Gox and sold my coins at the current ask price. The money is on the way to my bank right now.
I think I'm a pretty big fan of this money that doesn't grow on trees.
1They've since adjusted the price per the exchange rate.
2It looks like I missed a nice 8/9 dollar spike a few days back.
posted by Nonsteroidal Anti-Inflammatory Drug at 9:52 AM on May 19, 2011 [5 favorites]
I heard about Bitcoin when it first started, and pretty much ignored it. When I saw the FPP in April, and saw that you could get some Alpaca socks for 35 bitcoins1, I figured I might as well see what this is all about. I downloaded the client, found a utility to put my GPU to use, and then realized that it would take weeks before I generated anything. I figured I'd let my computer run overnight for a day or two, and wouldn't you know it, I beat the calculator - I generated a "block" (50 bitcoins) over the weekend.
Finally, I could get my Alpaca socks. But when I looked at the exchange rate, I realized I could sell my 50 bitcoins for at least 50 USD. This was a much better deal that the socks, and it seemed like there was a lot of buzz that might improve the exchange rate. I've been sitting on my 50 bitcoins until I ran across this article now, and saw that the exchange rate was up to ~7 USD2. I could have played the market a bit and waitied to see what the rate did, but I just wanted to cash out with minimal fuss, so I headed over to Mt. Gox and sold my coins at the current ask price. The money is on the way to my bank right now.
I think I'm a pretty big fan of this money that doesn't grow on trees.
1They've since adjusted the price per the exchange rate.
2It looks like I missed a nice 8/9 dollar spike a few days back.
posted by Nonsteroidal Anti-Inflammatory Drug at 9:52 AM on May 19, 2011 [5 favorites]
I've been peripherally interested in Bitcoin for a few weeks/a month now, although I haven't gone to the step of buying any for myself yet. In general, it has been an illuminating exercise in seeing just how much disinformation and FUD people (and here, its people on both sides of the argument) will respout just because they read it somewhere.
This thread has, sadly, proven no different.
posted by Inkoate at 11:21 AM on May 19, 2011
This thread has, sadly, proven no different.
posted by Inkoate at 11:21 AM on May 19, 2011
Inkoate : This thread has, sadly, proven no different.
If you want an explanation of any of the technical aspects of BTC, feel free to ask me - When I first took an interest about six months ago, I wrote my own mining client (a toy one, a mere 200 hashes per second, but fully functional) and block explorer, to help me understand how it works. So I'd say I have that side of the equation down passably well. :)
If your concern relates to deeper issues of economics, I can't say I can help you; For just about every issue brought up, I've seen good arguments in both directions. Mostly I just think that you can't take an all-or-nothing view of it - If it existed as the only currency in the world, we might have problems. As an alternative online currency, it works just fine (in that it solves most of the problems inherent in previous attempts at a pure-digital currency, as well as addressing many of the problems with using "real" currency in the online world).
posted by pla at 11:58 AM on May 19, 2011
If you want an explanation of any of the technical aspects of BTC, feel free to ask me - When I first took an interest about six months ago, I wrote my own mining client (a toy one, a mere 200 hashes per second, but fully functional) and block explorer, to help me understand how it works. So I'd say I have that side of the equation down passably well. :)
If your concern relates to deeper issues of economics, I can't say I can help you; For just about every issue brought up, I've seen good arguments in both directions. Mostly I just think that you can't take an all-or-nothing view of it - If it existed as the only currency in the world, we might have problems. As an alternative online currency, it works just fine (in that it solves most of the problems inherent in previous attempts at a pure-digital currency, as well as addressing many of the problems with using "real" currency in the online world).
posted by pla at 11:58 AM on May 19, 2011
I think I'm a pretty big fan of this money that doesn't grow on trees.
Yeah, this is how pyramid schemes usually work. The early people hype it up, make a profit off of the suckers who come in after them. Eventually you run out of suckers and someone gets left holding the back, and someone else ends up in prison.
posted by empath at 12:02 PM on May 19, 2011
Yeah, this is how pyramid schemes usually work. The early people hype it up, make a profit off of the suckers who come in after them. Eventually you run out of suckers and someone gets left holding the back, and someone else ends up in prison.
posted by empath at 12:02 PM on May 19, 2011
Look, I won't argue that the current price of BTC on the exchanges has more to do with speculation than their purchasing power.
But currency speculation does not count as a pyramid scheme. Calling something a pyramid scheme specifically requires that generation-Q investors receive their payouts from the investment capital of generation-Q+x.
In a pyramid scheme, eventually you have no "bigger sucker", and the current set of investors gets screwed because they have nothing - Not their fake "earnings" statements, not their original capital, not even penny stocks in a Bermudan B-movie studio - To pull back out of the system. In speculating on a currency (or commodity, for that matter), you can certainly lose your shirt; But no matter what happens, you end up with what you paid for - It just might not have a very pleasant market value at the time you get it.
If you buy 100BTC today, no matter how popular (or unpopular) Bitcoins may end up, you'll still have that 100BTC. It may have no more buying power than 100 Zimbabwean dollars, but the distinction makes a huge legal difference.
posted by pla at 12:39 PM on May 19, 2011 [2 favorites]
But currency speculation does not count as a pyramid scheme. Calling something a pyramid scheme specifically requires that generation-Q investors receive their payouts from the investment capital of generation-Q+x.
In a pyramid scheme, eventually you have no "bigger sucker", and the current set of investors gets screwed because they have nothing - Not their fake "earnings" statements, not their original capital, not even penny stocks in a Bermudan B-movie studio - To pull back out of the system. In speculating on a currency (or commodity, for that matter), you can certainly lose your shirt; But no matter what happens, you end up with what you paid for - It just might not have a very pleasant market value at the time you get it.
If you buy 100BTC today, no matter how popular (or unpopular) Bitcoins may end up, you'll still have that 100BTC. It may have no more buying power than 100 Zimbabwean dollars, but the distinction makes a huge legal difference.
posted by pla at 12:39 PM on May 19, 2011 [2 favorites]
Buying 100BTC's is no different from buying shares in a ponzi scheme. It's just a piece of paper that says you own something. I guess the only reason it's not fraud is that they aren't even bothering to claim that you're actually buying into anything real when you give up your money.
posted by empath at 12:43 PM on May 19, 2011
posted by empath at 12:43 PM on May 19, 2011
What, if anything, is keeping the top of the bitcoin pyramid from printing more money without telling anyone they did it?
The software. Cryptography. The rest of the network wouldn't allow it. Who do you even envision is at the "top" of this hypothetical bitcoin pyramid you've constructed in your head? It's an open source software project for crying out loud.
posted by Inkoate at 12:58 PM on May 19, 2011
The software. Cryptography. The rest of the network wouldn't allow it. Who do you even envision is at the "top" of this hypothetical bitcoin pyramid you've constructed in your head? It's an open source software project for crying out loud.
posted by Inkoate at 12:58 PM on May 19, 2011
All of your questions would be answered if you had read anything about how the protocol operates. I trust the software, because it is open source, and I can read (and more importantly, know that anyone else can read) the code to make sure that other people can't randomly generate coins out of thin air. You ask how open it is, I'm not sure what precisely that means, but its a GPL'd project, and you can read the source code... so I guess 100% open?
The rest of the network would know that you tried to create bitcoins out of thin air, because you wouldn't have a valid input source for those coins that could be traced back through the block chain to a valid generation block. Its not like this is a sneaky sneaky problem you've come up with that nobody had accounted for yet.
posted by Inkoate at 1:17 PM on May 19, 2011
The rest of the network would know that you tried to create bitcoins out of thin air, because you wouldn't have a valid input source for those coins that could be traced back through the block chain to a valid generation block. Its not like this is a sneaky sneaky problem you've come up with that nobody had accounted for yet.
posted by Inkoate at 1:17 PM on May 19, 2011
The World Famous : What, if anything, is keeping the top of the bitcoin pyramid from printing more money without telling anyone they did it?
You can trace every single BitCoin transaction back to a solved block.
You can trace every block back to Block 0.
So in order to cheat the system (client flaws such as the overflow bug mentioned earlier in this discussion notwithstanding - Those reflect problems in the software, not the system), a hypothetical "insider" would need to do nothing less than crack SHA256.
More than that, though - The nice thing about public key cryptography, you don't have any sort of "top" people who have the ability to do anything more than every single other participant.
Says who? You trust them?
I don't need to trust them - I've seen the code myself... As can you, or anybody!
How open? How do you know? Do you trust them? Why do you trust them?
"Open" in this context means that everybody has access to the source code. No trust required.
How would they know and, realistically, how long would it take the rest of the network to find out? Who, if anyone, is watching every transaction closely enough to notice?
Believe it or not, quite a lot of people.
posted by pla at 1:21 PM on May 19, 2011
You can trace every single BitCoin transaction back to a solved block.
You can trace every block back to Block 0.
So in order to cheat the system (client flaws such as the overflow bug mentioned earlier in this discussion notwithstanding - Those reflect problems in the software, not the system), a hypothetical "insider" would need to do nothing less than crack SHA256.
More than that, though - The nice thing about public key cryptography, you don't have any sort of "top" people who have the ability to do anything more than every single other participant.
Says who? You trust them?
I don't need to trust them - I've seen the code myself... As can you, or anybody!
How open? How do you know? Do you trust them? Why do you trust them?
"Open" in this context means that everybody has access to the source code. No trust required.
How would they know and, realistically, how long would it take the rest of the network to find out? Who, if anyone, is watching every transaction closely enough to notice?
Believe it or not, quite a lot of people.
posted by pla at 1:21 PM on May 19, 2011
The World Famous: There is no "them" in the sense you're saying. Your concern is as unlikely as with whether the creators of bittorrent disallowing downloading movies in theaters, it's impossible because they've released the code in the wild and no longer have any control over it. The creator of bitcoins can't issue more bitcoins for themselves nor create transaction fees without the approval of everyone else on the network.
For those of you concerned with the current difficulty of bitcoins and security of your own wallet file, I see keeping your bitcoins with bitcoin banks as a solution. Keeping your bitcoins to yourself and transferring to others for payments directly is like owning a bank and making bank wires. Bank wires are a cumbersome affair and I bet most of us probably haven't made a bank wire in the past year. Financial intermediaries as a solution for the difficulty of storing and transacting is an easy problem that we solved a long time ago for holding cash under our mattress is just as applicable here. The difference is that making the equivalent of a bank wire on bitcoin is dead easy and accessible for everyone.
posted by amuseDetachment at 1:33 PM on May 19, 2011
For those of you concerned with the current difficulty of bitcoins and security of your own wallet file, I see keeping your bitcoins with bitcoin banks as a solution. Keeping your bitcoins to yourself and transferring to others for payments directly is like owning a bank and making bank wires. Bank wires are a cumbersome affair and I bet most of us probably haven't made a bank wire in the past year. Financial intermediaries as a solution for the difficulty of storing and transacting is an easy problem that we solved a long time ago for holding cash under our mattress is just as applicable here. The difference is that making the equivalent of a bank wire on bitcoin is dead easy and accessible for everyone.
posted by amuseDetachment at 1:33 PM on May 19, 2011
odinsdream: Yeah that annoyed the heck out of me too and I complained in the IRC channel. Supposedly they have easy wallet backup GUI (with encryption) in their version 0.4 roadmap for what that's worth.
posted by amuseDetachment at 1:56 PM on May 19, 2011
posted by amuseDetachment at 1:56 PM on May 19, 2011
So as it stands, Bitcoins have zero ability to create inflation to discourage hoarding after the 21 Million Bitcoins are produced.
