And you will know my name is the lord.
June 14, 2014 10:19 AM Subscribe
It's Time For a Hard Bitcoin Fork. "A Bitcoin mining pool, called GHash and operated by an anonymous entity called CEX.io, just reached 51% of total network mining power today. Bitcoin is no longer decentralized. GHash can control Bitcoin transactions."
If a hard fork happens, what happens to the prior Bitcoin? Are they worthless like DM or lira post-€ or are they like £ to the forked-Bitcoin €? Is this possible situation where currency becomes worthless and replaced overnight analogous to what might happen if Scotland declares independence?
posted by infinitewindow at 10:33 AM on June 14, 2014
posted by infinitewindow at 10:33 AM on June 14, 2014
Spork
posted by fallingbadgers at 10:36 AM on June 14, 2014 [4 favorites]
posted by fallingbadgers at 10:36 AM on June 14, 2014 [4 favorites]
Just as always, bitcoin will be worth exactly and only as much as you can convince someone to pay for it. Because no government accepts bitcoin for paying taxes, or legally declares bitcoin to be valid for all legal debts, a bitcoin is essentially a mathematical tulip. You pay what you think it is worth and hope for the best.
posted by idiopath at 10:38 AM on June 14, 2014 [22 favorites]
posted by idiopath at 10:38 AM on June 14, 2014 [22 favorites]
Basically, when you make a transaction with bitcoin, everyone else with bitcoins confirms it's legitimate or not, and then that transaction gets tacked on to the official ledger of all transactions. So if you have 51% you can start rejecting legitimate transactions. (Aside: I barely understand how bitcoin works.)
posted by chunking express at 10:38 AM on June 14, 2014 [3 favorites]
posted by chunking express at 10:38 AM on June 14, 2014 [3 favorites]
How does owning 51% yield full control over the market?
From the FAQ:
* Reverse transactions that he sends while he's in control. This has the potential to double-spend transactions that previously had already been seen in the block chain.
* Prevent some or all transactions from gaining any confirmations
* Prevent some or all other miners from mining any valid blocks
Trouble is, these are all detectable "griefer" attacks on the network that would likely just devalue Bitcoin and cause people to move to another currency. So unless the goal of this mysterious entity is to destroy Bitcoin, they are better off just mining and making lots of dough.
posted by RobotVoodooPower at 10:42 AM on June 14, 2014 [2 favorites]
From the FAQ:
* Reverse transactions that he sends while he's in control. This has the potential to double-spend transactions that previously had already been seen in the block chain.
* Prevent some or all transactions from gaining any confirmations
* Prevent some or all other miners from mining any valid blocks
Trouble is, these are all detectable "griefer" attacks on the network that would likely just devalue Bitcoin and cause people to move to another currency. So unless the goal of this mysterious entity is to destroy Bitcoin, they are better off just mining and making lots of dough.
posted by RobotVoodooPower at 10:42 AM on June 14, 2014 [2 favorites]
What keeps GHash from applying their computing power to the fork?
posted by michaelh at 10:45 AM on June 14, 2014
posted by michaelh at 10:45 AM on June 14, 2014
Could someone explain this in small words? How does owning 51% yield full control over the market?
As I understand it, basically for anything to be "official" - for a transaction to occur, or for a new bitcoin to be mined - 50%+1 of mining has to agree that it did. GHash can now reject any mined bitcoins that didn't come from them, and monopolize all future bitcoins.
posted by kafziel at 10:47 AM on June 14, 2014 [1 favorite]
As I understand it, basically for anything to be "official" - for a transaction to occur, or for a new bitcoin to be mined - 50%+1 of mining has to agree that it did. GHash can now reject any mined bitcoins that didn't come from them, and monopolize all future bitcoins.
posted by kafziel at 10:47 AM on June 14, 2014 [1 favorite]
If a hard fork happens, what happens to the prior Bitcoin?
As the article states, you can start the "new" currency in the same state as the old one, so everybody's balances stay alive. This has already happened for another issue.
What keeps GHash from applying their computing power to the fork?
The point of the fork is a change in the rules to make pools and hosted mining not work (basically, allow them to steal from each other). The conglomerate would hopefully fall apart.
posted by a robot made out of meat at 10:48 AM on June 14, 2014 [2 favorites]
As the article states, you can start the "new" currency in the same state as the old one, so everybody's balances stay alive. This has already happened for another issue.
What keeps GHash from applying their computing power to the fork?
The point of the fork is a change in the rules to make pools and hosted mining not work (basically, allow them to steal from each other). The conglomerate would hopefully fall apart.
posted by a robot made out of meat at 10:48 AM on June 14, 2014 [2 favorites]
Another chapter in the expanding book of Bitcoin stuff I will never understand, no matter how hard I try.
posted by colie at 10:49 AM on June 14, 2014 [1 favorite]
posted by colie at 10:49 AM on June 14, 2014 [1 favorite]
Just as always, bitcoin will be worth exactly and only as much as you can convince someone to pay for it.
You could say this about literally anything and it would be true.
posted by indubitable at 10:50 AM on June 14, 2014 [26 favorites]
You could say this about literally anything and it would be true.
posted by indubitable at 10:50 AM on June 14, 2014 [26 favorites]
Is it time for the bubble to burst, yet?
posted by Chocolate Pickle at 10:50 AM on June 14, 2014 [2 favorites]
posted by Chocolate Pickle at 10:50 AM on June 14, 2014 [2 favorites]
Mm, this is delicious. This crisis has been happening in slow motion for awhile and it finally tipped over the 50% number. It's unlikely that CEX's plan is to take this power they have and destroy Bitcoin, but it's not impossible. You have to trust them.
From what I've read. CEX.io operates GHash.io, a mining pool that owns the mining hardware. A GHash.io customer pays to buy Bitcoin mining power, 0.007 BTC/gigahash, apparently. You then get the Bitcoins that chunk of hardware is mining. Enough people found that investment interesting that GHash now has a lot of computers. Centralized power, in what is supposed to be a decentralized network.
Bitcoin's is off about 10% against the dollar on the news, which is more a reflex reaction than an "OMG the sky is falling". The Bitcoin subreddit is full of hilarious threads of people complaining that it's all the fault of the monsters who are GHash customers. It's like the libertarian nerds have never heard of the tragedy of the commons.
The more I read the more I think the Litecoin/Dogecoin folks have the right idea in using different proof of work functions that are harder to optimize with dedicated hardware.
posted by Nelson at 10:57 AM on June 14, 2014 [12 favorites]
From what I've read. CEX.io operates GHash.io, a mining pool that owns the mining hardware. A GHash.io customer pays to buy Bitcoin mining power, 0.007 BTC/gigahash, apparently. You then get the Bitcoins that chunk of hardware is mining. Enough people found that investment interesting that GHash now has a lot of computers. Centralized power, in what is supposed to be a decentralized network.
Bitcoin's is off about 10% against the dollar on the news, which is more a reflex reaction than an "OMG the sky is falling". The Bitcoin subreddit is full of hilarious threads of people complaining that it's all the fault of the monsters who are GHash customers. It's like the libertarian nerds have never heard of the tragedy of the commons.
The more I read the more I think the Litecoin/Dogecoin folks have the right idea in using different proof of work functions that are harder to optimize with dedicated hardware.
posted by Nelson at 10:57 AM on June 14, 2014 [12 favorites]
You could say this about literally anything and it would be true.
The unspoken premise is that there are reasons besides speculation or hiring assassins anonymously that make it reasonably easy to convince someone.
posted by fatbird at 10:57 AM on June 14, 2014 [3 favorites]
The unspoken premise is that there are reasons besides speculation or hiring assassins anonymously that make it reasonably easy to convince someone.
posted by fatbird at 10:57 AM on June 14, 2014 [3 favorites]
It's unlikely that CEX's plan is to take this power they have and destroy Bitcoin, but it's not impossible. You have to trust them.
I guess I don't follow. Wouldn't this condition alone sour Bitcoin as currency?
posted by cribcage at 10:59 AM on June 14, 2014
I guess I don't follow. Wouldn't this condition alone sour Bitcoin as currency?
posted by cribcage at 10:59 AM on June 14, 2014
The suggestion to prevent GHash.io to take over again is to make it possible to secretly opt out from bitcoin pools like this. But it's the case that the tragedy of the commons can be solved, with centralized power: punishment is dealt out to the person violating the commons. So GHash.io simply identifies the people paying to buy mining power and figures out a way to find out if they are violating the commons....
posted by curuinor at 11:00 AM on June 14, 2014
posted by curuinor at 11:00 AM on June 14, 2014
How does owning 51% yield full control over the market?
Short version: the Bitcoin cryptography design has flaws that can be exploited by someone who gets a majority of the computer power in the world Bitcoin mining network. The design was created with the premise that nobody could get a majority. Oops!
What keeps GHash from applying their computing power to the fork?
If they applied anything more than 1.0% of their computer power to the fork, they'd lose control since they would have less than 50% of the Bitcoin network. As it is, the network continues to grow so they have to continue adding more computer power just to keep their majority.
posted by charlie don't surf at 11:01 AM on June 14, 2014 [2 favorites]
Short version: the Bitcoin cryptography design has flaws that can be exploited by someone who gets a majority of the computer power in the world Bitcoin mining network. The design was created with the premise that nobody could get a majority. Oops!
What keeps GHash from applying their computing power to the fork?
If they applied anything more than 1.0% of their computer power to the fork, they'd lose control since they would have less than 50% of the Bitcoin network. As it is, the network continues to grow so they have to continue adding more computer power just to keep their majority.
posted by charlie don't surf at 11:01 AM on June 14, 2014 [2 favorites]
The real concern should be security compromise of GHash or a rogue/coerced employee. GHash's incentive is to earn more profits over time as cooperative miners. Screwing up Bitcoin hurts them. The capability is there, however, if someone with non-financial incentives can take control and wants to damage Bitcoin.
The effect of attacks like this potential one is to make Bitcoin less useful, and swiftly useless if they are concerted, more than to steal things.
posted by save alive nothing that breatheth at 11:01 AM on June 14, 2014 [1 favorite]
The effect of attacks like this potential one is to make Bitcoin less useful, and swiftly useless if they are concerted, more than to steal things.
posted by save alive nothing that breatheth at 11:01 AM on June 14, 2014 [1 favorite]
The rough explaination of why 51% attacks are bad and any one entity controlling 51% of the mining is bad comes down to the fact that Bitcoin is decentralized essentially via an algorithm that lets each mining entity use their hashpower to "vote" for a block of transactions to be included in the blockchain, the public ledger of all bitcoin transactions.
Usually, there's really not too much drama to including transactions. Transactions with a higher voluntary fee tend to be included faster, but it really just comes down to chance in the end. However, a mining pool with 51% could start finding all the blocks, take the rewards for themselves, and halt transactions or even reverse recent transactions. The way this works is that the Bitcoin protocol is designed to avoid forking by having miners adopt the longest blockchain on the network, and if you're able to build a blockchain faster the rest of the network combined, you can effectively write one blockchain that says a transaction got confirmed, then mine two more blocks from the last point where that confirmation didn't happen. You could use this to cheat others online by buying goods or other cytpocoins or whatever, although it'd be pretty obvious.
I think the idea of Ghash.io doing a crazy 51% attack that upsets the community is unlikely, but it puts bitcoin in an uncomfortable position. The idea behind bitcoin is that it's safe from anyone even trying to do something to change Bitcoin's policies, and now the network is essentially forced to trust Ghash.io not to do such a thing. Obviously, Ghash.io has no real motivation to do it, but I feel like this is still a huge philosophical loss. The reason normal people use dollars is because they trust the Federal Reserve to implement somewhat sensible monetary policy, and I highly doubt the Federal Reserve would ever try Zimbabwe style inflation as they would really gain nothing from it long term except a crazy economic crisis. Bitcoin is essentially privatized fiat when an entity holds 51% of the hashing power.
posted by mccarty.tim at 11:03 AM on June 14, 2014 [9 favorites]
Usually, there's really not too much drama to including transactions. Transactions with a higher voluntary fee tend to be included faster, but it really just comes down to chance in the end. However, a mining pool with 51% could start finding all the blocks, take the rewards for themselves, and halt transactions or even reverse recent transactions. The way this works is that the Bitcoin protocol is designed to avoid forking by having miners adopt the longest blockchain on the network, and if you're able to build a blockchain faster the rest of the network combined, you can effectively write one blockchain that says a transaction got confirmed, then mine two more blocks from the last point where that confirmation didn't happen. You could use this to cheat others online by buying goods or other cytpocoins or whatever, although it'd be pretty obvious.
I think the idea of Ghash.io doing a crazy 51% attack that upsets the community is unlikely, but it puts bitcoin in an uncomfortable position. The idea behind bitcoin is that it's safe from anyone even trying to do something to change Bitcoin's policies, and now the network is essentially forced to trust Ghash.io not to do such a thing. Obviously, Ghash.io has no real motivation to do it, but I feel like this is still a huge philosophical loss. The reason normal people use dollars is because they trust the Federal Reserve to implement somewhat sensible monetary policy, and I highly doubt the Federal Reserve would ever try Zimbabwe style inflation as they would really gain nothing from it long term except a crazy economic crisis. Bitcoin is essentially privatized fiat when an entity holds 51% of the hashing power.
posted by mccarty.tim at 11:03 AM on June 14, 2014 [9 favorites]
The thing that has kept me away from bitcoin is not knowing who to trust. Everyone seems to be looking at it as a way to get rich quick. I don't see anyone looking at it as a way to fuel organic creation of real-world value.
