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Amir Taaki Answers Your Questions About Bitcoin

timothy posted more than 3 years ago | from the conspiracy-theorists-in-three-two-one-go dept.

Bitcoin 262

Last week, you asked questions (many rather pointed!) of Amir Taaki, co-founder of Bitcoin Consultancy, which develops Bitcoin related services, exchanges and Bitcoin itself. (They also own Britcoin.co.uk.) Says Taaki: "When creating video games I spent much time imagining tools to make artists lives easier, and how we could keep funding developers to write free software. One contribution of mine to the community was a site where developers could get funded for developing features and I'd love nothing more than to pay people to write free software." With regard to Bitcoin, similarly, "We need fulltime developers thinking about the problems and solutions needed to keep this system running. We aim to get all the creative thinkers from the community and provide a mechanism for enabling their work." Below find his answers to the questions readers raised.

Is the gold rush over?
by curunir

With BitCoin limited to a pre-determined amount and the difficulty of mining new BitCoins, it seems that this gives a huge advantage to people who got into BitCoin early and have already amassed a considerable amount of BitCoins. Is this true and, if so, do you think this disincentive will undermine BitCoin's ability to become more popular since the majority of the population will have to work so much harder to obtain the currency?

Amir Taaki: It is certainly true that early adopters have been rewarded. I do not think these inequities will be more shocking than those in the real world. Any guesses as to how this will play out is pontification. However, I don't think anyone has proposed a working model for a decentralized secure digital currency where such a thing would not happen. Overall, I believe the properties of this currency will significantly add to the wealth of all peoples, especially those less well off.

Crypto-Anarchism?
by conner_bw

I argue that bitcoin is interesting because it's a locked currency, with a known maximum, and a timeline for that maximum based on contemporary crypto math and radical ideas. There is clearly well thought out timeline for adoption and disruption. It's not just "Cool, new money!" Are you a crypto anarchist, or similar?

A.T.: Yes, I myself am a crypto anarchist. However, not everyone on my team has the same political ideologies and we do not try to push our ideologies on each other. In fact, we have all seen our ideologies change over time with the awareness of new knowledge and information. Ideologies should not be a point of contention, especially when we all see the immense prolific value of a more efficient means of commerce.

If not, then is this another Tulip craze [wikipedia.org] and all these news stories and bitcoin currency exchange services being hyped heavily the last month machinations for profiteering?

A.T.: I do not advocate that people speculate on bitcoins. In fact I actively advocate against that because those who are new to bitcoin might see it as just that, a 'craze.' I do however think that the properties of bitcoin are clearly advantageous over the current means of commerce. Although bitcoin is still underdeveloped, everything visible in the modern world can be adapted using bitcoins as a backbone. This will result in all the services of today's world (clearing houses, security, fraud protection, interest bearing accounts...) continuing to be offered, but with far less overhead.

Austrian Acceptance
by MyFirstNameIsPaul

I have found that the Austrians have a hard time accepting the idea of a digital currency. The core of their argument seems to be that digital currencies are not made up of something that had value before being a medium of exchange, such as gold and silver. When I counter to them that BitCoin is made up of code and people pay money for things like video games, they argue that the video game would have to be the thing valued, not the computer code. How do you deal with these kinds of objections?

A.T.: Gold is not a currency in my mind. It is a store of value. I would not want to go to buy bread from my local store and shave off some gold from a bullion and take out a scale and wait for an acid test to be performed. Gold is backed by real world properties.

Bitcoin is backed by the fact that is has unique properties as well:

  • Decentralized
  • No bank holidays
  • International
  • No concept of borders
  • Divisible
  • True micro-transactions possible (new markets feasible)
  • New privacy model
  • Private identity yet transparent
  • Secure
  • You do not have to trust merchant sites (Sony - Playstation) to protect your data
  • Fast Transactions
  • No Charge backs

Useful Calculations?
by Bodhammer

Is there any way to make the calculations more useful (i.e. Boinc) and still maintain the same level of difficulty in the computations? It just seems so wasteful to run Bitcoin at this time.

A.T.: Our world's current infrastructure depends on paying employees, building large buildings, paying for heat, electricity, transportation, lawyers, courts, judges, policemen, government bureaucracies, armies and much more. Doesn't it seem wasteful to rely on tedious and sometimes ambiguous real world laws with a lot of overhead instead of mathematical laws?

When merchants started accepting bitcoins, verifiers (because miners is a misnomer) started to see that their generated coins were worth something. They became competitive and found ways to do the same calculations cheaper which provided security for the network and verified the transactions. Verifiers found out that running these hashing algorithms on one's GPU was far more energy efficient than running them on one's CPU. Specialized software was later constructed for these purposes. Some keep their machines under dry ice. In the not so distant future, hardware FPGAs will be specially designed for this verification process.

The advantages of bitcoin exist because it is an inherently more efficient and less wasteful system. The reward for minting a block, provides a healthy competition that causes the energy cost to be driven down.

Additional privacy layers and smartphones?
by DriedClexler

Is there any serious development underway to make the privacy more robust? There has been talk of "Bitcoin laundry," where large pools swap their coins around between each other to make it harder to connect a coin/address with an owner. But for this to seriously work, it needs a lot more people to be involved in it, and it has to be integrated in a way that's secure (against someone just keeping coins in the middle of a shuffle) and transparent to the user (so they don't have to think about the new addresses they generate, or which coins are optimal to send where for the maximum shuffle). How soon can we expect something like this? Also, how soon will smartphones be able to handle this with the same ease as desktops and notebooks?

A.T.: A bitcoin laundry already exists. The volume on it is very low, but if demand increases in the future then such a service is trivial to setup. A mixing service (as they're called) requires a large volume and therefore a persistent demand.

Smartphones can already use bitcoin :) An Android version of the command line Bitcoin was compiled. Additionally one can use an online wallet service (or a bitcoin exchange) to store their bitcoins.

Lost/forgotten bitcoins?
by algorimancer

One thing that concerns me is the fixed maximum number of bitcoins. Lets say people acquire bitcoins, but the amount isn't enough to worry about, so they never use them, or perhaps their computer crashes and they don't have a backup. My understanding is that these bitcoins are permanently lost from the economy of bitcoins. Over time, the total supply would begin to dwindle, presumably pushing up the value of those that remain, until people become frustrated at the small supply and are motivated to move to a new system, then bitcoin is abandoned. In the real world this happens with dollar bills, but the government can compensate for this by creating more. Is this issue addressed in some fashion?

A.T.: The supply of bitcoins is 21 million. The supply of money is infinite. A bitcoin can currently be divided to 8 decimal places. The loss of bitcoins in the future may lead to some deflation however I expect it to be insignificant. In the very long term, even if there was only 1 bitcoin theoretically in circulation, running the world economy would not be a problem. There exists only 6 MBTC in circulation at this moment.

Extreme instability of Bitcoin vs. USD
by Limerent Oil

Why would any merchant IN THEIR RIGHT MIND want to deal with Bitcoin? With the insane USD-to-Bitcoin exchange-rate gyrations happening lately, why would any serious retailer even bother, when the value of Bitcoin vs. USD could change by 50% or more in just a few hours?

A.T.: As liquidity increases transaction costs decrease. If there was already an appropriate clearing house in place, a merchant would be able to automatically accept bitcoins and liquidate them to dollars. In the same way that people who use the internet are not all cognizant of the communication protocols they are using, I foresee the possibility of merchants offering their products in USD, EUR, GBP, and customers purchasing those products in their local currency. And the underlying mechanism which facilitates this transfer is the bitcoin. Bitcoin would provide these same services that payment services, credit cards or banks do but with much less cost to the merchant and customer.

What about the lack of inflation?
by Cyberax

It's long known that economic growth is severely stunted without some measure of inflation. Adopting bitcoins for the global economy would mean that policymakers lose control on money supply, and while there are advantages in this, disadvantages far outweigh them. Additionally, adopting a global currency standard will deny governments ability to influence currency rates robbing them of yet another way to control the economy. Is there any plan to solve this? Maybe a system of independent bitcoin 'roots' operated by governments would help?

A.T.: Ben Friedman has released a lot of work on E money and how it will affect the future and how governments will adapt. The truth is that the government will still have monopolies on much of the operations of the economy such as fractional reserve banking and the issuing of licenses which allow banks to lend money.

