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Bitcoin

edited May 2011 in Technology
The value of bitcoins, a digital decentralized cryptocurrency, has been dramatically increasing. Do you think that it is a viable currency? I like the tech, but I just can't see myself using them unless they were accepted by major online retailers. Who knows? Maybe it will succeed.
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Comments

  • Scam.
    How so?
  • edited May 2011
    Do you think that it is a viable currency?
    Well, how is an any different from the other successful Internet currencies, like beenz or Flooz?

    Well, other than that it hasn't crashed and burned after the CEOs and VC investors make a shitload of money, then cut and run.

    Seriously - Despite what that site says, this is not a new idea. It's just another trade based internet currency which will enjoy some moderate success, make a bunch of money, and then vanish, leaving the customers holding the bag. The only difference here is that it's more distributed and a little harder to take down in one blow, but it's doubtful that it'll ever amount to much.
    Post edited by Churba on
  • Has anyone ever figured out a good way to implement whuffie?
  • Let me know when I can use my Flow to make awesome things happen.
  • Has anyone ever figured out a good way to implement whuffie?
    If you integrated it into a social network and had people increase your cred by connecting with them and doing them favors or trading goods and services, it could work.

    I'm of the mind that the only way an internet currency can function is if it works like Flow or Whuffie and only has a basis in the value of the individual, rather than in actual "IRL" money.
  • That's two times Flow has been mentioned. Apparently, I don't know what it is, and Google is surprisingly unhelpful. What the hell is it?
    I'm of the mind that the only way an internet currency can function is if it works like Flow or Whuffie and only has a basis in the value of the individual, rather than in actual "IRL" money.
    Yeah. It'd be interesting if there was some way to create a sort of internet-wide system of accumulating a sort of "awesome points" that people would give you for doing things that are creative, or helpful, or generous, and that could be spent for favors or services or whatever. I imagine it would immediately break down into something horrible, like Chinese whuffie farms and the like. On the other hand, if whuffie-farming meant doing a bunch of awesome stuff for people, I guess that wouldn't be that bad.
  • edited May 2011
    That's two times Flow has been mentioned. Apparently, I don't know what it is, and Google is surprisingly unhelpful. What the hell is it?
    Luke Crane's RPG FreeMarket's version of Artha, I think. (which is a useless explination if you don't know anything about Burning Wheel >__>)
    Post edited by Walker on
  • Luke Crane's RPG FreeMarket's version of Artha, I think
    It's the "currency" of FreeMarket, not the Artha.
  • Scam.
    Not sure if it is or isn't a scam (it's all open source and stuff), but it's definitely dumb. It simply won't take off because I have no need for any currency other than the dollar and neither does anyone else.
  • edited May 2011
    Has anyone ever figured out a good way to implement whuffie?
    If you integrated it into a social network and had people increase your cred by connecting with them and doing them favors or trading goods and services, it could work.

    I'm of the mind that the only way an internet currency can function is if it works like Flow or Whuffie and only has a basis in the value of the individual, rather than in actual "IRL" money.
    The problem is that it would be really hard to implement on a social network without accidentally including some loophole that will encourage undesirable behavior - things like people making a bunch of fake accounts and then using them to generate money. In short, mechanism design on the Internet is hard, and having an exploit in a currency system is unforgivable.

    Really, something like Whuffie would only be useful post-scarcity, when life's necessities aren't dependent on having currency.

