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Secretive Bitcoin Startup 21 Reveals Record Funds, Hints at Mass Consumer Play

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Re: Secretive Bitcoin Startup 21 Reveals Record Funds, Hints at Mass Consumer Play

#51

Post by IkmoIkmo »

comrade1 wrote: post #3

Are there ways to reduce the size of the block chain? Or will we get to the point where only large service providers can hold the block chain? I ask because I was maintaining my own wallet for awhile but stopped because the block chain database was getting unwieldy - it would take up to a week to resync if I ever turned my wallet software off for a significant amount of time. You know though... I actually don't care.…

Yes, it's called pruning, it's in development and not finished.

The basic idea is that bitcoins are actually units of money that are in your wallet. Rather bitcoin works by chaining transactions (put into blocks, hence the blockchain).

Thus if you give me $1, I don't have $1, I actually have a record that you gave me $1 so that must mean I have $1 to spend. That's the simplistic idea.

That is the reason why instead of storing account numbers with money numbers in them, bitcoin stores transactions.

By now it's probably obvious to you that the vast majority of those transactions don't need to be stored. If I give you $1 and you give it back, repeat 1 million times, we end up with exactly the same amount of money. And all but the last few transactions can be reasonable deleted. (pruning)

As for syncing, syncing up a wallet is much, much faster now that it's headers first. But most users never sync, they either use 3rd party wallets like Coinbase, or they use wallet software that plugs into various nodes and APIs, so that no blockchain has to be present on-disk. The blockchain is really stored mostly by nodes, dedicated servers, businesses, a few enthusiasts.

That doesn't mean someone else manages the wallet by the way, like you mentioned for 'consumer devices', it just means that someone else manages the node. But the node doesn't control your money, your private keys do, and those are just a few bytes of storage. And as there are thousands of nodes and many APIs, trust of nodes isn't any different as when running your own node (which gets and sends data to other nodes, requiring the exact same amount of trust which is zero when it comes to controlling your money).

As for transaction fees being expensive, they're extremely cheap? Pennies to send thousands or millions, and as it's an open protocol anyone can build free centralized payment networks on top of it, like Changetip. Conversion with other currencies is also cheaper than most fiat conversions (e.g. dollar to euro), and in fact some companies already offer it for free (e.g. bitcoin/usd is completely free and pretty much instant with Circle, founded by Jeremy Allaire who founded Coldfusion).

The 15minute thing might be a deal-breaker for some. There are lots of solutions though that can remove that timer, built on top of bitcoin. Sidechains, treechains, payment channels etc. Anyway time will tell if these things work well but there don't seem to be any dealbreakers yet on the horizon.

Re: Secretive Bitcoin Startup 21 Reveals Record Funds, Hints at Mass Consumer Play

#52

Post by IkmoIkmo »

jboggan wrote: post #6

What percentage of that funding is just buying and holding Bitcoins? Many of these large rounds have that business model baked into the amount they raise. There's much more profit to be had from buying at current prices and selling at a consumer inflection point than there is in actually building a Bitcoin service.

It's idiotic to assume an investor will invest in a company to buy coins, rather than coins directly.

Maybe if it was expensive art, exotic animals or something difficult and tricky to buy and store without having specialized knowledge, yes then you'd invest in a company to buy and manage these assets.

But storing bitcoin is storing private keys... a password. Anyone can buy it and store it. Hell you can even buy it on registered exchanges, or as a security from SecondMarket's bitcoin fund.

No. These guys raised money to hire software and hardware engineers, they're looking to build a product.

Does that mean the investors aren't buying bitcoin? No, they do so, but outside the company. It's well known that there are a number of VCs (e.g. Chamath) who have bought a few million worth of bitcoins besides their investments in bitcoin companies.

I don't any evidence that many of the 'large rounds' have this business model. There are some companies that bought bitcoin, but that's for liquidity, not investments. Circle, Coinbase or exchanges all need bitcoin to sell as they're brokers/exchanges. But they didn't buy it as an investment, they could just buy bitcoin as individuals, as could investors.

Re: Secretive Bitcoin Startup 21 Reveals Record Funds, Hints at Mass Consumer Play

#53

Post by cpwright »

pash wrote: post #36
CPLX wrote: post #30

Earlier quoted context omitted.