The get-rich-quick angle inherently means that people with more knowledge/power/luck take money from people with less knowledge/power/luck. My default assumption when I see anyone take a strong position on bitcoin is that they are attempting to manipulate others for their own self interest. Whether it's these guys claiming that the sky is falling, or others saying that everything is fine.
How can the majority of us (who don't spend all day immersed in the world of bitcoin) have any hope of coming out ahead? Bitcoin is not a neutral environment; it is an environment where everyone is looking to beat out everyone else. It would be foolish to trust others, or invest a significant amount of money without a huge amount of knowledge. I will continue keeping my distance.
posted by mantecol at 11:03 AM on June 14, 2014 [6 favorites]
The get-rich-quick angle inherently means that people with more knowledge/power/luck take money from people with less knowledge/power/luck. My default assumption when I see anyone take a strong position on bitcoin is that they are attempting to manipulate others for their own self interest. Whether it's these guys claiming that the sky is falling, or others saying that everything is fine.
How can the majority of us (who don't spend all day immersed in the world of bitcoin) have any hope of coming out ahead? Bitcoin is not a neutral environment; it is an environment where everyone is looking to beat out everyone else. It would be foolish to trust others, or invest a significant amount of money without a huge amount of knowledge. I will continue keeping my distance.
posted by mantecol at 11:03 AM on June 14, 2014 [6 favorites]
I guess I don't follow. Wouldn't this condition alone sour Bitcoin as currency?
At this point, nothing about bitcoin rests on reasonable confidence in it as a currency. Anyone still in it in a significant way is aware that there's large unknowns, and is gambling on it working out somehow over the long haul because the only way we'll get a real digital currency is for candidates like Bitcoin to suffer real world trials like this.
posted by fatbird at 11:05 AM on June 14, 2014 [1 favorite]
At this point, nothing about bitcoin rests on reasonable confidence in it as a currency. Anyone still in it in a significant way is aware that there's large unknowns, and is gambling on it working out somehow over the long haul because the only way we'll get a real digital currency is for candidates like Bitcoin to suffer real world trials like this.
posted by fatbird at 11:05 AM on June 14, 2014 [1 favorite]
The more I read the more I think the Litecoin/Dogecoin folks have the right idea in using different proof of work functions that are harder to optimize with dedicated hardware.
That seems to have been Litecoin's original attempt, but it's futile. People will develop specialized hardware that is optimized for whatever algorithms are profitable. Trying to make things trickier only delays matters and increases hardware and development costs, but Litecoin and Dogecoin will be mostly ASICs soon enough, if not already.
posted by save alive nothing that breatheth at 11:06 AM on June 14, 2014 [1 favorite]
That seems to have been Litecoin's original attempt, but it's futile. People will develop specialized hardware that is optimized for whatever algorithms are profitable. Trying to make things trickier only delays matters and increases hardware and development costs, but Litecoin and Dogecoin will be mostly ASICs soon enough, if not already.
posted by save alive nothing that breatheth at 11:06 AM on June 14, 2014 [1 favorite]
Every Bitcoin node has a complete copy of the Bitcoin ledger, which records the balances and complete transaction history of every Bitcoin wallet in existence, ever. Whenever a transaction of funds from one Bitcoin wallet to another is initiated, the system first checks the ledger to make sure the source account actually has the funds available. To avoid relying on any one copy of the ledger—which could be forged—the system polls many different nodes on the network, and each one responds with either "yes, wallet # 17637585112 has sufficient funds to cover this transaction", or "no it doesn't".
In practice, the system doesn't poll *every single* node—just a random sample of them. The size of this sample is customizable; larger samples produce greater reliability, at the cost of longer processing times.
Anyway, if there's disagreement among the nodes being polled, the majority wins. So if a single entity controls more than 50% of the nodes, they can control approval or denial of transfers.
posted by escape from the potato planet at 11:07 AM on June 14, 2014 [6 favorites]
In practice, the system doesn't poll *every single* node—just a random sample of them. The size of this sample is customizable; larger samples produce greater reliability, at the cost of longer processing times.
Anyway, if there's disagreement among the nodes being polled, the majority wins. So if a single entity controls more than 50% of the nodes, they can control approval or denial of transfers.
posted by escape from the potato planet at 11:07 AM on June 14, 2014 [6 favorites]
mantecol, Bitcoin is often called "trustless," as so long as your private keys (which make up a Bitcoin wallet) are kept secure, it's statistically impossible (as in, all computers running until the heat death of the universe impossible) to steal someone's Bitcoins. Of course, private keys do get stolen or lost, so that's how a lot of people end up losing their Bitcoins, just like people end up getting their credit card numbers and passwords stolen. Bitcoins should be more secure against theft as a private key is not shared when sending a transaction (it's used to cryptographically sign the transaction), but they're also an attractive target as stolen bitcoins are harder to prosecute than stolen credit cards because Bitcoins are pseudoanonymous.
And I think the trustless bit really ends when you start doing transactions, as you have to trust the person you are doing business with more when you spend bitcoins, as there is no way to issue a chargeback on Bitcoins. There are schemes to use escrow and multisignature transactions, but they're not the default and must rely on a third party to verify the transaction went through who will probably not work for free, adding more fees.
The ultimate moral of Bitcoin seems to be that trustless currency moves the burden of trust onto the consumer.
posted by mccarty.tim at 11:11 AM on June 14, 2014 [1 favorite]
And I think the trustless bit really ends when you start doing transactions, as you have to trust the person you are doing business with more when you spend bitcoins, as there is no way to issue a chargeback on Bitcoins. There are schemes to use escrow and multisignature transactions, but they're not the default and must rely on a third party to verify the transaction went through who will probably not work for free, adding more fees.
The ultimate moral of Bitcoin seems to be that trustless currency moves the burden of trust onto the consumer.
posted by mccarty.tim at 11:11 AM on June 14, 2014 [1 favorite]
On the question of trusting GHash, the "What Not to Do" section of the fine article we all read and are discussing here (right?) is quite interesting. Specifically the allegation that GHash already abused its hashing power to steal money from a gambling site. That's pretty insane, if true.
posted by Nelson at 11:11 AM on June 14, 2014 [2 favorites]
posted by Nelson at 11:11 AM on June 14, 2014 [2 favorites]
This is like post #30 on the subject and I still don't fucking understand bitcoin, I feel like a pomeranian trying to do calculus, im so upset
i think i need it explained to me with a puppet show
posted by elizardbits at 11:13 AM on June 14, 2014 [32 favorites]
i think i need it explained to me with a puppet show
posted by elizardbits at 11:13 AM on June 14, 2014 [32 favorites]
Well, the defenders say Ghash only did it a few times, and that was over nine months ago! So far in the past!
Its pretty easy to see why such a huge percentage of all bitcoins ever have been stolen or lost.
posted by Iax at 11:15 AM on June 14, 2014
Its pretty easy to see why such a huge percentage of all bitcoins ever have been stolen or lost.
posted by Iax at 11:15 AM on June 14, 2014
The more I read the more I think the Litecoin/Dogecoin folks have the right idea in using different proof of work functions that are harder to optimize with dedicated hardware.
that's changing
posted by p3on at 11:16 AM on June 14, 2014
that's changing
posted by p3on at 11:16 AM on June 14, 2014
indubitable: some things are worth what you are willing to pay, others have the backing of large institutions, willing to defend the value of their fiat (with violence or coercion if needed). Setting aside the moral justification for such institutions and violence (or lack thereof), this is a concrete and not at all theoretical reason that a fiat currency from a powerful and stable government has value.
posted by idiopath at 11:16 AM on June 14, 2014 [2 favorites]
posted by idiopath at 11:16 AM on June 14, 2014 [2 favorites]
Could someone explain this in small words? How does owning 51% yield full control over the market?
Anyway, if there's disagreement among the nodes being polled, the majority wins. So if a single entity controls more than 50% of the nodes, they can control approval or denial of transfers.
It's actually not that simple. To prevent a fraud in consensus the argument is, as mentioned only once in a thread of so far 23 comments, the longest block chain wins.
The 51% attack is sort of like this.
You have a block chain:
1a -- 2a -- 3a -- 4a -- 5a
Now the community has been mining away at this block chain but wait a second, all of a sudden, a group comes in with a completely new block chain:
1a -- 2b -- 3b -- 4b -- 5b -- 6b
The new block chain is longer so they win the network war.
But how did they do that? The answer is they worked on their own block chain using more power than the rest of the network combined. Which is 51%. Which is how the 51% attack works in a (greatly simplified) nutshell. So any coins that have already been spent on 2a, 3a, 4a are now invalid and those people are out their money/bitcoins/whatever.
posted by Talez at 11:17 AM on June 14, 2014 [2 favorites]
Anyway, if there's disagreement among the nodes being polled, the majority wins. So if a single entity controls more than 50% of the nodes, they can control approval or denial of transfers.
It's actually not that simple. To prevent a fraud in consensus the argument is, as mentioned only once in a thread of so far 23 comments, the longest block chain wins.
The 51% attack is sort of like this.
You have a block chain:
1a -- 2a -- 3a -- 4a -- 5a
Now the community has been mining away at this block chain but wait a second, all of a sudden, a group comes in with a completely new block chain:
1a -- 2b -- 3b -- 4b -- 5b -- 6b
The new block chain is longer so they win the network war.
But how did they do that? The answer is they worked on their own block chain using more power than the rest of the network combined. Which is 51%. Which is how the 51% attack works in a (greatly simplified) nutshell. So any coins that have already been spent on 2a, 3a, 4a are now invalid and those people are out their money/bitcoins/whatever.
posted by Talez at 11:17 AM on June 14, 2014 [2 favorites]
I love EVE Online threads. how much did these exploded space ships cost in USD?
posted by jepler at 11:18 AM on June 14, 2014 [64 favorites]
posted by jepler at 11:18 AM on June 14, 2014 [64 favorites]
united shibe dollars
posted by elizardbits at 11:20 AM on June 14, 2014 [5 favorites]
posted by elizardbits at 11:20 AM on June 14, 2014 [5 favorites]
I'd make a puppet show about Bitcoin, but all my puppet shows about cyptography always devolve into Eve whacking Alice and Bob with a bat until they give up their private keys.
posted by mccarty.tim at 11:21 AM on June 14, 2014 [24 favorites]
posted by mccarty.tim at 11:21 AM on June 14, 2014 [24 favorites]
It's unlikely that CEX's plan is to take this power they have and destroy Bitcoin, but it's not impossible. You have to trust them.
Hah! A lot of anarcho libertarian types talk about using bitcoins because they don't trust the Fed not to debase the US dollar. And now they have to trust some unknown private mining entity not to debase bitcoins. Classic.
I am also reminded of this excellent bitcoin diagram from FT Alphaville.
posted by pravit at 11:22 AM on June 14, 2014 [10 favorites]
Hah! A lot of anarcho libertarian types talk about using bitcoins because they don't trust the Fed not to debase the US dollar. And now they have to trust some unknown private mining entity not to debase bitcoins. Classic.
I am also reminded of this excellent bitcoin diagram from FT Alphaville.
posted by pravit at 11:22 AM on June 14, 2014 [10 favorites]
To my fellow calculus-befuddled Pomeranians: this explanation was the only one I found to help me get it.
posted by Jack Karaoke at 11:23 AM on June 14, 2014 [4 favorites]
posted by Jack Karaoke at 11:23 AM on June 14, 2014 [4 favorites]
I guess I don't follow. Wouldn't this condition alone sour Bitcoin as currency?
The standard response is it's a known issue, so don't worry about it. Same reasoning as the pitiful number of transactions per hour or any of the host of other Bitcoin problems.
I suspect underpants gnome reasoning may be involved.
posted by fifteen schnitzengruben is my limit at 11:27 AM on June 14, 2014 [3 favorites]
The standard response is it's a known issue, so don't worry about it. Same reasoning as the pitiful number of transactions per hour or any of the host of other Bitcoin problems.
I suspect underpants gnome reasoning may be involved.
posted by fifteen schnitzengruben is my limit at 11:27 AM on June 14, 2014 [3 favorites]
This is like post #30 on the subject and I still don't fucking understand bitcoin, I feel like a pomeranian trying to do calculus, im so upset
i think i need it explained to me with a puppet show
This is exactly what I mean about trust. Every time I read about bitcoin, some new wrinkle comes up that I wouldn't have predicted based on what I had previously learned about bitcoin. I did pretty well in math and science, so I can be pretty sure that the majority of people investing in bitcoin have even less foresight than I do. There is a lot of money up for grabs for the bloggers, exchanges, and miners who control bitcoin knowledge and computing power.
posted by mantecol at 11:27 AM on June 14, 2014
i think i need it explained to me with a puppet show
This is exactly what I mean about trust. Every time I read about bitcoin, some new wrinkle comes up that I wouldn't have predicted based on what I had previously learned about bitcoin. I did pretty well in math and science, so I can be pretty sure that the majority of people investing in bitcoin have even less foresight than I do. There is a lot of money up for grabs for the bloggers, exchanges, and miners who control bitcoin knowledge and computing power.
posted by mantecol at 11:27 AM on June 14, 2014
Is it time for the bubble to burst, yet?
For the millionth time. It's not a bubble, a bubble is where the price, or a significant portion of the price, rises based on speculation.
While some people are buying bitcoin for this reason, by and large most users are buying and selling for its actual purpose. They are hiding financial transactions, i.e. drugs, money laundering and other illegal activities.
posted by Bonzai at 11:27 AM on June 14, 2014 [1 favorite]
For the millionth time. It's not a bubble, a bubble is where the price, or a significant portion of the price, rises based on speculation.
