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Why I'm Interested in Bitcoin

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Re: Why I'm Interested in Bitcoin

#71

Post by Sambdala »

modeless wrote: post #63
saalweachter wrote: post #54

We don't know what the cost of transactions in Bitcoin will be yet. Bitcoin includes two methods to pay miners for the infrastructure costs of running the network: mining rewards and transaction fees. The idea is to bootstrap the network off of mining rewards, and then switch to relying on transaction fees in the future, as Bitcoin reaches its limit of 21 million coins. The problem is that mining rewards are currentl…

You're assuming that mining revenue must never decrease, but there's no reason for that to be true. A more likely scenario is that as block rewards go away, instead of transaction fees going up, overall mining revenue goes down. Some miners will exit, but as long as there's money to be made there will still be miners. Bitcoin users and miners will adjust fees until they reach a compromise that's mutually acceptable.

Yeah, this is likely to be the case.

Part of the genius of the block award being so top-heavy in the beginning is that it made the network much more secure than it would have been if it had relied on transactions from the beginning which will allow it to mature and stabilize before supply & demand determines what the market is willing to bear in transaction fees.

In addition, it allowed a decentralized method of distributing the coins that isn't able to be gamed.

Re: Why I'm Interested in Bitcoin

#72

Post by minimax »

steveklabnik wrote: post #51
quack wrote: post #2

I used to believe that the reversibility of transactions was a major benefit of using cards, but it turns out that is really just a reversibility of liability. Credit cards are an outdated tool. They pass plain text data about a user to authorize a transaction allowing hackers to pull something off like the Target hack. One of the advantages of bitcoin is the ability to digitally authorize a transaction that cannot b…

Hi, I work for Balanced Payments, a payments company for marketplaces, YC W11. You can track our plans for cryptocurrency support here: https://github.com/balanced/balanced-api/issues/204 > In an online marketplace it's far far easier to accept bitcoins than credit cards because you have no fraud risk, which is a HUGE problem in online retail. I'm not sure how you are getting this. Bitcoin is absolutely susceptible t…

Agree with everything you said. Credit cards have useful consumer protections baked in. What happens when you look at it from the merchant's perspective? Lets say someone buys something from me with a card, I ship it out, but then it turns out the card was stolen. Who takes the loss? The merchant or the credit card company? I guess what I'm trying to figure out is whether or not the irreversibility of a transaction might be a good thing for merchants dealing with fraudulent buyers.

Re: Why I'm Interested in Bitcoin

#73

Post by saalweachter »

modeless wrote: post #63
saalweachter wrote: post #54

We don't know what the cost of transactions in Bitcoin will be yet. Bitcoin includes two methods to pay miners for the infrastructure costs of running the network: mining rewards and transaction fees. The idea is to bootstrap the network off of mining rewards, and then switch to relying on transaction fees in the future, as Bitcoin reaches its limit of 21 million coins. The problem is that mining rewards are currentl…

You're assuming that mining revenue must never decrease, but there's no reason for that to be true. A more likely scenario is that as block rewards go away, instead of transaction fees going up, overall mining revenue goes down. Some miners will exit, but as long as there's money to be made there will still be miners. Bitcoin users and miners will adjust fees until they reach a compromise that's mutually acceptable.

The problem with shedding hardware from the Bitcoin network is that it undermines the core of Bitcoin's security.

Let's imagine that 2025, and we hit the fourth mining-rewards-halving. It's now unprofitable to mine given the existing numbers of miners, and users refuse to accept higher transaction fees, so 50% of miners exit, leaving half the profits to half the miners.

This means that 50% of the Bitcoin hardware is now on the market, being sold on the cheap. What do you need to compromise the security of the Bitcoin network? Why, 51% of the hardware--

Re: Why I'm Interested in Bitcoin

#75

Post by pault »

steveklabnik wrote: post #51
quack wrote: post #2

I used to believe that the reversibility of transactions was a major benefit of using cards, but it turns out that is really just a reversibility of liability. Credit cards are an outdated tool. They pass plain text data about a user to authorize a transaction allowing hackers to pull something off like the Target hack. One of the advantages of bitcoin is the ability to digitally authorize a transaction that cannot b…

Hi, I work for Balanced Payments, a payments company for marketplaces, YC W11. You can track our plans for cryptocurrency support here: https://github.com/balanced/balanced-api/issues/204 > In an online marketplace it's far far easier to accept bitcoins than credit cards because you have no fraud risk, which is a HUGE problem in online retail. I'm not sure how you are getting this. Bitcoin is absolutely susceptible t…

M-of-N transactions solve most of the trust problems with online marketplaces without having to cede total authority to the escrow service. If you want to favor the buyer in disputes a la paypal, that's easy, but the worst thing that can happen in the case of a false positive (from the seller's perspective) is the loss of a single transaction, rather than having an entire account frozen.

