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Online Cash Bitcoin could Challenge Governments, Banks

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Re: Online Cash Bitcoin could Challenge Governments, Banks

#61

Earlier quoted context omitted.

What complexity? The client pretty much only has one button, "send BitCoins".

How do I transfer my coins from one computer to another? I found digging through my application data to find the wallet.dat file is unintuitive.. along those same lines, how many less technical users have lost extremely important data because they never made a backup? Additionally what if I want one wallet so I can go to a physical store, and use my phone to pay? The shuffle seems very inefficient to me. Perhaps peop…

> How do I transfer my coins from one computer to another?

You just send the coins to your other computer.

> how many less technical users have lost extremely important data because they never made a backup?

How many people have lost their wallets?

> I want to buy a game I have to somehow...

That's just because that form is the equivalent of "PayPal us some money then tell us about it".

Re: Online Cash Bitcoin could Challenge Governments, Banks

#62
> Because Bitcoin is an open-source project, and because the database exists only in the distributed peer-to-peer network created by its users, there is no Bitcoin company to raid, subpoena or shut down.

Which will leave only Bitcoin users to raid, subpoena and shut down.

Re: Online Cash Bitcoin could Challenge Governments, Banks

#63

Why is Bitcoin a good currency again? If I understand how it is distributed correctly, those with higher/more computational power receive more of the finite bitcoins. How does that not favor the already rich?

>Why is Bitcoin a good currency again?

It isn't, but almost anything can work if the community of users is small enough. As for why it isn't, we need to step back a bit.

In a barter economy an exchange occurs when two individuals each produce something which takes time/labor/capital and which the other person values more than what they're giving up. For example, if I grow an apple, and you grow an orange, and we trade, it is clear[1] that I value the orange more than the apple, and you value the apple more than the orange (otherwise we wouldn't have made the exchange). The value of those items is individually subjective[2], and the supply of those items is constrained by market forces (e.g., alternate uses of time, labor, and capital).

A money economy emerges from a barter economy when individuals accept in exchange something they do not want for itself, but with the anticipation that they can use it for some future exchange. It is critical that the commodity in question be desirable eventually. If no one ever wants it, then it wouldn't emerge as money. (Important Aside: once a commodity begins to function as money, part of the demand for the commodity will be as money, thus there is positive feedback loop, but some non-money demand needs to exist to get the process running. This is why all functioning fiat currencies have their roots in a commodity money.)

It's important to notice that commodity money has some inherent constraint on its creation (i.e., its supply curve is bounded by market forces), and that it satisfies the wants of others (i.e., there exists some demand curve). For example, the gold supply is constrained by the cost of mining/processing new gold, and the demand affected by its consumption into produced goods and demand to hold "cash balances" of gold.

So far as I can tell, bitcoin is a scheme whose total supply is constrained only by an exogenous, artificial limit of 21M coins, and not by the demand for alternative uses of its factors of production[3]. There can be, at most, a marginal value[4] equal to the marginal cost of producing a coin, which appears to be nothing but otherwise-idle computer time and some electricity.

But far more importantly, this is a scheme whereby artificial scarcity is created (e.g., it takes n hours to produce a coin) but no thing of value is produced. This would be akin to inventing a system of money involving sticks whittled into perfect cylinders. Sure it might take a long time to create one, and it might consume resources, but if the end result doesn't have any value to anyone, it isn't money, it's just waste.

"The curious task of economics is to demonstrate to men how little they really know about what they imagine they can design."

[1] http://en.wikipedia.org/wiki/Revealed_preference

[2] http://en.wikipedia.org/wiki/Subjective_theory_of_value

[3] http://en.wikipedia.org/wiki/Factors_of_production

[4] http://en.wikipedia.org/wiki/Marginalism

Re: Online Cash Bitcoin could Challenge Governments, Banks

#65
post #16

Bitcoin is really cool. I just wish I knew what to sell to get some. My dabbling with mining bitcoins has convinced me it requires a on-all-the-time setup to mine with any prayer of success. Last time I looked, there didn't seem to be a real economy, just people trading bitcoins. ~.~

Don't bother trying to get lucky on the 50BTC block bounty; join a pool that splits the winnings. Pools provide well over half the calculation capacity of the Bitcoin system, most are free to join and ones worth joining don't have any real requirements. I make about 1 BTC per day just with spare GPU cycles on my desktop; it's not a substantial amount by any means, just a test pool for experiments and playing with sof…

AFAICS, the benefit to being in a mining pool is you can make some bitcoins immediately, rather than waiting for a big, rare payout. There's no increased probability of winning due to pooling resources is there?