> The "no recourse for fraud" meme about Bitcoin is simply wrong. OK, but wait: > There are not many dispute-resolution mechanisms right now... If Bitcoin catches on among a wider demographic, dispute resolution... will get built. The technology is very flexible and can accommodate just about everything... Ah, OK. So the fact that there's no recourse for fraud is actually correct. But because, in theory, there could…

Are you asking me about the capabilities of the techology, or are you asking me to predict the future? I'm giving you the former. I don't know what Bitcoin will look like in ten years. I do understand the technology and am interested in having a discussion about it. But on Hacker News, in threads like this one, a great many of the comments demonstrate fundamental technical misunderstandings or seem to regard Bitcoin…

I find the fundamental disconnect to be that people are pushing the lower-cost transactions as a bit motivation for Bitcoin. The less enthusiastic point out all of the good anti-fraud infrastructure credit cards have from a consumer perspective. Then the proponents point out you can build that on Bitcoin, which is true; but it doesn't come for free, thus I expect mostly negating the transaction cost advantages that Bitcoin is potentially offering.

Re: Secretive Bitcoin Startup 21 Reveals Record Funds, Hints at Mass Consumer Play

#54

Post by ci5er »

dollaaron wrote: post #15
CPLX wrote: post #11

Earlier quoted context omitted.

> actually using bitcoin (that you already have) to buy things is a better experience than using credit cards It's just not. It's not easier than swiping a magnetic strip and signing something, or typing in sixteen digits (or using autofill or the site's previously saved CC info) and pressing buy. It's not good that I can't demand a return or have recourse in the event of fraud. And it's not a benefit that with bitco…

> It's just not. It's not easier than swiping a magnetic strip and signing something, or typing in sixteen digits (or using autofill or the site's previously saved CC info) and pressing buy. It's much easier to take your phone, open an app, and scan a QR code, than to take out your credit card, transcribe a 16 digit number, check the expiration date, and enter the CSC (or is it CVC?). Sure, for websites where your in…

For a number of reasons, for some banks doing a pilot in Eastern Europe, I prototyped a card-interoperable system that does something like this. From the user's point-of-view.

  - You shop and check out

  - You are presented a QR that you scan

  - The "app" asks you to sign into your bank.

  - The bank issues you a virtual card with your billing address details, but a one-time-PAN (credit card number), CVV and expiry.

  - There is a sub-account created that is the amount you are about to auth with the merchant. The merchant about to be doing the authorization is linked.

  - The "app" presents the merchant "POS" with the virtual card details

  - The merchant "POS" authorizes it using any gateway they happen to be using. Which in turn does the Brand-Net auth dance with the issuer.

  - On positive auth, the sub-account balance is transferred to the merchant (thanks, VisaNet!), and the OTP (one-time PAN) is tossed in the recycle bin.
In any case, they don't have to deal with 6,000 banks like we have in the US. That said, the US could probably do this easily enough in cooperation with FDC or Total Systems or both.

If the merchant doesn't have the QR-code thing, you can still manually key-enter your one-time PAN virtual card details like you do today, knowing that you don't care about the number past its use right now.

There are a lot of weird details about how it all works if some party or another isn't an active full cooperating member of the system, but the idea is to:

1) Limit card number exposure

2) Get a user's explicit pre-auth for a specific merchant, amount and date

3) Get the usability factor you are talking about

4) Leverage the existing bank card consumer protection rules already in place

Which is not to say that Bitcoin isn't cool. But I'm not sure that it is useful enough for consumers to replace the thin-veneers like this that the existing payment infrastructure players will inevitably roll out.

There may be (and probably are) lots of uses for the blockchain. Consumer payments may not ultimately be one of the big ones.

*EDIT: I apparently am an idiot that can not figure out how to convince the system to let me wrap "bullets".

Re: Secretive Bitcoin Startup 21 Reveals Record Funds, Hints at Mass Consumer Play

#55

Post by deeviant »

jafaku wrote: post #42
shashu10 wrote: post #27

Earlier quoted context omitted.

They possibly could if they create a more secure cryptocurrency

That's not really a possibility, it's just your desire to see Bitcoin go down. I don't know why there are so many people so salty about Bitcoin.

Yeah really, the only other time I saw a group of people so salty about something is Google glass. There is just something about bitcoin and glass that makes people go NaCL.

Re: Secretive Bitcoin Startup 21 Reveals Record Funds, Hints at Mass Consumer Play

#56

Post by dangerlibrary »

pash wrote: post #36
CPLX wrote: post #30

Earlier quoted context omitted.

> The "no recourse for fraud" meme about Bitcoin is simply wrong. OK, but wait: > There are not many dispute-resolution mechanisms right now... If Bitcoin catches on among a wider demographic, dispute resolution... will get built. The technology is very flexible and can accommodate just about everything... Ah, OK. So the fact that there's no recourse for fraud is actually correct. But because, in theory, there could…

Are you asking me about the capabilities of the techology, or are you asking me to predict the future? I'm giving you the former. I don't know what Bitcoin will look like in ten years. I do understand the technology and am interested in having a discussion about it. But on Hacker News, in threads like this one, a great many of the comments demonstrate fundamental technical misunderstandings or seem to regard Bitcoin…

I can give you a sense of the future: Bitcoin will become completely unusable because the blockchain is growing at an increasing rate.

https://blockchain.info/charts/blocks-size?timespan=all&show...