Isn't this backwards? Inflation discourages hoarding, since the longer you hold on to your money, the more worthless it gets. Only by investing it (i.e. lending it to a bank or individual who will in turn invest or spend it) can it retain (or even increase) its value.
posted by Deathalicious at 2:20 PM on May 19, 2011
Isn't this backwards? Inflation discourages hoarding, since the longer you hold on to your money, the more worthless it gets. Only by investing it (i.e. lending it to a bank or individual who will in turn invest or spend it) can it retain (or even increase) its value.
posted by Deathalicious at 2:20 PM on May 19, 2011
So as it stands, Bitcoins have zero ability to create inflation to discourage hoarding after the 21 Million Bitcoins are produced.
Isn't this backwards? Inflation discourages hoarding, since the longer you hold on to your money, the more worthless it gets. Only by investing it (i.e. lending it to a bank or individual who will in turn invest or spend it) can it retain (or even increase) its value.
You're reading that initial quote wrong, it is saying what you're saying.
posted by Green With You at 2:33 PM on May 19, 2011
Isn't this backwards? Inflation discourages hoarding, since the longer you hold on to your money, the more worthless it gets. Only by investing it (i.e. lending it to a bank or individual who will in turn invest or spend it) can it retain (or even increase) its value.
You're reading that initial quote wrong, it is saying what you're saying.
posted by Green With You at 2:33 PM on May 19, 2011
Deathalicious: I meant increasing the money supply (which implicitly creates inflation in most circumstances). By having zero ability to increase it beyond 21 million bitcoins, there will likely be deflation as a result.
posted by amuseDetachment at 2:50 PM on May 19, 2011 [1 favorite]
posted by amuseDetachment at 2:50 PM on May 19, 2011 [1 favorite]
Do you all like how nothing you made yesterday is worth what you will make tomorrow?
Hopefully you make more. Otherwise you've been taxed by inflation. Do you understand that?
posted by aychedee at 2:52 PM on May 19, 2011
Hopefully you make more. Otherwise you've been taxed by inflation. Do you understand that?
posted by aychedee at 2:52 PM on May 19, 2011
Do you all like how nothing you made yesterday is worth what you will make tomorrow?
Hopefully you make more. Otherwise you've been taxed by inflation. Do you understand that?
Wait what? I don't understand what do you mean? Are you talking about depreciation of an asset? Pricing or value?
posted by humanfont at 4:16 PM on May 19, 2011
Hopefully you make more. Otherwise you've been taxed by inflation. Do you understand that?
Wait what? I don't understand what do you mean? Are you talking about depreciation of an asset? Pricing or value?
posted by humanfont at 4:16 PM on May 19, 2011
The World Famous : The fact that you can says nothing about whether anyone actually will. The more transactions there are, the less likely it is that fraud will be discovered.
I think you (deliberately) miss the point - You, or an auditor, can manually trace any transaction back to block zero. The bitcoin client, as its standard mode of operation, does that for every single transaction. If your transaction doesn't have a kosher lineage, out the door it goes, end of story. It never even makes it to the block chain for others to need to reject.
Now, for bugs like the one recently discovered - How long would it take you to notice that you have negative sixteen quadrillion dollars left in your personal checking account?
Anyone who has lived anywhere but a cave for the last 10 years and who thinks that an unregulated financial market supported by unfettered transactions and an unregulated system of banks is a good idea is an idiot.
He proposed that as a middle-ground for people too lazy to figure out the best way to stuff their mattresses with wads of cash. If you prefer not to trust banks (or a better analogue, PayPal), you have the option of managing your own funds (including the semi-optional task backing up "wallet.dat" under your profile, which admittedly requires at least 30 seconds of research).
posted by pla at 7:09 PM on May 19, 2011
I think you (deliberately) miss the point - You, or an auditor, can manually trace any transaction back to block zero. The bitcoin client, as its standard mode of operation, does that for every single transaction. If your transaction doesn't have a kosher lineage, out the door it goes, end of story. It never even makes it to the block chain for others to need to reject.
Now, for bugs like the one recently discovered - How long would it take you to notice that you have negative sixteen quadrillion dollars left in your personal checking account?
Anyone who has lived anywhere but a cave for the last 10 years and who thinks that an unregulated financial market supported by unfettered transactions and an unregulated system of banks is a good idea is an idiot.
He proposed that as a middle-ground for people too lazy to figure out the best way to stuff their mattresses with wads of cash. If you prefer not to trust banks (or a better analogue, PayPal), you have the option of managing your own funds (including the semi-optional task backing up "wallet.dat" under your profile, which admittedly requires at least 30 seconds of research).
posted by pla at 7:09 PM on May 19, 2011
There is an option - not go into debt.
If x is optional in a really strict sense, then anything that implies or leads to x must also be optional.
Further, if x and ¬x are mutually exclusive, and ¬x is optional, x must be optional.
Suppose, then, that not going into debt is an option. Then going into debt is optional. Then anything that would lead to being in debt is optional.
And yet we know that many things can lead to one's being in debt which are in no way under one's own control and not, in any meaningful way, optional.
Consequently, not going into debt is not optional. (Many individual instances of debt are optional. But it is not generally true that anyone in debt opted for debt.)
posted by kenko at 7:32 PM on May 19, 2011
If x is optional in a really strict sense, then anything that implies or leads to x must also be optional.
Further, if x and ¬x are mutually exclusive, and ¬x is optional, x must be optional.
Suppose, then, that not going into debt is an option. Then going into debt is optional. Then anything that would lead to being in debt is optional.
And yet we know that many things can lead to one's being in debt which are in no way under one's own control and not, in any meaningful way, optional.
Consequently, not going into debt is not optional. (Many individual instances of debt are optional. But it is not generally true that anyone in debt opted for debt.)
posted by kenko at 7:32 PM on May 19, 2011
kenko : And yet we know that many things can lead to one's being in debt which are in no way under one's own control and not, in any meaningful way, optional.
Massive derail here, so hopefully my "good" contributions will make up for it, but...
Excellent post (and I really mean that), but you can't mix "meaningful" in with a reductio ad absurdum. Asserting "Blue and not blue" may let you validly say that Siddhartha Gautama served as the 97th female president of the United States, but that conclusion has no interpretation that makes sense under "meaningful" preconditions.
In this case, though, you have left out something that you personally considered a meaningless (in its negation) premise - "You don't have the option of dying".
Allow that, and you've added, at the weakest, a hard limit to your conclusion - "You don't have the option of {debt,¬debt} AND continuing to live".
posted by pla at 8:04 PM on May 19, 2011
Massive derail here, so hopefully my "good" contributions will make up for it, but...
Excellent post (and I really mean that), but you can't mix "meaningful" in with a reductio ad absurdum. Asserting "Blue and not blue" may let you validly say that Siddhartha Gautama served as the 97th female president of the United States, but that conclusion has no interpretation that makes sense under "meaningful" preconditions.
In this case, though, you have left out something that you personally considered a meaningless (in its negation) premise - "You don't have the option of dying".
Allow that, and you've added, at the weakest, a hard limit to your conclusion - "You don't have the option of {debt,¬debt} AND continuing to live".
posted by pla at 8:04 PM on May 19, 2011
Jenga sort of said this already, but for the record: If you don't back up your wallet every single time you send out bitcoins, any data loss can irreversibly destroy some or all of the contents of your wallet. In 2010, somebody lost 9,000 BTC to this bug/feature/misfeature — about US$62,000 at today's rates.
(If you receive a block of 100 BTC and send 1 BTC to somebody else, the system actually sends the other 99 BTC back to you at a newly created address. The private key for those 99 BTC now exists in your wallet and nowhere else. If you lose it, restoring an old version of your wallet from when you still had all 100 bitcoins won't help you; as far as everyone else is concerned, they've already been spent.)
posted by teraflop at 2:11 AM on May 20, 2011
(If you receive a block of 100 BTC and send 1 BTC to somebody else, the system actually sends the other 99 BTC back to you at a newly created address. The private key for those 99 BTC now exists in your wallet and nowhere else. If you lose it, restoring an old version of your wallet from when you still had all 100 bitcoins won't help you; as far as everyone else is concerned, they've already been spent.)
posted by teraflop at 2:11 AM on May 20, 2011
I have bitcoins, but I see no reason up spend them anytime soon. They cost me nothing to hold onto. The smallness of the money supply means that in the event that it ever takes off each coin will be worth a small fortune.
posted by humanfont at 4:14 AM on May 20, 2011
posted by humanfont at 4:14 AM on May 20, 2011
Question, what stops someone from forking bitcoin and creating their own slightly different currency once bitcoin stops generating coins?
posted by empath at 6:02 AM on May 20, 2011
posted by empath at 6:02 AM on May 20, 2011
empath: Nothing, other than the explicit acceptance of everyone else with bitcoins by downloading your fork. The forked currency is worthless to existing builds of bitcoin.
posted by amuseDetachment at 6:18 AM on May 20, 2011
posted by amuseDetachment at 6:18 AM on May 20, 2011
I tried out Bitcoin software. Until I delved in, I had no idea it'd take weeks or months to mine a Bitcoin (unless you get lucky). I also had no idea how much latency the P2P network engenders. The initial sync is very slow, taking hours, and it took over 5 minutes for a free BitCoin transaction to show up on Block Explorer.
Also some useful history for you youngsters: Steven Levy's 1994 article on e-money.
posted by Nelson at 10:52 AM on May 20, 2011 [1 favorite]
Also some useful history for you youngsters: Steven Levy's 1994 article on e-money.
posted by Nelson at 10:52 AM on May 20, 2011 [1 favorite]
It's kind of interesting to me because it's a decentralized, self starting, self-promoting ponzi scheme without need of any centralized direction.
The people at the top are the people who are 'mining' coins -- the get all of the benefit with 0 investment. They then work really hard to convince others that they have value. Some merchants will also jump in early to accept the coin, because they hope to cash out their collection out as soon as people start paying cash money for the coins.
The first round of suckers that buy them will bounce the price up, showing it to be a profitable 'investment', which will then further encourage more speculation. All the while, of course, everyone who owns them will be starting messageboard threads downing the dollar and playing into anti-fed/anti-banking gold-buggery conspiracy theories, etc.
At some point, the price will hit a point where people want to cash out, or where merchants will stop accepting them in lieu of real dollars. Suddenly, no one will want any, they'll dip in value by a few percent, and it'll start a panic as the 'inflation proof' currency collapses in value.
That said, I don't think there's any reason not to start mining coins for free today. What the hell, getting in at the bottom of a ponzi scheme is a good racket, and there's quite a bit of plausible deniability built into this, so I doubt anyone will go to prison for it unless it gets completely out of control.
posted by empath at 11:03 AM on May 20, 2011 [1 favorite]
The people at the top are the people who are 'mining' coins -- the get all of the benefit with 0 investment. They then work really hard to convince others that they have value. Some merchants will also jump in early to accept the coin, because they hope to cash out their collection out as soon as people start paying cash money for the coins.
