Online Cash Bitcoin could Challenge Governments, Banks • Hacker News Board

Re: Online Cash Bitcoin could Challenge Governments, Banks

#211

Post by joeycfan » Mon, Apr 18, 2011, 1:59 AM UTC

ZitchDog wrote: post #78

Bitcoin is a fantastic idea, with one crucial mistake: the finite nature of bitcoins. The fact that coins will one day "run out" will almost certainly lead to increased speculation, which will in turn lead to a deflationary spiral, followed by a "bubble burst" when speculators sell all their bitcoins and average coin holders are left holding the bag. Infinite coins would tie the value to the opportunity cost of compu…

Two mistakes - the unencrypted wallet file is another WEIRD error.

Otherwise - it's the proof of concept for digital currency.

Re: Online Cash Bitcoin could Challenge Governments, Banks

#212

Post by erikpukinskis » Mon, Apr 18, 2011, 2:58 AM UTC

joe_the_user wrote: post #204

narcissus wrote: post #191

Earlier quoted context omitted.

I think a lot of that problem disappears when you start using separate receive addresses with each transaction. Yes, that can become a bit of a pain, but it's more than doable. From what I remember, the default of the GUI, at least, is to generate you a new receive address as soon as you receive something on your current address. That should remove a lot of the problems of tracking net worth.

No, you don't understand... a look at the article will show that publicness is inherent in the protocol... Without a public "audit trail", the problem of re-using bitcoins (which are just numbers) you hypothetically "spent" would clearly unsolvable (though I'm doubtful if you could truly free of this problem even with the public audit trail).

"No, you don't understand..."

I wouldn't be so quick to judge. What if you are the one who doesn't understand? It's just a conversation, leave the door open that you might learn something too.

You are correct that there is an audit trail, but it's somewhat anonymous. Every time I get paid, I can generate a new BTC address, and I have a new chunk of money that's potentially anonymous. Unless the person who paid me spills the beans, no one knows that I have that money, and even if you could figure out what that money was spent on, you still wouldn't be able to connect it back to me, without the help of the person who paid me.

You could also use some sort of network/behavior analysis to guess who was using the money, but that's far from "trivial". And it requires that you already know who is behind quite a large percentage of transactions, so there's a bit of a bootstrapping problem.

Re: Online Cash Bitcoin could Challenge Governments, Banks

#213

Post by erikpukinskis » Mon, Apr 18, 2011, 3:13 AM UTC

nerfhammer wrote: post #199

danenania wrote: post #184

Earlier quoted context omitted.

Wikipedia (emphasis mine): "The Great Deflation or the Great Sag refers to the period from 1870 until 1890 in which world prices of goods, materials and labor decreased.This had a negative effect on established industrial economies such as Great Britain while simultaneously allowing incredible growth in the United States which was just beginning to industrialize. Deflation has historically been more associated with r…

Your contention is that "one of the few" refutes "almost invariably" but is compatible with "not that rare"

I feel like you're being pedantic. The key point is that the causal relationship between the deflationary periods and the associated recessions is in doubt.

Re: Online Cash Bitcoin could Challenge Governments, Banks

#214

Post by getsat » Mon, Apr 18, 2011, 4:00 AM UTC

waynerad wrote: post #210

getsat wrote: post #138

Earlier quoted context omitted.

I don't have to download a new copy of uTorrent if I decide to use different ports. The client could probably just check periodically for a signed message from a central server (or a broadcast on the network itself) with instructions to currently operate on the network. This isn't really a big deal or usability issue that I can see.

I see I've been modded down. Why? What do you people know that I don't? It seems to me like I'm asking a simple, obvious question: what is stopping governments from simply shutting down Bitcoin within their physical borders? You think they will not be smart enough to handle a simple port number change? Regarding the comparison with Bittorrent, my ISP (Comcast) did in fact block and throttle Bittorrent, successfully,…

(I am not modding you down.)

It's fortunate (for Bitcoin) that governments and ISPs generally move at a sloth's pace. If it comes down to an arms race, they can't win more than extremely temporary victories. If they could, they'd have completely stopped filesharing over Bittorrent, IRC, AIM, MSN, Skype, HTTP, email, Usenet, various P2P services like Kazaa and Limewire, ... and so on.

If they start blocking/interfering with the protocol (like Comcast injecting RSTs into suspected torrent connections), you can just encrypt the entire transport layer and randomise the ports. People were configuring their firewalls to drop the falsified RSTs from Comcast.