Re: Online Cash Bitcoin could Challenge Governments, Banks

#66
post #3

This is what happens when you challenge governments and banks: http://news.ycombinator.com/item?id=2451302

There are lots of examples of governments or large organisations taking down networks with single points of failure, but far fewer examples of taking down highly distributed networks like Bitcoin. I don't think this fight is a foregone conclusion. I think it would be difficult to write a law that would make Bitcoin illegal, without making things like MMO currencies or SSL certificates illegal.

there is ONLY one money-printing machine in USA, it is a privately owned entity called "Federal Reserve", dont get fooled by "Federal" in the name (Federal Express is private company).

everyone else coming up with more or less sophisticated machine to print money, or exchange money, or any form of transaction that Federal Government is unable to track/monitor/accept or deny WILL get hurt very badly. It is just a matter how popular your machine is and how much traction it is getting. But rest assured, once you turn it on, you have your own chart in the FBI system.

Re: Online Cash Bitcoin could Challenge Governments, Banks

#67

Earlier quoted context omitted.

There are lots of examples of governments or large organisations taking down networks with single points of failure, but far fewer examples of taking down highly distributed networks like Bitcoin. I don't think this fight is a foregone conclusion. I think it would be difficult to write a law that would make Bitcoin illegal, without making things like MMO currencies or SSL certificates illegal.

there is ONLY one money-printing machine in USA, it is a privately owned entity called "Federal Reserve", dont get fooled by "Federal" in the name (Federal Express is private company). everyone else coming up with more or less sophisticated machine to print money, or exchange money, or any form of transaction that Federal Government is unable to track/monitor/accept or deny WILL get hurt very badly. It is just a matt…

It is not useful to argue that the Fed is private, nor is it useful to argue that it is public. It is both and neither depending on which stance will serve its interests at the time.

Re: Online Cash Bitcoin could Challenge Governments, Banks

#68

Why is Bitcoin a good currency again? If I understand how it is distributed correctly, those with higher/more computational power receive more of the finite bitcoins. How does that not favor the already rich?

>Why is Bitcoin a good currency again? It isn't, but almost anything can work if the community of users is small enough. As for why it isn't, we need to step back a bit. In a barter economy an exchange occurs when two individuals each produce something which takes time/labor/capital and which the other person values more than what they're giving up. For example, if I grow an apple, and you grow an orange, and we trad…

Is a $20 bill something of value? No, it's merely somewhat hard to forge, and accepted as currency by lots of people.

Or how about an entry in a ledger on some bank's computer?

The only reasons the $20 bill or the entry in the computer retain value are because there's a central entity that limits the creation of too many of them, and people accept it as currency in exchange for good, because they expect that other people in the future will accept it in exchange for goods.

Well, Bitcoin just gets rid of that central entity. It makes it hard to produce new units (and impossible after 21M have been produced). And it relies on the fact that people are willing to trade it for goods, services, and other currencies to give it value.

Look, if I have 100 bitcoins right now, I could get $100 for it, or I could buy web hosting services, or I can buy specialty coffees, or a variety of other things. That seems like real value to me. Now, the total size of the bitcoin economy is pretty small at the moment, but it is growing.

I don't see why people feel like other fiat currencies somehow have value but something like bitcoin cannot. They are both artificially scarce things that can be easily transferred with no intrinsic value.

Re: Online Cash Bitcoin could Challenge Governments, Banks

#69

Earlier quoted context omitted.

How do I transfer my coins from one computer to another? I found digging through my application data to find the wallet.dat file is unintuitive.. along those same lines, how many less technical users have lost extremely important data because they never made a backup? Additionally what if I want one wallet so I can go to a physical store, and use my phone to pay? The shuffle seems very inefficient to me. Perhaps peop…

Baby steps. Try starting out using an eWallet, such as MyBitcoin: http://www.mybitcoin.com Then buy your Bitcoins with PayPal here: http://coinpal.ndrix.com use the bitcoin address generated at MyBitcoin. You'll get your bitcoins in less than an hour at MyBitcoin. Then those bitcoins can be spent using your example, at StrongGames.

Thanks! this actually answers many of my questions.
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