Aspirations
by slim

What are your aspirations for the currency? Do you hope for it to be near-ubiquitous — used by corner shops and mainstream merchants like Amazon? Or are you happy to see a parallel economy grow, as a niche thing? Or something else?

A.T.: I have lofty dreams of a world where people can send money abroad without having to pay 20+% in many cases to rip offs like western union. Where people can raise funds through services like paypal but not have their accounts arbitrarily frozen. Where citizens in developing nations who already oppose their government do not have to pay for wars of genocide out of their own pockets as was the case in ex-Yugoslavia where authoritarian control over the money supply helped finance a terrible war and bring about the worst hyper-inflation in Europe since WWII.

Bitcoin in some form is going to be adopted whether it is used as a unique currency, a payment system or as a clearing house. Our aspiration for bitcoin is to provide competition to the current system making everything cheaper for all. It's about cutting the middleman, democratising money and handing back power to people.

Will governments let it survive?
by merdaccia

We live in a world where the supply and movement of money are controlled by governments, central banks, money laundering laws, and financial institutions. How can BitCoin survive in this world? Middle men like banks stand to lose a fortune in fees and exchange rates, governments stand to lose a fortune in taxes if they can't track money movement, and the black market stands to gain a silent way to move value. For BitCoin to gain adoption, some major retailers need to start supporting it, but given the above risks, what stops a government from telling companies in its jurisdiction that they can't accept it?

A.T.: The US is not the world. If their government forces everyone to continue to use typewriters in lieu of computers and pay through the nose, they can. New and better technology, especially when it is revolutionary, does threaten archaic models and practices. Hopefully there will not be contention. My team is already in contact with SWIFT which has operated for 30 years and is the backbone of international money transfer for over 9000 banks. Many forward thinkers see the advantages of bitcoins but it is easy to understand how those perhaps well-intentioned but not well-versed in what bitcoin is can promote FUD.

Regulatory compliance?
by molo

For those of us interested in developing financial services using bitcoin, how have you dealt with regulatory issues? It seems like the SEC and FINRA in the US would not be keen on unregistered broker-dealers and agents and owners not having the legally required Series 7 and Series 24 certifications. Have you sought the UK equivalent certifications? The requirements of lawyers, accountants, certifications etc. seem to put a very high capital cost on starting a legitimate business offering services in this space.

A.T.: As well as being a developer, I own and operate www.Britcoin.co.uk (the UK exchange site). My team has been in negotiations for a long time now with lawyers and regulators. There is no regulatory process or restrictions now on the running of such services. Non-regulated sectors rarely seek out regulation. However, when it comes to bitcoins, I believe the sooner they are regulated the better. If their regulation is pushed by those who understand what bitcoins are then we may be able to regulate them in the best way possible and show the world they were not created for illegal practices. The sooner they are regulated, the sooner users can have legal assurances that merchants are liable for their operations. The negligence seen at MTGox would never have happened in a regulated market.

Although the FSA have not made any official statement about bitcoins. We at www.britcoin.co.uk are hoping that we can show to the proper authorities that indeed we have recorded our history of transactions. That all the money in our users accounts is accounted for. This process would dispel the FUD surrounding bitcoins and allow the people of the world to enjoy the freedoms and wealth of bitcoins that much sooner.

Tax avoidance and illicit trading
by slim

Some "benefits" of Bitcoin, from one perspective, appear to be that its cash-like properties lend themselves to tax avoidance (making transactions without declaring them), illicit trading (e.g. drugs or prostitution) and money laundering. Do you view this as a positive, a negative, or neutral? If you view it as a problem, how can the problem be mitigated?

A.T.: Most new technologies can be used for good and bad. Of course I do not condone or agree with the use of Bitcoins for illegal purposes.

However, I really want people to understand one thing. The criminalization of Bitcoin would not stop the illegal activity that surrounds it. In fact, it would help those who use it as a means of engaging in illegal activity by not regulating the purchasing and selling of bitcoins. Criminalization would only stop people from enjoying the tremendous and fruitful benefits of such a system, it would hinder the social good. Regulation would allow the proper authorities to find and charge those who use bitcoins for illegal activities.

Britcoin.co.uk has kept a clear record of the exchanges which have gone on. Every single transaction is recorded and we are happy to open our books to the proper authorities. We are aggressively advocating and promoting the legalization and regulation of the exchanges.

Bitcoins offer massive potential for positive social change. It would be a sad thing to see Bitcoins outlawed due to ignorance or reactionary feelings. If you outlaw Bitcoin then the illicit trades will still continue, perhaps even proliferate, but the good would disappear.

Kings used to raise capital in order to wage wars. They required popular support before they were able to fund their wars. A common tool in modern day authoritarian regimes is currency manipulation in order to fund their wars of genocide (e.g Milosevic in the 90s). Bitcoin democratises governments.

Quantum Computing?
by SanityInAnarchy

Are there plans to deal with quantum computing, or with any of the algorithms used being compromised?

A.T.: If SHA256 or ECDSA was ever cracked, we'd have far bigger problems to worry about than bitcoin being destroyed. I suspect that there won't be any overnight switch, giving everybody enough time in order to adjust the current system to any changes.

The internet wasn't built perfect. But years of reshaping/patching/incremental design have shaped it into a workable network. Bitcoin will too undergo this transformation with time as it ages.

(More from the call for questions:)

is there ever going to be a bitcoin bank? ... The idea that if you lose or destroy or whatever your computer and lose all your money isn't going to make the general public accept this.

A.T.: Bitcoin now stands at its early stages. It's the kernel of the software stack that will eventually exist for this financial system. Other services and software utilising Bitcoin will exist. A common view is where Bitcoin acts as an automated clearing house between all these user facing services in the future.

Bitcoin's protocol itself will need to be extended in order for it to grow. As the network expands, block sizes could become impossible large once it rivals the transaction volume of a comparable service like VISA or Paypal. To have lightweight clients that don't need to process these large GB sized blocks new protocol commands like a txmatch regex would need to be introduced in order that clients don't need to process the entire block data.

The point to Bitcoin is that you can choose your own level of trust in an external service. One of our group's members, Patrick Strateman, came up with a scheme whereby a wallet could be recovered algorithmically using an email and a password. In the future I expect savings accounts where retrieving the money is an arduous proccess. Then we can go further to where a person has all their funds in a trusted service like with email today- how many people run their own mail servers?

What markets do you think will be the first to most aggressively adopt bitcoins as their currency?

What insights can you offer as to why the US government is having a hostile reaction to bitcoins?"

What kinds of competing P2P currencies are in development, and how will their deployment affect the valuation of bitcoins?

A.T.: Immediately as liquidity improves in exchanges, the best use for Bitcoins will be individuals transferring funds between countries without fees. Our group has a lot of interest from mobile sectors because of the potential as a micropayment system. Currently now in Africa, people use mobile credit as a form of currency to transfer funds across borders, but that's usually less than ideal.

The US government isn't a homogenous entity, and one senator (possibly funded by bankers) made a false claim on Bitcoin- calling it a scheme for drug trafficking networks. It may simply be due to reactionary misunderstanding like the people in Yahoo Finance calling Bitcoin a Ponzi scheme invented by bankers. That's why our group is aggressively pursuing press in order to dispel these myths.

Terminology

If we eventually use Bitcoin in everyday life, say, in the supermarket, how will we deal with prices in fractions of a Bitcoin? What terminology might we use for something priced at 0.00000005 Bitcoins?

A.T.: The accepted 'standard' is to use SI prefixes. 0.005 BC would be 5 mBC.

Here come the regulators ...

How will your business change when countries regulate exchanges? How do you ensure your exchange isn't being used for illicit purposes (to avoid being shut down by government authorities)?

A.T.: It is our goal (and has been for months) to get legal legitimisation. Our organisation has been aggressively seeking FSA regulation here in the UK for Britcoin. Our hope is that when governments do come to look at Bitcoin, they will see a long running, honest, legal exchange with open books. By having something in the law books about Bitcoin, it sets a positive legal precedent in the future and puts us as the policy makers rather than a bunch of old 60 year banker types.

Our exchange complies with the UK Know Your Customer laws which ensures it's not being used for illicit activity. We keep detailed transaction records and run regular audit logs to look for missing funds.

