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qntmfred
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I've heard a little chatter about this over the last couple weeks. I don't know much about currency theory, so I present it to TSB for your thoughts.

http://www.bitcoin.org/

5/5/2011 12:50:23 PM

EuroTitToss
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move to tech talk

this shit is mind boggling

5/5/2011 2:28:23 PM

mrfrog

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Quote :
"move to tech talk"


...I think you fail to understand what goes on in tech talk

5/5/2011 3:59:55 PM

ghotiblue
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I've been looking into this a lot lately. I'm really excited about the potential of a truly decentralized currency. I think it's a brilliant idea and hope to see it really catch on. I think it will take a while though, I'd imagine most people right now don't understand enough about how money works to trust a currency not backed by any government. Of course, that's exactly its biggest strength IMO, since it is impossible to manipulate for the benefit of those in control like fiat currency is.

5/5/2011 4:17:05 PM

d357r0y3r
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What would this digital currency be backed by? What keeps it from being duplicated? There's something to be said for real, physical material that can't just be brought into existence.

5/5/2011 4:21:59 PM

mrfrog

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I just watched one of the most terrible videos ever explaining how this works

http://www.youtube.com/watch?v=FTOhti7wxXk&feature=related

Too complicated? I think so. If I get interested in monetary philosophy I might read some and write about it. But currently it occurs to me as useless to complete transactions with.

The idea seems to be centered around the idea that it creates public and private keys, which defines their "money". I guess each time a transaction occurs a new private key (at minimum) has to be created. But they're throwing around nonsense like the idea that private keys for newly issued money has to be created from scratch, which takes a quantifiable number of CPU cycles so they can be assured a certain rate of discovery. And then somehow this makes incentives for hosting transactions in their distributed network.

It would seem that this is validly newly issued money. If that is truly the case, then people would start speculating with it right now. I'm confused about this to be sure, but I also think it will fail. You can't issue new currency. You just can't do it. Governments categorically do not allow it, and I don't think this has a direct backing. Bad idea all around.

5/5/2011 4:24:31 PM

ghotiblue
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Quote :
"The idea seems to be centered around the idea that it creates public and private keys, which defines their "money". I guess each time a transaction occurs a new private key (at minimum) has to be created. But they're throwing around nonsense like the idea that private keys for newly issued money has to be created from scratch, which takes a quantifiable number of CPU cycles so they can be assured a certain rate of discovery. And then somehow this makes incentives for hosting transactions in their distributed network."


It's actually not nonsense, it's brilliant. New coins are generated by "miners", who use their own computers to generate hash codes in an attempt to discover the next batch of 50 coins. As more coins are discovered, the difficulty to solve these hashes is increased, so that the rate of generating new coins is controlled, until the maximum of 21 million coins is created sometime around 2040.

https://en.bitcoin.it/wiki/FAQ#How_are_new_Bitcoins_created?

Each coin is encrypted and whenever it is traded to another person, a record is entered into a publicly shared database that records each transaction to ensure coins cannot be double-spent.

Quote :
"It would seem that this is validly newly issued money. If that is truly the case, then people would start speculating with it right now."

People are in fact mining and speculating right now. The exchange rate for Bitcoins has grown considerably since the beginning of the year as more people have become aware of the technology. https://mtgox.com/trade/history

Quote :
"I'm confused about this to be sure, but I also think it will fail. You can't issue new currency. You just can't do it. Governments categorically do not allow it, and I don't think this has a direct backing. Bad idea all around."

Because this is decentralized, it would be tough for the government to shut it down. It operates in the same way that bittorrent does, being shared across users' computers. There is no third-party intermediary. The biggest threat would be the government making it illegal for businesses to accept the currency, which is a possibility. One of the lead developers is actually going to be giving a presentation to the CIA in June about the technology, so that meeting may end up revealing something about what the government intends to do.