The first round of suckers that buy them will bounce the price up, showing it to be a profitable 'investment', which will then further encourage more speculation. All the while, of course, everyone who owns them will be starting messageboard threads downing the dollar and playing into anti-fed/anti-banking gold-buggery conspiracy theories, etc.
At some point, the price will hit a point where people want to cash out, or where merchants will stop accepting them in lieu of real dollars. Suddenly, no one will want any, they'll dip in value by a few percent, and it'll start a panic as the 'inflation proof' currency collapses in value.
That said, I don't think there's any reason not to start mining coins for free today. What the hell, getting in at the bottom of a ponzi scheme is a good racket, and there's quite a bit of plausible deniability built into this, so I doubt anyone will go to prison for it unless it gets completely out of control.
posted by empath at 11:03 AM on May 20, 2011 [1 favorite]
empath : It's kind of interesting to me because it's a decentralized, self starting, self-promoting ponzi scheme without need of any centralized direction.
We've already discussed why it doesn't count as a Ponzi scheme. Do you have something else to add to that discussion?
The people at the top are the people who are 'mining' coins -- the get all of the benefit with 0 investment.
At the current block difficulty, the yield over time in BTC roughly equals the cost of the electricity it takes to mine them. Not much of a scam to trade dollars for electricity to generate BTC to trade for the same number of dollars back.
posted by pla at 11:51 AM on May 20, 2011
We've already discussed why it doesn't count as a Ponzi scheme. Do you have something else to add to that discussion?
The people at the top are the people who are 'mining' coins -- the get all of the benefit with 0 investment.
At the current block difficulty, the yield over time in BTC roughly equals the cost of the electricity it takes to mine them. Not much of a scam to trade dollars for electricity to generate BTC to trade for the same number of dollars back.
posted by pla at 11:51 AM on May 20, 2011
Not much of a scam to trade dollars for electricity to generate BTC to trade for the same number of dollars back.
You're trading electricity to who? You're doing nothing of value whatsoever.
posted by empath at 12:30 PM on May 20, 2011
You're trading electricity to who? You're doing nothing of value whatsoever.
posted by empath at 12:30 PM on May 20, 2011
empath : You're trading electricity to who?
Wha?
You're doing nothing of value whatsoever.
As opposed to mining for gold?
posted by pla at 1:09 PM on May 20, 2011
Wha?
You're doing nothing of value whatsoever.
As opposed to mining for gold?
posted by pla at 1:09 PM on May 20, 2011
I agree that gold is also overvalued, but it does actually have some inherent worth.
posted by empath at 1:14 PM on May 20, 2011
posted by empath at 1:14 PM on May 20, 2011
Gold's industrial equilibrium price is probably less than 1/10 its current price, and I'm being incredibly generous with that number. Its high valuation is based on the exact same benefits that bitcoin provides.
posted by amuseDetachment at 1:23 PM on May 20, 2011
posted by amuseDetachment at 1:23 PM on May 20, 2011
I'm not arguing that gold isn't far overvalued. It's in a huge bubble right now.
But the lowest theoretical minimum value of gold isn't $0
posted by empath at 1:27 PM on May 20, 2011
But the lowest theoretical minimum value of gold isn't $0
posted by empath at 1:27 PM on May 20, 2011
Suppose I was selling coffee at a shop for .05 bitcoin. Settlement takes 10 minutes, well that won't work will it? Then assuming I have thousands of transactions a week, what's my computing going to be to sign and send all these things to suppliers?
In conclusion won't the velocity of money approach zero as the number of participants and participant transactions grows and coins are divided? If this happened the bitcoin economy would collapse.
posted by humanfont at 6:26 PM on May 20, 2011
In conclusion won't the velocity of money approach zero as the number of participants and participant transactions grows and coins are divided? If this happened the bitcoin economy would collapse.
posted by humanfont at 6:26 PM on May 20, 2011
humanfront: Transferring bitcoins in that fashion is analogous to making a bank wire to a coffee shop. You just wouldn't do that. Hypothetically, one would run a credit/debit card service that is transacted with bitcoins -- you'd just make payments monthly or keep a deposit with the card company in bitcoins.
posted by amuseDetachment at 1:52 AM on May 21, 2011
posted by amuseDetachment at 1:52 AM on May 21, 2011
humanfont : Suppose I was selling coffee at a shop for .05 bitcoin. Settlement takes 10 minutes, well that won't work will it?
Transaction happens.
Condition 1) You have an active connection to the bitcoin network -> You get confirmation instantly.
Condition 2) You disconnect right at the moment of the transaction -> You have to wait for the next block to come out (ten minutes between blocks, so five minutes on average).
If you have a live connection to the Bitcoin network, a transaction goes through faster than your typical Visa swipe confirmation.
Then assuming I have thousands of transactions a week, what's my computing going to be to sign and send all these things to suppliers?
The CPU bottleneck (more on this below) comes from ECDSA verification of inbound transactions, not outbound transactions. The current codebase puts that at about 80 per second (though switching to batch verification, planned for the near future, should increase that considerably). That gives you 7 million transactions per day, or approximately half of one percent of Visa's peak daily load. That could legitimately turn into a problem, but that section of code currently has almost no optimization, and a number of planned improvements for the near future (most notably, batch verification) should increase it by a good two orders of magnitude.
In conclusion won't the velocity of money approach zero as the number of participants and participant transactions grows and coins are divided?
The real current limit comes from the artificially capped blocksize of 1MB, meaning an upper limit of 4600 transactions per ten minutes, or 666k per day. That particular bottleneck we can adjust more-or-less arbitrarily, though at a tradeoff against network traffic.
So yes, Bitcoin will need some optimization as it grows. But Mom n' Pop don't need to worry about that, even the likes of Walmart only exceed its current capacity by a small margin. Only the likes of Visa and other huge payment processors (which Bitcoin not-coincidentally makes irrelevant) would see any real technological limitations from using Bitcoin.
amuseDetachment : humanfront: Transferring bitcoins in that fashion is analogous to making a bank wire to a coffee shop. You just wouldn't do that. Hypothetically, one would run a credit/debit card service that is transacted with bitcoins
You could do that, but why would you?
Your debit card analogy works well, but extend that - Think of using BTC as using a self-issued debit card. You don't need a payment processor, because all participants (magnitude of their holdings notwithstanding) act on an even playing field. Right now, we have no choice but to use banks because they provide services that most of us have no ability to do on our own. If you could do all of that on your own (and without needing to think about it, because the currency has it built in as a passive feature), would you still pay someone else to do it for you? Would you still put up with the myriad fees your bank charges for the "privilege" of using your own money?
posted by pla at 5:32 AM on May 21, 2011 [1 favorite]
Transaction happens.
Condition 1) You have an active connection to the bitcoin network -> You get confirmation instantly.
Condition 2) You disconnect right at the moment of the transaction -> You have to wait for the next block to come out (ten minutes between blocks, so five minutes on average).
If you have a live connection to the Bitcoin network, a transaction goes through faster than your typical Visa swipe confirmation.
Then assuming I have thousands of transactions a week, what's my computing going to be to sign and send all these things to suppliers?
The CPU bottleneck (more on this below) comes from ECDSA verification of inbound transactions, not outbound transactions. The current codebase puts that at about 80 per second (though switching to batch verification, planned for the near future, should increase that considerably). That gives you 7 million transactions per day, or approximately half of one percent of Visa's peak daily load. That could legitimately turn into a problem, but that section of code currently has almost no optimization, and a number of planned improvements for the near future (most notably, batch verification) should increase it by a good two orders of magnitude.
In conclusion won't the velocity of money approach zero as the number of participants and participant transactions grows and coins are divided?
The real current limit comes from the artificially capped blocksize of 1MB, meaning an upper limit of 4600 transactions per ten minutes, or 666k per day. That particular bottleneck we can adjust more-or-less arbitrarily, though at a tradeoff against network traffic.
So yes, Bitcoin will need some optimization as it grows. But Mom n' Pop don't need to worry about that, even the likes of Walmart only exceed its current capacity by a small margin. Only the likes of Visa and other huge payment processors (which Bitcoin not-coincidentally makes irrelevant) would see any real technological limitations from using Bitcoin.
amuseDetachment : humanfront: Transferring bitcoins in that fashion is analogous to making a bank wire to a coffee shop. You just wouldn't do that. Hypothetically, one would run a credit/debit card service that is transacted with bitcoins
You could do that, but why would you?
Your debit card analogy works well, but extend that - Think of using BTC as using a self-issued debit card. You don't need a payment processor, because all participants (magnitude of their holdings notwithstanding) act on an even playing field. Right now, we have no choice but to use banks because they provide services that most of us have no ability to do on our own. If you could do all of that on your own (and without needing to think about it, because the currency has it built in as a passive feature), would you still pay someone else to do it for you? Would you still put up with the myriad fees your bank charges for the "privilege" of using your own money?
posted by pla at 5:32 AM on May 21, 2011 [1 favorite]
pla: bitcoins are only reliably transferred after they are recorded in 6 blocks. One can be reasonably confident after 1 block for small transactions. Considering each block takes on average to record, it'd be far too long for the coffee example. If you confirm a transaction before a recorded block, from what I understand, you're vulnerable to a double-spend attack (spend the same bitcoins twice with one transaction eventually being rejected).
posted by amuseDetachment at 5:42 AM on May 21, 2011
posted by amuseDetachment at 5:42 AM on May 21, 2011
... blocks on average takes 10 minutes to record ...
posted by amuseDetachment at 5:44 AM on May 21, 2011
posted by amuseDetachment at 5:44 AM on May 21, 2011
amuseDetachment : pla: bitcoins are only reliably transferred after they are recorded in 6 blocks.
Good catch, I should have distinguished between "received" and "confirmed".
You can receive a transaction instantly, when online. Confirmation occurs as almost a sort of peer-review process, and does indeed require waiting for (at an absolute minimum) the next block to come out.
I won't call this a non-issue, but you could fairly compare it to stores that don't make you sign for credit card purchases below a certain dollar value - Yes, you could refute it, and they'd have no proof "you" bought the product; But the vast majority of people don't commit credit card fraud getting their morning coffee, so making you sign for every $2.54 purchase just wastes everyone's time and money.
posted by pla at 6:09 AM on May 21, 2011
Good catch, I should have distinguished between "received" and "confirmed".
You can receive a transaction instantly, when online. Confirmation occurs as almost a sort of peer-review process, and does indeed require waiting for (at an absolute minimum) the next block to come out.
I won't call this a non-issue, but you could fairly compare it to stores that don't make you sign for credit card purchases below a certain dollar value - Yes, you could refute it, and they'd have no proof "you" bought the product; But the vast majority of people don't commit credit card fraud getting their morning coffee, so making you sign for every $2.54 purchase just wastes everyone's time and money.
posted by pla at 6:09 AM on May 21, 2011
The confirmation delay seems like a real issue. But even more worrisome to me is the need to verify a coin by working your way back up the block chain to the genesis block. How is that possibly going to scale? Is there some design plan for short-circuiting the cryptographic verification so you don't always have to look back to January 2009?