But eventually, one would want to use BitCoins to pay for legal services. My question is; how do you get to that point? Why would a legitimate business accept a currency that is used almost exclusively for illegal means? What is the strategy to convince mainstream businesses that BitCoins have a purpose in the main web, as well?

A.T.: The illicit markets are a very small part of Bitcoin yet the most sensationalist. I can see how one would think Bitcoin is purely for illegal trade if I didn't know better.

Check out the list of merchants.

Full and open disclosure: how many bitcoins do you currently own?

A.T.: 32 BC. At one point I had 6000, but I'm a bad hoarder. Everytime Bitcoins would double (and I'd have $2k), I'd donate half my wealth to other free software developers. Then recently I was going to wait until I had $4k, but the price went down and I'm very bad at holding onto cash :)

But that doesn't bother me at all. We have our group of free software developers developing Bitcoin itself and other related projects. Funds are coming in and we're growing. The goal is to this as a sustainable operation paying developers working on Bitcoin fulltime.

What are the advantages of bitcoin?

One problem I see with bitcoin is it offers very little over what we currently have. If I want to perform an online transaction using my computer, unless I am buying something illegal, then there are already companies which offer products for me to use. If I want to make an anonymous purchase in person, I would easily use cash.

Bitcoin seems to suffer from a lack of portability, which makes me wonder, what "need" is bitcoin catering to? What do I do in my day-to-day life that bitcoin will help me do such that as some point, bitcoin becomes irreplaceable and achieves de facto permanency?

A.T.: Sending funds abroad is time consuming, expensive and difficult. Recently I tried sending funds to a Polish bank from the UK- the bank was closed and I waited until Monday. Requiring me to be in person at the bank, the woman was unable to enter the Polish L looking character into her terminal. I had to aquire an internet banking code to do it online. Waited 3 days, logged in and the internet banking form didn't work. In the end, I ended using a friend to aquire Bitcoins and use the Polish exchange bitomat (we never use Britcoin ourself).

I wanted to donate funds to the excellent Symphony of Science musician. I went to fill in the Paypal form, spent 10 mins signing up to an account, entering all my very personal details and my card was rejected. In the end I got him to accept Bitcoins and donated directly without paying fees to Paypal.

Sony recently was hacked. Millions of accounts were leaked. If they were using Bitcoins then the addresses people donated to would be known to the attacker. Not my private keys which enable said attacker to spend my cash.

With commerce, everything becomes cheaper. Bitcoin vastly reduces the overhead needed for fees. We no longer require staff sitting inside banks pressing numbers on a keyboard since the system is automatically backed by mathematics and cryptography, not laws and people.

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Didn't answer my question (-1)

Anonymous Coward | more than 3 years ago | (#36533214)

That's great, but my question of bitcoin - drug valuations was never answered.

Not Answered... (5, Funny)

Anonymous Coward | more than 3 years ago | (#36533222)

How do I combat the shakes when 24 hours pass without a Bitcoin article on /.?

Re:Not Answered... (1)

Co0Ps (1539395) | more than 3 years ago | (#36533278)

+5 Funny

Re:Not Answered... (3, Funny)

Dunbal (464142) | more than 3 years ago | (#36533820)

Go here [apple.com] .

More Bitcoin spam? (-1, Redundant)

Anonymous Coward | more than 3 years ago | (#36533228)

This reads like an advertisement

I've got a question (3, Funny)

vgerclover (1186893) | more than 3 years ago | (#36533230)

How have you managed to flood /. on a daily basis?

Re:I've got a question (2, Funny)

Anonymous Coward | more than 3 years ago | (#36533316)

It certainly wasn't paid with bitcoins, thats for sure.

Re:I've got a question (0, Flamebait)

Anonymous Coward | more than 3 years ago | (#36533944)

So there's an Ask Slashdot about bitcoin... and then you bitch when the answers come back?

Seriously. Fuck off. Fucking whiners...

Jesus (-1)

Anonymous Coward | more than 3 years ago | (#36533252)

More bitcoin crap... Thanks!!!

Re:Jesus (2)

TheCouchPotatoFamine (628797) | more than 3 years ago | (#36533874)

you are very short sighted. Ask yourself, is this type of system inevitable? If not with Bitcoin, do you really, really think this is NOT going to happen in my lifetime? You are nuts not to express general interest.

Re:Jesus (3, Insightful)

Americano (920576) | more than 3 years ago | (#36534020)

History is littered with the detritus of "inevitable ideas whose time has come" that weren't inevitable, and whose time hadn't come.

Is this type of system inevitable? No, I don't think so. In fact I think it has a lot of things actively working against it, not the least of which is the simple fact that it'll be hard for the government to trace, tax, and control this new currency, and the government is the only one with the guns and laws to enforce adoption of a fiat currency, so you've just alienated the very organization whose support you desperately need to be able to break out of the small niche you're occupying.

Do I really, really think this is not going to happen in my lifetime? There will always be naive simpletons willing to buy into the delusion that this sort of thing will catch on "any day now." I don't think that means that this is going to happen in my lifetime.

A steady drumbeat of articles flogging this pyramid scam is not "expressing a general interest," it's beating a dead horse.

Buttcoins (-1, Redundant)

Anonymous Coward | more than 3 years ago | (#36533254)

Pyramid Schemes for Nerds, Stuff that Doesn't Matter.

Basically nothing new (2)

OverlordQ (264228) | more than 3 years ago | (#36533268)

So in short, lots of rationalization for having spent lots of time working on this with nothing of real substance to get people to actually use it.

Re:Basically nothing new (1)

tepples (727027) | more than 3 years ago | (#36533412)

Compare BTC to US Dollars, which likewise have "nothing of real substance". The big difference I can see is that one can pay tax in USD.

Re:Basically nothing new (3, Insightful)

David Gerard (12369) | more than 3 years ago | (#36533452)

USD are also a lot more popular. This is actually important: there's 300 million people who will do work for you if you offer them a certain quantity of pieces of paper called "US dollars".

Re:Basically nothing new (1)

ArhcAngel (247594) | more than 3 years ago | (#36533852)

USD are also a lot more popular. This is actually important:

You are right...it is very important. It is important that people perceive their money has value. The USA measures this perception and calls it the Consumer Price Index [wikipedia.org] (CPI). But perceptions can quickly change and destroy economies [wikipedia.org] .

Re:Basically nothing new (1)

Shados (741919) | more than 3 years ago | (#36534022)

Hell, a lot more than that, since banks across the world will give you most any other currency at a fairly standard rate for those pieces of papers called US dollars.

So really, its more like a few billion peoples. Just some of them will ask for a bit more to cover the fees and inconvenience.

Re:Basically nothing new (1)

vlm (69642) | more than 3 years ago | (#36533536)

Compare BTC to US Dollars, which likewise have "nothing of real substance". The big difference I can see is that one can pay tax in USD.

You can pay tax in BTC the same way you can pay tax in euros... simple conversion... Anyone who tried to claim euros are worthless because form 1040 requires dollars would be laughed at.

Re:Basically nothing new (2, Insightful)

Beelzebud (1361137) | more than 3 years ago | (#36533580)

A bank will convert euros to dollars. I don't know of any bank I can convert from bitcoin to dollars, thus, to me it's worthless. No one would claim the Euro is worthless because it's backed by the European Union. What exactly backs bitcoin besides "Some guy" in an IRC channel?

Re:Basically nothing new (1)

vlm (69642) | more than 3 years ago | (#36533724)

A bank will convert euros to dollars. I don't know of any bank I can convert from bitcoin to dollars, thus, to me it's worthless.

OK, for the sake of argument, since you insist for some reason that the money changers who do exist, do not exist, I will humor you. If they're worthless, and you have a hundred thousand of them, because they're worthless, give those worthless things to me. To me, they're worth a couple bucks a piece because I can quite trivially (trivially for me, because I can use google) turn each into dollars or any other currency I desire.

I am tempted to create a BTC receiving address and post it in this thread so all the naysayers who insist "everyone knows they're worthless" can make me rich by giving me worthless BTC.

Re:Basically nothing new (2, Funny)

Beelzebud (1361137) | more than 3 years ago | (#36533754)

I don't have bitcoins to throw in your tin can. Go get a job and earn real money, bum.