Here is a good overview of how it works by TIME's tech section:
http://techland.time.com/2011/04/16/online-cash-bitcoin-could-challenge-governments/

[Edited on May 5, 2011 at 4:51 PM. Reason : govt stuff]

5/5/2011 4:45:48 PM

AndyMac
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Quote :
"I've been looking into this a lot lately. I'm really excited about the potential of a truly decentralized currency. I think it's a brilliant idea and hope to see it really catch on. I think it will take a while though, I'd imagine most people right now don't understand enough about how money works to trust a currency not backed by any government. Of course, that's exactly its biggest strength IMO, since it is impossible to manipulate for the benefit of those in control like fiat currency is."


Why is it impossible to manipulate?

While it's bad that a government can manipulate its own currency, it can also insure that not just anyone can manipulate or monopolize it.

5/5/2011 7:18:46 PM

ghotiblue
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Quote :
"Why is it impossible to manipulate?

While it's bad that a government can manipulate its own currency, it can also insure that not just anyone can manipulate or monopolize it."


It's impossible to manipulate because the creation of new coins occurs at a preset rate, and nobody can change that. The code is open-source and shared across all users, and if anyone attempts to manipulate the code their coins will be seen as invalid by all clean clients. The coins cannot be created infinitely as fiat currency can be.

5/5/2011 10:02:40 PM

mrfrog

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Quote :
"Because this is decentralized, it would be tough for the government to shut it down. It operates in the same way that bittorrent does, being shared across users' computers."


AHAHAHAHA!

Look, I get at least a lot of the arguments. I don't doubt the technical details about how you can in theory have such a decentralized authority for a monetary system. I understand that you can have a hash code that will allow one to keep a string that is verified in a split second but would take a million years to crack. I know.

But you, as a citizen, can be prevented from using a different currency for a transaction. Does the system have a way to prevent your ISP or network administrator from knowing that you used the program? Can your transaction partner be prevented from knowing your identity? Do they have a plan for how to list bitcoin transactions in IRS tax returns?

Technicalities, yeah, I haven't looked into the details but I know you can do it. But you won't. We're not talking about play money here. We're talking about something that will trade with the other currencies. It will not go beyond a certain scale. It is impossible that you will ever see Amazon or any other major online retailer use it. You can buy alpaca socks with it right now, but you will not be able to use it as 'real money'. If you think otherwise, then you just don't understand your place in the world.

5/5/2011 10:08:33 PM

nastoute
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that's a hell of a commercial, I'll give you that...

5/5/2011 10:41:00 PM

timbo
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Someone reads forbes magazine...

5/5/2011 10:48:36 PM

disco_stu
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Wake me up when either my employer is paying me in bitcoin or I need to buy something that can only be purchased on bitcoin.

Otherwise it's currently the equivalent of converting my dollars to yen.

5/6/2011 8:57:08 AM

lazarus
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Quote :
"A Revolutionary Concept

Bitcoin is potentially revolutionary for several reasons. For one thing, artificial currency inflation is impossible. In most countries, a central bank controls the money supply, and sometimes (such as during the recent economic crisis) it may decide to inject more money into an economy. A central bank does this essentially by printing more money. More cash in the system, however, means that the cash you already hold will be worth less. By contrast, because Bitcoin has no central authority, no one can decide to increase the money supply. The rate of new bitcoins introduced to the system is based on a public algorithm and therefore perfectly predictable."


Sounds a lot like any currency that is pegged to, say, gold, which cannot be created out of thin air by the government and also (I assume) enters into the economy at a predictable rate. Revolutionary you say?

[Edited on May 6, 2011 at 9:19 AM. Reason : ]

5/6/2011 9:17:35 AM

nastoute
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The biggest drawback on something like this is competition.

You can easily say, fuck Bitcoin, I'm making my own currency.

Very very hard to do that with nation backed fiat currency.

