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(The Week)   You know your country's financial crisis is bad when buying Bitcoins seems like a safer and more sensible alternative than keeping your money in your country's banks   (theweek.com) divider line 15
    More: Scary, Cyprus, crisis  
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1737 clicks; posted to Geek » on 22 Mar 2013 at 12:14 PM (1 year ago)   |  Favorite    |   share:  Share on Twitter share via Email Share on Facebook   more»



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2013-03-23 11:52:38 AM
1 votes:

mcreadyblue: Magorn: nmemkha: Magorn: Since I know nothing abut Bitcoins, perhaps some smarter person than me can explain how they are any different from say Second life's Lindens or Eve's currency?  Specifically who controls the amount of them in circulation and how robust are the controls on the issuing authority? (and for that matter, how hard can a digital currency be to counterfeit)  there's usaully a reason only large central governments are trusted with tasks like minting money, especially the kind accepted internationally in trade.

As I understand it:

Bitcoins are generated by anyone who solves (a portion) of a very hard (to compute) math problem. The system is set up so that it takes more and more effort to produce additional BitCoins as coins are produced.

Transaction processing is decentralized with many nodes in the network verifying the work of other nodes. Once a set amount of verification has occurred, the transaction is considered valid.

So Moore's law virtually guarantees hyper-inflation? And a clever mathematician who comes up with a more elegant way to solve the equation, or a hacker who gets control over a Cray  could become an overnight billionaire

Cray?

[media.economist.com image 300x271]


Yeah, I think people are using the term "Cray" as a generic for "supercomputer," without realizing that the actual computer by that name was from the 70s, and that we now carry around in our pockets computers that are many orders of magnitude more powerful.
xcv
2013-03-22 04:49:47 PM
1 votes:

Stile4aly: The real money in bitcoins is to be made selling the hardware needed to build the computers used for mining. In a gold rush, sell shovels.


Hm, thought one of the major 'specialized' hardware manufacturers actually went into the bitcoin mining business themselves because it was more profitable to use their inventory to generate income.
2013-03-22 03:52:47 PM
1 votes:

Magorn: nmemkha: Magorn: Since I know nothing abut Bitcoins, perhaps some smarter person than me can explain how they are any different from say Second life's Lindens or Eve's currency?  Specifically who controls the amount of them in circulation and how robust are the controls on the issuing authority? (and for that matter, how hard can a digital currency be to counterfeit)  there's usaully a reason only large central governments are trusted with tasks like minting money, especially the kind accepted internationally in trade.

As I understand it:

Bitcoins are generated by anyone who solves (a portion) of a very hard (to compute) math problem. The system is set up so that it takes more and more effort to produce additional BitCoins as coins are produced.

Transaction processing is decentralized with many nodes in the network verifying the work of other nodes. Once a set amount of verification has occurred, the transaction is considered valid.

So Moore's law virtually guarantees hyper-inflation? And a clever mathematician who comes up with a more elegant way to solve the equation, or a hacker who gets control over a Cray  could become an overnight billionaire


Cray?

media.economist.com
2013-03-22 03:24:11 PM
1 votes:

Magorn: MugzyBrown: Magorn: Since I know nothing abut Bitcoins, perhaps some smarter person than me can explain how they are any different from say Second life's Lindens or Eve's currency?  Specifically who controls the amount of them in circulation and how robust are the controls on the issuing authority? (and for that matter, how hard can a digital currency be to counterfeit)  there's usaully a reason only large central governments are trusted with tasks like minting money, especially the kind accepted internationally in trade.

The government isn't trusted to mint money they make it illegal for others to compete so they can fark with the currency like Bernanke is.

If you think Bernanke is "farking witht he currency" it's time to log off the Ron Paul fansites, and get an education in how the Federal Reserve really works, why its independence is a VERY good thing, how much money it makes the US government every year and why it makes the US dollar the international go-to "reserve" currency


Downturns in the economy have been more frequent and severe since the creation of the federal Reserve.

Also Google inflation hockey stick to see what it's done to the currency.

Finally it has destroyed the savings of the middle class by continually devaluing the currency by giving handouts to banks through its policies
2013-03-22 01:25:27 PM
1 votes:
Oversimplifying it to an absurd degree, mining Bitcoins is like finding prime numbers. Each time someone finds one, it's hard to get another one. Once you find one, it's yours (i.e., finding the prime earns you a "coin" with that prime number on it). You can break that coin into pieces and exchange it with others for goods and services.

Now imagine that, attached to the coin, is a list of every transaction in which that coin had changed hands, all the way back to the date it was discovered. If there was a dispute over who owned the coin, or an allegation that it had been stolen, and enough people decided that X is entitled to the coin rather than Y (the current holder of it). They could look back over the receipt and decide which transaction(s) should be "cancelled" and restore the coin to X.