Re:Basically nothing new (1)

vlm (69642) | more than 3 years ago | (#36533808)

LOL best summary of the opposition to BTC I've seen in awhile.

Re:Basically nothing new (0)

Anonymous Coward | more than 3 years ago | (#36534218)

Well maybe if you had read Takki's answers you'd see a list [bitcoin.it] of places you can buy and sell bitcoins for other currencies.
What backs bitcoins? SCIENCE! (and math [and crypto])

Re:Basically nothing new (1)

betterunixthanunix (980855) | more than 3 years ago | (#36533596)

Here's the difference: nobody is converting other currencies into BTC in order to pay their taxes. That undermines the demand for BTC and doesn't say much for its long-term prospects. Nobody is punished for not having BTC, but people can be punished for not having other currencies (i.e. because they are punished for not paying taxes), which leads me to believe that over time people will sell their BTC more rapidly than they buy (or in other words, that BTC needs to keep getting more people to buy into the system in order to remain viable, which is not even close to a sustainable policy).

Re:Basically nothing new (2)

idontgno (624372) | more than 3 years ago | (#36533766)

Anyone who tried to claim euros are worthless because form 1040 requires dollars would be laughed at.Only a man made of hay would claim that. But, if you have a positive quantity on line 76 of your IRS Form 1040, it doesn't matter if you want to pay your US tax bill with Euros, diamonds, or your left kidney: it won't work. You have to exchange the appropriate amount of whatever you've got into U. S. Dollars.

Same with Bitcoins. And from that limited perspective, Bitcoins are no more immediately valuable than a trunk full of aluminum cans or a suitcase full of Pound notes. You pay your debts to the government in the properly-denoted currency demanded by that government, or you rot in jail.

Re:Basically nothing new (1)

vlm (69642) | more than 3 years ago | (#36533974)

Anyone who tried to claim euros are worthless because form 1040 requires dollars would be laughed at.Only a man made of hay would claim that. But, if you have a positive quantity on line 76 of your IRS Form 1040, it doesn't matter if you want to pay your US tax bill with Euros, diamonds, or your left kidney: it won't work. You have to exchange the appropriate amount of whatever you've got into U. S. Dollars.

Same with Bitcoins. And from that limited perspective, Bitcoins are no more immediately valuable than a trunk full of aluminum cans or a suitcase full of Pound notes. You pay your debts to the government in the properly-denoted currency demanded by that government, or you rot in jail.

So what exactly is your point? I'm, frankly, mystified how that could even remotely be relevant.

Lets do the standard /. procedure here:
1) I have a cloth bag at home with a handful of euro coins in it from last time I visited southern Ireland.
2) I can't pay my taxes with euro coins.
3) ....
4) I will rot in jail and/or Profit!!!!

I think we're missing a little something in step 3...

A trunk full of UK pound notes should be able to pay most reasonable tax bills, there's dozens of old fashioned brick and mortar places to convert into $ within a reasonable drive, at a huge transaction cost and general agony of course. Aluminum cans, maybe not much value there, and there's only a handful of places within a reasonable drive that take them, at least with little hassle although they don't pay market rates either. BTC? A zillion individuals and a zillion "companies" on the entire internet will trade with you, way easier than either example. BTC are waaaaaaay more liquid than a trunk of pound notes or recycled cans.

Re:Basically nothing new (0)

Anonymous Coward | more than 3 years ago | (#36534036)

Because come tax season, there will be people who want to buy your GBP and give you USD, because they live in the UK and need to pay their taxes in GBP. Nobody needs to do this for BTC, so if (through some hilariously improbable miracle) Bitcoin is still alive by next April, it'll crash again then.

Re:Basically nothing new (1)

betterunixthanunix (980855) | more than 3 years ago | (#36533538)

The big difference I can see is that one can pay tax in USD.

More importantly, you can be arrested and lose your property if you refuse to pay your taxes, and you need to use USD to do so. Nobody is punished for not having BTC, but people can be punished for not having USD, which creates some serious imbalance in the demand for BTC.

Re:Basically nothing new (1)

vlm (69642) | more than 3 years ago | (#36533794)

More importantly, you can be arrested and lose your property if you refuse to pay your taxes, and you need to use USD to do so. Nobody is punished for not having BTC, but people can be punished for not having USD, which creates some serious imbalance in the demand for BTC.

If your one and only contact with the economic system is paying taxes, you need to get out more.

If the $ were exclusively used to pay taxes, it would be fairly worthless, people would burn cash in the winter to keep warm, or use it as toilet paper. In that situation it would seem pretty trivial to find someone who does business with the govt to trade some BTC for some cash-firewood.

Re:Basically nothing new (1)

betterunixthanunix (980855) | more than 3 years ago | (#36533854)

If the $ were exclusively used to pay taxes, it would be fairly worthless, people would burn cash in the winter to keep warm, or use it as toilet paper.

...and then the IRS would come and arrest them, because they wouldn't have any money available to pay their taxes with.

I never said the only thing USD was useful for was paying taxes. However, at least in theory anything that BTC can be used for USD could also be used for; yet there are things that USD can be used for (settling debts with the government, paying fees to the government, etc.) which BTC cannot be used for. There is therefore an imbalance in demand, at least among US users of BTC.

Re:Basically nothing new (2)

demonbug (309515) | more than 3 years ago | (#36533880)

Compare BTC to US Dollars, which likewise have "nothing of real substance". The big difference I can see is that one can pay tax in USD.

I see this claim a lot, but I think it is a little bit backwards. The value of the USD isn't in that they can be used to pay tax, it is that they are backed by the US Government, which imposes (and enforces) taxes. That is, while they are not backed by gold or some other set commodity, they are backed by the taxes collected by the US Government. So by extension, USD are backed by all of the physical goods produced, services rendered, and real estate owned in the U.S.

This is of course a simplification and not entirely accurate, but I think it makes a lot more sense than saying something is valuable because you can pay taxes with it.

Bitcoin explained (0, Redundant)

David Gerard (12369) | more than 3 years ago | (#36533274)

Bitcoin is a decentralised computer currency designed by self-righteous Ayn Rand-reading nerds who despise looters and parasites like, er, you. It is used to purchase Internet services, illegal drugs and pictures of naked women holding video cards.

Bitcoin works by an emergent synergy of cryptography, peer-to-peer, anonymity, anarchism, libertarianism, wasting stupendous quantities of electricity, the marketing department at NVidia, the enduring exchange value of tulip bulbs and doing all of this instead of Folding@Home.

Bitcoin successfully harnesses a hitherto-unexploited Internet resource: the vast reserves of unexamined privilege amongst computer programmers. Coins are "mined" by stealing them from people who are able to comprehend this level of computer science but still keep their Bitcoin wallet in plain text on a Windows machine.

The Bitcoin system is robustly designed to continue past the inevitable collapse of the US dollar and the world economy, as the Internet, fast computers and reliable electricity are all expected to be readily available when barbarian hordes are wandering the burnt-out post-apocalyptic remnants of civilisation.

It is completely incorrect to describe Bitcoin as a "pyramid scheme." Technically, it's a "pump-and-dump."

Many common products are still inexplicably not purchasable with Bitcoins. "It's like they don't understand the revolutionary wonder of Bitcoin," says Debian developer Hiram Nerdboy, 17. "I can't get chicks with Bitcoins either. Even with my slickest Pick-Up Artist techniques! It's as if my knowledge of economics, game theory and Bayesian epistemology didn't substitute for understanding anything about people. But that's impossible, of course. They're probably just theists. Hold on, I just gotta post to Slashdot about this."

Bitcoin was invented by Internet libertarians, in the spirit of freely-chosen individual interpersonal interactions that will bring about the utter collapse of the oppressive taint of the dead hand of government, in order to make money at your expense.

Photo: A typical Bitcoin advocate swimming through his Bitcoin bin, while his family look on, looking at him like he's insane. [newstechnica.com]

+1 Comedy Gold (0)

Anonymous Coward | more than 3 years ago | (#36533326)

Bravo! Take a bow, gentle sir.

Re:+1 Comedy Gold (3, Insightful)

David Gerard (12369) | more than 3 years ago | (#36533394)

I am amazed it took this long for someone to work out a way to mine and exploit unexamined privilege as a resource.