5/6/2011 1:32:49 PM

ghotiblue
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Quote :
"Sounds a lot like any currency that is pegged to, say, gold, which cannot be created out of thin air by the government and also (I assume) enters into the economy at a predictable rate. Revolutionary you say?"

It is a lot like a commodity-backed hard currency. The principle may not be new, but the digital implementation certainly is very innovative.

Quote :
"The biggest drawback on something like this is competition.

You can easily say, fuck Bitcoin, I'm making my own currency.

Very very hard to do that with nation backed fiat currency."

Why is potential competition considered a drawback? I think it would be very beneficial if we were able to use competing currencies and not forced to trade in US dollars that are constantly being devalued. Money is simply a medium of exchange. People have always been able to create their own currency out of whatever they want. Rocks, seashells, paper. As long as other people recognize the value of it. I don't see what the problem is.

[Edited on May 6, 2011 at 2:02 PM. Reason : .]

5/6/2011 2:01:36 PM

nastoute
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Quote :
"I don't see what the problem is.
"


Quote :
"As long as other people recognize the value of it.
"


...

The thing about any kind of money is that we all kind of pretend it has value.

How can we pretend though when the curtain is drawn back like every fucking second?

This is a game in lets pretend something we ABSOLUTELY KNOW is valueless has value.

I think it's interesting but will be shot down for any number of reasons including it's rationality.

[Edited on May 6, 2011 at 3:41 PM. Reason : .]

5/6/2011 3:37:10 PM

moron
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Quote :
"It's impossible to manipulate because the creation of new coins occurs at a preset rate, and nobody can change that. The code is open-source and shared across all users, and if anyone attempts to manipulate the code their coins will be seen as invalid by all clean clients. The coins cannot be created infinitely as fiat currency can be."


If we lived in a vacuum this would be true.

But it could be manipulated. If I was a wealthy, powerful asshole, I could start selling iPods for 1 bitcoin a piece substantially increasing the value of bitcoins creating an artificial bubble, the other people who were buying something on term with bitcoins would be screwed when the bubble popped (the supply of iPads diminished).

That being said, the fact that the coins are generated at a fixed rate does fix some of the problems you'd have with a gold-backed system.

There are other risks too though like if someone broke the internet, broke the server architecture, hacked the coins database, or a myriad of other technical issues, it would be very problematic. The question of if these problems are worth it would be very relevant. Not to mention that if someone had access to a super-computing cluster, they could generate the coins for themselves and horde them for their own benefit it seems.

5/6/2011 5:56:28 PM

d357r0y3r
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How many things that were supposedly "unhackable" ended up getting hacked?

5/6/2011 6:51:09 PM

spöokyjon

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All of them?

5/6/2011 7:33:14 PM

nastoute
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All of them^2?

5/6/2011 9:24:03 PM

Charybdisjim
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Doesn't this make dangerous assumptions about innovations in solution methodology? While sudden and unexpected leaps in hardware capabilities are less likely, a significant innovation in solution methodology would completely destroy the currency wouldn't it? That's also not to say that (by 2040 at least) the computational mathematics potential of quantum computers may provide hard to predict improvements in the methods available if not a jump in raw computational power. That is new types of computers such as quantum computers (and DNA computers and others) will not necessarily be faster but can be applied to computational mathematics problems in wholly different ways than current technologies.

Combined with clever innovation in software, the use of GPU, QPU, and potentially DNAPU co-processing could render their predictions and their currency meaningless - particularly on the stupidly long time-frame they've given.