The exchange rate is back down at $5.70 / bitcoin, from a high of $8.50. That's a 35% devaluation in a week. The volatility serves as a reminder that toy currencies may not be such a great store of value.
posted by Nelson at 8:19 AM on May 21, 2011
The exchange rate is back down at $5.70 / bitcoin, from a high of $8.50. That's a 35% devaluation in a week. The volatility serves as a reminder that toy currencies may not be such a great store of value.
posted by Nelson at 8:19 AM on May 21, 2011
This seems very vulnerable to a denial of device attack from a transaction flood. What if someone just took a single bitcoin, a pair of VMs with wallets in them and started sending 0.00000001 bitcoin increments back and forth.
posted by humanfont at 2:32 PM on May 21, 2011
posted by humanfont at 2:32 PM on May 21, 2011
Thanks Jenga I am still trying to understand how it all works.
posted by humanfont at 11:45 AM on May 22, 2011
posted by humanfont at 11:45 AM on May 22, 2011
Cryptonomicon
Snow Crash
The Big U
The Mongoliad!
Am I doing this right?
posted by zippy at 3:35 PM on June 1, 2011
Snow Crash
The Big U
The Mongoliad!
Am I doing this right?
posted by zippy at 3:35 PM on June 1, 2011
When I first heard about Bitcoin I spent a while browsing the official forums, and there seemed to be a tacit acceptance in threads about the currency's future that when the time came, bitcoin would be altered to resume mining in order to combat deflation.
I'm not sure if that attitude has changed, but it seems to be technically feasible - strictly speaking, you'd need a majority of users to switch over, but the some announcements about the looming crisis, together with automatic updates for the major clients, ought to be able to reach that. At the very least it would create a competing currency poised to take over when inflation-free bitcoins died their inevitable death. (It's also worth noting that while it's unlikely that any single user can overtake the network at this point, major players like governments and botnet operators would likely be able to cast the deciding votes in scenarios like this.)
These types of discussions also made clear that bitcoin isn't completely unregulated: there are the developers who could push updates like those, plus any other self-appointed experts. They only have as much power as people put faith in them, but if bitcoin takes off it will be used by more than its current niche of cypherpunks and drug dealers, and many of its users will care more about convenience than any technical details of the software or the people behind it.
Currently those people seem to be trustworthy and motivated by genuine concerns about existing currencies (although trustworthy people can still make mistakes). What could happen down the line is anyone's guess, especially if there's significant money at stake.
posted by marakesh at 11:30 PM on June 2, 2011
I'm not sure if that attitude has changed, but it seems to be technically feasible - strictly speaking, you'd need a majority of users to switch over, but the some announcements about the looming crisis, together with automatic updates for the major clients, ought to be able to reach that. At the very least it would create a competing currency poised to take over when inflation-free bitcoins died their inevitable death. (It's also worth noting that while it's unlikely that any single user can overtake the network at this point, major players like governments and botnet operators would likely be able to cast the deciding votes in scenarios like this.)
These types of discussions also made clear that bitcoin isn't completely unregulated: there are the developers who could push updates like those, plus any other self-appointed experts. They only have as much power as people put faith in them, but if bitcoin takes off it will be used by more than its current niche of cypherpunks and drug dealers, and many of its users will care more about convenience than any technical details of the software or the people behind it.
Currently those people seem to be trustworthy and motivated by genuine concerns about existing currencies (although trustworthy people can still make mistakes). What could happen down the line is anyone's guess, especially if there's significant money at stake.
posted by marakesh at 11:30 PM on June 2, 2011
I think you'd probably have something like "bitcoin2" and the clients would be updated to support both but they'd have to be kept seperate.
Oh, and bitcoins are up to $14.3 now, on a daily trade volume of 61.7k, or $880k worth in a day changing hands. There are probably bitcoin millionares out there now.
posted by delmoi at 7:42 AM on June 3, 2011
Oh, and bitcoins are up to $14.3 now, on a daily trade volume of 61.7k, or $880k worth in a day changing hands. There are probably bitcoin millionares out there now.
posted by delmoi at 7:42 AM on June 3, 2011
The volatility of Bitcoin trade is astonishing. Up, down, who cares; it's swining 100% a week. The volume is still pretty small: 50,000 Bitcoins a day, or roughly $500,000. That's a lot for a toy market but nothing for a real currency.
posted by Nelson at 8:25 AM on June 3, 2011
posted by Nelson at 8:25 AM on June 3, 2011
strictly speaking, you'd need a majority of users to switch over, but the some announcements about the looming crisis, together with automatic updates for the major clients, ought to be able to reach that
Not sure; it might be a hell of a hard sell to users who have bitcoins and expect them to go up in value forever. And I'm not sure the developers would go for it, I get the impression that they are pretty hardcore Austrian-school anti-inflationists.
In fact the whole thing seems to be principally an experiment in an un-inflatable currency. Not even gold and silver are immune to supply-side inflation, since more is constantly being mined. There's a lot of both of them in the earth; as prices rise, interest in extracting them from previously uneconomical sources grows. (Supposedly there is a price where it would make sense to begin extracting gold from seawater, where there is a lot of it in total but it's very dilute.)
The whole "mining" thing strikes me as a way of getting people involved, and eliminating the requirement of having a central bank to issue the currency. It solves what would otherwise be a very severe chicken-and-egg problem: who's going to be the first few people to buy a 'currency' that can't be used for anything? Well, bitcoin mining solves that -- very early adopters acquired BTC just using spare CPU cycles. Once they had them, they started trading them for stuff. (There's a thread somewhere about the first BTC purchase; it was a pizza or couple of pizzas for 10,000 BTC.)
Personally I hope the developers hold the line and don't allow any inflation once the original ~20M promised bitcoins are allocated. It will be a very interesting experiment in deflationary economics, at the least.
posted by Kadin2048 at 10:45 AM on June 3, 2011
Not sure; it might be a hell of a hard sell to users who have bitcoins and expect them to go up in value forever. And I'm not sure the developers would go for it, I get the impression that they are pretty hardcore Austrian-school anti-inflationists.
In fact the whole thing seems to be principally an experiment in an un-inflatable currency. Not even gold and silver are immune to supply-side inflation, since more is constantly being mined. There's a lot of both of them in the earth; as prices rise, interest in extracting them from previously uneconomical sources grows. (Supposedly there is a price where it would make sense to begin extracting gold from seawater, where there is a lot of it in total but it's very dilute.)
The whole "mining" thing strikes me as a way of getting people involved, and eliminating the requirement of having a central bank to issue the currency. It solves what would otherwise be a very severe chicken-and-egg problem: who's going to be the first few people to buy a 'currency' that can't be used for anything? Well, bitcoin mining solves that -- very early adopters acquired BTC just using spare CPU cycles. Once they had them, they started trading them for stuff. (There's a thread somewhere about the first BTC purchase; it was a pizza or couple of pizzas for 10,000 BTC.)
Personally I hope the developers hold the line and don't allow any inflation once the original ~20M promised bitcoins are allocated. It will be a very interesting experiment in deflationary economics, at the least.
posted by Kadin2048 at 10:45 AM on June 3, 2011
What if someone just took a single bitcoin, a pair of VMs with wallets in them and started sending 0.00000001 bitcoin increments back and forth.
There's a transaction limit to prevent this. (I think it's currently 8 txns/sec.) Maybe you could hack the client to remove it, but other clients may just drop transactions above the limit rather than propagate them to other nodes. It is designed to be raised in the future, and its explicitly to prevent this sort of attack.
posted by Kadin2048 at 10:50 AM on June 3, 2011
There's a transaction limit to prevent this. (I think it's currently 8 txns/sec.) Maybe you could hack the client to remove it, but other clients may just drop transactions above the limit rather than propagate them to other nodes. It is designed to be raised in the future, and its explicitly to prevent this sort of attack.
posted by Kadin2048 at 10:50 AM on June 3, 2011
A strictly deflationary currency does seem to be what Satoshi intended, but the experiment is out of his hands now. Personally I hope that whatever is necessary to keep the currency viable gets done (which may be nothing!).
The really interesting thing is that, as far as I can tell, if a major split like this occurs, the bitcoins in your wallet before the split don't belong to either branch. They can be treated as either BTC or BTC2, and you can spend them as whichever currency you think has a future. In theory hoarders have nothing to lose, whichever currency wins out, they can side with it afterwards.
None of this has ever been possible before. It really is an incredibly fascinating experiment to watch.
posted by marakesh at 1:09 PM on June 3, 2011
The really interesting thing is that, as far as I can tell, if a major split like this occurs, the bitcoins in your wallet before the split don't belong to either branch. They can be treated as either BTC or BTC2, and you can spend them as whichever currency you think has a future. In theory hoarders have nothing to lose, whichever currency wins out, they can side with it afterwards.
None of this has ever been possible before. It really is an incredibly fascinating experiment to watch.
posted by marakesh at 1:09 PM on June 3, 2011
Looking at the mt. gox exchange I see that bitcoins are spiking in value. This looks like a classic bubble. On the other hand I suppose that eventually if there are enough bitcoin horders out there and they are trading for a cash value high enough merchants will be enticed to take them at a below market exchange rate based on the inherent risks. For example I might normally charge $200/hr for consulting but I might do it for 100 bc/hour on the assumption that while exchange rates have spike recently to 1BC:$10, they probably are due for a correction. Now if you had BC you might say, well I'll just convert to cash and pay you, but perhaps you are willing to pay the premium in the name of the movement. Or perhaps you are concerned that you can't liquidate your bitcoins without wrecking the exchange rate given the low volume of trades.
posted by humanfont at 8:53 PM on June 3, 2011
posted by humanfont at 8:53 PM on June 3, 2011
The other thing about bitcoins, though is that they are splittable. So you can divide one bitcoin into 1k microbtc. But still, I would expect deflation to kill this over time. People won't be willing to give up their bitcoins as long as the prices keep rising, which will in turn constrict supply. No one will be able to make any money selling anything with bitcoin because people want to hold on to them. Bitcoins could become an illiquid asset.
posted by delmoi at 10:17 PM on June 3, 2011
posted by delmoi at 10:17 PM on June 3, 2011
Yeah, the price today is up to $17 / BitCoin, with a weak buy-side book but there's someone willing to buy 2000 BTC at $16. Over on BlockExplorer you can view large transactions. Someone moved 35,000 BTC to a single address on June 3. No way to know if money changed hands or it was an internal transaction, but it doees demonstration some individual controls $600,000 in Bitcoins. That's a pretty big pile of cryptocash. There's 20+ transactions of 1000+ BTC in the past couple of days, and again while you can't be sure how much of that was money moving from one person to another it does point to some significant players in the market.