While some people are buying bitcoin for this reason, by and large most users are buying and selling for its actual purpose. They are hiding financial transactions, i.e. drugs, money laundering and other illegal activities.
posted by Bonzai at 11:27 AM on June 14, 2014 [1 favorite]
Would it be possible for GHash to explicitly threaten to disavow a party's transactions unless that party consented to a skim for GHash? If GHash is in a position to veto any verification, it puts them in a position to charge for not vetoing.
posted by fatbird at 11:28 AM on June 14, 2014
posted by fatbird at 11:28 AM on June 14, 2014
This is like post #30 on the subject and I still don't fucking understand bitcoin, I feel like a pomeranian trying to do calculus, im so upset
i think i need it explained to me with a puppet show
That's how I taught my Pomeranian calculus.
posted by Mrs. Pterodactyl at 11:29 AM on June 14, 2014 [10 favorites]
i think i need it explained to me with a puppet show
That's how I taught my Pomeranian calculus.
posted by Mrs. Pterodactyl at 11:29 AM on June 14, 2014 [10 favorites]
The idea behind bitcoin is that it's safe from anyone even trying to do something to change Bitcoin's policies, and now the network is essentially forced to trust Ghash.io not to do such a thing. Obviously, Ghash.io has no real motivation to do it, but I feel like this is still a huge philosophical loss.
They have no motivation that sustains Bitcoin's viability. But maybe sustaining Bitcoin's viability isn't what's driving them.
posted by scalefree at 11:29 AM on June 14, 2014
They have no motivation that sustains Bitcoin's viability. But maybe sustaining Bitcoin's viability isn't what's driving them.
posted by scalefree at 11:29 AM on June 14, 2014
So is now a good time for MetaFilter stop accepting donations in Bitcoin?
posted by cosmologinaut at 11:32 AM on June 14, 2014
posted by cosmologinaut at 11:32 AM on June 14, 2014
So now we have a bitcoin cartel, right? What they can now do is run a protection racket and start extorting fees from other users. "None of your transactions will be approved unless you give us 5%."
posted by Chocolate Pickle at 11:32 AM on June 14, 2014 [1 favorite]
posted by Chocolate Pickle at 11:32 AM on June 14, 2014 [1 favorite]
To my fellow calculus-befuddled Pomeranians: this explanation was the only one I found to help me get it.
Honestly I would be happier with a link to a single page that says A WIZARD DID IT
posted by elizardbits at 11:33 AM on June 14, 2014 [2 favorites]
Honestly I would be happier with a link to a single page that says A WIZARD DID IT
posted by elizardbits at 11:33 AM on June 14, 2014 [2 favorites]
"None of your transactions will be approved unless you give us 5%."
Just like Visa!
posted by Hlewagast at 11:34 AM on June 14, 2014 [7 favorites]
Just like Visa!
posted by Hlewagast at 11:34 AM on June 14, 2014 [7 favorites]
This seems like a design flaw in this digital commodity that claims to be decentralized, but is, in fact, gameable to be centralized. Are there pseudo-currencies that are engineered to avoid this scenario?
posted by Blazecock Pileon at 11:38 AM on June 14, 2014
posted by Blazecock Pileon at 11:38 AM on June 14, 2014
Hah! A lot of anarcho libertarian types talk about using bitcoins because they don't trust the Fed not to debase the US dollar. And now they have to trust some unknown private mining entity not to debase bitcoins. Classic.
But gubmint bad, private sector good. Praise Lew Rockwell!
posted by T.D. Strange at 11:43 AM on June 14, 2014
But gubmint bad, private sector good. Praise Lew Rockwell!
posted by T.D. Strange at 11:43 AM on June 14, 2014
I've been curious if the 50% tipping point is necessary, or if that threshold is adjustable. Most distributed consensus algorithms have a parameter so that, say, 90% of people need to collude instead at the cost of things being a bit slower / more brittle. I wonder if that's true for Bitcoin consensus, I don't understand the agreement protocol well enough to be sure.
posted by Nelson at 11:43 AM on June 14, 2014
posted by Nelson at 11:43 AM on June 14, 2014
For the millionth time. It's not a bubble, a bubble is where the price, or a significant portion of the price, rises based on speculation.
While some people are buying bitcoin for this reason, by and large most users are buying and selling for its actual purpose. They are hiding financial transactions, i.e. drugs, money laundering and other illegal activities.
Well bitcoin is volatile and (unless everyone decides it's shit) inherently deflationary. So (unless everyone decides it's shit) it seems kind of ideal for speculative investment. Do you have some evidence that suggests that people aren't holding/buying bitcoins as an investment?
posted by aubilenon at 11:50 AM on June 14, 2014 [4 favorites]
While some people are buying bitcoin for this reason, by and large most users are buying and selling for its actual purpose. They are hiding financial transactions, i.e. drugs, money laundering and other illegal activities.
Well bitcoin is volatile and (unless everyone decides it's shit) inherently deflationary. So (unless everyone decides it's shit) it seems kind of ideal for speculative investment. Do you have some evidence that suggests that people aren't holding/buying bitcoins as an investment?
posted by aubilenon at 11:50 AM on June 14, 2014 [4 favorites]
To be kind, the top 1% of Americans seem to have gained control of the economy with only 20% of the dollars, so requiring 51% is actually an improvement. /sarcasm
posted by benito.strauss at 11:53 AM on June 14, 2014 [14 favorites]
posted by benito.strauss at 11:53 AM on June 14, 2014 [14 favorites]
Nelson, my understanding is that there's not really any sort of percent-based concensus, but it's more about each node or miner trusting whatever the longest blockchain propagated to them across the network (both blocks also have to satisfy the rules of the algorithm, too). Therefore, it's more about how many nodes see and rebroadcast the longest block first. And if there's two versions, I think clients just go with whichever version is more common.
I don't recall the exact statistic, but there are often orphaned blocks and soft forks on the network, where one two mining pools solve the block at the same time, and it's not clear who gets the reward until the next block is mined off of one block or the other. After that, the longest blockchain wins and any transactions that were confirmed but lost on the orphaned block get confirmed soon on the other blocks. This is why a lot of early bitcoin guides said to wait for 6 blocks to confirm your transaction, but today the network is large enough that orphaned blocks are rarer and tend to die quickly.
posted by mccarty.tim at 11:53 AM on June 14, 2014 [1 favorite]
I don't recall the exact statistic, but there are often orphaned blocks and soft forks on the network, where one two mining pools solve the block at the same time, and it's not clear who gets the reward until the next block is mined off of one block or the other. After that, the longest blockchain wins and any transactions that were confirmed but lost on the orphaned block get confirmed soon on the other blocks. This is why a lot of early bitcoin guides said to wait for 6 blocks to confirm your transaction, but today the network is large enough that orphaned blocks are rarer and tend to die quickly.
posted by mccarty.tim at 11:53 AM on June 14, 2014 [1 favorite]
Most religious texts claim that the devout and the righteous will disappear suddenly when the day of reckoning comes, while the remaining people are left to roam the earth.
Citation needed?
posted by Going To Maine at 11:53 AM on June 14, 2014
Citation needed?
posted by Going To Maine at 11:53 AM on June 14, 2014
It's a social network propagation error, he only learned about Christianity in public school social studies.
posted by mccarty.tim at 11:55 AM on June 14, 2014 [4 favorites]
posted by mccarty.tim at 11:55 AM on June 14, 2014 [4 favorites]
if there's two versions, I think clients just go with whichever version is more common.
OK if that's it, then the rule is "50% majority wins any conflict". They could just change the algorithm to require a 90% majority. Ie: if more than 10% of the results are in conflict, reject the transaction from the blockchain. Note: this is my totally half-assed idea without any real understanding of how Bitcoin works. But maybe it's actually 90%-assed! :-)
posted by Nelson at 12:07 PM on June 14, 2014
OK if that's it, then the rule is "50% majority wins any conflict". They could just change the algorithm to require a 90% majority. Ie: if more than 10% of the results are in conflict, reject the transaction from the blockchain. Note: this is my totally half-assed idea without any real understanding of how Bitcoin works. But maybe it's actually 90%-assed! :-)
posted by Nelson at 12:07 PM on June 14, 2014
So Bitcoin will fork, as it has forked before, keeping everyone's balances intact, and solving another design flaw---in this case, by dismantling the benefits of mining as a pool. It's amazing to watch these problems being addressed and solved one by one---and to see Metafilter go from near-complete mockery to dismissal to employment as a donation mechanism.
posted by Mapes at 12:07 PM on June 14, 2014 [2 favorites]
posted by Mapes at 12:07 PM on June 14, 2014 [2 favorites]
It's amazing to watch these problems being addressed and solved one by one
In the way that earthquakes address the problems of earthquake-resistant architecture.
posted by holgate at 12:22 PM on June 14, 2014 [12 favorites]
In the way that earthquakes address the problems of earthquake-resistant architecture.
posted by holgate at 12:22 PM on June 14, 2014 [12 favorites]
In the way that engineers have addressed problems and increased earthquake resistance in architecture by observing and modeling earthquake damage. Not by making fun of architecture.
posted by Mapes at 12:27 PM on June 14, 2014 [1 favorite]
posted by Mapes at 12:27 PM on June 14, 2014 [1 favorite]
Obviously, Ghash.io has no real motivation to do it, but I feel like this is still a huge philosophical loss.
Unprecedented deregulation leads to unprecedented control. Film at 11.
posted by phaedon at 12:33 PM on June 14, 2014 [2 favorites]
Unprecedented deregulation leads to unprecedented control. Film at 11.
posted by phaedon at 12:33 PM on June 14, 2014 [2 favorites]
So it sounds like they really don't control the market in any way other than a Paul Maud'dib "The power to destroy a thing is the absolute control over it." sort of thing.
posted by Tell Me No Lies at 12:38 PM on June 14, 2014 [1 favorite]
posted by Tell Me No Lies at 12:38 PM on June 14, 2014 [1 favorite]
It's amazing to watch these problems being addressed and solved one by one---and to see Metafilter go from near-complete mockery to dismissal to employment as a donation mechanism.
yea but have you considered that its nerd money for buying heroin
posted by p3on at 12:43 PM on June 14, 2014 [6 favorites]
yea but have you considered that its nerd money for buying heroin
posted by p3on at 12:43 PM on June 14, 2014 [6 favorites]
>Just as always, bitcoin will be worth exactly and only as much as you can convince someone to pay for it.
You could say this about literally anything and it would be true.
Not really, no. "Worth" has many meanings beyond money.
On the other hand, I once formed a strong emotional attachment to a set of California State Bonds (non-taxable at 5.5%!) so who knows, maybe bitcoin is worth more than money to the holders.
posted by Tell Me No Lies at 12:52 PM on June 14, 2014
You could say this about literally anything and it would be true.
Not really, no. "Worth" has many meanings beyond money.
On the other hand, I once formed a strong emotional attachment to a set of California State Bonds (non-taxable at 5.5%!) so who knows, maybe bitcoin is worth more than money to the holders.
posted by Tell Me No Lies at 12:52 PM on June 14, 2014
Do you have some evidence that suggests that people aren't holding/buying bitcoins as an investment?
No. I can't prove a negative.
To be fair, no one can.
posted by Bonzai at 1:08 PM on June 14, 2014
No. I can't prove a negative.
To be fair, no one can.
posted by Bonzai at 1:08 PM on June 14, 2014
Of course many BTC users are holding BTC as a form of speculation. A cursory glance at any BTC forum would show that.
posted by Sticherbeast at 1:12 PM on June 14, 2014 [1 favorite]
posted by Sticherbeast at 1:12 PM on June 14, 2014 [1 favorite]
Honestly I would be happier with a link to a single page that says A WIZARD DID IT
Let me help you out with that.
posted by Wolfdog at 1:27 PM on June 14, 2014 [3 favorites]
Let me help you out with that.
posted by Wolfdog at 1:27 PM on June 14, 2014 [3 favorites]
The free market works!
posted by boo_radley at 1:44 PM on June 14, 2014
posted by boo_radley at 1:44 PM on June 14, 2014
T.D. Strange: "Hah! A lot of anarcho libertarian types talk about using bitcoins because they don't trust the Fed not to debase the US dollar. And now they have to trust some unknown private mining entity not to debase bitcoins. Classic.
But gubmint bad, private sector good. Praise Lew Rockwell!"
This is all very giggly, LOL-tea-party stuff, except that you can opt not to use Bitcoin but it's impossible to opt out of using fiat money, which is of course 100% issued and controlled by your government. If you think GHash is the bad guy in the bitcoin scenario, then "The Fed" is even worse in terms of the dollar (or $currency, if your money is issued by the Bank of Japan, the European Central Bank, the Central Bank of Russia or whatever.)
posted by chavenet at 1:54 PM on June 14, 2014
But gubmint bad, private sector good. Praise Lew Rockwell!"
This is all very giggly, LOL-tea-party stuff, except that you can opt not to use Bitcoin but it's impossible to opt out of using fiat money, which is of course 100% issued and controlled by your government. If you think GHash is the bad guy in the bitcoin scenario, then "The Fed" is even worse in terms of the dollar (or $currency, if your money is issued by the Bank of Japan, the European Central Bank, the Central Bank of Russia or whatever.)
posted by chavenet at 1:54 PM on June 14, 2014
It's amazing to watch these problems being addressed and solved one by one---and to see Metafilter go from near-complete mockery to dismissal to employment as a donation mechanism.