Re:Bitcoin explained (1)

David Gerard (12369) | more than 3 years ago | (#36533362)

Though to be fair, that Amir is British and is actively seeking proper regulation gets him a lot of points in my mind :-)

Re:Bitcoin explained (4, Informative)

genjix (959457) | more than 3 years ago | (#36533404)

I'm Amir Taaki from this article. You lump us all in as Ayn Rand right wing 'nerds'. Maybe you should google my nickname 'genjix'... then you can see my past history for the last 10 years working below minimum wage on free software, and my writings on Wikipedia about building a better future for all.

You're acting like politicians who smear there enemies by pointing at anyone they dislike and shouting 'TERRORISTS!'

We're all very diverse in the Bitcoin community, but we recognise the potential of this currency how others recognise the potential of something like Esperanto or Linux. Your Ad Homineum attacks on our personalities are counter-productive for any kind of sensible debate about the merits of this system.

RE: Oversaturation of Bitcoin crap (-1)

Anonymous Coward | more than 3 years ago | (#36533444)

No, we are sick of being overwhelmed with bitcoin articles by timothy.

Re:Bitcoin explained (1, Troll)

David Gerard (12369) | more than 3 years ago | (#36533486)

"You're acting like politicians"

This is an unjustified plural. As I note above [slashdot.org] , that you're personally actively seeking proper regulation for BTC gets you a lot of points in my mind.

But you put your hand on your personal equivalent of the Bible and tell me that most Bitcoin partisans are not accurately portrayed as above. I've read the forums. They're economically naive Internet libertoonians whose most exploitable resource is their unexamined privilege.

Re:Bitcoin explained (0)

Anonymous Coward | more than 3 years ago | (#36534190)

Interesting that you consider the only semi-organized group of people who predicted the financial bubbles and their bursting as well as the failure and negative effects of the 'cures' to be naïve.

Re:Bitcoin explained (-1)

Anonymous Coward | more than 3 years ago | (#36533546)

I googled your name and saw a post where you are selling the sexual services of two persons, one of whom is underage, on the BitCoin forums.

Are these two persons related to you, perhaps?

Re:Bitcoin explained (1, Informative)

David Gerard (12369) | more than 3 years ago | (#36533608)

I just read one Bitcoin partisan (Robert Horning) arguing on Wikimedia foundation-l that Bitcoin would seriously continue past the existence of the Internet, computers and reliable electricity . I mean, what the actual fuck. People here react badly to Bitcoin advocacy because the quality of it is so consistently awful - that's what my undue cruelty to Bitcoin for cheap lulz is about.

Quite seriously - I work with programmers. They tell jokes about annoying Bitcoin advocates in the office. You seriously, seriously have to do something about the terrible advocates you have. The rest of the world really hates them.

Re:Bitcoin explained (1)

Applekid (993327) | more than 3 years ago | (#36534156)

It's all math, so clearly you have to etch out all the bits from your wallet file onto a stone tablet, no electricity required. :)

Re:Bitcoin explained (3, Insightful)

Hazel Bergeron (2015538) | more than 3 years ago | (#36533678)

working below minimum wage on free software

Working below minimum wage is when you have to go out and get a job to survive and you're so desperate that you take something below what even the state considers reasonable for your survival. Choosing to spend time on free software projects voluntarily because they happen to interest you is not "working below minimum wage" - it's a hobby.

my writings on Wikipedia about building a better future for all

Wikipedia is the ultimate Objectivist dystopia. And Wales may be a slimy embezzler but at least he doesn't deny his admiration for Rand, so you can't plead ignorance.

You're acting like politicians who smear there enemies by pointing at anyone they dislike and shouting 'TERRORISTS!'

That's only bad when "terrorist" isn't well-defined or when the target doesn't fit the definition. But when a group of people act as self-righteous Ayn Rand-reading nerds then it's perfectly acceptable to call them self-righteous Ayn Rand-reading nerds.

We're all very diverse in the Bitcoin community,

Why is it that every single oddball group uses the defence, "We're all very diverse"? You're as diverse as any group of people who think bitcoin is a good idea can be - and that's not very diverse.

but we recognise the potential of this currency how others recognise the potential of something like Esperanto or Linux.

Adoption of Esperanto was an interesting idea for cross-border communication which evolved into... everyone speaking English. Linux is and always was a pragmatic operating system project based on a Free software licence which has resulted in a very usable operating system. Bitcoin has... no redeeming feature whatever. It's not untraceable; it's not secure (unless you regard users' machines as less crackable than a bank's); it's not scaleable... so what is it, apart from a get-rich-quick scheme for its founders?

Your Ad Homineum attacks on our personalities are counter-productive for any kind of sensible debate about the merits of this system.

It is very important, in studying any human system, to examine the personalities of its leaders. It would be irrelevant ad hominem to dismiss you because you are, say, fat or Asian or whatever. But to consider bitcoin's political culture is entirely appropriate.

Re:Bitcoin explained (1)

Nick Ives (317) | more than 3 years ago | (#36534024)

It's worth pointing out that even though Objectivists and Crypto Anarchists start out from very different moral perspectives, they tend to end up in similar places.

Power won't go away because it's a natural product of human relations. Our economy is a product of social and productive relationships in our society and having a p2p forex system won't fundamentally change anything.

It is nice to have an alternative to things like PayPal for international money transfer. However ,given the computing power that will eventually be required to run the bitcoin network and the requirement to convert bitcoins into local currency so one can pay ones taxes, etc, then it's looking more like you've just done the banks a massive favour by inventing a p2p forex system that enables them to cut costs for themselves.

Once the banks are in on this system I'm sure they'll quickly dominate it. They already operate as lawful, licensed cartels so it seems inevitable that using bitcoin, with its fixed supply, as an intermediary token for forex whilst still charging regular punters extortionate rates for daring to convert the things into real money would be top of their agenda.

Of course, if your concious of the fact that the established banks and their regulators are your mortal enemies then you stand a better chance of getting some sort of victory out of them. Regulation is required to stop national governments banning bitcoin under the pretext that it can be used for laundering, but you should still be very wary of the banking sector.

Re:Bitcoin explained (1)

shawn(at)fsu (447153) | more than 3 years ago | (#36534074)

I'm going to agree with the AC below me, I'm tired of the GD bitcoin stories on /. Until payment with bitcoins becomes ubiquitous, like paypal is with online purchases, I don't need to see a story about it every few days. Until then I don't care.

Re:Bitcoin explained (3, Funny)

betterunixthanunix (980855) | more than 3 years ago | (#36534120)

Bitcoin...Esperanto or Linux.

Hm...

  • Esperanto -- a language developed by linguists.
  • Linux -- a computer program developed by computer programmers.
  • Bitcoin -- a currency not designed by economists.

I see your point.

Re:Bitcoin explained (0)

Anonymous Coward | more than 3 years ago | (#36533406)

the marketing department at NVidia,

Except NVidia cards are nearly worthless for bitcoin mining, so I'm not sure how NVidia's marketing department has anything to do with it. Maybe you should read up on what you are bashing before doing so, or reposting it in this case.

Mod Parent Redundant (1)

Anonymous Coward | more than 3 years ago | (#36533448)

Parent is a one trick pony [slashdot.org] .

Re:Bitcoin explained (1)

Lord Ender (156273) | more than 3 years ago | (#36533704)

Will slashdot ever stop upmoding this copy/paste spam? It was kinda funny the first time it was posted. By now, most of slashdot has seen the joke multiple times already.

People, if you're into cryptography, infosec, parallel programming, economics, or finance, you will probably find bitcoin interesting. If you don't find it interesting, however, then don't click on bitcoin stories. And for the love of Bob don't paste tired old joke spam into such stories.

Re:Bitcoin explained (1)

Kethinov (636034) | more than 3 years ago | (#36533870)

Maybe people keep modding it up because it keeps being relevant.

Just a thought.

Re:Bitcoin explained (1)

PhreakOfTime (588141) | more than 3 years ago | (#36533954)

Will slashdot ever stop upmoding this copy/paste spam?

That's funny, I have the same feelings about the non-stop spam of BitCoin stories on slashdot that seem to be programmed to appear no matter when I sign on in the hopes that the fad has finally passed.