No doubt regulatory authorities will take an interest in this at some point. They'll find amazingly detailed records of every transaction.
posted by Nelson at 8:53 AM on June 4, 2011
No doubt regulatory authorities will take an interest in this at some point. They'll find amazingly detailed records of every transaction.
posted by Nelson at 8:53 AM on June 4, 2011
At some point it becomes cheaper to buy a rack of computers with GPUs, though, yeah?
posted by empath at 8:57 AM on June 4, 2011
posted by empath at 8:57 AM on June 4, 2011
Further Reading:
Working Paper (Preliminary Draft) by Yale law student Reuben Grinberg called "Bitcoin: An Innovative Alternative Digital Currency" (PDF 44 pages - four times as much annotations; to download it either click on "One-Click Dwnload" or one of the five mirrors accompanied by a fancy logo)
This paper examines a few relevant legal issues, such as the recent conviction of the Liberty Dollar creator, the Stamp Payments Act, and the federal securities acts.
posted by KMB at 4:09 PM on June 4, 2011 [2 favorites]
Working Paper (Preliminary Draft) by Yale law student Reuben Grinberg called "Bitcoin: An Innovative Alternative Digital Currency" (PDF 44 pages - four times as much annotations; to download it either click on "One-Click Dwnload" or one of the five mirrors accompanied by a fancy logo)
This paper examines a few relevant legal issues, such as the recent conviction of the Liberty Dollar creator, the Stamp Payments Act, and the federal securities acts.
posted by KMB at 4:09 PM on June 4, 2011 [2 favorites]
Here's a Bitcoin mining profit report. It says that a Radeon 5830 doing full time mining will pay for itself in 12 days. If you want to buy a top of the line Radeon 6990, it'll take a month for it to pay for itself. Of course those numbers fluctuate wildly with the exchange rate.
For a different take on this, see the daily earnings of a Bitcoin mining pool. The big drop after May 1 is (I think) when the difficulty factor doubled. That'll happen again, and again, and pretty soon mining won't be worth the cost of electricity.
posted by Nelson at 9:10 AM on June 5, 2011
For a different take on this, see the daily earnings of a Bitcoin mining pool. The big drop after May 1 is (I think) when the difficulty factor doubled. That'll happen again, and again, and pretty soon mining won't be worth the cost of electricity.
posted by Nelson at 9:10 AM on June 5, 2011
I went looking for more details on mining and found this article about miners getting visited by the police for their high electricity use, with the cops suspecting grow-ops.
posted by delmoi at 7:49 PM on June 5, 2011
posted by delmoi at 7:49 PM on June 5, 2011
I wonder how long it will be before sone enterprising maker builds a custom chipset and board to do this at an extreme scale.
posted by humanfont at 7:55 PM on June 5, 2011
posted by humanfont at 7:55 PM on June 5, 2011
I was actually looking at the prices of various FPGAs earlier. One with 9k logic gates goes for $6 in bulk. I have no idea how much effort it would be to port the bitcoin algorithm to pure logic, and even then I'm not sure if you would be able to beat AMD's rates. But it's possible.
posted by delmoi at 7:58 PM on June 5, 2011
posted by delmoi at 7:58 PM on June 5, 2011
It seems to me that the real problem long term problem here is that there's nothing preventing anyone from inventing another currency to compete if the prices keep going up. And all it will take is a small dip in prices to make the speculators run for the exits. The volatility is nuts.
I thought about buying coins when the gawker article came out (and would have made a quick $700 if i invested what I had planned), but I backed out when i saw how shady Mt Gox looked. I'd be really worried about letting the money ride there for a while and then getting your account frozen when the market crashes.
posted by empath at 8:19 PM on June 5, 2011
I thought about buying coins when the gawker article came out (and would have made a quick $700 if i invested what I had planned), but I backed out when i saw how shady Mt Gox looked. I'd be really worried about letting the money ride there for a while and then getting your account frozen when the market crashes.
posted by empath at 8:19 PM on June 5, 2011
I thought about buying coins when the gawker article came out
I'm looking into mining them right now using EC2. My plan is to see if I can buy server time on the spot market and use them to mine coins. Amazon does have a GPU instance so I can try that. Right now though I'm getting stymied because I have an old Linux distro that doesn't seem to want to let me compile or run the standard unix client. *sigh*
The interesting thing, though, it's only now that the price is climbing that it's worthwhile to bother buying servers to crank out bitcoin (notwithstanding the rate at which it was coming out of the system before, It would be interesting to see difficulty charts for the past few months)
this site has a handy calculator for how much you can make for a given hash rate. I'm curious to see what kind of hash rate vs. hosting rate I can get.
posted by delmoi at 11:24 PM on June 5, 2011
I'm looking into mining them right now using EC2. My plan is to see if I can buy server time on the spot market and use them to mine coins. Amazon does have a GPU instance so I can try that. Right now though I'm getting stymied because I have an old Linux distro that doesn't seem to want to let me compile or run the standard unix client. *sigh*
The interesting thing, though, it's only now that the price is climbing that it's worthwhile to bother buying servers to crank out bitcoin (notwithstanding the rate at which it was coming out of the system before, It would be interesting to see difficulty charts for the past few months)
this site has a handy calculator for how much you can make for a given hash rate. I'm curious to see what kind of hash rate vs. hosting rate I can get.
posted by delmoi at 11:24 PM on June 5, 2011
Okay, I got the mining to work. I got bitcoin running on an unbuntu virtualbox (I couldn't get it running on EC2, annoyingly). I ran an RPC client on EC2, which is giving me about 2Mhahes/sec. According to the calculator that's worth about $2/month, on cloud hosting that costs $2/hr.
In comparison, my desktop machine is able to crank out 16-18Mhashes/hr or so (on 8 cores), or about $18/month :) Although I'm a little worried about burning out my CPUs if I tried it (my cooling isn't really what it should be).
I'll try the GPU thing on EC2 and see how it goes later, although it's just NVidia so it probably won't be that good. (apparently the 'difficulty' is up to 567,358 now, although I have no idea what that means. It was only 400k yesterday. And the exchange rate is almost 18.9
posted by delmoi at 6:56 AM on June 6, 2011
In comparison, my desktop machine is able to crank out 16-18Mhashes/hr or so (on 8 cores), or about $18/month :) Although I'm a little worried about burning out my CPUs if I tried it (my cooling isn't really what it should be).
I'll try the GPU thing on EC2 and see how it goes later, although it's just NVidia so it probably won't be that good. (apparently the 'difficulty' is up to 567,358 now, although I have no idea what that means. It was only 400k yesterday. And the exchange rate is almost 18.9
posted by delmoi at 6:56 AM on June 6, 2011
Can someone spec me out a no-expense-spared rack mounted server to mine these? I have space at a datacenter I can use at no cost.
posted by empath at 7:50 AM on June 6, 2011
posted by empath at 7:50 AM on June 6, 2011
seems like the first limit that's going to be hit is the difficulty of mining a single BTC once the computational difficulty outpaces even the best supercomputers, in terms of electricity input required.
I'm not sure that's the case. The difficulty is varied by the network (not in realtime, but at intervals) in order to ensure that the correct number of BTC is generated. I'm not sure of the current target but it's a fixed number of blocks per day, each block containing 50 BTC. (At one point I think it was several blocks per hour but it may have slowed down from that.)
As more power is added to the network the difficulty is increased, in order to try and keep the block-discovery rate constant.
The rational outcome would be that, for any BTC price, people will apply enough computing horsepower to it so that the amount you can make (BTC/hr) is equivalent to the electricity and other operating costs. However, I don't think the market is totally rational right now, and it wouldn't surprise me if people are actually pounding away with mining setups that consume more in electricity than they will ever make in BTC ... enough people doing that and the whole operation could be a money-loser.
Of course, once people get discouraged and stop mining, the network will scale back the difficulty to try and achieve the target rate again. This won't happen quickly (there will be a period of slow mining), but it will happen -- the difficult setting is not a 'ratchet.'
Back when the network was first getting started it was apparently possible to generate bitcoins economically using just CPU power. Then it got larger and it required a GPU to make money ... now I think we're probably soon going to hit the breakeven point for commodity GPUs as well, although it depends what happens to the USD/BTC exchange rate.
posted by Kadin2048 at 8:36 AM on June 6, 2011
I'm not sure that's the case. The difficulty is varied by the network (not in realtime, but at intervals) in order to ensure that the correct number of BTC is generated. I'm not sure of the current target but it's a fixed number of blocks per day, each block containing 50 BTC. (At one point I think it was several blocks per hour but it may have slowed down from that.)
As more power is added to the network the difficulty is increased, in order to try and keep the block-discovery rate constant.
The rational outcome would be that, for any BTC price, people will apply enough computing horsepower to it so that the amount you can make (BTC/hr) is equivalent to the electricity and other operating costs. However, I don't think the market is totally rational right now, and it wouldn't surprise me if people are actually pounding away with mining setups that consume more in electricity than they will ever make in BTC ... enough people doing that and the whole operation could be a money-loser.
Of course, once people get discouraged and stop mining, the network will scale back the difficulty to try and achieve the target rate again. This won't happen quickly (there will be a period of slow mining), but it will happen -- the difficult setting is not a 'ratchet.'
Back when the network was first getting started it was apparently possible to generate bitcoins economically using just CPU power. Then it got larger and it required a GPU to make money ... now I think we're probably soon going to hit the breakeven point for commodity GPUs as well, although it depends what happens to the USD/BTC exchange rate.
posted by Kadin2048 at 8:36 AM on June 6, 2011
empath: The best bet is to use AMD (formerly ATi) graphics cards. There are hardware benchmarks here
Looking at the price/performance based on that chart and the price on newegg, here's what I came up with:
Interestingly, right now the Mhs/sec and the earnings are about the same. But as you can see there's like a sweet spot with the 6750, 6860 and 6870 earn back what they put in pretty quickly. Those figures are based on the highest rates for the cards, clock rate is also a factor and actually they overlapp. (also the links don't go to the cheapest ones, but rather the ones I thought looked most interesting among the cheapest few :P)
Looking at motherboards I found one with 8 PCIe x16 slots, but since the cards (except the cheapest) are double width you would only be able to use 5 of them at once. And then this one could let you run 4, supposedly. Although I don't actually know if that many will physically work together. And remember that the larger cards have their own power requirements, so you might need two power supplies.
If you go down to three slots (but fully spaced) you could use an AMD CPU which would save you some more money.
I think you could probably get a decent rig going for maybe $3-5, depending on the rest of the stuff (or if you can recycle things like the case and PSU)
I'm kind of tempted, but who knows how things will look in a week or two:P
posted by delmoi at 9:13 AM on June 6, 2011
Looking at the price/performance based on that chart and the price on newegg, here's what I came up with:
price Mhs/sec earning/mo 6570 $70 82 $83.35 link 6750 $104 168 $170.76 link 6850 $159 244 $248.01 link 6870 $187 329 $334.40 link 6970 $339 403 $409.62 link 6990 $734 835 $848.71 link
Interestingly, right now the Mhs/sec and the earnings are about the same. But as you can see there's like a sweet spot with the 6750, 6860 and 6870 earn back what they put in pretty quickly. Those figures are based on the highest rates for the cards, clock rate is also a factor and actually they overlapp. (also the links don't go to the cheapest ones, but rather the ones I thought looked most interesting among the cheapest few :P)
Looking at motherboards I found one with 8 PCIe x16 slots, but since the cards (except the cheapest) are double width you would only be able to use 5 of them at once. And then this one could let you run 4, supposedly. Although I don't actually know if that many will physically work together. And remember that the larger cards have their own power requirements, so you might need two power supplies.