Canadian Tire accepts Canadian Tire money. Not sure that means that it is a robust currency... (In other words: tech places accepting tech produced currency doesn't mean anything about the wider validity of that currency.) And given (well, as far as I know) that no largescale currency speculator has decided to turn their attention to Bitcoin in the way that Soros did to Sterling and other currencies, I'm not sure it's really been tested yet in the way that most currencies have.
posted by lesbiassparrow at 1:56 PM on June 14, 2014 [2 favorites]
Canadian Tire accepts Canadian Tire money. Not sure that means that it is a robust currency... (In other words: tech places accepting tech produced currency doesn't mean anything about the wider validity of that currency.) And given (well, as far as I know) that no largescale currency speculator has decided to turn their attention to Bitcoin in the way that Soros did to Sterling and other currencies, I'm not sure it's really been tested yet in the way that most currencies have.
posted by lesbiassparrow at 1:56 PM on June 14, 2014 [2 favorites]
If you think GHash is the bad guy in the bitcoin scenario, then "The Fed" is even worse in terms of the dollar (or $currency, if your money is issued by the Bank of Japan, the European Central Bank, the Central Bank of Russia or whatever.)
Are you suggesting that governments doing things to insure (well. hopefully) that most currencies don't wildly fluctuate is in itself a bad thing? Or just when done badly?
posted by lesbiassparrow at 1:58 PM on June 14, 2014
Are you suggesting that governments doing things to insure (well. hopefully) that most currencies don't wildly fluctuate is in itself a bad thing? Or just when done badly?
posted by lesbiassparrow at 1:58 PM on June 14, 2014
lol bitcoin
oh no wait I mean *facepalm*
posted by feckless fecal fear mongering at 2:03 PM on June 14, 2014
oh no wait I mean *facepalm*
posted by feckless fecal fear mongering at 2:03 PM on June 14, 2014
If you require a 90% consensus that allows someone who controls just 10% of the network to reject valid transactions. They can't directly steal coins like 50%+1 allows them to do now, but they could pay out coins and then take then back.
posted by Benjy at 2:07 PM on June 14, 2014 [2 favorites]
posted by Benjy at 2:07 PM on June 14, 2014 [2 favorites]
If you think GHash is the bad guy in the bitcoin scenario, then "The Fed" is even worse in terms of the dollar (or $currency, if your money is issued by the Bank of Japan, the European Central Bank, the Central Bank of Russia or whatever.)
Are you suggesting that governments doing things to insure (well. hopefully) that most currencies don't wildly fluctuate is in itself a bad thing? Or just when done badly?
Yeah, I think most people consider that to be a strength of the dollar, or the euro, or what have you.
posted by kafziel at 2:09 PM on June 14, 2014 [1 favorite]
Are you suggesting that governments doing things to insure (well. hopefully) that most currencies don't wildly fluctuate is in itself a bad thing? Or just when done badly?
Yeah, I think most people consider that to be a strength of the dollar, or the euro, or what have you.
posted by kafziel at 2:09 PM on June 14, 2014 [1 favorite]
This is all very giggly, LOL-tea-party stuff, except that you can opt not to use Bitcoin but it's impossible to opt out of using fiat money, which is of course 100% issued and controlled by your government.
I believe the LOL libertarian stuff here is at the repeated cadence that regulation is bad and that a free market left to itself will result in the best outcome for everyone involved. That does not appear to be occurring in this case.
posted by Tell Me No Lies at 2:10 PM on June 14, 2014 [1 favorite]
I believe the LOL libertarian stuff here is at the repeated cadence that regulation is bad and that a free market left to itself will result in the best outcome for everyone involved. That does not appear to be occurring in this case.
posted by Tell Me No Lies at 2:10 PM on June 14, 2014 [1 favorite]
There are really four separate, almost wholly independent, discussions that tend to get fatally confused.
The first is whether a cryptographic, not-central-bank-controlled currency is a useful thing other than for illegal transactions, which one should assume will eventually be suppressed.
The second is whether an calculation-created, limited-supply, not-asset-backed coin is a particularly useful implementaion of cryptographic, not-central-bank-controlled currency, versus unlimited supply and/or asset backed alternatives.
The third is whether Bitcoin, itself, is an especially useful implementation of a calculation-created, limited supply, not-asset backed coin, vs other coins.
The fourth is whether Bitcoin is so useful that increased legal adaption and its particularly constrained supply will mean that exchange rate of Bitcoin will be at least maintained, and potentially continue to increase dramatically.
posted by MattD at 2:11 PM on June 14, 2014 [7 favorites]
The first is whether a cryptographic, not-central-bank-controlled currency is a useful thing other than for illegal transactions, which one should assume will eventually be suppressed.
The second is whether an calculation-created, limited-supply, not-asset-backed coin is a particularly useful implementaion of cryptographic, not-central-bank-controlled currency, versus unlimited supply and/or asset backed alternatives.
The third is whether Bitcoin, itself, is an especially useful implementation of a calculation-created, limited supply, not-asset backed coin, vs other coins.
The fourth is whether Bitcoin is so useful that increased legal adaption and its particularly constrained supply will mean that exchange rate of Bitcoin will be at least maintained, and potentially continue to increase dramatically.
posted by MattD at 2:11 PM on June 14, 2014 [7 favorites]
That does not appear to be occurring in this case.
Or, you know, ever. Yet they keep trotting out the same old lie as though this time [handwavium] will be different.
posted by feckless fecal fear mongering at 2:12 PM on June 14, 2014 [2 favorites]
Or, you know, ever. Yet they keep trotting out the same old lie as though this time [handwavium] will be different.
posted by feckless fecal fear mongering at 2:12 PM on June 14, 2014 [2 favorites]
While in one sense every asset is only worth what someone will pay for it, there is still a pretty important distinction between tangible and fiat assets. An asset that can be created at will is fundamentally different from and more inflatable than an asset that requires an input of value or the creation of a liability to be created.
This is in large part why modern Central Banking has managed the money supply in ways that ways that try to withdraw assets from or create liabilities in the market to the extent of the money that is injected in.
posted by MattD at 2:18 PM on June 14, 2014
This is in large part why modern Central Banking has managed the money supply in ways that ways that try to withdraw assets from or create liabilities in the market to the extent of the money that is injected in.
posted by MattD at 2:18 PM on June 14, 2014
Nelson: "Specifically the allegation that GHash already abused its hashing power to steal money from a gambling site."
In addition to that, there's recently been a block-withholding attack discovered against another mining pool.
Basically, think of Bitcoin mining as playing a scratch-off lottery game. Mining pools collect a lot of lotto tickets, and pool participants scratch them off (the "work" of mining). If any of the tickets in the batch win, the pool pays the ticket-scratchers in proportion to how many tickets they scratched. The attack consists of scratching a bunch of tickets, but keeping for yourself any winners and giving back all the losers to the pool. Not only does the attacker get to keep the winnings for themself, but they get reimbursed for their share of the effort they appear to have expended to benefit the pool as a whole, when in fact they have done just the opposite it by depriving it of winnings.
Nobody knows who is behind the attack, but it's speculated that the ghash.io folks might be. It's an attack that requires a lot of computational power to pull off; there's a short list of (known) entities that have that kind of power available.
It's kind of fun watching the anarcho-libertarian fantasia slowly wilt into an ecosystem where powerful and devious people expend their energy ruthlessly screwing anyone they can, and making out like bandits.
posted by dendrochronologizer at 2:19 PM on June 14, 2014 [11 favorites]
In addition to that, there's recently been a block-withholding attack discovered against another mining pool.
Basically, think of Bitcoin mining as playing a scratch-off lottery game. Mining pools collect a lot of lotto tickets, and pool participants scratch them off (the "work" of mining). If any of the tickets in the batch win, the pool pays the ticket-scratchers in proportion to how many tickets they scratched. The attack consists of scratching a bunch of tickets, but keeping for yourself any winners and giving back all the losers to the pool. Not only does the attacker get to keep the winnings for themself, but they get reimbursed for their share of the effort they appear to have expended to benefit the pool as a whole, when in fact they have done just the opposite it by depriving it of winnings.
Nobody knows who is behind the attack, but it's speculated that the ghash.io folks might be. It's an attack that requires a lot of computational power to pull off; there's a short list of (known) entities that have that kind of power available.
It's kind of fun watching the anarcho-libertarian fantasia slowly wilt into an ecosystem where powerful and devious people expend their energy ruthlessly screwing anyone they can, and making out like bandits.
posted by dendrochronologizer at 2:19 PM on June 14, 2014 [11 favorites]
They could just change the algorithm to require a 90% majority.
Out of my depth, but I think the 51% limit is more fundamental than that. The consensus algorithms you're thinking of require fewer than 1/3 of participants to break the rules, such as your 90% rule. (See "Byzantine Generals problem.")
Bitcoin allows the network to return eventually-correct results, despite an unlimited number of bad actors, by effectively requiring each bitcoin miner to "bet" their CPU cycles on a prediction about the correct state of the network. Each participant has an incentive to follow the rules (e.g. adopt the longest existing chain), because if they don't their own bets are less likely to pay off.
That works as long as each participant wins its "bets" less than half the time; the network is like a casino where the house always wins as long as it has a slight edge. If one participant starts winning more than half the time, they can break the rules and win, like a blackjack player who counts cards and busts the casino.
posted by jhc at 2:23 PM on June 14, 2014 [2 favorites]
Out of my depth, but I think the 51% limit is more fundamental than that. The consensus algorithms you're thinking of require fewer than 1/3 of participants to break the rules, such as your 90% rule. (See "Byzantine Generals problem.")
Bitcoin allows the network to return eventually-correct results, despite an unlimited number of bad actors, by effectively requiring each bitcoin miner to "bet" their CPU cycles on a prediction about the correct state of the network. Each participant has an incentive to follow the rules (e.g. adopt the longest existing chain), because if they don't their own bets are less likely to pay off.
That works as long as each participant wins its "bets" less than half the time; the network is like a casino where the house always wins as long as it has a slight edge. If one participant starts winning more than half the time, they can break the rules and win, like a blackjack player who counts cards and busts the casino.
posted by jhc at 2:23 PM on June 14, 2014 [2 favorites]
kafziel: "Yeah, I think most people consider that to be a strength of the dollar, or the euro, or what have you"
Given the economic disaster that is the euro zone, and the dollar zone, since 2008, I think it's more a bug than a feature.
posted by chavenet at 2:26 PM on June 14, 2014
Given the economic disaster that is the euro zone, and the dollar zone, since 2008, I think it's more a bug than a feature.
posted by chavenet at 2:26 PM on June 14, 2014
you can keep your filthy fiat, bitcoin derives its value from its natural value as a mechanism for money laundering
posted by p3on at 2:48 PM on June 14, 2014 [9 favorites]
posted by p3on at 2:48 PM on June 14, 2014 [9 favorites]
There's just something peculiarly obscene about an invented goldrush that essentially rewards wasting electricity, with ever-diminishing rewards for ever-increasing waste. For this reason alone I'd be delighted to see it fail miserably.
posted by George_Spiggott at 2:48 PM on June 14, 2014 [21 favorites]
posted by George_Spiggott at 2:48 PM on June 14, 2014 [21 favorites]
Bitcoin is a bubble precisely because none of the other cryptocurrencies have taken off on the same scale, yet offer the same convenience. As for declaring dollars a fiat currency, implying that bitcoin is not, it bears remembering that dollars represent trillions of units of value in real estate, public land and offshore, future commodities, and all types of investment under the aegis of the government in question. Furthermore, this value is hardened by evolved legal frameworks that mention it by name, and actual printed money distributed far and wide without an internet connection, impossible to destroy without nuclear war. If such as disaster would occur, then a single chicken or gold tooth would have more value than all the bitcoin combined without a government supported network to transfer it.
posted by Brian B. at 2:57 PM on June 14, 2014 [1 favorite]
posted by Brian B. at 2:57 PM on June 14, 2014 [1 favorite]
where powerful and devious people expend their energy ruthlessly screwing anyone they can, and making out like bandits.
Meet the new boss, same as the old boss.
posted by Literaryhero at 3:42 PM on June 14, 2014
Meet the new boss, same as the old boss.
posted by Literaryhero at 3:42 PM on June 14, 2014
dendrochronologizer, I've heard of this attack and you got one major detail wrong.
When bitcoin mining pools hash, the miners are hashing over an assigned range of seeds from the pool, and searching for a block that pays out to the mining pool. Bitcoin's puzzle is to find a hash below a certain value (often shorthand refered to as "with enough leading zeros") for the block. The block will have inputs that include a random element, as well as details on what address to send the reward to. The way cryptographic hashes work, if you change any input into the hash, whether it's a small or big change, the hash's output will change unpredictably and usually be nothing like what you started with, which is why hashes are easy to verify but almost completely impossible to reverse.
Therefore, you can't just take a winning block and rewrite it to pay you. Doing such would change the hash, and you'd need to brute force another solution. To take your lottery ticket metaphor, imagine that your supervisor bought the lottery tickets from a lottery that requires you input your bank account details to prevent other people from taking your winnings. But the lottery requires you send in the scratched ticket to actually send the money. In this case, you're scratching tickets, and send your boss losing tickets to show you're trying, but if you ever do find a winner, you rip it up and throw it in the trash.
As a result, your boss pays you money and is none the wiser you are abusing the system (after all, it's statistically unlikely for any one worker to win, hence the need for the pool). This doesn't earn you more money for your hashing, but you do end up siphoning away money from your boss, and reducing the chance they will find winning lottery tickets with the regularity they'd hope for.