To be fair, the 'pump' phase of pump-and-dump has not quite ended yet. However, the signs are starting to show that it is near. It doesn't matter if its stocks, commodities, or tulips. When the volatility begins to swing wildly like it currently is for bitcoins, the 'dump' phase is not far away.

Poster art is still art. (0)

Anonymous Coward | more than 3 years ago | (#36533986)

When repetition is deliberate, value of message is unaffected.

Re:Bitcoin explained (1)

TheCouchPotatoFamine (628797) | more than 3 years ago | (#36533926)

grow up. You act like you think this isn't going to happen, one way or the other. You honestly LIKE how credit cards work?

And the criminals go (0)

Anonymous Coward | more than 3 years ago | (#36533328)

WOO-HOO!!!!! Launching BitCoin with an unsecured wallet.dat file format into the general non-savvy populace is a little bit like throwing a hundred pounds of sirloin into a den full of lions and locking the door for month - a few will wind up fat and happy, but most will be starving and dying.

Re:And the criminals go (2)

David Gerard (12369) | more than 3 years ago | (#36533432)

What amazes me is that people who understand the cryptography still do this stuff on Windows machines [newstechnica.com] . WHAT.

Non-answers (1)

pathological liar (659969) | more than 3 years ago | (#36533368)

The "why would anyone accept bitcoin given its instability" question was admittedly a bit inflammatory, but it would have been nice if he'd even made an attempt at answering it.

When the market doesn't have enough volume to smooth out wild gyrations like over the past few weeks it's completely unacceptable for real world use...

Needs economists (2)

Fnkmaster (89084) | more than 3 years ago | (#36533372)

The bitcoin effort needs the involvement of some economists with experience studying and understanding currencies, not just techies. It could also use some PR and marketing people, with all the bad press they've been getting lately for their poorly crafted currency system.

It sounds like they have the technology stuff reasonably well figured out, but they have utterly failed on the economics and marketing side of things.

I suspect that bitcoin needs to be replaced with a new system that has the advantages of the current without the raging disadvantages, re-branded without the negative associations of bitcoin, and work to make sure they don't fuck up again.

Re:Needs economists (1)

Duradin (1261418) | more than 3 years ago | (#36533428)

"It could also use some PR and marketing people"

Please, for the love of $DEITY, no more PR and marketing people at /..

Re:Needs economists (1)

betterunixthanunix (980855) | more than 3 years ago | (#36533476)

The bitcoin effort needs the involvement of some economists with experience studying and understanding currencies

Funny how mainstream economists connect currency with banking and government, and how they advocate the role of governments and banks in regulating and stabilizing currency.

I suspect that bitcoin needs to be replaced with a new system that has the advantages of the current without the raging disadvantages

Most digital cash systems call for a bank to issue the digital currency in exchange for physical currency. I would like to see those systems more widely deployed, although I get the feeling that the current banks would not be too enthusiastic about introducing an electronic payment system that deprives them of transactions fees.

Economists Must Learn to Subtract (0)

Anonymous Coward | more than 3 years ago | (#36533610)

Re:Needs economists (4, Informative)

genjix (959457) | more than 3 years ago | (#36533782)

The guy in our group (Donald Norman) that handles the business side of things is well educated in finance and economy. He's been deeply looking into that for a while now and has been communicating with Ben Friedman. Our group has for a long time been in contact with an economics professor, Adam Bragar. He's been specifically following and studying Bitcoin from an economics perspective too.

Re:Needs economists (1)

DriedClexler (814907) | more than 3 years ago | (#36534040)

I have the nagging suspicion that your comment was code for "they need to turn bitcoin into an inflationary currency but don't realize it because they're so economically illiterate".

In that case, I would suggest that, more than an economist, Bitcoin's developers need an ethicist nearby. You know, someone who can tell them that, "Hey, you got everyone involved in this currency on the promise of a very specific rate of money supply growth. If you default on this promise you made to every user, you are an asshole, no matter what your economic rationalization."

Why is it that no one can get an inflationary currency up and running without horribly defaulting a previous promise or custom? Hm...

The Flow of Money Problem (4, Interesting)

eldavojohn (898314) | more than 3 years ago | (#36533388)

In regards to the question on illegal purchases with BTC he said:

However, I really want people to understand one thing. The criminalization of Bitcoin would not stop the illegal activity that surrounds it.

Well, I think you're jumping to conclusions if you thought that the idea is to halt the drug trade and prostitution rings by illegalizing BitCoins. I think the question was really asking how you feel about BitCoins enticing and extending illegal activities. Allow me to provide a real world example. A person I knew in a small town high school was making yearly trips to the nearest metropolis with his stash of cash, purchasing drugs from many sources and then driving back and dealing them. At some point this stash became $15,000 and on his last trip he made his first stop to pick up some mushrooms from a woman who had been compromised by police. As he pulled away, they picked him up and found some shrooms but also $14,000. Now, he went to jail for six months for drug possession but also the very large sum of money. They were able to prove that he was a dealer and was en route to make more purchases. If he had had BitCoins, he merely would have kept a wallet on his phone then transferred the cash to the woman and could have denied the whole transaction had taken place and was clueless about the shrooms in his car. Would they have been able to make anything stick?

Criminalization would only stop people from enjoying the tremendous and fruitful benefits of such a system, it would hinder the social good.

Not if the bad elements of society enjoy those "fruitful benefits" much more than the rest of society. All the old organized crime tactics like protection rackets suddenly become virtually untraceable when you can demand the money be sent to an anonymous BTC handle and then move it again. The flow of cash is a seriously important element in detecting and prosecuting crime and the anonymity of a currency destroys that. Corporate embezzlement becomes easier, drug dealing becomes easier, funding terrorism becomes easier, etc. Someone could steal my bank account information and pilfer money from me tomorrow but at least the bank would be able to trace it. Who traces the stolen wallet files? Sure the bank charges an overhead but they provide a service that is more secure than a mattress store.

You seemingly sweep the bad under the carpet and talk about only the good. This is a double edged sword and it's insulting for you to deny it.

We are aggressively advocating and promoting the legalization and regulation of the exchanges.

You keep saying this but you fail to provide any details on how this will be done. When transactions are anonymous, how in the hell does this happen?

Kings used to raise capital in order to wage wars. They required popular support before they were able to fund their wars. A common tool in modern day authoritarian regimes is currency manipulation in order to fund their wars of genocide (e.g Milosevic in the 90s). Bitcoin democratises governments.

That is so bizarre, you're all for the regulation and legalization of exchanges ... are you seriously that daft that you don't think the government is going to tax that which it regulates? You can't eat your cake and have it too. How will we fund schools and libraries and roads if everyone's going through BTC? How will we even know that everyone's going through BTC? I cannot fathom how you expect this to work!

I understand the good points of this experiment but I'm insulted by how quickly you try to pull the wool over everyone's eyes.

Re:The Flow of Money Problem (1)

vlm (69642) | more than 3 years ago | (#36533628)

Same way they got Al Capone, tax evasion. Dude has no non-BTC income, dude spends $250K/yr on non-BTC "things" resulting in Big Trouble.

There seems to be this peculiar idea that BTC is untraceable ... Not so. Once you have proof of who owns an address, you got them. Yes, you can make as many addresses as you want, just like you can make as many real world dead drops as you want. But once someone takes the bait...

Re:The Flow of Money Problem (0)

Anonymous Coward | more than 3 years ago | (#36533888)

Simple solution - track all BTC expenditures as "income". It's not income until it's redeemed for a good or service. Similar with stocks. You don't get taxed on your holdings, just when you sell. If trading BTC for another virtual currency - game or otherwise, then it really isn't income either since it has no tangible value.

I could give you $100 trillion [wikimedia.org] and it wouldn't be worth the paper it's printed on.

Re:The Flow of Money Problem (0)

Anonymous Coward | more than 3 years ago | (#36533966)

This is all rather ridiculous. Firstly there is nothing wrong with magic mushrooms and they shouldn't be illegal.

Secondly the US$ is used for more crime than any other currency, ever.

Bitcoin is not anonymous per se, infact if you search for the block explorer you can see a list of every transaction ever made. Think of the benefits of that in stopping crime. You may move them around as much as you desire, but we can always see where they are and where they have been.

