For once my general laziness looks like it is paying off. Mined a couple bitcoins years and years ago, and was too lazy to sell them at the time.
A while ago when 1 btc was < $0.1 usd, there was a site called the bitcoin tap (or something like that) which gave away free bitcoins for experimentation. I was too lazy to save my free bitcoin :<
Bitcoin breaks $200
201–209 of 209 posts
Re: Bitcoin breaks $200
#202Earlier quoted context omitted.
How does this prove it is a bubble? If anything, isn't this evidence for the opposite? I expected the price to drop dramatically after the Silk Road shutdown.
It would have been rational for the price to drop after SR. This might then be irrational exuberance.
Not really. The market was well-aware that SR was an illegal enterprise which could end at any time. The risk should have already been priced in. To a reasonably efficient market, good news is not good news if it was already predicted, and bad news is not bad news if that had been predicted instead. What matters is the extent to which the news is better or worse than predicted.
In SR's case, the news was better than one would have predicted. Despite it being the worst-case scenario - the server seized intact, Ross's laptop seized unlocked, all outstanding balances confiscated - it wasn't that bad because Ross's personal savings do not yet seem to have been taken, the current seizures will not be sold until the trial is over, and the bust was not due to breaks in either Bitcoin (they didn't even bother with blockchain analysis in the indictments!) or Tor (as far as we can currently tell) but to errors and overwhelming hubris on Ross's part, so SR could be and was quickly replaced by a flood of clones/competitors (at last count: BlackMarket Reloaded, Sheep Marketplace, BuyItNow, DeepBay, Budster, & Black Flag are all actively buying & selling; in addition, The Market and Silk Road Reloaded are expected to come online in the next few weeks/months).
Re: Bitcoin breaks $200
#203Earlier quoted context omitted.
For what it's worth, Silk Road provided it's own system for guaranteeing stability of price (that is to say, there were guaranteed exchange rates if desired). I don't think there was any need for SR users (well, sellers at least) to manipulate the price for that reason.
Interesting; have you more detail on that system?
Google its 'hedging' system; now that it's down, the documentation will be harder to come by but there should still be clearnet discussions of it.
Re: Bitcoin breaks $200
#204Earlier quoted context omitted.
If it's not solid you are free to attack it. You keep dismissing the incentives that Bitcoin gives, which should also be considering part of its security. The only rational attacker that could have an interest and resources to stop Bitcoin is a nation-state. But even then, another nation-state could jump in and protect it. We can't know what will happen until it happens. The field that you want to use to model everyt…
"You keep dismissing the incentives that Bitcoin gives, which should also be considering part of its security" We do not speak of "incentives" in other contexts. When we talk about encryption, we do not spend our time pondering the "incentives" for not attacking our cryptosystems -- we create encryption systems that cannot be feasibly attacked regardless of what motivates the attacker. When we talk about secure multi…
> we should be secure against irrational attackers too
Right, of course it would be better to have something indestructible. But so far it's "good enough" (passes the reviews of its individual components, has resisted for years as a system, but wouldn't resist an irrational attacker). And I much rather have this than the previous system, which is insecure by design (ie: your funds can and are systematically stolen through inflation and other means). Maybe you live in a very good country, where you don't have to worry about such issues (or you live in a regular country but are just not conscious about it?). But most of the world (including myself) doesn't, so Bitcoin is welcome as is.
Re: Bitcoin breaks $200
#205Earlier quoted context omitted.
"You keep dismissing the incentives that Bitcoin gives, which should also be considering part of its security" We do not speak of "incentives" in other contexts. When we talk about encryption, we do not spend our time pondering the "incentives" for not attacking our cryptosystems -- we create encryption systems that cannot be feasibly attacked regardless of what motivates the attacker. When we talk about secure multi…
> we should be secure against irrational attackers too Right, of course it would be better to have something indestructible. But so far it's "good enough" (passes the reviews of its individual components, has resisted for years as a system, but wouldn't resist an irrational attacker). And I much rather have this than the previous system, which is insecure by design (ie: your funds can and are systematically stolen th…
"so far it's "good enough""
Perhaps so, but what I was originally replying to was a claim that Bitcoin was rock solid. There is an enormous difference between "good enough" and "rock solid."
"I much rather have this than the previous system, which is insecure by design (ie: your funds can and are systematically stolen through inflation and other means)."
Perhaps so, but as I have noted elsewhere, Bitcoin is not a fiat currency killer. Most businesses that claim to accept Bitcoin payments are actually accepting fiat currency payments. Most adults still need to pay their taxes. There are strong incentives to issue loans in the currency that the courts deal in i.e. fiat currency.