    I just wrote a 6-page paper with Whuffie as one of my inspirations, so I've been thinking about it a lot.
    I have no need for any currency other than the dollar and neither does anyone else.
    Close enough to true.
    Post edited by Linkigi(Link-ee-jee) on
  • Scam.
    Not sure if it is or isn't a scam (it's all open source and stuff), but it's definitely dumb. It simply won't take off because I have no need for any currency other than the dollar and neither does anyone else.
    This is pretty much what I think.
  • Scam.
    Not sure if it is or isn't a scam (it's all open source and stuff), but it's definitely dumb. It simply won't take off because I have no need for any currency other than the dollar and neither does anyone else.
    You know who has a need for currency other than the dollar? People who want to buy illegal things on the internet, for which anonymous digital currency like egold and bitcoins is very useful.
  • Does anyone bother to read this? Bitcoin.pdf
  • Does anyone bother to read this? Bitcoin.pdf
    Yep. But nothing contained therein actually indicates that bitcoin is going to be anything more than just another internet currency that has a spike in popularity, and then fades into obscurity.
  • Actually, Bitcoin may have a different life than just fading. Because it's decentralized and can be traded for real money, I heard that people are starting to use it for money laundering.
  • Hoo boy. Didn't see that one coming.
  • Actually, Bitcoin may have a different life than just fading. Because it's decentralized and can be traded for real money, I heard that people are starting to use it for money laundering.
    So, Stamped out or regulated instead of fading, then?
  • edited May 2011
    Actually, Bitcoin may have a different life than just fading. Because it's decentralized and can be traded for real money, I heard that people are starting to use it for money laundering.
    So, Stamped out or regulated instead of fading, then?
    That is the one aspect of this that many people don't get yet, I think. This thing is impossible to stamp out or regulate without reducing the Internet as a whole to a Balkanized, ultra controlled form. And even then you could just re-implement this idea in whatever method of communication is allowed.

    Whether this particular company is going to be successful or not is not that important, it is only a matter of time before someone figures out the right way to implement this / makes the right kind of deals with Facebook / Amazon / Google. Disparaging the idea vs the company is an entirely different thing and much more interesting.

    The step to using this kind of currency is akin to the adoption of paper money and abolishment of the gold standard. The difference being that with paper money you still had a central authority, i.e. the government / central bank, which stood behind the value and in which you could place trust. By extension, of course, the government is just all of us collectively and this new form of currency does what the Internet always seems to do and cuts out the middle man. It is the purest form of currency in that respect and it's value explicitly depends on the amount of trust people have in it being useful at some point in the future.

    The obvious criticism then is that this is a chicken - egg problem; without this sort of currency being a major/dominant form of value exchange there is no guarantee that people will use it in the future and vice versa. Of course, we know companies who have solved the chicken - egg problem so that is not a very good argument.

    Another point would be that since potentially switching currencies could be as easy as switching from MySpace to Facebook or just downloading a different "wallet" app to your machine, trust in a digital currency is inherently lower than trust in something that has to be physically produced. This is also not a very good argument, since a widespread digital currency will be integrated into third party services which would all have to switch as well.

    The best argument against a currency of this type (and one that I have not found a good counter argument against yet) is that it's creation is entirely set in stone by the generating algorithm. This makes it a horrible, horrible currency for economists who want to have a moderate and steady amount of inflation. Since demand for a currency changes unpredictably and sometimes wildly due to fluctuations in national productivity / wars / economic bubbles, the supply side must be able to adjust. However, if there is leeway in the algorithm and someone controls that leeway, then that person becomes the central authority and focus of trust in the currency and we are back to having an ordinary currency. Even worse, if the algorithm has leeway and the adjustments in generation of new currency is automatic, the algorithm becomes a ripe target for large scale value manipulation.
    Post edited by Dr. Timo on
  • edited May 2011
    This thing is impossible to stamp out or regulate without reducing the Internet as a whole to a Balkanized, ultra controlled form.
    You could simply make it illegal. It won't stop it, but it will break it's metaphorical neck, and all we have to do then is watch it rapidly die - and this isn't terribly unlikely, as it's a great system for laundering money and conducting illegal activities.

    Now, to refer it to someone smarter than me who can explain it much better than me, He's Adam Cohen - Senior Software Developer at Seatgeek, and Stanford educated Economist - Who doesn't think it's a bad idea. In fact, he actually thinks it's a ludicrously bad idea, and an outright Scam.

    There are further arguments for and against later on, many of which are quite interesting. I still don't trust bitcoin at all, and I think if you trade in it, you're a damned fool - I've got a pretty good nose for cons, and this stinks like week-old offal. Even failing that, I still wouldn't trust it, as it reminds me quite strongly of Tulip mania in the 1600s.