As for why it's worth what it's worth? Because that's what people are willing to pay for it.
2013-03-22 01:21:37 PM
1 votes:

Stile4aly: In the end, bitcoins are like any other speculated commodity: they have no inherent value. The only value is the number of dollars someone will pay you for them, so they're hardly a replacement for said dollars.


And if there's a maximum fixed number of them they're inherently deflationary (or at least would be if enough people took them seriously).

Every time I hear about Bitcoins I'm surprised they still exist.
2013-03-22 12:59:51 PM
1 votes:

samiti: Magorn: nmemkha: Magorn: Since I know nothing abut Bitcoins, perhaps some smarter person than me can explain how they are any different from say Second life's Lindens or Eve's currency?  Specifically who controls the amount of them in circulation and how robust are the controls on the issuing authority? (and for that matter, how hard can a digital currency be to counterfeit)  there's usaully a reason only large central governments are trusted with tasks like minting money, especially the kind accepted internationally in trade.

As I understand it:

Bitcoins are generated by anyone who solves (a portion) of a very hard (to compute) math problem. The system is set up so that it takes more and more effort to produce additional BitCoins as coins are produced.

Transaction processing is decentralized with many nodes in the network verifying the work of other nodes. Once a set amount of verification has occurred, the transaction is considered valid.

So Moore's law virtually guarantees hyper-inflation? And a clever mathematician who comes up with a more elegant way to solve the equation, or a hacker who gets control over a Cray  could become an overnight billionaire

Not exactly... the system is designed (as I understand it) so that there are some constraints:

Difficulty will auto-adjust to ensure that only so many coins can be generated in a given period of time. This controls the generation rate... Additionally, the generation rate is designed to slow over time.

Furthermore, it is also designed that eventually, only a fixed, finite number of bitcoins can ever exist. There's an upper-bound (with the current blockchain...)

So... you have a system with a finite quantity of units that can exist at any given time, and a predictable growth rate for the volume of those units... that provides inherently a commodity that can be exchanged....


Except that it's not without its problems.  There was a story a few weeks ago where a signficant number of bitcoins were lost because of a problem with too many miners working on a younger blockchain without completing the older blockchain first resulting in an unexpected failure in the transactional system.  There are also any number of bitcoin scams out there which offer to exchange your bitcoins for currency only to be coincidentally hacked right after receiving your deposit.  The real money in bitcoins is to be made selling the hardware needed to build the computers used for mining.  In a gold rush, sell shovels.

In the end, bitcoins are like any other speculated commodity: they have no inherent value.  The only value is the number of dollars someone will pay you for them, so they're hardly a replacement for said dollars.
2013-03-22 12:51:52 PM
1 votes:

Magorn: Coder: Magorn: So Moore's law virtually guarantees hyper-inflation? And a clever mathematician who comes up with a more elegant way to solve the equation, or a hacker who gets control over a Cray  could become an overnight billionaire

Nope, the system anticipated that. As the proof-of-works are computed more often (from faster hardware or more CPU's being used), the difficulty of the work increases to balance. This keeps the growth to a predictable rate.

Interesting,  a clever technical solution, but it still doesn;t answer the question of who gets to decide how much money is in circulation and what they base it on.  Yes according to the wiki-link it's pre-set, but who got to set the limit and based on what?


Both the limit itself (about 21 million BTC) and the mechanism that grows the amount in circulation at a steady rate up to that limit are defined as part of the system by the guy whole invented it. Now that the whole bitcoin network is up and running, not even the inventor could change those values unless the network agreed, which if it ever happened would take the form of a whole different currency/system (for example Litecoin, which is like Bitcoin but with a different defined specs e.g. different hashing algorithm)
2013-03-22 12:46:22 PM
1 votes:

Magorn: nmemkha: Magorn: Since I know nothing abut Bitcoins, perhaps some smarter person than me can explain how they are any different from say Second life's Lindens or Eve's currency?  Specifically who controls the amount of them in circulation and how robust are the controls on the issuing authority? (and for that matter, how hard can a digital currency be to counterfeit)  there's usaully a reason only large central governments are trusted with tasks like minting money, especially the kind accepted internationally in trade.

As I understand it:

Bitcoins are generated by anyone who solves (a portion) of a very hard (to compute) math problem. The system is set up so that it takes more and more effort to produce additional BitCoins as coins are produced.

Transaction processing is decentralized with many nodes in the network verifying the work of other nodes. Once a set amount of verification has occurred, the transaction is considered valid.

So Moore's law virtually guarantees hyper-inflation? And a clever mathematician who comes up with a more elegant way to solve the equation, or a hacker who gets control over a Cray  could become an overnight billionaire


Not exactly... the system is designed (as I understand it) so that there are some constraints:

Difficulty will auto-adjust to ensure that only so many coins can be generated in a given period of time. This controls the generation rate... Additionally, the generation rate is designed to slow over time.