If you go down to three slots (but fully spaced) you could use an AMD CPU which would save you some more money.
I think you could probably get a decent rig going for maybe $3-5, depending on the rest of the stuff (or if you can recycle things like the case and PSU)
I'm kind of tempted, but who knows how things will look in a week or two:P
posted by delmoi at 9:13 AM on June 6, 2011
I've thought about mining also, but the problem is that we're pretty clearly in the middle of a speculative bubble and nobody knows when it's going to break.
It looks to me suspiciously like starting a tulip farm in Holland in 1637. Some people will undoubtedly make out okay, but others -- in particular the ones who have thousands of dollars on gear on order the day the market breaks and goes south -- will get carried out.
posted by Kadin2048 at 9:21 AM on June 6, 2011
It looks to me suspiciously like starting a tulip farm in Holland in 1637. Some people will undoubtedly make out okay, but others -- in particular the ones who have thousands of dollars on gear on order the day the market breaks and goes south -- will get carried out.
posted by Kadin2048 at 9:21 AM on June 6, 2011
Wow, I hope you're not serious about "investing money" in mining Bitcoins. If you are, please consider the return on investment if the exchange rate drops back to $1 / Bitcoin. where it was mid-April. I think that's a possible outcome even without any bubble popping or government investigation, the currency is just too tiny and too volatile. (And I hope the Mt Gox guy has a good lawyer.)
If you want to just mine Bitcoins for fun I recommend joining a pool like slush's. You get paid for work done whether you personally get lucky and find a coin or not: same average return, less variance. Don't bother without a GPU. I made about 0.1 BTC in a day with my 3 year old NVidia card.
posted by Nelson at 9:46 AM on June 6, 2011
If you want to just mine Bitcoins for fun I recommend joining a pool like slush's. You get paid for work done whether you personally get lucky and find a coin or not: same average return, less variance. Don't bother without a GPU. I made about 0.1 BTC in a day with my 3 year old NVidia card.
posted by Nelson at 9:46 AM on June 6, 2011
Wow, I hope you're not serious about "investing money" in mining Bitcoins. If you are, please consider the return on investment if the exchange rate drops back to $1 / Bitcoin.
Worst case scenario -- i have a bunch of GPU's I can unload on ebay.
posted by empath at 10:35 AM on June 6, 2011
Worst case scenario -- i have a bunch of GPU's I can unload on ebay.
posted by empath at 10:35 AM on June 6, 2011
Hmm, this is annoying. I started an "quadruple extra large CPU" instance and the performance I'm getting is terrible. It's doing like 100kHashes per second per thread, with, I think about 16 threads available. So 1.6Mhashes. This is supposedly a machine with 8 3Ghz CPU cores. Except /proc/cpuinfo shows 16 total (maybe due to hyperthreading?).
On the "large" box I was getting a solid 1M/CPU.
I'm testing it out on the non-GPU version because it's cheaper to run, and I can install/download the GPU miner on it.
posted by delmoi at 8:26 PM on June 6, 2011
On the "large" box I was getting a solid 1M/CPU.
I'm testing it out on the non-GPU version because it's cheaper to run, and I can install/download the GPU miner on it.
posted by delmoi at 8:26 PM on June 6, 2011
Okay I guess my binary was just not optimized properly :/ Using this guy's binaries I'm getting 3.2MHsh/sec/cpu * 8cpu so 25MHsh/sec.
I tried it on the GPU cluster and... it just didn't work! Annoyingly it simply wouldn't connect to my server. cpuminer running on the same machine connected just fine. I did a tcp dump, and it didn't appear to be sending the username/password for some reason, so I pretty much just wasted $2.10 (Amazon rounds up to the nearest hour) on that.
I'm actually going to be out of town for a couple days coming up, otherwise I might try putting together an AMD rig. (And if it doesn't work out I'll just have a sweet gaming rig :)
posted by delmoi at 9:43 PM on June 6, 2011
I tried it on the GPU cluster and... it just didn't work! Annoyingly it simply wouldn't connect to my server. cpuminer running on the same machine connected just fine. I did a tcp dump, and it didn't appear to be sending the username/password for some reason, so I pretty much just wasted $2.10 (Amazon rounds up to the nearest hour) on that.
I'm actually going to be out of town for a couple days coming up, otherwise I might try putting together an AMD rig. (And if it doesn't work out I'll just have a sweet gaming rig :)
posted by delmoi at 9:43 PM on June 6, 2011
If... anyone actually cares at this point: I actually did join a pool. I'm using Eligius which is really simple. Your username for the miner is just your bitcoin address. I actually realized the reason I couldn't get RPCMiner to work the other night was that I had missed a hyphen in the command (I did 'password=' instead of '-password=' and I was pretty tired at that point)
So, I'm running the 2GPUs on EC2 at 80MHash/sec. 8 CPU cores at 3.2Mhash/sec, and 6 cores on my desktop for 14MHash/sec So about 200Hash/sec! (I'm leaving 2 cores for personal use) That's about equivalent to a low-end AMD card for now :)
Still, it's fun though. The EC2 instance costs about $2/h so it's probably not worthwhile. Eligigus averages hash speed over 3h so I'll probably leave it running for about 3h, and see what kind of performance I get in that time.
posted by delmoi at 9:38 AM on June 7, 2011
So, I'm running the 2GPUs on EC2 at 80MHash/sec. 8 CPU cores at 3.2Mhash/sec, and 6 cores on my desktop for 14MHash/sec So about 200Hash/sec! (I'm leaving 2 cores for personal use) That's about equivalent to a low-end AMD card for now :)
Still, it's fun though. The EC2 instance costs about $2/h so it's probably not worthwhile. Eligigus averages hash speed over 3h so I'll probably leave it running for about 3h, and see what kind of performance I get in that time.
posted by delmoi at 9:38 AM on June 7, 2011
Bitcoins have just broken the $20 barrier. This is insane.
posted by ymgve at 5:28 PM on June 7, 2011 [1 favorite]
posted by ymgve at 5:28 PM on June 7, 2011 [1 favorite]
Just installed a 6970. I was able to turn the graphics settings to max at the highest resolution my monitor can handle in starcraft II. So that was nice. And I'm getting 360Mhash/sec.
I was a little worried that my power supply wouldn't handle it, but everything seems fine so far.
posted by delmoi at 1:20 PM on June 10, 2011
I was a little worried that my power supply wouldn't handle it, but everything seems fine so far.
posted by delmoi at 1:20 PM on June 10, 2011
delmoi : And then this one could let you run 4, supposedly. Although I don't actually know if that many will physically work together. And remember that the larger cards have their own power requirements, so you might need two power supplies.
You actually don't need x16 slots, you can get away with a whole slew of x1 lanes - BitCoin mining involves very close to zero actual bus traffic, and electrically, an x16 card works just fine in an x1 slot (though you may need to take a dremel to the inside edge of the connector to physically seat the card).
Power, OTOH, presents the real limiting factor to the viability of mining. Even ignoring the fact that few OEM machines can handle much more than a 5750 (and you can't even safely assume that much without checking your PSU) - For the mainline of efficient ATI cards, it effectively adds the up-front cost of the card back in every year in electricity bills. And at 300W for a 5970, don't forget that running four of those adds up to a very viable space heater... Great in the Winter, not so great in the summer, and hard to keep cool no matter what the season.
Nelson : Wow, I hope you're not serious about "investing money" in mining Bitcoins.
At the current exchange rates, I've made back (as in, "have cash in hand", not just hypothetically) twenty times my "investment" in a mid-range ATI card bought about six months ago solely for playing with BitCoins. Granted, I didn't do it expecting to make a penny, but hey, can't complain. :D
If you are, please consider the return on investment if the exchange rate drops back to $1 / Bitcoin.
I sincerely hope it does - The current prices reflect speculation, not any real purchasing power in the marketplace. Windfall profits don't suck, but I took an interest in BitCoins hoping to see them succeed as an actual alternative currency, not just inflate as a bubble.
(And I hope the Mt Gox guy has a good lawyer.)
Not an American. 'nuff said.
posted by pla at 9:31 PM on June 10, 2011 [1 favorite]
You actually don't need x16 slots, you can get away with a whole slew of x1 lanes - BitCoin mining involves very close to zero actual bus traffic, and electrically, an x16 card works just fine in an x1 slot (though you may need to take a dremel to the inside edge of the connector to physically seat the card).
Power, OTOH, presents the real limiting factor to the viability of mining. Even ignoring the fact that few OEM machines can handle much more than a 5750 (and you can't even safely assume that much without checking your PSU) - For the mainline of efficient ATI cards, it effectively adds the up-front cost of the card back in every year in electricity bills. And at 300W for a 5970, don't forget that running four of those adds up to a very viable space heater... Great in the Winter, not so great in the summer, and hard to keep cool no matter what the season.
Nelson : Wow, I hope you're not serious about "investing money" in mining Bitcoins.
At the current exchange rates, I've made back (as in, "have cash in hand", not just hypothetically) twenty times my "investment" in a mid-range ATI card bought about six months ago solely for playing with BitCoins. Granted, I didn't do it expecting to make a penny, but hey, can't complain. :D
If you are, please consider the return on investment if the exchange rate drops back to $1 / Bitcoin.
I sincerely hope it does - The current prices reflect speculation, not any real purchasing power in the marketplace. Windfall profits don't suck, but I took an interest in BitCoins hoping to see them succeed as an actual alternative currency, not just inflate as a bubble.
(And I hope the Mt Gox guy has a good lawyer.)
Not an American. 'nuff said.
posted by pla at 9:31 PM on June 10, 2011 [1 favorite]
I'm also wondering how long it will be that 6970s and 6870s are even available for sale, considering that ALL of the high end 5k cards have been snapped up, along with the 6990
posted by delmoi at 12:43 AM on June 11, 2011
posted by delmoi at 12:43 AM on June 11, 2011
Oh yeah and:
posted by delmoi at 12:44 AM on June 11, 2011
You actually don't need x16 slots, you can get away with a whole slew of x1 lanes - BitCoin mining involves very close to zero actual bus traffic, and electrically, an x16 card works just fine in an x1 slot (though you may need to take a dremel to the inside edge of the connector to physically seat the card).Yeah, I actually know this from looking at motherboard specs. Most "16x slots" are only 16x in from. PCIe is actually a really an interesting spec, and you can put a smaller 'x' card in a larger slot, and cards (should?) work with fewer actual data lines, just not as fast.
posted by delmoi at 12:44 AM on June 11, 2011
Good to see you taking a realistic view of things, pla, in that you're only counting money you've actually received and that you recognize the speculation for what it is.
I'm looking at /r/Bitcoins on reddit right now and it's... not the same there for the most part.
I really hate the idea of someone buying in at the peak with everything and then losing it all. I'm also less than comfortable with the attitude that if you're not the one paying the electricity bill then it's free.
posted by ODiV at 10:01 AM on June 11, 2011
I'm looking at /r/Bitcoins on reddit right now and it's... not the same there for the most part.
