Bitcoin's $137k Jackpot • Hacker News Board

Re: Bitcoin's $137k Jackpot

#101

Post by CydeWeys » Sat, Apr 30, 2016, 3:27 AM UTC

xigency wrote: post #95

CydeWeys wrote: post #78

Earlier quoted context omitted.

I've been using central ledger currency systems (i.e. logging into my bank's website and issuing payments) for longer than Bitcoin has existed. Decentralization is the entire point of Bitcoin. Take that away and you aren't left with anything that wasn't already done long ago. What you're proposing is something that banks have already been doing widely for decades.

> Take that away and you aren't left with anything that wasn't already done long ago And that is exactly my point. There are very interesting ideas in digital currencies/digital cash that have no representation in Bitcoin or at all. By using Bitcoin, like using your bank's website, you still need an Internet connection to use your currency digitally. However, it's possible to create a digital currency that doesn't ha…

> By using Bitcoin, like using your bank's website, you still need an Internet connection to use your currency digitally.

You can do all sorts of things with Bitcoin without needing to be attached to a network. You can have an address that has value associated with it and then print a private key as physical Bitcoin -- variants that have been done include coins, bills, paper wallets, and OCR-able backups of regular wallets. In a high security situation you can have Bitcoin running on an offline computer and sneakernet signed transactions from it to avoid ever exposing it to the Internet.

> However, it's possible to create a digital currency that doesn't have to be plugged-in to a network to operate.

Yes, like all of the above.

> Being able to send an e-mail with a cash value integrated in its data is something that hasn't been done long ago, or even yet today.

You lost me. How does email work without being attached to a network?! If you're giving us access to a network, why not just use Bitcoin? If you meant something like snail mail, well then, again, see above.

> Even better, some digital currencies could (conceptually) be sent in a paper letter as cash.

Yes. Like Bitcoin.

Or are you truly trying to propose some kind of digital currency that never requires network access? How could that possibly work? If network access isn't allowed, how do I know that you haven't already sent the same "digital coin" that you're sending me to ten other people? The double spend problem is real. Bitcoin solves it. I don't see how a solution is possible that doesn't involve some kind of communication.

Re: Bitcoin's $137k Jackpot

#102

Post by gnaritas » Sat, Apr 30, 2016, 3:28 AM UTC

xigency wrote: post #35

aianus wrote: post #31

Earlier quoted context omitted.

> So each transaction costs 11000/2000=5.5 USD No, each transaction costs at most $5.50 USD. You haven't established any lower bound in your calculations. A better approach would be to calculate the average number of hashes required to mine a block and the power efficiency of the latest generation ASIC miners. Also, for what it's worth, $5 is much cheaper than a Western Union or SWIFT wire transfer so even this upper…

Except environmentally, you need to look at the energy footprint of Western Union compared to the network of Bitcoin miners, not the price of electricity or amount of coins awarded.

No, you need to look at the energy footprint of the entire currency system including printing and movement of cash, not just Western Union.

Re: Bitcoin's $137k Jackpot

#103

Post by HappyTypist » Sat, Apr 30, 2016, 4:10 AM UTC

derefr wrote: post #96

fiatmoney wrote: post #86

Earlier quoted context omitted.

Stock exchanges really cannot be expected to track numbers of outstanding shares. One puts in a bid or an ask, indicating that one is willing to purchase or sell the given number at the given price, and an order type, indicating the manner to fulfil (fill-or-kill, limit to a certain price, take whatever outstanding offers are necessary...). This is more than enough nuance for a professional product like a stock excha…

Coming from a perspective of competitive multiplayer game networking, that seems insane. You can't trust the client. An ideal stock exchange, I'd think, would include the same sort of logic as a payment processor: blocking any orders that seem to be "not the sort of order this client would make", to prevent e.g. orders being executed by people who have illegitimately gained access to the account. Of course, these typ…

Not at all. If your exchange takes five milliseconds, you're gonna lose the volume of high frequency trading algorithms because they cannot front run as effectively. For an exchange volume (hence fees) is key, so you really have to work for HFTers.

Re: Bitcoin's $137k Jackpot

#104

Post by known » Sat, Apr 30, 2016, 4:26 AM UTC

Is Bitcoin suffering from https://en.wikipedia.org/wiki/Pareto_principle

Re: Bitcoin's $137k Jackpot

#105

Post by xigency » Sat, Apr 30, 2016, 4:47 AM UTC

CydeWeys wrote: post #101

xigency wrote: post #95

Earlier quoted context omitted.

> Take that away and you aren't left with anything that wasn't already done long ago And that is exactly my point. There are very interesting ideas in digital currencies/digital cash that have no representation in Bitcoin or at all. By using Bitcoin, like using your bank's website, you still need an Internet connection to use your currency digitally. However, it's possible to create a digital currency that doesn't ha…

> By using Bitcoin, like using your bank's website, you still need an Internet connection to use your currency digitally. You can do all sorts of things with Bitcoin without needing to be attached to a network. You can have an address that has value associated with it and then print a private key as physical Bitcoin -- variants that have been done include coins, bills, paper wallets, and OCR-able backups of regular w…

Digital implies something that is based in information, which doesn't imply a computer network. I won't pretend to be an expert, and I might have been living under a rock concerning Bitcoin, as it is not something I use.

The article link I posted (for a research paper, second level post), plus the original sources and works that cite it specifically discuss digital or cryptographic cash which follow six properties, including anonymity and some measures of usefulness.

Bitcoin achieves this, but it's also possible to achieve with a central authority or coalition of authorities. Interestingly, the consequence of double payment or false payments is to have one's identity revealed or to effectively assume debt. The fraudulent charges are exposed as IOUs.