Furthermore, it is also designed that eventually, only a fixed, finite number of bitcoins can ever exist. There's an upper-bound (with the current blockchain...)

So... you have a system with a finite quantity of units that can exist at any given time, and a predictable growth rate for the volume of those units... that provides inherently a commodity that can be exchanged....
2013-03-22 12:43:19 PM
1 votes:

Coder: Magorn: So Moore's law virtually guarantees hyper-inflation? And a clever mathematician who comes up with a more elegant way to solve the equation, or a hacker who gets control over a Cray  could become an overnight billionaire

Nope, the system anticipated that. As the proof-of-works are computed more often (from faster hardware or more CPU's being used), the difficulty of the work increases to balance. This keeps the growth to a predictable rate.


Interesting,  a clever technical solution, but it still doesn;t answer the question of who gets to decide how much money is in circulation and what they base it on.  Yes according to the wiki-link it's pre-set, but who got to set the limit and based on what?
2013-03-22 12:37:44 PM
1 votes:

nmemkha: Magorn: Since I know nothing abut Bitcoins, perhaps some smarter person than me can explain how they are any different from say Second life's Lindens or Eve's currency?  Specifically who controls the amount of them in circulation and how robust are the controls on the issuing authority? (and for that matter, how hard can a digital currency be to counterfeit)  there's usaully a reason only large central governments are trusted with tasks like minting money, especially the kind accepted internationally in trade.

As I understand it:

Bitcoins are generated by anyone who solves (a portion) of a very hard (to compute) math problem. The system is set up so that it takes more and more effort to produce additional BitCoins as coins are produced.

Transaction processing is decentralized with many nodes in the network verifying the work of other nodes. Once a set amount of verification has occurred, the transaction is considered valid.


Sounds like someone is making a rainbow table
2013-03-22 12:34:37 PM
1 votes:

MugzyBrown: Magorn: Since I know nothing abut Bitcoins, perhaps some smarter person than me can explain how they are any different from say Second life's Lindens or Eve's currency?  Specifically who controls the amount of them in circulation and how robust are the controls on the issuing authority? (and for that matter, how hard can a digital currency be to counterfeit)  there's usaully a reason only large central governments are trusted with tasks like minting money, especially the kind accepted internationally in trade.

The government isn't trusted to mint money they make it illegal for others to compete so they can fark with the currency like Bernanke is.


If you think Bernanke is "farking witht he currency" it's time to log off the Ron Paul fansites, and get an education in how the Federal Reserve really works, why its independence is a VERY good thing, how much money it makes the US government every year and why it makes the US dollar the international go-to "reserve" currency
2013-03-22 12:31:34 PM
1 votes:

nmemkha: Magorn: Since I know nothing abut Bitcoins, perhaps some smarter person than me can explain how they are any different from say Second life's Lindens or Eve's currency?  Specifically who controls the amount of them in circulation and how robust are the controls on the issuing authority? (and for that matter, how hard can a digital currency be to counterfeit)  there's usaully a reason only large central governments are trusted with tasks like minting money, especially the kind accepted internationally in trade.

As I understand it:

Bitcoins are generated by anyone who solves (a portion) of a very hard (to compute) math problem. The system is set up so that it takes more and more effort to produce additional BitCoins as coins are produced.

Transaction processing is decentralized with many nodes in the network verifying the work of other nodes. Once a set amount of verification has occurred, the transaction is considered valid.


So Moore's law virtually guarantees hyper-inflation? And a clever mathematician who comes up with a more elegant way to solve the equation, or a hacker who gets control over a Cray  could become an overnight billionaire
2013-03-22 12:20:40 PM
1 votes:

Magorn: Since I know nothing abut Bitcoins, perhaps some smarter person than me can explain how they are any different from say Second life's Lindens or Eve's currency?  Specifically who controls the amount of them in circulation and how robust are the controls on the issuing authority? (and for that matter, how hard can a digital currency be to counterfeit)  there's usaully a reason only large central governments are trusted with tasks like minting money, especially the kind accepted internationally in trade.


As I understand it:

Bitcoins are generated by anyone who solves (a portion) of a very hard (to compute) math problem. The system is set up so that it takes more and more effort to produce additional BitCoins as coins are produced.

Transaction processing is decentralized with many nodes in the network verifying the work of other nodes. Once a set amount of verification has occurred, the transaction is considered valid.
2013-03-22 11:45:02 AM
1 votes:
Since I know nothing abut Bitcoins, perhaps some smarter person than me can explain how they are any different from say Second life's Lindens or Eve's currency?  Specifically who controls the amount of them in circulation and how robust are the controls on the issuing authority? (and for that matter, how hard can a digital currency be to counterfeit)  there's usaully a reason only large central governments are trusted with tasks like minting money, especially the kind accepted internationally in trade.
 
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