Basically, think of it this way: if Bitcoin exchanges were to disappear right now, what would happen to Bitcoin? What reason is there to think that Bitcoin will ever reach a point where it is not utterly dependent on the existence of exchanges? When even people who want to adopt Bitcoin are only doing so with the help of services that automatically exchange Bitcoin payments for fiat currency, why should we believe that we can ever live in a world where Bitcoin stands on its own two feet?
Finally, let's assume that there is an economic theory that supports a system like Bitcoin i.e. a currency that has no central authority and no intrinsic value. That theory should motivate a security definition. As a point of reference, consider Chartalism (a key part of modern monetary theory), which basically explains why fiat currency works (in a nutshell: the government issues the money and requires you to return some amount later on via taxes), and a key security definition used in the academic work on digital cash (in a nutshell: you have security if it is infeasible to deposit more money with the bank than was withdrawn [this can be stated more formally]). Note the very clear connection: the central authority issues the currency and decides its validity when it is "deposited."
So, to bring things full circle, I give you this challenge: present an economic theory to explain systems like Bitcoin, and use that theory to motivate a security definition that Bitcoin can be tested against (or better yet, proved to meet).
Re: Bitcoin breaks $200
#206Earlier quoted context omitted.
> we should be secure against irrational attackers too Right, of course it would be better to have something indestructible. But so far it's "good enough" (passes the reviews of its individual components, has resisted for years as a system, but wouldn't resist an irrational attacker). And I much rather have this than the previous system, which is insecure by design (ie: your funds can and are systematically stolen th…
"so far it's "good enough"" Perhaps so, but what I was originally replying to was a claim that Bitcoin was rock solid . There is an enormous difference between "good enough" and "rock solid." "I much rather have this than the previous system, which is insecure by design (ie: your funds can and are systematically stolen through inflation and other means)." Perhaps so, but as I have noted elsewhere, Bitcoin is not a fi…
> Basically, think of it this way: if Bitcoin exchanges were to disappear right now, what would happen to Bitcoin?
If Bitcoin doesn't replace all currencies (I don't expect it to do that anyway), it can be used as digital gold (in fact I think you can expect higher price increases from this use case, than from every day transactions). Currently I would love to be able to save in gold, but I can't for many reasons. My government banned it, so I can no longer buy it in a trusted bank (if such thing exists). I can't buy it from other individuals like me, because it's difficult to divide, so you can never get the amount you wanted. You can't import it from other countries because you can't hide it from customs. You can't buy it in the black market either, because they will sell you golden bars filled with tungsten. And all this is for buying. When you want to sell it you will have similar problems. Bitcoin fixes all this, and you don't really need exchanges for this. In fact I never used one (international wires are banned).
Let me think about the security definition. I don't promise you anything, but I'll give it a try when my mind is clear.
Re: Bitcoin breaks $200
#207Earlier quoted context omitted.
How would coins become valued without mining? Isn't this the way that bitcoins actually become valued in terms of existing currency?
No, mining just prevents double-spending. The value comes from elsewhere.
People spend money on mining - power, equipment, time. This amounts to them buying bitcoins (from the set that haven't been mined).
This gives bitcoins a value in terms of existing currency (dollars etc.).
They might accrue value in other ways (how?), but does this process not bootstrap the bitcoins into having some initial value?
Re: Bitcoin breaks $200
#208Earlier quoted context omitted.
No, mining just prevents double-spending. The value comes from elsewhere.
People spend money on mining - power, equipment, time. This amounts to them buying bitcoins (from the set that haven't been mined). This gives bitcoins a value in terms of existing currency (dollars etc.). They might accrue value in other ways (how?), but does this process not bootstrap the bitcoins into having some initial value?
"does this process not bootstrap the bitcoins into having some initial value?"
No, because nowhere in that explanation is there any mention of demand for the mined bitcoins. If nobody were willing to accept a Bitcoin payment, the cost of Bitcoin mining would be irrelevant because the value of Bitcoin would be zero.
Re: Bitcoin breaks $200
#209Earlier quoted context omitted.
People spend money on mining - power, equipment, time. This amounts to them buying bitcoins (from the set that haven't been mined). This gives bitcoins a value in terms of existing currency (dollars etc.). They might accrue value in other ways (how?), but does this process not bootstrap the bitcoins into having some initial value?
"does this process not bootstrap the bitcoins into having some initial value?" No, because nowhere in that explanation is there any mention of demand for the mined bitcoins. If nobody were willing to accept a Bitcoin payment, the cost of Bitcoin mining would be irrelevant because the value of Bitcoin would be zero.
Ah, now I think I get it.
It is demand pull, not supply push - the miners are only willing to spend money on mining because they think they can get that money back by selling.
Buying mining hardware is speculating on the future price of bitcoin.