Re: Secretive Bitcoin Startup 21 Reveals Record Funds, Hints at Mass Consumer Play

#57

Post by CPLX »

venaoy wrote: post #48
CPLX wrote: post #22

Earlier quoted context omitted.

> It's much easier to take your phone, open an app, and scan a QR code, than to take out your credit card, transcribe a 16 digit number, check the expiration date, and enter the CSC (or is it CVC?). > Sure, for websites where your information is already saved, or if you leave all your credit card information saved in the browser, then this isn't easier, but they're still pretty comparable in my opinion. Even if it wa…

> For a CC sure I might have to grab the card out of my wallet and punch it in, but my numbers are pretty much memorized by now and it's beyond simple. "beyond simple", really? A lot of people would disagree with you. The inconvenience of typing in the CC billing info is the number one reason why fewer sales take place on mobile than on desktop. And it is one of the main reasons why people stick with a store they kno…

I'm not sure you are me are using the same definition of simple.

Typing 16 digits plus four digits on the front and three digits from the back of a card in your pocket is incredibly simple. I just described it in one short declarative sentence.

In addition it is mildly tedious, and slightly inconvenient. But extremely simple it remains.

In contrast, bitcoin requires typing in an extremely long and essentially random sequence of alphanumeric characters.

Except that it doesn't you say? Because an app can automate it? Oh wait.

Re: Secretive Bitcoin Startup 21 Reveals Record Funds, Hints at Mass Consumer Play

#58

Post by Procrastes »

comrade1 wrote: post #3

Are there ways to reduce the size of the block chain? Or will we get to the point where only large service providers can hold the block chain? I ask because I was maintaining my own wallet for awhile but stopped because the block chain database was getting unwieldy - it would take up to a week to resync if I ever turned my wallet software off for a significant amount of time. You know though... I actually don't care.…

There are a couple of good options for working with truncated blockchains to a checkpoint without reducing the security of the blockchain. Likely one or the other with settle out as the common practice, and the blockchain growth problem will be solved.

Power consumption, on the other hand, may not be solvable even in theory, and it also seems likely to drive mining to just large service providers. The current pools aren't a solution in this case because the startup cost to even participate meaningfully will grow too large.

Maybe this could be solvable with a different proof mechanism. A few have been suggested and tried (PPC etc.), but I don't think it's solvable for BTC as it's currently defined. I'm happy to be proven wrong.

Re: Secretive Bitcoin Startup 21 Reveals Record Funds, Hints at Mass Consumer Play

#59

Post by [deleted] »

comrade1 wrote: post #3

Are there ways to reduce the size of the block chain? Or will we get to the point where only large service providers can hold the block chain? I ask because I was maintaining my own wallet for awhile but stopped because the block chain database was getting unwieldy - it would take up to a week to resync if I ever turned my wallet software off for a significant amount of time. You know though... I actually don't care.…

[deleted]

Re: Secretive Bitcoin Startup 21 Reveals Record Funds, Hints at Mass Consumer Play

#60

Post by macns »

ajross wrote: post #50
macns wrote: post #46

Earlier quoted context omitted.

> This is a digression Two things make currency work: usability and security. How can this be a digression? > Cold storage is essentially isomorphic to keeping treasure in a safe I'll admit the wiki is a bit tl;dr .. (I guess you didn't read it). Using your "keeping treasure in a safe" quote: Cold storage is like keeping a treasure in a safe, at the bottom of the deepest ocean of another earth-like planet in a solar…

What? No, no, no. Cold storage is exactly as secure as the physical storage used to keep it. Unless that physical safe (or deposit box, or mattress) in which you put the printout or USB stick was launched on an interstellar rocket, then no. It's true that it's inaccessible to the internet. It's not true that it's more secure than physical storage, because ultimately it is physical storage. I await your "But you can m…

Well regarding bitcoin theory obviously you skimmed through the basics, but I'll make an effort to counter your arguments.

A (public) bitcoin address is useless without the private key. Suppose you do find one, you'd just knew the transactions referring to it(by looking up the blockchain).

One can easily have thousands of addresses. Many people generate a different address for each transaction, so good luck finding the one that looks like a safe.

A safe will be opened up without a key, eventually, a bitcoin address never: [0]The private key is mathematically related to the Bitcoin address, and is designed so that the Bitcoin address can be calculated from the private key, but importantly, the same cannot be done in reverse.

[0]https://blockchain.info/wallet/bitcoin-faq

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