I don't think many BitCoin users are against paying taxes, what we are opposed to is paying companies like paypal vast transaction fee's for a very poor service - Or cash machines to access our own money.

Slashdot these days.. sigh. It' almost a guarantee that if you don't like it here it will become successful.

Re:The Flow of Money Problem (1)

conner_bw (120497) | more than 3 years ago | (#36533758)

Someone could steal my bank account information and pilfer money from me tomorrow but at least the bank would be able to trace it.

Yes, trace it back to themselves [goo.gl] .

Re:The Flow of Money Problem (1)

import (40570) | more than 3 years ago | (#36533810)

I think there's an underlying assumption in your writing: that there is no inherent good in people so they will evade taxes or sell drugs if given the chance. As for myself, I don't think that's true of the majority...

Re:The Flow of Money Problem (1)

myurr (468709) | more than 3 years ago | (#36533884)

It only needs to be a minority if they're disruptive enough. This is true of almost all crime today, whereby it is only perpetrated by a small minority but the ramifications and ripples for that affect the majority to varying degrees.

Re:The Flow of Money Problem (1)

vlm (69642) | more than 3 years ago | (#36534094)

I think there's an underlying assumption in your writing: that there is no inherent good in people so they will evade taxes or sell drugs if given the chance. As for myself, I don't think that's true of the majority...

And if the majority supports it, why should it be illegal? Making the unjustified assumption that govt exists to support its people, rather than the real world implementation which is the other way around.

Bitcoin is a flat currency (0)

Anonymous Coward | more than 3 years ago | (#36533482)

My favorite part was when he said "Gold is backed by real world properties", which is completely true, and then followed that up by saying BitCoin is backed by 12 random bullet points, with one of them being "No bank holidays". Seriously? The bottom line is BitCoin is a flat currency and I love when it's supporters can't just admit that. It's only value is that it's perceived to have value, it's not backed by anything. If everyone decided tomorrow that DerpCoins were the new cool thing and flooded away from BitCoins they'd be worthless, how does them being "backed by no bank holidays" help in that situation?

Infomercials (0)

ugen (93902) | more than 3 years ago | (#36533490)

Considering the amount of bitcoin related articles on /. (almost daily now?) in relation to its real world importance (extremely low and unlikely to grow), I wonder if this is "stuff that matters" or a paid (or otherwise incentivized) advertisement on part of /.?

FWIW I looked at bitcoint - it's usefulness in my personal opinion is virtually nil, it's either a scam or a pipe dream, and likely both.

Re:Infomercials (-1)

Anonymous Coward | more than 3 years ago | (#36533668)

The neat thing about Bitcoin is that they don't need to pay for advertorial content on Slashdot: as long as timothy and a couple other editors generated some coins for cheap back in 2010, those editors have an incentive to try and make the currency worth something without Amir and his associates paying them anything directly! (Warning: your jurisdiction's pump-and-dump related legislation may apply.)

Inherent Speculation (1)

turtle graphics (1083489) | more than 3 years ago | (#36533498)

I get paid in US$, and expect to get paid in US$ for some time. If I get myself some bitcoin, I'm now involved in currency speculation whether I like it or not. I don't go out and buy a bunch of Euros so I'm ready to purchase things from France at some point - I wait until I (rarely) need to, and then convert at that moment. AT discourages speculation, but that is the only thing to see here!

Gold? (0)

freefrag (728150) | more than 3 years ago | (#36533570)

Pretty much all of those advantages used to tout BTC are better achieved through a specie currency like gold.

Re:Gold? (1)

betterunixthanunix (980855) | more than 3 years ago | (#36533664)

Except for secure electronic payments. Luckily, there is a boatload of research on digital cash protocols, and it would be relatively straightforward to establish digital cash that is backed by gold.

Re:Gold? (1)

import (40570) | more than 3 years ago | (#36533778)

Except for secure electronic payments. Luckily, there is a boatload of research on digital cash protocols, and it would be relatively straightforward to establish digital cash that is backed by gold.

I don't know if you're writing that tongue in cheek but on face value, it doesn't seem plausible due to the need for centralization. See "e-gold Ltd" - shut down by the feds.

Re:Gold? (1)

betterunixthanunix (980855) | more than 3 years ago | (#36533982)

On the other hand, there are lots of private currencies out there, and I do not see any particular reason that a private digital currency would be illegal, if the issuing authority were in full compliance with the law. There already exist gold-backed ETFs, whose shares can be traded on the open market; a digital cash system backed by gold would not be terribly different, except in how trade is actually performed.

Personally, I am not a fan of gold-backed currency and would choose to back digital cash with non-digital cash if I were to set up such a system. Still, although IANAL I do not see why a gold-backed digital cash system could not operate in compliance with the law.

Re:Gold? (1)

Lord Ender (156273) | more than 3 years ago | (#36533816)

Perhaps you can explain how you fit the gold into your intertubes when trying to send it to someone online...

Re:Gold? (0)

Anonymous Coward | more than 3 years ago | (#36533898)

I use gold to buy bitcoins, transfer those, and then they can sell the bitcoins to buy gold. See, magic?

Solution to Bitcoin spamming problem... (1)

plsenjy (2104800) | more than 3 years ago | (#36533656)

To stop those monsters 1-2-3,
Here's a fresh new way that's trouble-free,
It's got Paul Anka's guarantee...
(Guarantee void in Tennessee)
Just don't look! Just don't look!
Just don't look! Just don't look!
Just don't look! Just don't look!

Blegh (-1)

Anonymous Coward | more than 3 years ago | (#36533660)

Looks like we get one every day now.. Just let it die already.

Theoretically 1 bitcoin in circulation??? (0)

Anonymous Coward | more than 3 years ago | (#36533682)

A.T.: The supply of bitcoins is 21 million. The supply of money is infinite. A bitcoin can currently be divided to 8 decimal places. The loss of bitcoins in the future may lead to some deflation however I expect it to be insignificant. In the very long term, even if there was only 1 bitcoin theoretically in circulation, running the world economy would not be a problem. There exists only 6 MBTC in circulation at this moment.

This is totally nonsensical. Can you please explain this more? If this is true, let's just put 1 bitcoin into circulation and run the world economy on it!

Re:Theoretically 1 bitcoin in circulation??? (2)

Americano (920576) | more than 3 years ago | (#36533906)

He's talking out his ass is how you explain it.

World economy - roughly 74 trillion GDP. 74,000,000,000.00 dollars - (source - Wikipedia)

1 bitcoin is divisible to 8 decimal places, giving 100,000,000 units of value (source - Bitcoin)

If 1 bitcoin were running the world economy, then the smallest unit of currency in our new world economy would be worth approximately 740 dollars. Good luck buying a cup of coffee or a pack of gum. And if you think gas prices are high today, good luck earning your .00000001 bitcoin/liter.

Re:Theoretically 1 bitcoin in circulation??? (2)

genjix (959457) | more than 3 years ago | (#36533934)

Right now the divisibility of Bitcoin is 8 decimals. This can be extended if need be in the future. The placing of the decimal point is completely arbitrary.

There will be (in the future) only 21 million bitcoins, but currently there is 6 million. I tried to use the SI prefix mega to emphasise the fact of the decimal's placing to be arbitrary... But maybe it came out ambiguously. Internally 1 BC is stored as 100 000 000 in a 64 bit integer.

Ergo theoretically we could run the entire economy on a single bitcoin :)

Re:Theoretically 1 bitcoin in circulation??? (0)

Hazel Bergeron (2015538) | more than 3 years ago | (#36533962)

Ergo theoretically we could run the entire economy on a single bitcoin :)

I see your propaganda and raise you a question: how many bitcoins do you hold, genjix?

Enough with the bitcoin posts already (-1)

Anonymous Coward | more than 3 years ago | (#36533716)

Why don't you rename the blog to bitcoindot and get it over with?

Early adopter reward "not shocking"? (1)

Anonymous Coward | more than 3 years ago | (#36533796)

It is certainly true that early adopters have been rewarded. I do not think these inequities will be more shocking than those in the real world.

Look at this graph of the mining activity and difficulty over time (log scale) [bitcoin.sipa.be] . Activity and difficulty have increased a millionfold from what they were throughout 2009; if we figure there are about 10 million miners now (that's probably an overestimate) that means there were just about 10 peoples back then, mining the 3 million bitcoins created in 2009. [wikipedia.org] That's just 10 people owning half the bitcoins created so far, or 1/7 the amount that can ever be created.

