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Why Bitcoin Matters

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Re: Why Bitcoin Matters

#131

Post by sigil »

maaku wrote: post #124
sigil wrote: post #115

Earlier quoted context omitted.

How do you know they're building off of non-public blocks if they're doing so in secret collusion? For what it's worth, Felten et al have a somewhat convincing (if not yet rigorous) argument that members of a so-called selfish mining pool have more incentive to defect than to continue cheating [0]. But, if a single entity controlled all of the 33%, defection is not a risk, and this entity could still claim an outsize…

By running your own node. You can know what is public and what is not.

The selfish miner(s) build a blockchain in private and choose the right moment to reveal it. This paper describes it in more detail:

http://arxiv.org/pdf/1311.0243v2.pdf

Re: Why Bitcoin Matters

#132

Post by riemannzeta »

riemannzeta wrote: post #100

Bitcoin is a digital bearer instrument. It is a way to exchange money or assets between parties with no pre-existing trust: A string of numbers is sent over email or text message in the simplest case. The sender doesn’t need to know or trust the receiver or vice versa. Related, there are no chargebacks – this is the part that is literally like cash – if you have the money or the asset, you can pay with it; if you don…

This is the closest that I have seen to an answer:

Since Bitcoin is a digital bearer instrument, the receiver of a payment does not get any information from the sender that can be used to steal money from the sender in the future, either by that merchant or by a criminal who steals that information from the merchant.

I don't know enough about how the costs of payment fraud breakdown to know what percentage of the administrative costs of the system result from stolen card numbers. I can imagine it being a big percentage, but I can also imagine it being relatively small since solutions to it might be have the same characteristics of scalability as the fraud itself whereas the other failure modes associated with credit card fraud require more comprehensive human involvement both in their perpetration and in their redress.

For the moment then, it looks as if Bitcoin is an improvement to existing costly solutions to the BGP, but not an absolute solution. But that's better than no solution at all, which is how it seemed.

Re: Why Bitcoin Matters

#133

Post by plock »

ye wrote: post #122
plock wrote: post #79

Earlier quoted context omitted.

If we take 'intrinsic value' to mean 'having some use other than to simply trade away again to someone else, or being backed by something with intrinsic value', then the dollar has intrinsic value in that it is backed by freedom from being prosecuted by the US government for non-payment of taxes.

> the dollar has intrinsic value in that it is backed by freedom from being prosecuted by the US government for non-payment of taxes Do you realize how little sense you're making? It's like you wanted to insert meaningless buzzwords like "freedom", not to mention that there's no freedom from being prosecuted for non-payment of taxes. Well, in that case Bitcoin's intrinsic value is that it's backed by the freedom of s…

>not to mention that there's no freedom from being prosecuted for non-payment of taxes.

What? If I pay my taxes, I won't be prosecuted for non-payment of taxes.

>in that case Bitcoin's intrinsic value is that it's backed by the freedom of storage

Storage of what?

>transfer,

It doesn't matter how easy it is to transfer something to someone else if they don't want it. That thing must be seen as valuable for some other reason for anyone to care how easily it can be transferred.

>global acceptance

Who across the globe is guaranteeing they'll accept a certain number of bitcoins in exchange for a certain amount of something else?

>immunity to being counterfeited

If I generate a random RSA public key and use it to sign some randomly generated blobs of useless bits, do those blobs of bits and their signature have intrinsic value because it's hard to counterfeit them?

>immunity from inflation caused by printing

These things you're listing make bitcoin a more suitable currency than some other arbitrary thing that doesn't have those properties, all else equal. It doesn't mean bitcoin has intrinsic value, as I've defined it, and it certainly doesn't mean bitcoin is a good currency overall.

Re: Why Bitcoin Matters

#134

Post by lhc- »

msvan wrote: post #32
minimax wrote: post #16

Bitcoin is the first Internet-wide payment system where transactions either happen with no fees or very low fees (down to fractions of pennies). Existing payment systems charge fees of around 2 percent to three percent As long as consumers are paid in their local currency and vendors pay their employees, their taxes, and their other costs in local currency, then bitcoin as a payment technology has similar costs as cr…

True, but the alternative vision is that we cut out the USD BTC exchange process entirely. For instance, I could get paid in BTC, then I go to Target and pay for their goods in BTC, whereafter they keep the BTC. But Andreessen Horowitz wouldn't like that, of course.

If you noticed though, the article constantly referenced the ability of both consumers and merchants to NOT possess any actual bitcoins. The actual bitcoin is so volatile, not to mention the gold-standard-like deflationary nature of them, that convincing most people that holding onto actual bitcoins rather than fiat currency does not seem to be a16z's goal (which is a good decision on their part). So its hard to argue the merits of the article while basically rejecting one of its main points (that you dont need to hold any bitcoins for it to still be super cheap).

Re: Why Bitcoin Matters

#135

Post by nhaehnle »

drcode wrote: post #94
nhaehnle wrote: post #61

Earlier quoted context omitted.