If they blacklist hostnames, there's a near limitless number of them that can be generated. The client can precalculate a domain and ping it at a given time for instructions the same way botnet clients work. The government can't register/block every possible domain name that will be generated. Another alternative: http://en.wikipedia.org/wiki/Fast_flux There's nothing illegal about having a hostname resolving to an IP.

> Especially if the software is open source, as Bitcoin is, all the knowledge of the inner workings of the protocol is public knowledge

This is also true for GPG, ciphers like AES/Twofish/Serpent, etc. Openness does not necessarily imply weakness.

Re: Online Cash Bitcoin could Challenge Governments, Banks

#215

Post by narcissus » Mon, Apr 18, 2011, 11:08 AM UTC

erikpukinskis wrote: post #212

joe_the_user wrote: post #204

Earlier quoted context omitted.

No, you don't understand... a look at the article will show that publicness is inherent in the protocol... Without a public "audit trail", the problem of re-using bitcoins (which are just numbers) you hypothetically "spent" would clearly unsolvable (though I'm doubtful if you could truly free of this problem even with the public audit trail).

"No, you don't understand..." I wouldn't be so quick to judge. What if you are the one who doesn't understand? It's just a conversation, leave the door open that you might learn something too. You are correct that there is an audit trail, but it's somewhat anonymous. Every time I get paid, I can generate a new BTC address, and I have a new chunk of money that's potentially anonymous. Unless the person who paid me spi…

"Every time I get paid, I can generate a new BTC address"

Yeah, that was kind of my point, too. I mean obviously it's audit-able, but how much does that help when each and every transaction that I partake in is in its own little 'world', unlinked with any other transaction? And in fact, as I commented earlier, the GUI at least will generate you a new address automatically after each transaction, just to make that whole process easier.

Re: Online Cash Bitcoin could Challenge Governments, Banks

#216

Post by waynerad » Mon, Apr 18, 2011, 6:01 PM UTC

getsat wrote: post #214

waynerad wrote: post #210

Earlier quoted context omitted.

I see I've been modded down. Why? What do you people know that I don't? It seems to me like I'm asking a simple, obvious question: what is stopping governments from simply shutting down Bitcoin within their physical borders? You think they will not be smart enough to handle a simple port number change? Regarding the comparison with Bittorrent, my ISP (Comcast) did in fact block and throttle Bittorrent, successfully,…

(I am not modding you down.) It's fortunate (for Bitcoin) that governments and ISPs generally move at a sloth's pace. If it comes down to an arms race, they can't win more than extremely temporary victories. If they could, they'd have completely stopped filesharing over Bittorrent, IRC, AIM, MSN, Skype, HTTP, email, Usenet, various P2P services like Kazaa and Limewire, ... and so on. If they start blocking/interferin…

Weakness from the standpoint of the ability of a network operator to block the protocol? GPG could be blocked quite easily. Email encrypted with GPG declares itself so

I feel upset about being modded down -- I feel I asked a fair question. Governments gain their power from being able to tax and dilute currency. Bitcoin, if it gains traction, will be a direct threat to both. It does not seem realistic to think governments will not fight back, and hard. If I'm right, it means simple tricks like changing ports and changing IP's won't work. You say "The government can't register/block every possible domain name that will be generated." -- maybe they can if they know the algorithm that is being used to generate the domain names? Or maybe they can examine the contents of the packets, so there is no need to block every domain name (or IP in the case of Fast flux). For every change to the protocol to thward getting blocked, the blockers and respond to the change because the protocol is open.

I suppose the "worst case scenario" is that Bitcoin has to be used over a generic VPN protocol, similar to what people do now to get around the Great Firewall Of China. As I understand it, the Chinese government has not blocked the VPN protocols, mostly because few enough of the Chinese people use them -- but if a large percentage of Chinese people started using VPN's, wouldn't the Chinese government start blocking VPN protocols?

Perhaps the Great Firewall Of China is the best example of the capability a government has to control its internet within its physical territory?

Blocking every VPN is something that should eventually fail because large enterprises (Fortune 500 Co) won't stand for it. So I can understand the argument that governments _ultimately_ can't stop Bitcoin or something like it. But it seems to me like they won't give up without a fight.

Re: Online Cash Bitcoin could Challenge Governments, Banks

#217

Post by joe_the_user » Mon, Apr 18, 2011, 11:07 PM UTC

erikpukinskis wrote: post #212

joe_the_user wrote: post #204

Earlier quoted context omitted.