I really hate the idea of someone buying in at the peak with everything and then losing it all. I'm also less than comfortable with the attitude that if you're not the one paying the electricity bill then it's free.
posted by ODiV at 10:01 AM on June 11, 2011
ODiV : I really hate the idea of someone buying in at the peak with everything and then losing it all. I'm also less than comfortable with the attitude that if you're not the one paying the electricity bill then it's free.
I don't think too many serious miners get free electricity... Personally, I run a miner on my work machine at night, which means it draws probably 35W higher than it would if left idle overnight (and my boss knows about this and has no problem with it). Not too many people have 6990s (much less dual or quad setups) in their work machines, however - The guys running a few of those almost certainly don't do it on the sly at work, they pay for the electricity to run their dedicated mining-farms.
Now, parents' basements... ;)
posted by pla at 10:47 AM on June 11, 2011
I don't think too many serious miners get free electricity... Personally, I run a miner on my work machine at night, which means it draws probably 35W higher than it would if left idle overnight (and my boss knows about this and has no problem with it). Not too many people have 6990s (much less dual or quad setups) in their work machines, however - The guys running a few of those almost certainly don't do it on the sly at work, they pay for the electricity to run their dedicated mining-farms.
Now, parents' basements... ;)
posted by pla at 10:47 AM on June 11, 2011
It appears the Bitcoin bubble has burst. It's currently trading at under 14 Bitcoins to the dollar, down from over 30 in one day.
posted by gc at 7:39 PM on June 11, 2011 [2 favorites]
posted by gc at 7:39 PM on June 11, 2011 [2 favorites]
This is pretty cool.
Whether it's burst or not probably depends on a number of factors, the biggest of which probably being media coverage. I could easily see some high profile story early next week causing the price to shoot up again.
posted by ODiV at 7:56 PM on June 11, 2011
Whether it's burst or not probably depends on a number of factors, the biggest of which probably being media coverage. I could easily see some high profile story early next week causing the price to shoot up again.
posted by ODiV at 7:56 PM on June 11, 2011
gc : It appears the Bitcoin bubble has burst. It's currently trading at under 14 Bitcoins to the dollar, down from over 30 in one day.
Never mind the absolute price... It current has a bid/ask spread of over USD$4. Wow!
Clearly poised on the edge of a crash, but the real question - How high will the cat bounce?
posted by pla at 8:22 PM on June 11, 2011
Never mind the absolute price... It current has a bid/ask spread of over USD$4. Wow!
Clearly poised on the edge of a crash, but the real question - How high will the cat bounce?
posted by pla at 8:22 PM on June 11, 2011
It doesn't really look like his position has changed to me even after skimming through the thread again.
posted by ODiV at 8:45 PM on June 11, 2011
posted by ODiV at 8:45 PM on June 11, 2011
The spread at the moment. It looks like there's a gap of about a dollar, but it was much, much higher earlier today (believe it or not, this was the only image I could find. Not my editorializing).
posted by gc at 8:51 PM on June 11, 2011 [1 favorite]
posted by gc at 8:51 PM on June 11, 2011 [1 favorite]
And those two don't seem at odds at all in the current situation. Both could be true at the same time, unless we're working under different definitions or I've misunderstood something.
Personally, I have no idea if bitcoins will have a lasting utility as a currency*, but it seems to me that it would have more of a chance without all this speculation and volatility in value. If someone's interested in using bitcoins as a currency, they'd want (and expect?) it to stabilize at a price they felt was realistic.
* And I doubt they will, but I'm definitely no economist if it wasn't obvious.
posted by ODiV at 9:18 PM on June 11, 2011
Personally, I have no idea if bitcoins will have a lasting utility as a currency*, but it seems to me that it would have more of a chance without all this speculation and volatility in value. If someone's interested in using bitcoins as a currency, they'd want (and expect?) it to stabilize at a price they felt was realistic.
* And I doubt they will, but I'm definitely no economist if it wasn't obvious.
posted by ODiV at 9:18 PM on June 11, 2011
So uh, looks to me like the early people in made a pile of money and the people that jumped in at the end lost their shirts. Pretty classic pyramid scheme.
posted by empath at 9:25 PM on June 11, 2011
posted by empath at 9:25 PM on June 11, 2011
I think it is possible to analyze the public transaction log and see how many actors profited off this mini bubble. I bet the truth is pretty ugly. Block explorer shows a surprising number of 10000+ BTC transactions recently.
posted by Nelson at 9:31 PM on June 11, 2011
posted by Nelson at 9:31 PM on June 11, 2011
The folks at Reddit speculate that this post on SomethingAwful is responsible for the crash. They are not amused.
posted by gc at 12:17 AM on June 12, 2011
posted by gc at 12:17 AM on June 12, 2011
I just watched the value jump from $10 to $12.50 in minutes. Looks like the gap is gone.
posted by gc at 12:41 AM on June 12, 2011
posted by gc at 12:41 AM on June 12, 2011
And then from $13.50 to $12.50 in another minute.
This is exciting!
posted by gc at 12:46 AM on June 12, 2011
This is exciting!
posted by gc at 12:46 AM on June 12, 2011
The folks at Reddit speculate that this post on SomethingAwful is responsible for the crash. They are not amused.
If your whole economy can crash because of a single internet forum post, then maybe it's not that good of an economy after all.
(Of course, it's a convenient scapegoat when you don't want to admit that bitcoins, even at $1, was extremely overvalued)
posted by ymgve at 5:55 AM on June 12, 2011
If your whole economy can crash because of a single internet forum post, then maybe it's not that good of an economy after all.
(Of course, it's a convenient scapegoat when you don't want to admit that bitcoins, even at $1, was extremely overvalued)
posted by ymgve at 5:55 AM on June 12, 2011
This is actually trading a lot like a commodity rather than a currency.
posted by humanfont at 6:13 AM on June 12, 2011
posted by humanfont at 6:13 AM on June 12, 2011
Jenga : I might be misreading him but I thought he's been saying Bitcoin has utility and a future as a currency and not just a speculative commodity. In his last comment, he says Bitcoin is clearly going to crash (followed by a dead cat bounce).
Yes, both. I believe it could have a future as a government-independent digital currency, but only once it has a (reasonably stable) exchange rate tied to the purchase of goods and services, rather than baseless speculation.
Bubbles and speculation don't negate the underlying usefulness of the traded commodity - Oil and houses and wheat still have a place in the world - But bubbles do make it harder and more financially dangerous for the legitimate buyers, those who intend to use them as gasoline and shelter and bread, to acquire them.
Though interestingly, it looks like it never did end up crashing last night. The cat still has a life or two left. Pity.
posted by pla at 6:17 AM on June 12, 2011 [1 favorite]
Yes, both. I believe it could have a future as a government-independent digital currency, but only once it has a (reasonably stable) exchange rate tied to the purchase of goods and services, rather than baseless speculation.
Bubbles and speculation don't negate the underlying usefulness of the traded commodity - Oil and houses and wheat still have a place in the world - But bubbles do make it harder and more financially dangerous for the legitimate buyers, those who intend to use them as gasoline and shelter and bread, to acquire them.
Though interestingly, it looks like it never did end up crashing last night. The cat still has a life or two left. Pity.
posted by pla at 6:17 AM on June 12, 2011 [1 favorite]
Senators want DEA to look into website that uses bitcoins.
posted by drezdn at 6:44 AM on June 12, 2011
posted by drezdn at 6:44 AM on June 12, 2011
If you look at the intraday trading graph you'll see some $400,000 traded when the price fell through $20 to $14 over 10 minutes. My guess is that was some big speculator liquidating, and explains why the spread was so high. (Does Mt Gox have automated stop loss orders?) It's interesting there's enough demand the price is back up.
Bitcoins are definitely acting like a speculative commodity right now, not a stable currency nor an equity driven by underlying value.
posted by Nelson at 7:09 AM on June 12, 2011
Bitcoins are definitely acting like a speculative commodity right now, not a stable currency nor an equity driven by underlying value.
posted by Nelson at 7:09 AM on June 12, 2011
The carnage from last night. I saw it skirting 10 before it started going up. It looks like it's trading at about 19.50 right now.
posted by gc at 1:43 PM on June 12, 2011
posted by gc at 1:43 PM on June 12, 2011
Hey, just found out about Bitcoin Faucet which apparently sends out a small number (0.05 per IP right now, or something) of bitcoins when you visit the site. Could be fun for people wanting to play around with the currency.
posted by delmoi at 2:53 PM on June 12, 2011 [1 favorite]
posted by delmoi at 2:53 PM on June 12, 2011 [1 favorite]
The Economist weighs in.
I predict a jump once this disseminates.
No, I'm not putting any money on it.
posted by ODiV at 10:41 AM on June 14, 2011
I predict a jump once this disseminates.
No, I'm not putting any money on it.
posted by ODiV at 10:41 AM on June 14, 2011
Bitcoiner loses ~$500,000 due to insecure wallet configuration.
posted by anigbrowl at 3:53 PM on June 14, 2011 [2 favorites]
posted by anigbrowl at 3:53 PM on June 14, 2011 [2 favorites]
That $500k figure is way above the threshold for the FBI getting involved, if that guy requested it.
posted by delmoi at 8:37 AM on June 15, 2011
posted by delmoi at 8:37 AM on June 15, 2011
Guh, I slogged through all fifteen avatar-and-sig-and-nested-blockquote-bloated pages of that forum thread last night and came away wanting. Someone please drop a link to a decent digest of what if anything comes out of that, I'm spent.
posted by cortex at 8:57 AM on June 15, 2011
posted by cortex at 8:57 AM on June 15, 2011
Wow, the next estimated difficulty is 1.7 million, up from 500k a few days ago. That means the cost effectiveness of mining is going to drop by about a quarter. from last week :/
posted by delmoi at 9:02 AM on June 15, 2011
posted by delmoi at 9:02 AM on June 15, 2011
That $500k figure is way above the threshold for the FBI getting involved, if that guy requested it.
Question is, do the FBI think the coins are worth that much?
Let's say someone stole a baseball card collection purportedly worth the same - would FBI take the case?
posted by ymgve at 4:40 PM on June 15, 2011
Question is, do the FBI think the coins are worth that much?
Let's say someone stole a baseball card collection purportedly worth the same - would FBI take the case?
posted by ymgve at 4:40 PM on June 15, 2011
vmgve: I think the FBI would be interested simply because it would give them an excuse to look into bitcoins, for one thing.
posted by delmoi at 8:01 PM on June 15, 2011
posted by delmoi at 8:01 PM on June 15, 2011
Bitcoiner loses ~$500,000 due to insecure wallet configuration.
It occurs to me --- and I may be missing something trivial about the way bitcoin works here -- but wouldn't that amount of Bc be awful hard to spend or exchange without attracting notice?
I suppose the thieves may themselves be true believers, content to hold onto the coins indefinitely. But if they're not, going to all the trouble of nicking a half-mill hardly seems worth it if the only things it can buy you are a lifetime supply of graphic design services and skunk. Does Mt. Gox really have the trading volume where a string of large sell orders from one origin source could pass unnoticed?
Bit like nicking actual gold bars really --- a reliable store of value in man respects but quite cumbersome when it comes to actually buying things....
posted by Diablevert at 11:06 PM on June 15, 2011
It occurs to me --- and I may be missing something trivial about the way bitcoin works here -- but wouldn't that amount of Bc be awful hard to spend or exchange without attracting notice?