Re: Why I'm Interested in Bitcoin

#76

Post by wsxcde »

drcode wrote: post #69
wsxcde wrote: post #57

How much of the 2.5% credit card fees goes towards combating fraud and enabling reversibility of transactions? I assume it's a significant fraction because you get a better rate if you use services like "verified by visa", no? Is there any reason to believe that fraud rates will be lower with bitcoin? And as far the programmable money idea goes, I'd like to see more compelling applications than M of N transactions or…

> Is there any reason to believe that fraud rates will be lower with bitcoin? Yes, the risk of fraudulent creation of bitcoins or of double spending of a well-confirmed bitcoin are essentially zero (assuming no major flaw in the current science of cryptography.) Also, the odds of stolen identities (name/address/birthdate/ssn) would be zero, since those are not needed for sending bitcoins. So yes, fraud will be a lot…

> Yes, the risk of fraudulent creation of bitcoins or of double spending of a well-confirmed bitcoin are essentially zero (assuming no major flaw in the current science of cryptography.)

This is a pretty narrow definition of fraud. Credit card fraud isn't caused by double-spending or counterfeit currency. It's caused by people stealing your credit card information. This is akin to people stealing your bitcoin wallet, as has happened many times already and will probably become even more commonplace if bitcoin takes hold.

And while cryptography seems to be strong mathematically, side channels aren't. What are the odds that if you have a mobile bitcoin wallet app, it would be resistant to all the myriad side channel attacks we know of today and so many more that are going to get invented in the future?

> Also, the odds of stolen identities (name/address/birthdate/ssn) would be zero, since those are not needed for sending bitcoins.

On the other hand, due to anonymity and irreversibility, there is nothing you can do about fraudulent transactions involving bitcoins. You probably don't even even know who took your money. So color me unconvinced me again.

tbh, I can't tell if you guys are deceiving yourselves or trying to deceive me in an attempt to keep the bubble going.

Re: Why I'm Interested in Bitcoin

#77

Post by aggronn »

MrBlue wrote: post #74

"... I’m a lifelong Democrat who supported Obama in the last two elections. I think the Federal Reserve plays an important function..." I stopped reading here.

Regardless of what any armchair economist thinks about the federal reserve, how can you love bitcoin as a currency if you think that the fed 'plays an important function'?

Re: Why I'm Interested in Bitcoin

#79

Post by CamperBob2 »

wsxcde wrote: post #59
bluedino wrote: post #56

Earlier quoted context omitted.

>> I don't keep my savings in cash, but I can withdraw as much cash as I could reasonably want at zero cost from my bank. And once you are over a certain amount, the government finds out.

Maybe this is an issue for you, but I don't see this as compelling advantage.

Also, go to your bank and try to withdraw "as much cash as you reasonably want." At some point they will probably charge you a "Cash Withdrawal Fee," or some such.

I'm interested in Bitcoin because of its stated goal to disrupt the banking system. Banks suck.

Maybe this is an issue for you

Are you a US citizen, or a resident of one of the Five Eyes countries? If so, it's an issue for you whether you like it or not. You commit crimes all the time without knowing it, just like the rest of us do. Your government wouldn't have it any other way.

Re: Why I'm Interested in Bitcoin

#80

Post by drcode »

wsxcde wrote: post #76
drcode wrote: post #69

Earlier quoted context omitted.

> Is there any reason to believe that fraud rates will be lower with bitcoin? Yes, the risk of fraudulent creation of bitcoins or of double spending of a well-confirmed bitcoin are essentially zero (assuming no major flaw in the current science of cryptography.) Also, the odds of stolen identities (name/address/birthdate/ssn) would be zero, since those are not needed for sending bitcoins. So yes, fraud will be a lot…

> Yes, the risk of fraudulent creation of bitcoins or of double spending of a well-confirmed bitcoin are essentially zero (assuming no major flaw in the current science of cryptography.) This is a pretty narrow definition of fraud. Credit card fraud isn't caused by double-spending or counterfeit currency. It's caused by people stealing your credit card information. This is akin to people stealing your bitcoin wallet,…

> This is akin to people stealing your bitcoin wallet

No it isn't. If I buy something on amazon, I need to enter my credit card information. If I buy something with bitcoins from cointagion.com, I don't need to upload my bitcoin wallet.

> Credit card fraud isn't caused by double-spending

If I buy some socks on Amazon with my credit card info intended only for buying those socks and a hacker steals this info and then uses it to buy a plasma TV at Best Buy, this exactly meets the definition of double spending, and this is exactly what credit card thieves do (and what you can't do with bitcoins.)

> There is nothing you can do about fraudulent transactions involving bitcoins.

Again, if someone hacks Target and steal all the credit card numbers you have fraud. Since you can't hack a bitcoin merchant to steal my payment information, you can't have this kind of fraud, so this isn't a meaningful question.

wsxcde, I think you're confusing "fraud" and "theft". Yes, it's possible to steal bitcoins. But this is not fraud.

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