    Edit - It doesn't help that bitcoin apparently relies on Honesty of the masses and a good helping of hope to keep it afloat. If you have a botnet, or money to afford use of one, then you could bring down bitcoin within a very short period of time, and this is not a hidden weakness - it's right out there, in plain sight, and is part of how it works. That alone is a very good reason not to trust bitcoin AT ALL.
    Post edited by Churba on
  • You could simply make it illegal.
    That would actually be difficult. Short of banning cryptography and/or the exchange of numbers for money (which includes all music, movies, and software), or naming "Bitcoin" specifically, there's almost no way to actually make it illegal.
  • That would actually be difficult. Short of banning cryptography and/or the exchange of numbers for money (which includes all music, movies, and software), or naming "Bitcoin" specifically, there's almost no way to actually make it illegal.
    Yeah, there is no way to stop Bitcoin unless some technological flaw is found. It's not necessarily impossible, just extremely unlikely. You would have to get rid of the Internet to stop it.
  • edited May 2011
    That would actually be difficult. Short of banning cryptography and/or the exchange of numbers for money (which includes all music, movies, and software), or naming "Bitcoin" specifically, there's almost no way to actually make it illegal.
    Huh, Fair enough then. That's what I get for saying something without knowing enough about it.
    Yeah, there is no way to stop Bitcoin unless some technological flaw is found. It's not necessarily impossible, just extremely unlikely. You would have to get rid of the Internet to stop it.
    The technological flaw is right there in plain view, and even the FRCF village idiot - Hi there, that'd be me - Can see it, and I'm suprised you can't, Scott - You're generally 15 steps ahead of me on this sort of thing, on my best day and your worst. Get time on a botnet, and bitcoin is pretty much yours for the taking - the system, by the admission of the founder, is only resilient to some attacks as long as the majority of the nodes are "Honest" nodes. The Bredolab botnet has(or at least, had) an estimated 30 Million machines - So you could trivially dominate the entire bitcoin network twice over with the tiniest fraction of the power available to that botnet, let alone the smaller ones, of which there are many of sufficient size to overwhelm bitcoin - You only need a majority, everything after that is just a matter of time. In the link I added above, more attacks are listed, if you're interested.
    Post edited by Churba on
  • Congratulations, Timo.

    You have made me think enough about economics and currency to be truly terrified.
  • The Bredolab botnet has(or at least, had) an estimated 30 Million machines - So you could trivially dominate the entire bitcoin network twice over with the tiniest fraction of the power available to that botnet, let alone the smaller ones - You only need a majority, everything after that is just a matter of time. In the link I added above, more attacks are listed, if you're interested.
    Yes, if you had a botnet you could attack Bitcoin. However, there's no point in doing so. You would be better off using the Botnet to mine Bitcoins. The Bitcoin network could defend itself from attack by partitioning. Now there are two Bitcoin networks, your Botnet and everybody else.

    Also, it's trivial for anyone to setup a new network with the same protocol as Bitcoin. I could setup FRCCoin if I wanted to. If someone attacked it, I could just setup FRCCoin2 that is the same as FRCCoin1 prior to the attack.

    Also, when you setup your own Bitcoin network, you can setup different rules if you want. The "real" Bitcoin is setup in such a way that over time there will only ever be X Bitcoins in circulation. It doesn't have to be that way. You can create a Bitcoin-powered currency that is pegged to the US dollar, to gold, to whatever the fuck you want.

    The fundamental thing that is going on here is the willingness of people to exchange legal tender for what amounts to CPU time. As long as people are willing to do that, there's nothing any government can do to stop people from laundering money or engaging in unregulated commerce.
  • edited May 2011
    Yes, if you had a botnet you could attack Bitcoin. However, there's no point in doing so. You would be better off using the Botnet to mine Bitcoins. The Bitcoin network could defend itself from attack by partitioning. Now there are two Bitcoin networks, your Botnet and everybody else.
    The other issue it would raise is Double spending, which would allow a profit - practically free money, since all you do is exchange the bitcoin, and still have it, which is more likely than eliminating the network - after all, there is no profit to be had in destroying bitcoin, the profit comes in "Controlling" the network, so to speak. And - as I understand it, at least - their "Chain" is the biggest, they essentially own the bitcoin network after a fashion - though I could be misunderstanding.