[Edited on May 6, 2011 at 9:47 PM. Reason : ]

5/6/2011 9:43:06 PM

nastoute
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what I find funny, and it's true about the study of monetary policy and economics in general, is that the discussion is about the MOST IMPORTANT THING IN THE ENTIRE WORLD to a vast majority of people (if not everyone) and the people discussing it treat it like it's a game

money is not some game, people easily kill each other for money, people will fuck you and fuck you over for money

perspective on this is all over the fucking map

5/6/2011 9:46:37 PM

qntmfred
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I'm just in it for the flashy YouTube videos, personally

5/6/2011 10:12:28 PM

nastoute
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the linked commercial was pretty spiffy

5/6/2011 10:17:44 PM

spöokyjon

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Is the value of 50 bitcoins proportional to the computing power required to "mine" them? I don't know how much it costs to run my laptop (I know that's not exactly the optimal way to do computation intensive tasks efficiently), but I can't imagine the value of the 50 bitcoins I would get for finding a valid block would approach the cost of the power being consumed. Also, it damn near burned my dick off.

5/6/2011 11:35:31 PM

lewisje
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Quote :
"hacked the coins database"
bitcoins are not stored centrally

5/7/2011 9:08:12 AM

mrfrog

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right, there is a public database that has the codes generated by a checksum or whatever, but the original values required to get that output represented by the public codes are very difficult to get.

Granted, you could propose a hacking several ways
- pushing a new altered state of the public codes by presenting codes that conflicted with the cloud. If you created your own cloud that appeared to "out vote" the real cloud, then maybe that could work... in theory i mean
- just cracking the codes super efficiently. The bitcoin seems to think that mining will go on using their open source software, but ppl could make their own software. How effective are some crackers vs. others? It seems the system is based on the idea that required CPU cycles are immutable and a good grad student could just invent an algorithm that cracked them all 1000x as fast

But I'm more curious about other questions. How well could you break down a coin into smaller denominations, and how would this affect the scaling of the peer checking of public data? More than anything, why are "miners" entitled to free money? I mean, you can bicker about the technical details that don't matter much, but how about the glaring social problem with the system in the first place? This junk isn't charity.

5/7/2011 8:49:53 PM

spöokyjon

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Bitcoin miners are entitled to "free" money in the same way that gold miners are entitled to "free" gold.

5/7/2011 11:26:42 PM

lewisje
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I just downloaded the client and went to the faucet: http://freebitcoins.appspot.com/

5/8/2011 7:38:38 PM

qntmfred
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be sure to transfer 10 bitcoins to me as a finder's fee

5/8/2011 9:15:07 PM

lewisje
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The client doesn't even show my 0.02 that I got from the faucet

5/8/2011 10:37:29 PM

qntmfred
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well when the client shows 10 coins, you know where to find me

5/8/2011 10:48:55 PM

mrfrog

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Quote :
"Bitcoin miners are entitled to "free" money in the same way that gold miners are entitled to "free" gold."


...not the same at all. Someone, at some point, created the codes that the miners look for the originating key for. It doesn't offer any kind of productive work, and at some point the creation of bitcoin codes has to decided by committee, which is creation of currency, which is illegal in pretty much any nation-state that issues currency.

5/8/2011 11:38:58 PM

bobster
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5/9/2011 12:54:37 AM

GeniuSxBoY
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Quote :
"Not to mention that if someone had access to a super-computing cluster, they could generate the coins for themselves and horde them for their own benefit it seems."




oh.. you mean like... the people that designed the code? lol


This shit is going to fail. I can think of 1000 ways it can be hacked. If I can think of it, then someone in the fog of war can pull it off.

5/9/2011 3:19:23 AM

dakota_man
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OK, how can it be hacked? You don't even have to name all 1000.

5/11/2011 4:15:04 PM

Kris
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I cant see how they would regulate the rate at which the hashes are discovered. That would seem to be a serious problem as it reduces it to essentially an energy based currency.

5/11/2011 5:31:07 PM

dakota_man
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http://en.wikipedia.org/wiki/Bitcoin#Generating_bitcoins

Quote :
"each node separately readjusts the difficulty of the problem it tries to solve every two weeks according to any changes of the collective CPU-power of the peer-to-peer network.[citation needed]"


It would seem the nodes make the hashes harder to solve as needed.

5/12/2011 10:39:57 AM

Skack
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What's the exchange rate of Bitcoins to Schrute Bucks? I'm worried about them devaluing with Michael gone.