Individual miners don't have much incentive to do that attack, and their hash power isn't enough to make a dent. But a big contract mining company like cex.io/ghash.io might, as stopping another pool from finding a block gives them more time to find their own (there's no one solution for a block, it's just that finding a block is really statistically unlikely without running tons of hashes), and discourages miners from joining smaller pools that find themselves paying out less often and with more fees to make ends meet from this attack.
The biggest point is that you can't just find a block for somebody else and write your name on it. If you take away one thing, that's it.
posted by mccarty.tim at 4:13 PM on June 14, 2014 [1 favorite]
When bitcoin mining pools hash, the miners are hashing over an assigned range of seeds from the pool, and searching for a block that pays out to the mining pool. Bitcoin's puzzle is to find a hash below a certain value (often shorthand refered to as "with enough leading zeros") for the block. The block will have inputs that include a random element, as well as details on what address to send the reward to. The way cryptographic hashes work, if you change any input into the hash, whether it's a small or big change, the hash's output will change unpredictably and usually be nothing like what you started with, which is why hashes are easy to verify but almost completely impossible to reverse.
Therefore, you can't just take a winning block and rewrite it to pay you. Doing such would change the hash, and you'd need to brute force another solution. To take your lottery ticket metaphor, imagine that your supervisor bought the lottery tickets from a lottery that requires you input your bank account details to prevent other people from taking your winnings. But the lottery requires you send in the scratched ticket to actually send the money. In this case, you're scratching tickets, and send your boss losing tickets to show you're trying, but if you ever do find a winner, you rip it up and throw it in the trash.
As a result, your boss pays you money and is none the wiser you are abusing the system (after all, it's statistically unlikely for any one worker to win, hence the need for the pool). This doesn't earn you more money for your hashing, but you do end up siphoning away money from your boss, and reducing the chance they will find winning lottery tickets with the regularity they'd hope for.
Individual miners don't have much incentive to do that attack, and their hash power isn't enough to make a dent. But a big contract mining company like cex.io/ghash.io might, as stopping another pool from finding a block gives them more time to find their own (there's no one solution for a block, it's just that finding a block is really statistically unlikely without running tons of hashes), and discourages miners from joining smaller pools that find themselves paying out less often and with more fees to make ends meet from this attack.
The biggest point is that you can't just find a block for somebody else and write your name on it. If you take away one thing, that's it.
posted by mccarty.tim at 4:13 PM on June 14, 2014 [1 favorite]
Having trouble seeing what the problem is here.
Could they do it? Sure.
Would they do it? In other words, would they do something that completely undermines the value of their very significant investment, something that would cause people to desert the currency in droves?
What's their incentive? Unless they have a hidden agenda to destroy Bitcoin, that is. A very expensive agenda.
posted by obiwanwasabi at 4:46 PM on June 14, 2014
Could they do it? Sure.
Would they do it? In other words, would they do something that completely undermines the value of their very significant investment, something that would cause people to desert the currency in droves?
What's their incentive? Unless they have a hidden agenda to destroy Bitcoin, that is. A very expensive agenda.
posted by obiwanwasabi at 4:46 PM on June 14, 2014
mccarty.tim: "The biggest point is that you can't just find a block for somebody else and write your name on it. If you take away one thing, that's it."
Thanks.
posted by dendrochronologizer at 5:04 PM on June 14, 2014
Thanks.
posted by dendrochronologizer at 5:04 PM on June 14, 2014
As I mentioned - I think the real concern is that someone compromises them in one way or another.
One factor is that BTC basically is the SHA256 coin. Other SHA256 coins for the most part are special purpose, merge mine with BTC (BTC computations also serve for the other coin, but basically the other coin is subsidiary to BTC mining now), have some other thing going on like MyriadCoin's 5 separate algorithms including SHA...
In altcoins, though, the most prominent algorithm is Scrypt, powering Litecoin, Dogecoin, Reddcoin, Potcoin, and others. Litecoin has the highest hashrate. Dogecoin's hashrate is an order of magnitude lower, and every other Scrypt coin is an order of magnitude or more below DOGE. Litecoin has the highest "market cap" and dollar volume of the altcoins, but Dogecoin has more users and transactions, just smaller dollar amounts.
There are both dedicated pools that just mine DOGE, LTC, etc. and multipools that spread and move their hash power for maximum immediate profit, paid in BTC, LTC, or DOGE.
With the hashrate distributed between the coins as it is, the situation in Scrypt is that one mining pool might be able to 51% LTC sometimes. Big LTC mining pools or big multipools could 51% attack DOGE. Big DOGE pools and all of the above could easily attack the smaller coins. The norm, though, has been cooperative operation, though there have been attacks on some of the smaller coins. I'm not aware of any instances of anyone actually hacking a pool in order to attack another coin.
As for who's using it, I am conducting business in Dogecoin and of course making as much use of DOGE as possible. I have no revenue for a bit, only because testing/prototype runs are promotional freebies rather than a paid product, but I'm pretty much honor bound to discourage fiat. My lawyer accepts DOGE, contractors, some equipment and supplies... nowadays anything online is easy enough with gift cards from Egifter, Gyft, etc. Amazon et al don't have the most incentive to accept it on their own when they can get coin business just by selling gift cards to those resellers.
Seriously though if you don't like Bitcoin your best hope at this point is probably to get behind Dogecoin.
posted by save alive nothing that breatheth at 5:24 PM on June 14, 2014 [2 favorites]
One factor is that BTC basically is the SHA256 coin. Other SHA256 coins for the most part are special purpose, merge mine with BTC (BTC computations also serve for the other coin, but basically the other coin is subsidiary to BTC mining now), have some other thing going on like MyriadCoin's 5 separate algorithms including SHA...
In altcoins, though, the most prominent algorithm is Scrypt, powering Litecoin, Dogecoin, Reddcoin, Potcoin, and others. Litecoin has the highest hashrate. Dogecoin's hashrate is an order of magnitude lower, and every other Scrypt coin is an order of magnitude or more below DOGE. Litecoin has the highest "market cap" and dollar volume of the altcoins, but Dogecoin has more users and transactions, just smaller dollar amounts.
There are both dedicated pools that just mine DOGE, LTC, etc. and multipools that spread and move their hash power for maximum immediate profit, paid in BTC, LTC, or DOGE.
With the hashrate distributed between the coins as it is, the situation in Scrypt is that one mining pool might be able to 51% LTC sometimes. Big LTC mining pools or big multipools could 51% attack DOGE. Big DOGE pools and all of the above could easily attack the smaller coins. The norm, though, has been cooperative operation, though there have been attacks on some of the smaller coins. I'm not aware of any instances of anyone actually hacking a pool in order to attack another coin.
As for who's using it, I am conducting business in Dogecoin and of course making as much use of DOGE as possible. I have no revenue for a bit, only because testing/prototype runs are promotional freebies rather than a paid product, but I'm pretty much honor bound to discourage fiat. My lawyer accepts DOGE, contractors, some equipment and supplies... nowadays anything online is easy enough with gift cards from Egifter, Gyft, etc. Amazon et al don't have the most incentive to accept it on their own when they can get coin business just by selling gift cards to those resellers.
Seriously though if you don't like Bitcoin your best hope at this point is probably to get behind Dogecoin.
posted by save alive nothing that breatheth at 5:24 PM on June 14, 2014 [2 favorites]
Would they do it?
Well as I pointed out above, there's evidence GHash has already used their mining power to cheat on transactions. Before they had 50%. So yeah, maybe they would. Also I can imagine various scenarios where it'd be possible to subtly steal just a bit of money by occasionally manipulating transactions without immediately getting caught. There's a growing case that's what happend at Mt. Gox, that somebody was using that exchange to siphon out millions of dollars over the course of a year or so.
But the really distasteful thing about the 50% risk is that it requires all Bitcoin users now trust the motivations and goals of the folks who own the nuclear weapon aimed at the system. The whole point of all the magic crypto is that you're only supposed to have to trust the protocols and math. Not some anonymous company whose primary point of identity is a web site registered in the Indian Ocean Territory.
posted by Nelson at 6:30 PM on June 14, 2014
Well as I pointed out above, there's evidence GHash has already used their mining power to cheat on transactions. Before they had 50%. So yeah, maybe they would. Also I can imagine various scenarios where it'd be possible to subtly steal just a bit of money by occasionally manipulating transactions without immediately getting caught. There's a growing case that's what happend at Mt. Gox, that somebody was using that exchange to siphon out millions of dollars over the course of a year or so.
But the really distasteful thing about the 50% risk is that it requires all Bitcoin users now trust the motivations and goals of the folks who own the nuclear weapon aimed at the system. The whole point of all the magic crypto is that you're only supposed to have to trust the protocols and math. Not some anonymous company whose primary point of identity is a web site registered in the Indian Ocean Territory.
posted by Nelson at 6:30 PM on June 14, 2014
50% +1 != 51%
posted by signal at 6:30 PM on June 14, 2014 [2 favorites]
posted by signal at 6:30 PM on June 14, 2014 [2 favorites]
Having trouble seeing what the problem is here.
Could they do it? Sure.
Would they do it? In other words, would they do something that completely undermines the value of their very significant investment, something that would cause people to desert the currency in droves?
Jeez did none of you people ever see the movie Office Space? You can skim money with microscopic transactions and it would be virtually undetectable. You could still rake in the money without destroying the whole system. Nobody would even notice. It's not like anyone is going to subject the entire bitcoin network to an audit.
posted by charlie don't surf at 6:45 PM on June 14, 2014
Could they do it? Sure.
Would they do it? In other words, would they do something that completely undermines the value of their very significant investment, something that would cause people to desert the currency in droves?
Jeez did none of you people ever see the movie Office Space? You can skim money with microscopic transactions and it would be virtually undetectable. You could still rake in the money without destroying the whole system. Nobody would even notice. It's not like anyone is going to subject the entire bitcoin network to an audit.
posted by charlie don't surf at 6:45 PM on June 14, 2014
51% attack has become a phrase, what do you want...
posted by save alive nothing that breatheth at 7:37 PM on June 14, 2014 [1 favorite]
posted by save alive nothing that breatheth at 7:37 PM on June 14, 2014 [1 favorite]
Would they do it? In other words, would they do something that completely undermines the value of their very significant investment, something that would cause people to desert the currency in droves?
Naturally they wouldn't completely undermine the market. On the other hand, given that they are forced to use their servers for fully half the bitcoin transactions that happen, it is only reasonable that you pay them a small monthly fee to continue using bitcoin. And probably only then if you do 100 or more transactions a month, so as not to affect casual users.
posted by Tell Me No Lies at 8:34 PM on June 14, 2014
Naturally they wouldn't completely undermine the market. On the other hand, given that they are forced to use their servers for fully half the bitcoin transactions that happen, it is only reasonable that you pay them a small monthly fee to continue using bitcoin. And probably only then if you do 100 or more transactions a month, so as not to affect casual users.
posted by Tell Me No Lies at 8:34 PM on June 14, 2014
My lawyer accepts DOGE, contractors, some equipment and supplies... nowadays anything online is easy enough with gift cards from Egifter, Gyft, etc. Amazon et al don't have the most incentive to accept it on their own when they can get coin business just by selling gift cards to those resellers.
i seriously cant tell if this post is a joke
posted by p3on at 9:01 PM on June 14, 2014 [6 favorites]
i seriously cant tell if this post is a joke
posted by p3on at 9:01 PM on June 14, 2014 [6 favorites]
FWIW, I found this video helpful a while back at explaining bitcoin's technical concepts like blockchains and security concepts. Not that I even own any bitcoin.
posted by pwnguin at 10:19 PM on June 14, 2014
posted by pwnguin at 10:19 PM on June 14, 2014
Algorithms are free to make. Bitcoin has unlimited competition.
posted by stbalbach at 10:35 PM on June 14, 2014
posted by stbalbach at 10:35 PM on June 14, 2014
So it sounds like they really don't control the market in any way other than a Paul Maud'dib "The power to destroy a thing is the absolute control over it." sort of thing.
Tell me of the currencies of your homeworld, Usul.
posted by 7segment at 11:08 PM on June 14, 2014 [6 favorites]
Tell me of the currencies of your homeworld, Usul.
posted by 7segment at 11:08 PM on June 14, 2014 [6 favorites]
It's kind of fun watching the anarcho-libertarian fantasia slowly wilt into an ecosystem where powerful and devious people expend their energy ruthlessly screwing anyone they can, and making out like bandits.
...I thought that was the way libertarian fantasies were SUPPOSED to turn out? Oh, in this one, you mean the LIBERTARIANS are being screwed, not some faceless other'ed 'sheeple'? Don't worry, they've got lots of GUNS to protect their bitcoins with.
posted by Orb2069 at 11:42 PM on June 14, 2014 [2 favorites]
...I thought that was the way libertarian fantasies were SUPPOSED to turn out? Oh, in this one, you mean the LIBERTARIANS are being screwed, not some faceless other'ed 'sheeple'? Don't worry, they've got lots of GUNS to protect their bitcoins with.
posted by Orb2069 at 11:42 PM on June 14, 2014 [2 favorites]
I thought that was the way libertarian fantasies were SUPPOSED to turn out?
The ones I know are actually quite adamant that market forces will yield a polite and enlightened society.
They're an odd bunch that way. Fiscally conservative hippies.
posted by Tell Me No Lies at 12:28 AM on June 15, 2014
The ones I know are actually quite adamant that market forces will yield a polite and enlightened society.
They're an odd bunch that way. Fiscally conservative hippies.
posted by Tell Me No Lies at 12:28 AM on June 15, 2014
and to see Metafilter go from near-complete mockery to dismissal to employment as a donation mechanism.