The micropayments claim is a red herring. If Bitcoin were to actually take off for micropayments, it would no longer scale, and/or the operation of Bitcoin nodes would be limited to people with very serious hardware. At that point, we're back to the game that is currently being played by banks, just with different players in charge. So it's understandable that many people hope that such a transition will happen and t…

You're assuming no progress will be made in bitcoin scalibility in the near future, and comparing it to another technology stack that arguably hasn't seen any meaningful innovation in 40 years (since the advent of the debit/credit card.)

If there really hasn't been any meaningful innovation in that other technology stack, then the situation looks actually looks worse for the long-term fate of Bitcoin, because it means that the other technology stack could easily improve given the incentive.

That doesn't mean that Bitcoin will disappear or anything like that. It's just not going to become the prevalent unit of account as a currency.

Re: Why Bitcoin Matters

#136

Post by sigil »

hendzen wrote: post #130
sigil wrote: post #113

Earlier quoted context omitted.

Paxos is Byzantine Fault Tolerant. A malicious node is a special case of failed node. "The objective of Byzantine fault tolerance is to be able to defend against Byzantine failures, in which components of a system fail in arbitrary ways (i.e., not just by stopping or crashing but by processing requests incorrectly, corrupting their local state, and/or producing incorrect or inconsistent outputs)." http://en.wikipedia…

That is a correct definition of BFT, but as I said, Paxos does not tolerate Byzantine faults. Here's a direct quote [0] from Leslie Lamport, the author of the Paxos algorithm. Assume that agents can communicate with one another by sending messages. We use the customary asynchronous, non-Byzantine model, in which: • Agents operate at arbitrary speed, may fail by stopping, and may restart. Since all agents may fail aft…

I referred in the top level comment above to Byzantine Paxos, a modified version of Paxos that is BFT.

http://en.wikipedia.org/wiki/Paxos_(computer_science)#Byzant...

Re: Why Bitcoin Matters

#137

Post by Lambdanaut »

venomsnake wrote: post #65
Lambdanaut wrote: post #49

Earlier quoted context omitted.

Define "value", because I'm pretty sure that 99% of globally used currencies won't have this magical "intrinsic value" that you speak of.

The usd has intrinsic value - it saves you from years in jail if you cough up as much as Uncle Sam requires of you every year.

Once again there's this ridiculous "intrinsic value" / "value" dichotomy.

So then what, is your definition of "intrinsic value" that a recognized government accepts it as their official currency and exchanges bail bonds for it?

That's incredibly arbitrary.

Re: Why Bitcoin Matters

#138

Post by riemannzeta »

eurleif wrote: post #126
riemannzeta wrote: post #109

Earlier quoted context omitted.

I'm not an expert, but I read the paper. So you don't need an intermediary to confirm that a particular digital transaction took place between two people. By analogy to the original problem as stated, that's like saying you don't need an intermediary to confirm that a message with particular content was delivered between two generals. You still need an intermediary to confirm that the recipient is going to act on it…

>By analogy to the original problem as stated, that's like saying you don't need an intermediary to confirm that a message with particular content was delivered between two generals. No, that's not analogous. Bitcoin prevents double-spending. It doesn't just deliver messages. You're talking about a whole other level of cooperation. It's true that Bitcoin doesn't guarantee that, but no one said it did, and that doesn'…

Well I found a partial answer to the question I asked right in Andreessen's essay, but it's not the one you give here.

I guess I think of the authentication of sender and content for recipients as being equivalent to the elimination of double-spending, and I don't see either as being responsible for the failure modes of fraud in digital payment systems. As a practical matter, recipients don't have has to question whether a particular person actually has the credit to complete a given transaction right now, and I'm not aware of double-spending credit as being a big problem for credit card payment systems. Who cares about solving that problem when we have a perfectly workable solution right now?

But sure, I get the point about other forms of fraud might be harder -- namely, stealing account information necessary to initiate transactions.

The question there is whether that problem too goes away in a world in which credit numbers are kept as private keys on a physical device (like a smartphone) and exchanged with merchants via something like SSH. Is the overhead of Bitcoin still worth it?

Re: Why Bitcoin Matters

#139

Post by rib3ye »

dllthomas wrote: post #52
kaonashi wrote: post #50

Earlier quoted context omitted.

> people start getting paid in Bitcoin (already happening) and accept it as payment (also already happening), all these exchange fees go away. Still have to exchange for taxes.

But only enough to pay those taxes.

Also, fees are tax-deductible.

Re: Why Bitcoin Matters

#140

Post by [deleted] »

drcode wrote: post #120
galactus wrote: post #108

Earlier quoted context omitted.

If you were paying taxes or employees like overstock does you'd have to convert to fiat, wouldnt you?

Sure, you'd either have to convert part of it to fiat for taxes, or carry a currency risk and pay the taxes separately (as I do.) In the future, you'll probably be able to pay your expenses in bitcoin and then the issue becomes moot (you use your bitcoin earnings for expenses and your fiat earnings for taxes.)

[deleted]
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