5/12/2011 12:04:05 PM

cain
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whats to stop so schomoe with access to a non-production data center class vm environment from just running the hell out it for 2 weeks before the difficult is jacked up. Or access to one thats under utilize that can hammer on the cpus/memory for a few days. something with say 16 7500 series processes and a terabyte of ram (or 3-6x that)

5/13/2011 6:24:21 PM

aaronburro
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Quote :
"It doesn't offer any kind of productive work, and at some point the creation of bitcoin codes has to decided by committee, which is creation of currency, which is illegal in pretty much any nation-state that issues currency."

creating a currency is not illegal, at least not in the US.

^ nothing, really. except for his coworkers and boss

[Edited on May 13, 2011 at 6:45 PM. Reason : ]

5/13/2011 6:44:25 PM

bobster
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^exactly

I could print up a bunch of aaronburrobucks and I could spend them anywhere that was willing to accept aaronburrobucks in exchange for their goods.

5/13/2011 8:48:36 PM

GeniuSxBoY
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http://www.virtapay.com/r/geniusxboy


Quote :
"Why you should join today...

You start with $25 in your VirtaPay account and it's free.
VirtaPay will add up to $20 per day to your account for participating as we prepare to launch our new service.
You get $10 per person you refer to VirtaPay.
You'll be an EarlyBird user—before VirtaPay opens to the public.
You'll help shape the development of the best virtual currency and payment system ever designed for the Internet.
You could have hundreds or thousands of dollars in your account by the time we launch, without ever making a deposit!
"



Another virtual currency site.

I'm not saying I'd never use virtual money, I'm just going to wait until there is an advantage to use it over traditional money.

[Edited on May 15, 2011 at 1:54 PM. Reason : .]

5/15/2011 1:44:45 PM

dakota_man
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That seems much much different.

5/16/2011 8:07:59 PM

AntecK7
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I don't see this working because major vendors wont accept them for products and services. While you can buy anything on the internet, the company supplying you with the product will have a hard problem turning around and using the bitcons for more supplies.

So I sell Ipods for bitcons-then dollars, then buy more Ipods, that extra translation means im now speculating in a currency market in addition to taking the original risk of selling Ipods.

Also if a major computational player actually wants to jump in on the game (for example amazon turns their HP to it), it could quickly flood the market with a surge.

You might as well as be using WOW currency. It has the same type of system, its generated in limited amounts.

Even if it does succeed, banks will eventually have to get involved, because you will want to finance something. Like a house or a car. Which means that you'll need more bitcons or dollars or gold than you currently have. Which means you need a loan.

[Edited on May 17, 2011 at 1:34 PM. Reason : dd]

5/17/2011 1:23:06 PM

GeniuSxBoY
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Quote :
"May 19, 2011 Bonus from VirtaPay EarlyBird user bonus details $40.00 $77.47
May 16, 2011 Bonus from VirtaPay EarlyBird user bonus details $12.47 $37.47
May 15, 2011 Bonus from VirtaPay Sign-up Bonus details $25.00 $25.00"



Since I signed up they've been adding dollars to my account like crazy. I'm interested to see where this goes

[Edited on May 18, 2011 at 8:41 PM. Reason : however I think it's going to end up gay ]

5/18/2011 8:21:05 PM

PinkandBlack
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I like playing around with Bitcoin. There's no way I'd ever use it exclusively (Dwolla is becoming a favorite way to pay sites that accept it), but it's fun. I look at it the same way I look at other currency trading programs like Forex.

5/24/2011 4:26:04 PM

lewisje
All American
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Do it for the lulz: 176LRX4WRWD5LWDMbhr94ptb2MW9varCZP

6/2/2011 9:47:20 PM

face
All American
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Wow this bitcoin is up 200,000% in the last year. We just missed the investment opportunity of a lifetime holy shit

6/3/2011 12:57:33 PM

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