No, you don't understand... a look at the article will show that publicness is inherent in the protocol... Without a public "audit trail", the problem of re-using bitcoins (which are just numbers) you hypothetically "spent" would clearly unsolvable (though I'm doubtful if you could truly free of this problem even with the public audit trail).

"No, you don't understand..." I wouldn't be so quick to judge. What if you are the one who doesn't understand? It's just a conversation, leave the door open that you might learn something too. You are correct that there is an audit trail, but it's somewhat anonymous. Every time I get paid, I can generate a new BTC address, and I have a new chunk of money that's potentially anonymous. Unless the person who paid me spi…

OK...

I would be more credulous if you could show a path from me, say, working for someone to me, say buying something at a store and show that I couldn't say, buying two of that something by doing two different anonymous transactions.

- My argument is that the factor prevents me from using my information twice is the factor that identifies me (how does X know that "coin" Y belongs to Z? - The audit trail - if the audit trail can't show this, the whole app break. If the audit trail does show this, the state can figure things out).

Once I'm identified by other bitcoin participants, I'm identified by everyone and so the state will say "hey, you're transacting, you owe taxes"...

Re: Online Cash Bitcoin could Challenge Governments, Banks

#218

Post by quanticle » Wed, Apr 20, 2011, 2:07 PM UTC

vrotaru wrote: post #201

nerfhammer wrote: post #198

Earlier quoted context omitted.

If you're counting peak annual rate rather than total deflation then part of 1920-1921 was worse than 1929-1933, but if we're talking about momentary deflation then neither was the worst deflation in US history. see http://en.wikipedia.org/wiki/File:US_Historical_Inflation_An...

Thanks. I was speaking about annual rate. BTW, a very instructional chart. Can I rant a bit? Thanks again. It'll be about deflationary blips and deflationary spirals . Have you ever noticed that the definition of a deflationary spiral self-contradictory? You know how it goes, people hoard money in order to spend them later, but when that later comes they do not spend them but continue to hoard even more in order to s…

The problem is that people hoard money in anticipation of even lower prices down the road. Why should I buy good X for $Y today, when I anticipate that good X will be available for $(.85)Y tomorrow? If enough people think like I do, the quantity of X demanded drops, causing the market to create the very price drop I was anticipating.

In addition, deflation increases the value of debts - any spare cash I have is going to be soaked up by the increasing value of my debts, and will not be available for further consumption.

Re: Online Cash Bitcoin could Challenge Governments, Banks

#219

Post by vrotaru » Wed, Apr 20, 2011, 7:55 PM UTC

quanticle wrote: post #218

vrotaru wrote: post #201

Earlier quoted context omitted.

Thanks. I was speaking about annual rate. BTW, a very instructional chart. Can I rant a bit? Thanks again. It'll be about deflationary blips and deflationary spirals . Have you ever noticed that the definition of a deflationary spiral self-contradictory? You know how it goes, people hoard money in order to spend them later, but when that later comes they do not spend them but continue to hoard even more in order to s…

The problem is that people hoard money in anticipation of even lower prices down the road. Why should I buy good X for $Y today, when I anticipate that good X will be available for $(.85)Y tomorrow? If enough people think like I do, the quantity of X demanded drops, causing the market to create the very price drop I was anticipating. In addition, deflation increases the value of debts - any spare cash I have is going…

> Why should I buy good X for $Y today, when I anticipate that good X will be available for $(.85)Y tomorrow?

And why should you buy the good X for $(.85)Y tomorrow, if it will cost $(.7225)Y the day after tomorrow? Right?

I see that's why people never spend money on new phones and computers!!!1!!

Now seriously, the assumption that people will forever postpone consumption is absurd and wrong. But the whole deflationary spiral theory falls apart without that assumption.

Re: Online Cash Bitcoin could Challenge Governments, Banks

#220

Post by jsavimbi » Fri, Apr 22, 2011, 8:24 PM UTC

quanticle wrote: post #54

jsavimbi wrote: post #24

Earlier quoted context omitted.

You don't need a US-based exchange for BTC, per se, as other currencies are traded on the open market and the brokers simply relay quotes to their customers via feeds they receive rom the banks. If the banks saw the potential to make money off of trading BTC, they'd make it happen.

You don't need a US based exchange, but changing bitcoin into a foreign currency and then turning that foreign currency into dollars would probably incur enough in transaction fees to be unprofitable, especially if you're changing large amounts of currency on a regular basis.

If you read into what Forex is you'd discover that what you're speculating about actually happens, for pure profit, many many times over on a daily basis.