You are conflating Metafilter, the community, with MetaFilter Network, Inc.
posted by DevilsAdvocate at 12:34 AM on June 15, 2014 [1 favorite]
You are conflating Metafilter, the community, with MetaFilter Network, Inc.
posted by DevilsAdvocate at 12:34 AM on June 15, 2014 [1 favorite]
The ones I know are actually quite adamant that market forces will yield a polite and enlightened society.
I frequently find it hilarious that the glibertarian definition of "polite" tends not to rest on trust and friendship of the other party, but rather fear of violent retaliation to offense.
posted by Jimbob at 1:10 AM on June 15, 2014 [5 favorites]
I frequently find it hilarious that the glibertarian definition of "polite" tends not to rest on trust and friendship of the other party, but rather fear of violent retaliation to offense.
posted by Jimbob at 1:10 AM on June 15, 2014 [5 favorites]
On the other hand, given that they are forced to use their servers for fully half the bitcoin transactions that happen, it is only reasonable that you pay them a small monthly fee to continue using bitcoin.
You already pay a fee to use bitcoin, so I'm not really sure what the point here is.
posted by empath at 1:10 AM on June 15, 2014
You already pay a fee to use bitcoin, so I'm not really sure what the point here is.
posted by empath at 1:10 AM on June 15, 2014
You are conflating Metafilter, the community, with MetaFilter Network, Inc.
Members of the Metafilter community are employing Bitcoin as a donation mechanism to support the Metafilter site (with the participation of Metafilter, the company). Is that sufficiently precise?
posted by Mapes at 4:19 AM on June 15, 2014
Members of the Metafilter community are employing Bitcoin as a donation mechanism to support the Metafilter site (with the participation of Metafilter, the company). Is that sufficiently precise?
posted by Mapes at 4:19 AM on June 15, 2014
There's no question that Bitcoin's continued existence has surprised a lot of people. I personally have been expecting an implementation flaw (ala Heartbleed) to wipe it out, and frankly I still do.
Still, now that there's mature storefront technology it'd be reasonable enough to take bitcoin, particularly if I did it through a service such that I never dealt with it directly.
posted by Tell Me No Lies at 5:55 AM on June 15, 2014
Still, now that there's mature storefront technology it'd be reasonable enough to take bitcoin, particularly if I did it through a service such that I never dealt with it directly.
posted by Tell Me No Lies at 5:55 AM on June 15, 2014
Is that sufficiently precise?
I'd prepend "Some" to that statement. And trying to shoehorn "first they ignore you..." rules here isn't working very well.
posted by holgate at 8:18 AM on June 15, 2014
I'd prepend "Some" to that statement. And trying to shoehorn "first they ignore you..." rules here isn't working very well.
posted by holgate at 8:18 AM on June 15, 2014
... to see Metafilter go from near-complete mockery to dismissal to employment as a donation mechanism.
Though some members are using it, and MetaFilter is acceptinng it (!), I think we're still pretty much at near-complete mockery.
posted by benito.strauss at 8:34 AM on June 15, 2014 [6 favorites]
Though some members are using it, and MetaFilter is acceptinng it (!), I think we're still pretty much at near-complete mockery.
posted by benito.strauss at 8:34 AM on June 15, 2014 [6 favorites]
i seriously cant tell if this post is a joke
It is Dogecoin.
It's a joke.
But also every word you quoted was true. Do understand "contractors" means contracted Photoshop work for example, not construction workers.
I think some people are just being asses about it but some people really don't know or doubt this stuff is happening, but it really is. I have invoices in DOGE, BTC, and USD. Gonna go to a street fair for lunch on BTC/DOGE. Supposedly Doge macaroons. Feel free to doubt its longevity, for sure. I am in this with an awareness of risk and frankly the whole thing feels surreal, but that's how things are these days.
posted by save alive nothing that breatheth at 10:59 AM on June 15, 2014
It is Dogecoin.
It's a joke.
But also every word you quoted was true. Do understand "contractors" means contracted Photoshop work for example, not construction workers.
I think some people are just being asses about it but some people really don't know or doubt this stuff is happening, but it really is. I have invoices in DOGE, BTC, and USD. Gonna go to a street fair for lunch on BTC/DOGE. Supposedly Doge macaroons. Feel free to doubt its longevity, for sure. I am in this with an awareness of risk and frankly the whole thing feels surreal, but that's how things are these days.
posted by save alive nothing that breatheth at 10:59 AM on June 15, 2014
It's amazing to watch these problems being addressed and solved one by one---and to see Metafilter go from near-complete mockery to dismissal to employment as a donation mechanism.
Yeah, I for one still mock this nonsense.
posted by graphnerd at 11:01 AM on June 15, 2014
Yeah, I for one still mock this nonsense.
posted by graphnerd at 11:01 AM on June 15, 2014
Bitcoin has probably reached Peak Humor, now we're into the long, twilight slide into CueCat territory.
posted by fifteen schnitzengruben is my limit at 11:10 AM on June 15, 2014 [2 favorites]
posted by fifteen schnitzengruben is my limit at 11:10 AM on June 15, 2014 [2 favorites]
Bitcoin has probably reached Peak Humor, now we're into the long, twilight slide into CueCat territory.
You really should read the white papers and so on by various regulatory agencies and banks. I'm not suggesting that anyone buy them, it's super risky, but it is by no means a joke.
posted by empath at 12:11 PM on June 15, 2014 [1 favorite]
You really should read the white papers and so on by various regulatory agencies and banks. I'm not suggesting that anyone buy them, it's super risky, but it is by no means a joke.
posted by empath at 12:11 PM on June 15, 2014 [1 favorite]
I started to post the following comment:
posted by George_Spiggott at 1:01 PM on June 15, 2014
I'm minting buttcoin, which is a virtual currency strictly limited to the amount I can pull out of my ass.And then did the reasonable thing of defensively googling it, and of course as anyone with a reasonably functional brain fragment might have predicted, every conceivable joke or non-joke variant has been made or attempted for years. Posting this comment for information's sake.
Um, Figuratively speaking, of course. Heh. Yeah. Figuratively.
posted by George_Spiggott at 1:01 PM on June 15, 2014
You really should read the white papers and so on by various regulatory agencies and banks. I'm not suggesting that anyone buy them, it's super risky, but it is by no means a joke.
They're tulips, man.
posted by kafziel at 2:59 PM on June 15, 2014
They're tulips, man.
posted by kafziel at 2:59 PM on June 15, 2014
To the extent miners/nodes enforce fees, each bitcoin is the right to place x bytes of transaction messages (vaguely) in the distributed blockchain. It's kind of like how a few countries in Africa use MPesa phone credits for payments, but further abstracted.
<img />
posted by save alive nothing that breatheth at 3:26 PM on June 15, 2014 [1 favorite]
<img />
posted by save alive nothing that breatheth at 3:26 PM on June 15, 2014 [1 favorite]
How does this affect the incentives for other large btc mining pools to continue to support the currency and participate in mining? It seems that there is a feedback loop in play where other miners drop out as it becomes harder to get a payout.
posted by humanfont at 4:45 PM on June 15, 2014
posted by humanfont at 4:45 PM on June 15, 2014
You really should read the white papers and so on by various regulatory agencies and banks. I'm not suggesting that anyone buy them, it's super risky, but it is by no means a joke.
empath
I think what you and Mapes and others are missing is that the mockery isn't really aimed at the technology itself, which would be pointless.
What draws mockery is the asshole libertarian culture that has grown around the technology, which sadly continues to exist. What needs to fork is this culture. Bitcoin needs to rid itself of that idiot garbage and the speculators that swarm around it. It's an interesting idea that could be very useful for transferring money online, especially internationally, and if it had been promoted that way it wouldn't meet the widespread mockery it nows receives. Instead you have to wade through mountains of "Bitcoin is the dagger that will slay the State and break us free from the chains of fiat currency!" crap if you're interested in learning about the technology.
Bitcoin culture did and continues to deserve all the derision it gets.
posted by Sangermaine at 5:08 PM on June 15, 2014 [8 favorites]
empath
I think what you and Mapes and others are missing is that the mockery isn't really aimed at the technology itself, which would be pointless.
What draws mockery is the asshole libertarian culture that has grown around the technology, which sadly continues to exist. What needs to fork is this culture. Bitcoin needs to rid itself of that idiot garbage and the speculators that swarm around it. It's an interesting idea that could be very useful for transferring money online, especially internationally, and if it had been promoted that way it wouldn't meet the widespread mockery it nows receives. Instead you have to wade through mountains of "Bitcoin is the dagger that will slay the State and break us free from the chains of fiat currency!" crap if you're interested in learning about the technology.
Bitcoin culture did and continues to deserve all the derision it gets.
posted by Sangermaine at 5:08 PM on June 15, 2014 [8 favorites]
I would assume that if everyone is hashing honestly and not trying to pull off a 51% attack or a delayed block attack or anything that smaller pools can still operate. Their found block percentage should be close to the percentage of the hashing they contribute to the network.
Of course, getting a payout less often than with a big pool is less desirable, even if it averages out the same over time. There's also the issue that the smaller pools charge fees, unlike Ghash.io, which is a real issue for miners who mine on a low margin, which is most miners as the difficulty to find a block increases at an insane pace while the block reward stays the same. The difficulty is 10 times higher now than it was in January, and this means miners lose their profitability extremely quickly. Losing 1-2% of your revenue is a serious issue if you want to get a return on investment.
posted by mccarty.tim at 5:09 PM on June 15, 2014
Of course, getting a payout less often than with a big pool is less desirable, even if it averages out the same over time. There's also the issue that the smaller pools charge fees, unlike Ghash.io, which is a real issue for miners who mine on a low margin, which is most miners as the difficulty to find a block increases at an insane pace while the block reward stays the same. The difficulty is 10 times higher now than it was in January, and this means miners lose their profitability extremely quickly. Losing 1-2% of your revenue is a serious issue if you want to get a return on investment.
posted by mccarty.tim at 5:09 PM on June 15, 2014
So unless the goal of this mysterious entity is to destroy Bitcoin,
In thinking about it I can name a number of organizations with a huge amount of compute time available who have an interest in being able to block the occasional transaction -- you know, the kind between two parties who will never talk about it -- as well as having their finger on the big red button for the currency.
Interesting question if everyone is better off if it the U.S. or the Chinese.
posted by Tell Me No Lies at 5:14 PM on June 15, 2014
In thinking about it I can name a number of organizations with a huge amount of compute time available who have an interest in being able to block the occasional transaction -- you know, the kind between two parties who will never talk about it -- as well as having their finger on the big red button for the currency.
Interesting question if everyone is better off if it the U.S. or the Chinese.
posted by Tell Me No Lies at 5:14 PM on June 15, 2014
So unless the goal of this mysterious entity is to destroy Bitcoin
You're assuming rationality. Never assume actors are rational.
posted by Jimbob at 5:52 PM on June 15, 2014 [2 favorites]
You're assuming rationality. Never assume actors are rational.
posted by Jimbob at 5:52 PM on June 15, 2014 [2 favorites]
In thinking about it I can name a number of organizations with a huge amount of compute time available
You couldn't do it with regular computers. It has to be asics, which no government has very much of, if any.
posted by empath at 12:27 AM on June 16, 2014
You couldn't do it with regular computers. It has to be asics, which no government has very much of, if any.
posted by empath at 12:27 AM on June 16, 2014
Pfft could you imagine the US government having lots of dedicated hardware aimed at solving hashes? Next thing you'll be telling me that they record all our phone calls.
posted by Benjy at 4:51 AM on June 16, 2014 [1 favorite]
posted by Benjy at 4:51 AM on June 16, 2014 [1 favorite]
If they were buying or manufacturing asics on the scale you're suggesting, we would know. You can't use bitcoin asics for anything else. They're only good for bitcoin.
posted by empath at 5:45 AM on June 16, 2014
posted by empath at 5:45 AM on June 16, 2014
It's like the universe decided that the cookies in Cookie Clicker are worth real money.
posted by jbickers at 7:11 AM on June 16, 2014 [1 favorite]
posted by jbickers at 7:11 AM on June 16, 2014 [1 favorite]
I frequently find it hilarious that the glibertarian definition of "polite" tends not to rest on trust and friendship of the other party, but rather fear of violent retaliation to offense.
Please don't do this. I'm not a libertarian, and many of their ideas strike me as naïve and misguided, but this mean-spirited (and inaccurate) caricature of libertarians doesn't help anyone. It's pretty much the same thing as Tea Partiers comparing Obama to Lenin, or fundamentalists painting atheists as devil-worshippers.
The entire point of most libertarian schools of thought (there are many) is to create a society without violence or coercion. Now, you might not think that their proposed model of that society is workable, or even sane—and I'd mostly agree with you—but to say that libertarians don't value trust and friendship, or that they embrace coercion through threat of violence, is dishonest. It has no basis in what libertarians actually believe, and the only reason to say it is to smear and demonize libertarians.
By all means, vigorously debate those whose ideas you think are wrong. But please do it honestly, rationally, and civilly. That approach is better for everyone :)
posted by escape from the potato planet at 7:18 AM on June 16, 2014 [1 favorite]
Please don't do this. I'm not a libertarian, and many of their ideas strike me as naïve and misguided, but this mean-spirited (and inaccurate) caricature of libertarians doesn't help anyone. It's pretty much the same thing as Tea Partiers comparing Obama to Lenin, or fundamentalists painting atheists as devil-worshippers.