Inequality in current real-world economies has gotten pretty extreme, but Bitcoin makes them look like socialist utopias by comparison.

Why not just bind the value to the US $ (0)

Anonymous Coward | more than 3 years ago | (#36533828)

If the main purpose is 'just' to allow easy money transfer over the internet, why did they not just do the following:

No mining. The only way to get bitcoins, is to by them at our bitcoin store. And a bitcoint is always bought AND sold for 1 US $.

Then setup multiple offices around the world, where people can deliver their bitcoins, and get their US $.

Then bitcoins could be used for normal trading, and for transfer of money over the internet, without all the troubles the current solution have.

This solution would require setting up a "Not for profit" organisation to handle the transfer to/from bitcoins to US $ but that could be paid for by requiring a small transaction fee, when transfering bitcoins to US $.

This would allow bitcoins to be used as a normal payment for the internet, because they can be transfered to "real" money if needed. So I can pay you in bitcoins, and you can accept that payment, because other would also accept bitcoint money, and even if you someday need to pay someone who don't accept bitcoins all you have to do is to go to the bitcoint/us $ exchange and convert your bitcoins to $.

This way US $ would be the backing of bitcoins, in the same way that gold was the backing of US $ when we started the money system.

Didn't discuss issues of being unregulated (1)

bigsexyjoe (581721) | more than 3 years ago | (#36533836)

There where many questions regarding the fact that it is an unregulated currency. Unless you are a pretty staunch Friedmanist, you acknowledge that governments have to regulate markets and manipulate currency to keep the economy running (and stop pump and dump schemes etc.).

Since bitcoin seems to be completely resistant to any manipulation, it seems that governments not only can't do nasty big-brother type things, but also can't do the kinds of things we need it to do to stop depressions. I am disappointed to these issues being completely skirted.

Re:Didn't discuss issues of being unregulated (1)

betterunixthanunix (980855) | more than 3 years ago | (#36534016)

Since bitcoin seems to be completely resistant to any manipulation

Except that a single compromised account on an exchange caused severe devaluation:

http://www.engadget.com/2011/06/22/compromised-account-leads-to-massive-bitcoin-sell-off-eff-recon/ [engadget.com]

Re:Didn't discuss issues of being unregulated (1)

Pope (17780) | more than 3 years ago | (#36534050)

Since bitcoin seems to be completely resistant to any manipulation

Except that it's highly affected by manipulation, as the recent Mt. Gox debacle proved. Everything about this dude's answers look like hand-waving and talking points.

Re:Didn't discuss issues of being unregulated (1)

vlm (69642) | more than 3 years ago | (#36534072)

but also can't do the kinds of things we need it to do to stop depressions.

Currently they seem uninterested or unwilling or unaware of how to do those things ... Seems a fine distinction to be worried about, regardless of reason, they aren't doing it.

Forks (0)

Anonymous Coward | more than 3 years ago | (#36533850)

The number of Bitcoins may be limited, but the number of digital currencies is not. If Bitcoin become a success, what is to prevent it from being forked any number of times by those who feel that money is too scarce? Judging from the populist support of inflation in US monetary history, this would seem nearly inevitable.

Thanks for nothing, Amir (1)

DriedClexler (814907) | more than 3 years ago | (#36533862)

I was thankful that my question was selected despite it not having been modded up:

Is there any serious development underway to make the privacy more robust? ... for this to seriously work, it needs a lot more people to be involved in [laundry], and it has to be integrated in a way that's secure (against someone just keeping coins in the middle of a shuffle) and transparent to the user (so they don't have to think about the new addresses they generate, or which coins are optimal to send where for the maximum shuffle). How soon can we expect something like this?

But then in his reply, he just repeats back what I just told him, and then said it "will be trivial". Well, no, they've tried, and it's not trivial now, because it needs a concerted effort, both for user involvement, and in new coding. Total blow-off answer! See for yourself:

A.T.: A bitcoin laundry already exists. The volume on it is very low, but if demand increases in the future then such a service is trivial to setup. A mixing service (as they're called) requires a large volume and therefore a persistent demand.

If you're going to pick a question, actually answer it, "Amir". If I wanted to talk to a wall, there are four already around me.

Re:Thanks for nothing, Amir (0)

Anonymous Coward | more than 3 years ago | (#36534128)

On the other hand he mentioned, that all transactions are traceable, and it's required to be so, to be accepted by the authorities (the Britcoin part). So, is there privacy or not?

Re:Thanks for nothing, Amir (0)

Anonymous Coward | more than 3 years ago | (#36534136)

No your question was just full of crap, he answered it reasonably.

There isn't any serious development left to do to provide a extension of the laundry service. You set out the requirements yourself but fail to see we have already met most of them. We already have escrow services, and the code for laundry is already floating about on various websites. All we need is more volume (i.e. more interest) for it to be viable for larger transactions .

Compared to the real undertakings that still remain, i.e. working on the protocol , the clients and adding new features around the core of the system, services like laundry are trivial.

advertisement (-1)

Anonymous Coward | more than 3 years ago | (#36534018)

this whole interview is an advertisement. and not even well disguised. some serious credibility is being lost.

"It is certainly true that early adopters have been rewarded. I do not think these inequities will be more shocking than those in the real world"
-except in the real world bill gates doesnt make my money less valuable by deciding he wants to get rid of his. And isnt the whole point to get away from the problems of a real world currency.

"I do not advocate that people speculate on bitcoins."
-Its cute to say that, and maybe you actually believe it, but that's like saying, "i don't advocate people should ever eat food, just buy it and cook it."

"Doesn't it seem wasteful to rely on tedious and sometimes ambiguous real world laws with a lot of overhead instead of mathematical laws?"
-Oh the irony in all the energy wasted "mining" bitcoins.

"The reward for minting a block, provides a healthy competition that causes the energy cost to be driven down."
-False logic. May cause individual efficiency to go up. But not overall energy costs to go down especially as more people mine.

"The illicit markets are a very small part of Bitcoin."
-Hearsay at best. Probably not true at all.

"Where citizens in developing nations who already oppose their government do not have to pay for wars of genocide out of their own pockets as was the case in ex-Yugoslavia where authoritarian control over the money supply helped finance a terrible war and bring about the worst hyper-inflation in Europe since WWII. "
-This is in no way inherent to or enabled by bitcoin. Its straight advertising.

"Our exchange complies with the UK Know Your Customer laws which ensures it's not being used for illicit activity. We keep detailed transaction records and run regular audit logs to look for missing funds."
-Advertising

"If SHA256 or ECDSA was ever cracked, we'd have far bigger problems to worry about than bitcoin being destroyed."
-Skirting the issue.

and so many more i dont have the time to talk about.

Amir Taaki should be a politician. Canned answers, half logic, and lying through omission seem to be his strong points. And i mean seriously slashdot, i dont really understand the agenda here, but this is some serious discrediting shit. This is one of the biggest puff pieces ive ever read and its insulting to your readers.

"Doesn't it seem wasteful" ? (5, Insightful)

Smidge204 (605297) | more than 3 years ago | (#36534144)

Our world's current infrastructure depends on paying employees, building large buildings, paying for heat, electricity, transportation, lawyers, courts, judges, policemen, government bureaucracies, armies and much more. Doesn't it seem wasteful to rely on tedious and sometimes ambiguous real world laws with a lot of overhead instead of mathematical laws?

So let me get this straight - to pay people for doing productive things, like the physical labor to build and maintain the infrastructure bitcoins implicitly rely on - electrical power being among the most trivial when you think about it - is wasteful?

News flash dickhead - unless you've growing your own food with handmade tools and living in a hut you build yourself from materials you gathered yourself, you are sitting near the top of a MASSIVE pyramid of laborers, designers, artisans and technicians. All your "success" comes at a price of tens of thousands of other individuals doing their job. You just called all that wasteful.

Hell, the computer he's using probably has a hundred thousand sets of fingerprints on it - from the guy who dug the earth for the raw materials to the guy who dropped the box on his doorstep (because fuck knows he probably never leaves the house, which itself took a small army to make possible).
=Smidge=

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