    Do you still think it's a scam, as a side note, or have you changed your position?
    Post edited by Churba on
  • edited May 2011
    The other issue it would raise is Double spending, which would allow a profit - practically free money, since all you do is exchange the bitcoin, and still have it, which is more likely than eliminating the network - after all, there is no profit to be had in destroying bitcoin, the profit comes in "Controlling" the network, so to speak. And - as I understand it, at least - their "Chain" is the biggest, they essentially own the bitcoin network after a fashion - though I could be misunderstanding.
    Here's the thing. If you started double-spending people would figure it out very quickly. If the network was actually compromised, then the value of Bitcoin would drop to $0.00 pretty much instantly. Controlling the network like that just makes all the bitcoins worthless. You're better off mining. Since mining costs more in hardware and electricity than you get from it, you're better off putting your computers to sleep and working. Maybe if you had a gigantic botnet mining would be worth it since you would get a lot of hits and the electric bill would go to someone else.
    Do you still think it's a scam, as a side note, or have you changed your position?
    It's technologically sound and interesting, so from that perspective I recognize it. But from the perspective of would I actually want Bitcoins, hell no! Not anymore than I want WoW Gold or anything else of that sort. People can make all sorts of currencies, but there is only one kind you can use to buy food and pay your taxes. That's the kind I'll be sticking with. If you're willing to give me real money, aka food and rent, in exchange for CPU time, have I got a deal for you!
    Post edited by Apreche on
  • edited May 2011
    Here's the thing. If you started double-spending people would figure it out very quickly. If the network was actually compromised, then the value of Bitcoin would drop to $0.00 pretty much instantly. Controlling the network like that just makes all the bitcoins worthless. You're better off mining. Since mining costs more in hardware and electricity than you get from it, you're better off putting your computers to sleep and working. Maybe if you had a gigantic botnet mining would be worth it since you would get a lot of hits and the electric bill would go to someone else.
    You do have a point, yeah, I can see where you're coming from. Thanks for setting me straight on that.
    It's technologically sound and interesting, so from that perspective I recognize it. But from the perspective of would I actually want Bitcoins, hell no! Not anymore than I want WoW Gold or anything else of that sort. People can make all sorts of currencies, but there is only one kind you can use to buy food and pay your taxes. That's the kind I'll be sticking with. If you're willing to give me real money, aka food and rent, in exchange for CPU time, have I got a deal for you!
    Agreed. I also can see the limitations as pointed out by the bloke I mentioned above, Adam Cohen, as well as viewing it - again, as I mentioned - somewhat like a high-tech version of the Tulip Mania of the 1600s(which was fascinating by itself.) I'm still idly applying old scams to this, and seeing what fits - most new scams are old scams with a little twist. After all, I doubt many of you knew what a Spanish Prisoner scam was, until people started calling it a 419 scam or Nigerian E-mail scam. You didn't know about the Bujo till people started doing it with Fake Anti-virus programs, and Phishing was a staple con long before it had the name Phishing attached to it.

    I must admit, there is also that something is giving the the gut feeling/hunch that it's a scam, and until I have enough to go on to tell my gut to STFU, I'm sticking with it.
    Post edited by Churba on
  • I must admit, there is also that something is giving the the gut feeling/hunch that it's a scam, and until I have enough to go on to tell my gut to STFU, I'm sticking with it.
    I think the reason for your confusion might be that you conflate the idea of a digital currency, the specific implementation that Bitcoin has created, and the company itself. The idea itself is technologically sound but economically flawed / difficult to implement soundly for the reasons I and others (like the post you linked to) have specified. The particular implementation in this instance is clearly economically unsound (e.g. has inbuilt deflation) but this does not a priori make it a scam -- it makes it behave in many ways like gold (i.e. like a resource) and gold trading is certainly not a scam. However, my clever analogy immediately brings to mind all the various outfits promising cash for gold, which are clearly scamalicous. Is Bitcoin is a scam? I'd say perhaps, but take to note that you should not generally attribute to malice what can be attributed to incompetence. If this really is a bunch of VC's and the founders trying to scam everyone out of money, then they are playing a difficult game. Taking into account the vastly larger possibilities for making money of a working digital currency vs. doing a one time scam, I'm not so sure they have bad intentions but maybe justa bad plan.
  • The important question is, could I run a digital fiddle game with bitcoins?
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