The proof of work portion of Bitcoin, which I think is bothersome and wasteful, is related to the money supply. If a currency were tied to real funds or precious metals some of the burden would be lifted, but a large database would still be required.

Re: Bitcoin's $137k Jackpot

#106

Post by xigency » Sat, Apr 30, 2016, 4:59 AM UTC

aaron695 wrote: post #89

xigency wrote: post #21

Sort of unrelated but, "According to my calculation, a single Bitcoin transaction uses roughly enough electricity to power 1.57 American households for a day." http://motherboard.vice.com/read/bitcoin-is-unsustainable I find this interesting thinking about Bitcoin as a currency. The first cryptographic currency example that I had read, from a cryptography book, didn't involve active power. I'm really surprised that B…

> Sort of unrelated but, Totally unrelated and an old argument talked about in depth. Plus you are conflating the word transaction. It is not how the article used that word. The person tried to spend 5 cents on the transaction. This is not one days worth of electricity.

That's true. I really wanted to talk about alternate digital currencies so I started by attacking Bitcoin's big blockchain and huge power burden.

I recognize each 'transaction' holds several payments. I find the growing size of the block chain pretty astonishing as well, in an alarming way for users.

Re: Bitcoin's $137k Jackpot

#107

Post by fiatmoney » Sat, Apr 30, 2016, 5:36 AM UTC

derefr wrote: post #96

fiatmoney wrote: post #86

Earlier quoted context omitted.

Stock exchanges really cannot be expected to track numbers of outstanding shares. One puts in a bid or an ask, indicating that one is willing to purchase or sell the given number at the given price, and an order type, indicating the manner to fulfil (fill-or-kill, limit to a certain price, take whatever outstanding offers are necessary...). This is more than enough nuance for a professional product like a stock excha…

Coming from a perspective of competitive multiplayer game networking, that seems insane. You can't trust the client. An ideal stock exchange, I'd think, would include the same sort of logic as a payment processor: blocking any orders that seem to be "not the sort of order this client would make", to prevent e.g. orders being executed by people who have illegitimately gained access to the account. Of course, these typ…

Multiplayer games are a completely different genre than a professional-level API like a stock exchange. You absolutely must trust that a client's business logic is sound; as long as their credentials validate it's simply out of scope for you to do anything other than explicitly execute their instructions, because that's how the traders make money. "Trust the client" doesn't mean state, it means actions - the equivalent reasoning in a game would be disallowing the player from "playing badly", which is nonsensical.

Re: Bitcoin's $137k Jackpot

#108

Post by optforfon » Sat, Apr 30, 2016, 5:50 AM UTC

ryan-c wrote: post #4

> Remember that time when you tried to transfer your life savings from one bank account to another for a small fee, but swapped the fee field with the total transfer amount field, and ended up losing all your life savings? Of course you don't. There are safeguards to catch and prevent these kinds of errors. > > But this is a common occurrence in Bitcoin-land. This mistake is difficult, if not impossible, to make with…

I'm surprised that this even happens. It's so involved to make a transaction yourself. It's not like leaving your keys on the kitchen counter. It's more like building a house and forgetting to add a door

Re: Bitcoin's $137k Jackpot

#109

Post by hueving » Sat, Apr 30, 2016, 6:09 AM UTC

derefr wrote: post #96

fiatmoney wrote: post #86

Earlier quoted context omitted.

Stock exchanges really cannot be expected to track numbers of outstanding shares. One puts in a bid or an ask, indicating that one is willing to purchase or sell the given number at the given price, and an order type, indicating the manner to fulfil (fill-or-kill, limit to a certain price, take whatever outstanding offers are necessary...). This is more than enough nuance for a professional product like a stock excha…

Coming from a perspective of competitive multiplayer game networking, that seems insane. You can't trust the client. An ideal stock exchange, I'd think, would include the same sort of logic as a payment processor: blocking any orders that seem to be "not the sort of order this client would make", to prevent e.g. orders being executed by people who have illegitimately gained access to the account. Of course, these typ…

A stock exchange isn't responsible for tracking how much outstanding stock there is. The purpose of an exchange is just to match orders, not to determine if they are insane.

Expecting otherwise would be like expecting eBay to determine that your buy it now price is too low or that you don't have enough inventory on hand to fulfill your listings.

Re: Bitcoin's $137k Jackpot

#110

Post by KMag » Sat, Apr 30, 2016, 6:36 AM UTC

Cyph0n wrote: post #9

hughes wrote: post #2

This reminds me of a similar error from 2005[1] where a trader mistook the "price" and "quantity" fields of the trading software. Instead of selling 1 share for 610,000 yen, 610,000 shares were sold for 1 yen. The mistake cost around $225 million. [1] http://www.foxnews.com/story/2005/12/09/typing-error-causes-...

Damn that's huge. You'd assume that the software checks the dollar amount and asks for a confirmation, or better yet permission from a higher up, if it exceeds some value.

2005 was ages ago in terms of financial markets. It was before the housing crash and other financial crises (notably in Greece). It was before the flash crash and other notable electronic trading incidents.

Many world equity markets now have daily up/daily down limits a certain percentage above and below the previous day's closing price. Others will pause trading for a short period of time if short-term price moves are abnormally large.

Many equities markets only allow direct connections to the market from brokerages licensed by the country's financial regulators. These days, brokerages often implement their own sanity checks on many order flows. Joe's Live Bait and Stock Trading generally isn't connecting directly to any equity trading venue.

I'm curious what the effect would be of a market switching to second-price blind auctions every 5 minutes if a stock moves up or down 5% on the day. There are academic papers showing theoretical stability advantages of second-price auctions. Trading at the second-highest bid when the market is down more than 5% and at the second-lowest ask when the market is up should help to attract one-sided liquidity in the direction of market stability.