The entire point of most libertarian schools of thought (there are many) is to create a society without violence or coercion. Now, you might not think that their proposed model of that society is workable, or even sane—and I'd mostly agree with you—but to say that libertarians don't value trust and friendship, or that they embrace coercion through threat of violence, is dishonest. It has no basis in what libertarians actually believe, and the only reason to say it is to smear and demonize libertarians.
By all means, vigorously debate those whose ideas you think are wrong. But please do it honestly, rationally, and civilly. That approach is better for everyone :)
posted by escape from the potato planet at 7:18 AM on June 16, 2014 [1 favorite]
It's like the universe decided that the cookies in Cookie Clicker are worth real money
Why are magic cards worth money? Why is Warcraft gold? Hell, why is *real* gold? Stuff is worth what people will pay for it, that's it. There's no such thing as inherent value beyond what utility people assign to objects, virtual or otherwise. If people find the bitcoin distributed ledger system useful, then they will pay for bitcoins, and bitcoins have value. It's really that simple.
posted by empath at 7:24 AM on June 16, 2014 [1 favorite]
Why are magic cards worth money? Why is Warcraft gold? Hell, why is *real* gold? Stuff is worth what people will pay for it, that's it. There's no such thing as inherent value beyond what utility people assign to objects, virtual or otherwise. If people find the bitcoin distributed ledger system useful, then they will pay for bitcoins, and bitcoins have value. It's really that simple.
posted by empath at 7:24 AM on June 16, 2014 [1 favorite]
My lawyer accepts DOGE
Hopefully your accountant does, too, since the IRS considers you to be trading in commodities when you use BItcoin. I do not envy you your short-term capital gains calculations.
posted by one more dead town's last parade at 7:47 AM on June 16, 2014 [1 favorite]
Hopefully your accountant does, too, since the IRS considers you to be trading in commodities when you use BItcoin. I do not envy you your short-term capital gains calculations.
posted by one more dead town's last parade at 7:47 AM on June 16, 2014 [1 favorite]
Why are magic cards worth money? Why is Warcraft gold? Hell, why is *real* gold? Stuff is worth what people will pay for it, that's it. There's no such thing as inherent value beyond what utility people assign to objects, virtual or otherwise. If people find the bitcoin distributed ledger system useful, then they will pay for bitcoins, and bitcoins have value. It's really that simple.
Why not make another, less flattering analogy: they have value in the same way that Beanie Babies or Cabbage Patch Dolls once had value. There's nothing wrong with collecting things and assigning them value - there's plenty of that going on all over, but that's traditionally not the most stable model of investing because of the extreme swings that many very popular collectibles endure. (And I would strongly suspect that at one point people were happily bartering away for things with Beanie Babies, for example.)
But it's a terrible analogy or model for a currency, because without the existence of some regulatory structure, backed by something with authority (such as a Nation state), you're only going to see trouble and chicanery. Even when gold is used as money (rather than something you swap for more easily tradeable money), it's generally issued under the auspices of a state, such as Rome, which guarantees it a stable value.
posted by lesbiassparrow at 7:56 AM on June 16, 2014
Why not make another, less flattering analogy: they have value in the same way that Beanie Babies or Cabbage Patch Dolls once had value. There's nothing wrong with collecting things and assigning them value - there's plenty of that going on all over, but that's traditionally not the most stable model of investing because of the extreme swings that many very popular collectibles endure. (And I would strongly suspect that at one point people were happily bartering away for things with Beanie Babies, for example.)
But it's a terrible analogy or model for a currency, because without the existence of some regulatory structure, backed by something with authority (such as a Nation state), you're only going to see trouble and chicanery. Even when gold is used as money (rather than something you swap for more easily tradeable money), it's generally issued under the auspices of a state, such as Rome, which guarantees it a stable value.
posted by lesbiassparrow at 7:56 AM on June 16, 2014
But it's a terrible analogy or model for a currency, because without the existence of some regulatory structure
We're actually seeing such a structure beginning to be built around bitcoin. Which will probably infuriate the libertarians who started the thing, but they're a small, small percentage of people who have invested in it, at this point.
posted by empath at 8:10 AM on June 16, 2014
We're actually seeing such a structure beginning to be built around bitcoin. Which will probably infuriate the libertarians who started the thing, but they're a small, small percentage of people who have invested in it, at this point.
posted by empath at 8:10 AM on June 16, 2014
We're actually seeing such a structure beginning to be built around bitcoin.
Who is building it?
posted by JohnLewis at 8:15 AM on June 16, 2014
Who is building it?
posted by JohnLewis at 8:15 AM on June 16, 2014
Hopefully your accountant does, too,
Tentatively arranged...
posted by save alive nothing that breatheth at 8:41 AM on June 16, 2014
Tentatively arranged...
posted by save alive nothing that breatheth at 8:41 AM on June 16, 2014
Bonzai : While some people are buying bitcoin for this reason, by and large most users are buying and selling for its actual purpose. They are hiding financial transactions, i.e. drugs, money laundering and other illegal activities.
For this to be true, it must also be true that GHash is using it to hide "financial transactions, i.e. drugs, money laundering and other illegal activities." Do you believe that? I'd say GHash is in it for the profits of mining and trading bitcoins.
posted by IAmBroom at 9:11 AM on June 16, 2014
For this to be true, it must also be true that GHash is using it to hide "financial transactions, i.e. drugs, money laundering and other illegal activities." Do you believe that? I'd say GHash is in it for the profits of mining and trading bitcoins.
posted by IAmBroom at 9:11 AM on June 16, 2014
If they were buying or manufacturing asics on the scale you're suggesting, we would know. You can't use bitcoin asics for anything else. They're only good for bitcoin.
So you're suggesting that the NSA, which designed and spec'd SHA 256, lacks the hardware ability to compete with companies like Butterfly Labs.
posted by Benjy at 9:20 AM on June 16, 2014 [1 favorite]
So you're suggesting that the NSA, which designed and spec'd SHA 256, lacks the hardware ability to compete with companies like Butterfly Labs.
posted by Benjy at 9:20 AM on June 16, 2014 [1 favorite]
Who is building it?
New York State, for one, is licensing bitcoin exchanges this year.
posted by empath at 9:51 AM on June 16, 2014
New York State, for one, is licensing bitcoin exchanges this year.
posted by empath at 9:51 AM on June 16, 2014
lacks the hardware ability to compete with companies like Butterfly Labs
Designing an ASIC is trivial. Building enough to seriously compromise the network without anyone noticing a gigantic ASIC factory would be difficult. You're probably underestimating how many bitcoin asics are being produced now.
posted by empath at 9:54 AM on June 16, 2014
Designing an ASIC is trivial. Building enough to seriously compromise the network without anyone noticing a gigantic ASIC factory would be difficult. You're probably underestimating how many bitcoin asics are being produced now.
posted by empath at 9:54 AM on June 16, 2014
New York State, for one, is licensing bitcoin exchanges this year.
Doesn't this remove Bitcoin from the space it most wants to occupy? (The free free market?)
I'm honestly trying to understand how this is a win for BitCoin (as opposed to general crypto currency).
posted by OmieWise at 9:56 AM on June 16, 2014
Doesn't this remove Bitcoin from the space it most wants to occupy? (The free free market?)
I'm honestly trying to understand how this is a win for BitCoin (as opposed to general crypto currency).
posted by OmieWise at 9:56 AM on June 16, 2014
I'd hope by the 15th Bitcoin conversation on Metafilter we'd be past a sophomoric discussion of "gee, why does money have value anyway?". It's a complex question, but it's also a well explored one. If you're really interested in comparing Bitcoin to, say, gold, it'd be much more useful if you start by reading some economic theory.
As for the fine article we're discussing here, even if Bitcoin used to be like gold, now Bitcoin is like gold where one anonymous entity can reverse other people's gold transactions and stop specific people from spending any gold at all.
posted by Nelson at 10:08 AM on June 16, 2014 [2 favorites]
As for the fine article we're discussing here, even if Bitcoin used to be like gold, now Bitcoin is like gold where one anonymous entity can reverse other people's gold transactions and stop specific people from spending any gold at all.
posted by Nelson at 10:08 AM on June 16, 2014 [2 favorites]
Doesn't this remove Bitcoin from the space it most wants to occupy? (The free free market?)
It's a protocol, it doesn't really have desires. I'm sure there are lots of people who still want it to be a libertarian free for all with drugs and assassination markets, but that's not where it's going any more. Having a regulated exchange where people can buy and sell more-or-less free from scammers can only be good for the price, and will probably help with volatility.
posted by empath at 10:23 AM on June 16, 2014 [2 favorites]
It's a protocol, it doesn't really have desires. I'm sure there are lots of people who still want it to be a libertarian free for all with drugs and assassination markets, but that's not where it's going any more. Having a regulated exchange where people can buy and sell more-or-less free from scammers can only be good for the price, and will probably help with volatility.
posted by empath at 10:23 AM on June 16, 2014 [2 favorites]
I'd hope by the 15th Bitcoin conversation on Metafilter we'd be past a sophomoric discussion of "gee, why does money have value anyway?"
The question goes far beyond Bitcoin. It's also one of those areas of human knowledge where the less that is actually known the more that gets written.
It is my opinion that absolutely no one fully understands large economies. They're too big, too complex, and too reliant on the vagaries of human emotions for any one person to get a handle on.
So we continue to ponder the unponderables, like why the nice people at Sears let me walk out with a table saw in exchange for pieces of paper. Digital currencies simply highlight an issue that people are thinking about anyway.
posted by Tell Me No Lies at 12:16 PM on June 16, 2014
The question goes far beyond Bitcoin. It's also one of those areas of human knowledge where the less that is actually known the more that gets written.
It is my opinion that absolutely no one fully understands large economies. They're too big, too complex, and too reliant on the vagaries of human emotions for any one person to get a handle on.
So we continue to ponder the unponderables, like why the nice people at Sears let me walk out with a table saw in exchange for pieces of paper. Digital currencies simply highlight an issue that people are thinking about anyway.
posted by Tell Me No Lies at 12:16 PM on June 16, 2014
If they were buying or manufacturing asics on the scale you're suggesting, we would know. You can't use bitcoin asics for anything else. They're only good for bitcoin.
That's excellent news. We should know who the people who own 51% are extremely quickly then.
posted by Tell Me No Lies at 1:30 PM on June 16, 2014 [1 favorite]
That's excellent news. We should know who the people who own 51% are extremely quickly then.
posted by Tell Me No Lies at 1:30 PM on June 16, 2014 [1 favorite]
We do know, it's right in the post at the top of the page.
posted by empath at 1:38 PM on June 16, 2014 [1 favorite]
posted by empath at 1:38 PM on June 16, 2014 [1 favorite]
I dug a bit deeper and CEX.io/GHash isn't quite as anonymous as this post indicates. The .io domain name is nonsense of course and the company's listed address is a mailbox in London. But their terms of service indicate a UK jurisdiction, incorporated November 2013. There's a public LinkedIn profile for their CIO Jeffrey Smith. This Bitcoin Talk discussion suggests Ukrainian founders, but it's pretty tenuous information. Anyway they seem pretty low profile but not entirely anonymous, somewhere between Mt. Gox and Silk Road in the stellar history of Bitcoin company governance.
posted by Nelson at 3:00 PM on June 16, 2014
posted by Nelson at 3:00 PM on June 16, 2014
I think what you and Mapes and others are missing is that the mockery isn't really aimed at the technology itself, which would be pointless. What draws mockery is the asshole libertarian culture that has grown around the technology, which sadly continues to exist.
I'm not so sure about your first statement. Both certain user groups and the capability have come in for a pretty hard mocking. I don't care much about the politics or demographics of the users. My fascination is in the change in attitude toward Bitcoin's capacity for use occurring over the same time that Expedia, Overstock, and, yes, Metafilter, have added it to their payment systems. Go to any Metafilter thread on Bitcoin from a year ago; it's an amazing contrast.
posted by Mapes at 4:28 PM on June 16, 2014
I'm not so sure about your first statement. Both certain user groups and the capability have come in for a pretty hard mocking. I don't care much about the politics or demographics of the users. My fascination is in the change in attitude toward Bitcoin's capacity for use occurring over the same time that Expedia, Overstock, and, yes, Metafilter, have added it to their payment systems. Go to any Metafilter thread on Bitcoin from a year ago; it's an amazing contrast.
posted by Mapes at 4:28 PM on June 16, 2014
The entire point of most libertarian schools of thought (there are many) is to create a society without violence or coercion.
Letting kids go hungry and without education is violence and coercion. And you implied that liberal democracy is somehow a plan to spread violence and coercion, since libertarians oppose the former. Also, just because they don't always advocate feudal warlords and organized religion to run human affairs doesn't mean they aren't for it by default. Politics is tricky. The so-called third world is not designed, but it's no accident either.
posted by Brian B. at 4:45 PM on June 16, 2014 [3 favorites]
Letting kids go hungry and without education is violence and coercion. And you implied that liberal democracy is somehow a plan to spread violence and coercion, since libertarians oppose the former. Also, just because they don't always advocate feudal warlords and organized religion to run human affairs doesn't mean they aren't for it by default. Politics is tricky. The so-called third world is not designed, but it's no accident either.
posted by Brian B. at 4:45 PM on June 16, 2014 [3 favorites]
We do know, it's right in the post at the top of the page.