I suppose the thieves may themselves be true believers, content to hold onto the coins indefinitely. But if they're not, going to all the trouble of nicking a half-mill hardly seems worth it if the only things it can buy you are a lifetime supply of graphic design services and skunk. Does Mt. Gox really have the trading volume where a string of large sell orders from one origin source could pass unnoticed?
Bit like nicking actual gold bars really --- a reliable store of value in man respects but quite cumbersome when it comes to actually buying things....
posted by Diablevert at 11:06 PM on June 15, 2011
Was the thief identified? If not are they just going on the victims say so that the bitcoins were stolen and not transferred as payment for half a million in blow or something?
posted by Mitheral at 2:32 AM on June 16, 2011
posted by Mitheral at 2:32 AM on June 16, 2011
I believe the victim is getting them all back
Do you have a reference on that? Not being snarky, genuinely curious. Under whose authorities is the thief being compelled to give the Bitcoins back? What was the standard of evidence to find the guy? How do we determine it was stolen? Do Bitcoin users want any government having authority over the property?
I disagree entirely that this story is "good for Bitcoin". The theft demonstrates just how dangerous it is having $500,000 stored as a file in your hard drive. I also think the semi-traceability of Bitconis is a bad thing for a currency, particularly one seemingly designed to satisfy cryptoanarchist principles.
posted by Nelson at 7:36 AM on June 16, 2011
Do you have a reference on that? Not being snarky, genuinely curious. Under whose authorities is the thief being compelled to give the Bitcoins back? What was the standard of evidence to find the guy? How do we determine it was stolen? Do Bitcoin users want any government having authority over the property?
I disagree entirely that this story is "good for Bitcoin". The theft demonstrates just how dangerous it is having $500,000 stored as a file in your hard drive. I also think the semi-traceability of Bitconis is a bad thing for a currency, particularly one seemingly designed to satisfy cryptoanarchist principles.
posted by Nelson at 7:36 AM on June 16, 2011
Nelson : I disagree entirely that this story is "good for Bitcoin". The theft demonstrates just how dangerous it is having $500,000 stored as a file in your hard drive...
...Under your bed.
Not really any different, except the burglar broke into his computer rather than his house. And if nothing else, no one held him at gunpoint for waking up at the wrong moment.
posted by pla at 8:54 AM on June 16, 2011
...Under your bed.
Not really any different, except the burglar broke into his computer rather than his house. And if nothing else, no one held him at gunpoint for waking up at the wrong moment.
posted by pla at 8:54 AM on June 16, 2011
Thanks for the info, Jenga. Let me be clear about MtGox, then. You put $500,000 in an account there. And then they may freeze your account at their whim. Awesome.
Is there any established protocol for resolving the conflict? Even assuming the alleged thief didn't bother to launder the money and the Bitcoins were trackable via the global transaction log, who's to say that money was illegitimately gained? How is the disagreement going to be resolved? I know cryptoanarchy is an appealing concept. But it turns out we have property laws and a regulated banking system for a reason.
Same goes with the argument that this theft is no different from stealing a stack of greenbacks from under your bed. Only an idiot keeps $500,000 in cash under their bed. Or someone whose criminal source of income requires they avoid the banking system.
(Sadly this will probably be my last post; I'm about to be offline for a few days. I've enjoyed the conversation, thanks!)
posted by Nelson at 9:32 AM on June 16, 2011 [1 favorite]
Is there any established protocol for resolving the conflict? Even assuming the alleged thief didn't bother to launder the money and the Bitcoins were trackable via the global transaction log, who's to say that money was illegitimately gained? How is the disagreement going to be resolved? I know cryptoanarchy is an appealing concept. But it turns out we have property laws and a regulated banking system for a reason.
Same goes with the argument that this theft is no different from stealing a stack of greenbacks from under your bed. Only an idiot keeps $500,000 in cash under their bed. Or someone whose criminal source of income requires they avoid the banking system.
(Sadly this will probably be my last post; I'm about to be offline for a few days. I've enjoyed the conversation, thanks!)
posted by Nelson at 9:32 AM on June 16, 2011 [1 favorite]
What on earth could they possibly do for him?
Supena ISP logs to see what IPs were coming in to his network to hack him (if he didn't use proxies), they can also look at banking transactions.
Remember, each of those bitcoins is going to be tagged as coming through his address. So whenever those coins crop up again, they can be flagged by the exchanges and the FBI would have the resources to spend time and money tracking them down once (or if) they enter the banking system. That's what they do. The coins were worth $500k and still are, more then enough for the FBI to be interested.
So let's say that MtGox sees the coins get added to an exchange. Without the FBI all he can do is hold the coins and return them to the owner. Working with the FBI he allow a withdraw and let the government track the funds from there.
Btw, the $250k minimum is for computer crimes, other types of crimes (like baseball cards) would have different standards and some would just be handled by the local police.
posted by delmoi at 11:37 AM on June 16, 2011
Supena ISP logs to see what IPs were coming in to his network to hack him (if he didn't use proxies), they can also look at banking transactions.
Remember, each of those bitcoins is going to be tagged as coming through his address. So whenever those coins crop up again, they can be flagged by the exchanges and the FBI would have the resources to spend time and money tracking them down once (or if) they enter the banking system. That's what they do. The coins were worth $500k and still are, more then enough for the FBI to be interested.
So let's say that MtGox sees the coins get added to an exchange. Without the FBI all he can do is hold the coins and return them to the owner. Working with the FBI he allow a withdraw and let the government track the funds from there.
Btw, the $250k minimum is for computer crimes, other types of crimes (like baseball cards) would have different standards and some would just be handled by the local police.
posted by delmoi at 11:37 AM on June 16, 2011
Jenga writes "MtGox took the step of freezing the thief's account all by themselves."
What does this mean practically? IE: how do you freeze an account where there is no central clearing house? Is it some kind of black list? Couldn't anyone approach the owner and offer to take these coins for ten cents on the dollar?
posted by Mitheral at 11:40 AM on June 16, 2011
What does this mean practically? IE: how do you freeze an account where there is no central clearing house? Is it some kind of black list? Couldn't anyone approach the owner and offer to take these coins for ten cents on the dollar?
posted by Mitheral at 11:40 AM on June 16, 2011
What does this mean practically? IE: how do you freeze an account where there is no central clearing house? Is it some kind of black list? Couldn't anyone approach the owner and offer to take these coins for ten cents on the dollar?
When you have an account on MtGox the bitcoins stay in the main system account. Just like when you store money at the bank, it all goes in the vault, and you just have a line in a database. If the thief had their money on their machine, nothing could be done (but the coins could be flagged to be recognized later).
But if you have the coins in an account, then you just lock the account. Alternatively, if you have a wallet hosted somewhere out of your control, then someone can prevent you from accessing it.
posted by delmoi at 2:45 PM on June 16, 2011
When you have an account on MtGox the bitcoins stay in the main system account. Just like when you store money at the bank, it all goes in the vault, and you just have a line in a database. If the thief had their money on their machine, nothing could be done (but the coins could be flagged to be recognized later).
But if you have the coins in an account, then you just lock the account. Alternatively, if you have a wallet hosted somewhere out of your control, then someone can prevent you from accessing it.
posted by delmoi at 2:45 PM on June 16, 2011
If the thief had their money on their machine, nothing could be done (but the coins could be flagged to be recognized later).
Hmmm...would a flagged coin be recognized in any exchange on the network? Or would one have to be deliberately looking for them to discover them? To draw a real life analogy --- as it is so fascinatingly easy to do with this subject --- if I hand over $1 m in cash as ransom and the FBI keeps a list of the serial numbers, it may be possible to have banks look out for the bills, and when one turns up, trace it. But if I spend that bill on a cup of coffee, the guy at the donut shop isn't going to cross-check with Interpol before giving me change.
I'm not sure if Bitcoins are different, though, given the way all transactions are recorded and verified by the network. If every coin's path must be authenticated for the new exchange to take place, then it seems like you'd have a currency that it'd be pointless to nick because you can't launder it --- there's no way of cycling the money through a process which will confer ligitimacy, because it could always be traced back to its illegal source.
Unless by the nature of the theft one somehow rendered this possible...
posted by Diablevert at 4:12 PM on June 16, 2011
Hmmm...would a flagged coin be recognized in any exchange on the network? Or would one have to be deliberately looking for them to discover them? To draw a real life analogy --- as it is so fascinatingly easy to do with this subject --- if I hand over $1 m in cash as ransom and the FBI keeps a list of the serial numbers, it may be possible to have banks look out for the bills, and when one turns up, trace it. But if I spend that bill on a cup of coffee, the guy at the donut shop isn't going to cross-check with Interpol before giving me change.
I'm not sure if Bitcoins are different, though, given the way all transactions are recorded and verified by the network. If every coin's path must be authenticated for the new exchange to take place, then it seems like you'd have a currency that it'd be pointless to nick because you can't launder it --- there's no way of cycling the money through a process which will confer ligitimacy, because it could always be traced back to its illegal source.
Unless by the nature of the theft one somehow rendered this possible...
posted by Diablevert at 4:12 PM on June 16, 2011
Hmmm...would a flagged coin be recognized in any exchange on the network? Or would one have to be deliberately looking for them to discover them? To draw a real life analogy --- as it is so fascinatingly easy to do with this subject --- if I hand over $1 m in cash as ransom and the FBI keeps a list of the serial numbers, it may be possible to have banks look out for the bills, and when one turns up, trace it. But if I spend that bill on a cup of coffee, the guy at the donut shop isn't going to cross-check with Interpol before giving me change.
Yeah, but the difference is that unlike serial numbers on bills, bitcoins are already stored in databases on network connected machines. It would be easy to build central (or decentralized) system to store lists of 'stolen' bitcoins, and check it with each transaction the same way credit cards are checked with each transaction.
posted by delmoi at 7:37 PM on June 16, 2011
Yeah, but the difference is that unlike serial numbers on bills, bitcoins are already stored in databases on network connected machines. It would be easy to build central (or decentralized) system to store lists of 'stolen' bitcoins, and check it with each transaction the same way credit cards are checked with each transaction.
So you could do it, but it's not set up that way now? Interesting. How would such an adaptation be approved? I can see how, as in real life, gatekeepers might decide to adopt the standard, but unless everyone voluntarily adopted it it would be possible to spend the coins...doesn't solve the problem of how you get coins onto the blacklist list, either --- seems like it would be difficult to do and preserve anonymity.
posted by Diablevert at 10:15 AM on June 17, 2011
So you could do it, but it's not set up that way now? Interesting. How would such an adaptation be approved? I can see how, as in real life, gatekeepers might decide to adopt the standard, but unless everyone voluntarily adopted it it would be possible to spend the coins...doesn't solve the problem of how you get coins onto the blacklist list, either --- seems like it would be difficult to do and preserve anonymity.
posted by Diablevert at 10:15 AM on June 17, 2011
« Older the old man of the lake | CDC's Advice on Living With the Living Dead Newer »
This thread has been archived and is closed to new comments
posted by loquacious at 2:27 PM on May 18, 2011 [5 favorites]