"What does God need with a crypto-currency?"
posted by Tell Me No Lies at 5:41 PM on June 16, 2014 [1 favorite]
"What does God need with a crypto-currency?"
posted by Tell Me No Lies at 5:41 PM on June 16, 2014 [1 favorite]
I didn't mention libertarians at all in the post because while they are knee deep in Bitcoin, it's clear the "currency" has moved beyond them. And this story really has nothing to do with any of that side of Bitcoin. It's funny reading old posts about the 51% attack because many people saw it as so unlikely or nonsensical.
Anyway, if we can't agree that Libertarians are the worst, what can we agree on?
posted by chunking express at 7:35 PM on June 16, 2014 [3 favorites]
Anyway, if we can't agree that Libertarians are the worst, what can we agree on?
posted by chunking express at 7:35 PM on June 16, 2014 [3 favorites]
ghash.io is doing an ama on /r/bitcoin, kind of. Haven't read it yet.
Or rather, not an AMA, just another ambiguous statement, it seems.
posted by empath at 9:58 PM on June 16, 2014
Or rather, not an AMA, just another ambiguous statement, it seems.
posted by empath at 9:58 PM on June 16, 2014
That is some awesome corporate language in that statement. Are people sure they're not owned by some massive corporation behind the scenes?
posted by lesbiassparrow at 11:40 PM on June 16, 2014
posted by lesbiassparrow at 11:40 PM on June 16, 2014
Wow that Reddit post is like a little capsule of how not to do PR on Reddit. Make one mealy-mouthed statement promising "a conversation" and then don't answer questions, allowing the Redditor masses to criticize you unchallenged. I don't think there's any massive corporation at all; I think it's just a few folks who have no idea what they're doing.
There is an interesting link in the discussion though, CEX.io's explanation of their previous attack on Bitcoin integrity. tl;dr: they blame a rogue employee from right before the November handover to the new corporate structure. That Reddit account has been modestly active for awhile.
There's also a link to Jeffrey Smith's Twitter account, their CIO. And from there to a Medium post. The Twitter account dates to 2009 but the first tweet online now is from March 2014. I'm curious if this is a real person or if the photo is from Stockphotopia. His LinkedIn page looks legit enough, with an employment history that could be independently verified.
posted by Nelson at 7:14 AM on June 17, 2014
There is an interesting link in the discussion though, CEX.io's explanation of their previous attack on Bitcoin integrity. tl;dr: they blame a rogue employee from right before the November handover to the new corporate structure. That Reddit account has been modestly active for awhile.
There's also a link to Jeffrey Smith's Twitter account, their CIO. And from there to a Medium post. The Twitter account dates to 2009 but the first tweet online now is from March 2014. I'm curious if this is a real person or if the photo is from Stockphotopia. His LinkedIn page looks legit enough, with an employment history that could be independently verified.
posted by Nelson at 7:14 AM on June 17, 2014
Building enough to seriously compromise the network without anyone noticing a gigantic ASIC factory would be difficult.
I suspect you're hugely over-estimating the volume of bitcoin ASICs compared to overall silicon production.
There's a number of "gigantic ASIC factories" out there that'll do contract wafer fab for anyone that provides them with a design and some money: foundry model. Wafer test, packaging, package test can all be contracted-out. Contract board assembly is an entire industry in itself.
It's not trivial and it's not cheap -- getting to tapeout is a fairly big financial hurdle for silicon startups. But with the NSA's resources: producing their own custom silicon at reasonably high volume would be entirely doable.
Although it seems tinfoil-hatty that the NSA would design custom bitcoin ASICs. But a general-purpose SHA-256 ASIC can be repurposed for bitcoin hashing -- which is after all basically just two rounds of SHA-256 and a test -- although not with as much efficiency as hardware specifically designed for bitcoin.
(My employer's a silicon startup with contracted-out production. Our chip does have a HW SHA256 accelerator. A while ago I did a bit of back-of-the-envelope work and figured that it could probably run bitcoin hashing with about 70% utilization of the SHA256 unit at a similar hash rate to a mid/low-end GPU. Would've been great a few years ago; utterly pointless now.)
posted by We had a deal, Kyle at 10:03 AM on June 21, 2014
I suspect you're hugely over-estimating the volume of bitcoin ASICs compared to overall silicon production.
There's a number of "gigantic ASIC factories" out there that'll do contract wafer fab for anyone that provides them with a design and some money: foundry model. Wafer test, packaging, package test can all be contracted-out. Contract board assembly is an entire industry in itself.
It's not trivial and it's not cheap -- getting to tapeout is a fairly big financial hurdle for silicon startups. But with the NSA's resources: producing their own custom silicon at reasonably high volume would be entirely doable.
Although it seems tinfoil-hatty that the NSA would design custom bitcoin ASICs. But a general-purpose SHA-256 ASIC can be repurposed for bitcoin hashing -- which is after all basically just two rounds of SHA-256 and a test -- although not with as much efficiency as hardware specifically designed for bitcoin.
(My employer's a silicon startup with contracted-out production. Our chip does have a HW SHA256 accelerator. A while ago I did a bit of back-of-the-envelope work and figured that it could probably run bitcoin hashing with about 70% utilization of the SHA256 unit at a similar hash rate to a mid/low-end GPU. Would've been great a few years ago; utterly pointless now.)
posted by We had a deal, Kyle at 10:03 AM on June 21, 2014
Just another nail in bitcoin's coffin folks. Another serious issue is their inability to adopt necessary protocol upgrades. It's okay though because dogecoin actually provides what bitcoin should've provided, a real economy.
All these transaction fees charged by banks for credit cards, ETFs, etc. are fundamentally immoral rents charged by monopolies. Bitcoin, dogecoin, etc. exist to break that monopoly. If they succeed, then I'd hope another electronic transaction system, ideally based on blind signing and backed by a nation, will arise to undercut bitcoin, dogecoin, etc., by charging no transaction fees. At that point, bitcoin, etc. all die.
In short, bitcoin is inherently a temporary tool useful for breaking existing monopolies, but not a long term thing.
posted by jeffburdges at 4:11 AM on July 2, 2014
All these transaction fees charged by banks for credit cards, ETFs, etc. are fundamentally immoral rents charged by monopolies. Bitcoin, dogecoin, etc. exist to break that monopoly. If they succeed, then I'd hope another electronic transaction system, ideally based on blind signing and backed by a nation, will arise to undercut bitcoin, dogecoin, etc., by charging no transaction fees. At that point, bitcoin, etc. all die.
In short, bitcoin is inherently a temporary tool useful for breaking existing monopolies, but not a long term thing.
posted by jeffburdges at 4:11 AM on July 2, 2014
Dogecoin was funny when it was only a joke. The idea that it has an economy and bitcoin doesn't, when places like newegg and overstock do millions of dollars of business with it is silly. Not to mention that the government just dropped 30,000 bitcoins on the market and the price went up.
Anyway, I'm up 25% or so since I started buying them a few months ago. That's better than my 401k, by a long way.
posted by empath at 9:12 AM on July 2, 2014 [1 favorite]
Anyway, I'm up 25% or so since I started buying them a few months ago. That's better than my 401k, by a long way.
posted by empath at 9:12 AM on July 2, 2014 [1 favorite]
empath: "Anyway, I'm up 25% or so since I started buying them a few months ago. That's better than my 401k, by a long way."
Is that really a feature you want in something that purports to be a currency? You've framed it as asset appreciation, but there's other lenses.
Currency Deflation. Every good in the economy costs 25 percent fewer bitcoins. If you took out a loan denominated in bitcoin, it became 25 percent harder to pay back. If there's a pervasive expectation of deflation (which there likely should be), then collectively, we will refrain from trading bitcoins for physical goods.
VolatileIt may be up 25 percent right now but will that hold? Over longer horizons, bitcoin prices have fluxuated more wildly than the present value of the 500 largest NASDAQ/NYSE companies and their discounted future income (which is up 25 percent in the past year). If you run a business that makes monthly orders for some input goods denominated in bitcoin, its very hard to predict whether you'll make a profit in the future. Much harder than say Chinese Renmenbi.
posted by pwnguin at 7:33 PM on July 2, 2014
Is that really a feature you want in something that purports to be a currency? You've framed it as asset appreciation, but there's other lenses.
Currency Deflation. Every good in the economy costs 25 percent fewer bitcoins. If you took out a loan denominated in bitcoin, it became 25 percent harder to pay back. If there's a pervasive expectation of deflation (which there likely should be), then collectively, we will refrain from trading bitcoins for physical goods.
VolatileIt may be up 25 percent right now but will that hold? Over longer horizons, bitcoin prices have fluxuated more wildly than the present value of the 500 largest NASDAQ/NYSE companies and their discounted future income (which is up 25 percent in the past year). If you run a business that makes monthly orders for some input goods denominated in bitcoin, its very hard to predict whether you'll make a profit in the future. Much harder than say Chinese Renmenbi.
posted by pwnguin at 7:33 PM on July 2, 2014
I don't think prices will ever be denominated in bitcoins. Why should they be? It only needs to remain stable in price on the order of hours or days to be useful. Same deal with loans in bitcoins (though people do it on bitfinex)
posted by empath at 7:35 PM on July 2, 2014
posted by empath at 7:35 PM on July 2, 2014
Umm, if you're doing a currency conversion then you're aggregate transaction fees must exceed whatever costs you incur in currency conversion. You cannot outperform the credit card processors that way. Dogecoin provides an actual economy that undercuts the bank's transaction fees because they don't need to convert it afterwards.
posted by jeffburdges at 10:12 PM on July 2, 2014
posted by jeffburdges at 10:12 PM on July 2, 2014
Dogecoin provides an actual economy that undercuts the bank's transaction fees because they don't need to convert it afterwards.
Of course they need to convert. Who is taking dogecoins for actual goods and services and not converting it?
posted by empath at 11:03 PM on July 2, 2014
Of course they need to convert. Who is taking dogecoins for actual goods and services and not converting it?
posted by empath at 11:03 PM on July 2, 2014
Also: If you choose to exchange bitcoin you receive into your local currency, then this is where transaction fees come into effect. We charge 1% to convert bitcoin into your local currency (or less based on volume). This fee is waived on your first $1,000,000 USD in merchant processing.
posted by empath at 11:05 PM on July 2, 2014
posted by empath at 11:05 PM on July 2, 2014
Of course they need to convert. Who is taking dogecoins for actual goods and services and not converting it?
I have performed services for DOGE and spent it as DOGE. My own goods and services are still being tweaked, not yet on offer, but I've paid people DOGE they've spent as DOGE.
posted by save alive nothing that breatheth at 12:03 AM on July 3, 2014
I have performed services for DOGE and spent it as DOGE. My own goods and services are still being tweaked, not yet on offer, but I've paid people DOGE they've spent as DOGE.
posted by save alive nothing that breatheth at 12:03 AM on July 3, 2014
You don't need to convert it if it just signifies lulz, agreement, recognition, etc. I'm happy however that bitcoin conversion fees have dropped so much, that's very cool.
posted by jeffburdges at 2:08 AM on July 3, 2014
posted by jeffburdges at 2:08 AM on July 3, 2014
What do you think is the total dollar value of services rendered or physical goods sold in dogecoins vs bitcoins?
posted by empath at 4:16 AM on July 3, 2014
posted by empath at 4:16 AM on July 3, 2014
I mean in terms of market cap, dogecoin is number *7* at 18 million. Bitcoin is 8 Billion.
posted by empath at 4:18 AM on July 3, 2014
posted by empath at 4:18 AM on July 3, 2014
We should not care about market cap for a "tulips style" commodity, except that.. We cannot really afford for bitcoin to become a major currency, due to the wealth inequality.
It's actually the number of transactions that counts, not the market capitalization. And dogecoin has obliterated all other crypto currencies combined in total transactions. Also, dogecoin's transactions are mostly legitimate, while a huge fragment of bitcoin transactions are mixing networks hiding rich people or drug deals. In fact, the dogecoin transaction volume is a respectable fragment of the total market, while bitcoins are almost exclusively hoarded.
Dogecoin has an actual economy. It's mostly not trading anything too important, but it's still provides more solid socially constructed value than bitcoin posses.
posted by jeffburdges at 4:58 AM on July 3, 2014
It's actually the number of transactions that counts, not the market capitalization. And dogecoin has obliterated all other crypto currencies combined in total transactions. Also, dogecoin's transactions are mostly legitimate, while a huge fragment of bitcoin transactions are mixing networks hiding rich people or drug deals. In fact, the dogecoin transaction volume is a respectable fragment of the total market, while bitcoins are almost exclusively hoarded.
Dogecoin has an actual economy. It's mostly not trading anything too important, but it's still provides more solid socially constructed value than bitcoin posses.
posted by jeffburdges at 4:58 AM on July 3, 2014
It's actually the number of transactions that counts, not the market capitalization
Says who? People pushing around fractions of a penny to each other for the lulz is meaningless.
posted by empath at 6:48 AM on July 3, 2014 [1 favorite]
Says who? People pushing around fractions of a penny to each other for the lulz is meaningless.
posted by empath at 6:48 AM on July 3, 2014 [1 favorite]
Plus there are a lot of transactions that are just internal to coinbase or the various markets that don't get recorded in the ledger.
posted by empath at 6:49 AM on July 3, 2014
posted by empath at 6:49 AM on July 3, 2014
Says who? People pushing around fractions of a penny to each other for the lulz is meaningless.
posted by empath at 9:48 AM on July 3 [1 favorite −]
posted by save alive nothing that breatheth at 12:11 PM on July 4, 2014
posted by empath at 9:48 AM on July 3 [1 favorite −]
posted by save alive nothing that breatheth at 12:11 PM on July 4, 2014
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posted by Tell Me No Lies at 10:33 AM on June 14, 2014 [1 favorite]