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BitInstant CEO Says World Operates "On an Inferior Monetary System"

samzenpus posted about a year and a half ago | from the your-money-is-no-good-here dept.

Bitcoin 185

hypnosec writes "BitInstant's CEO Charlie Shrem and Erik Voorhees were invited to speak about virtual currency at the NACHA (the North American Payments Association) Annual Global Payments Forum held in Rio de Janeiro. At the conference the duo stated that the world operates 'on an inferior monetary system'. One of the more interesting parts of the whole forum was how Bitcoin as a currency and transaction system "works within current legal frameworks." A presentation by Senior Legal Counsel to the Federal Reserve titled: 'The Implications of Dodd-Frank Section 1073' sheds light on requirements that need to be fulfilled by "Remittance Payment Company" (RPC) guidelines. This law requires such companies to disclose a lot of information about money transactions. This is where Bitcoin as a currency and system collide head-on with the law."

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185 comments

What to use for personal finance (0, Offtopic)

Makoska (2731039) | about a year and a half ago | (#41353405)

Since this is related, what do you guys use for personal finance tracking? I used Microsoft Money [wikipedia.org] for a long time, but they don't release new versions of that anymore. Would Microsoft Access be an overkill? What do you guys use?

Re:What to use for personal finance (0)

Anrego (830717) | about a year and a half ago | (#41353479)

I built my own.

It's one of those cases where re-inventing a wheel that has been invented a whole bunch of times made sense. I have fairly simple finances, nothing out there seemed to do what I wanted (either too complicated or too simple or too much of a hassle for what I needed) and by writing up my own app I got exactly what I wanted.

Re:What to use for personal finance (1)

clickclickdrone (964164) | about a year and a half ago | (#41353903)

I don't use anything anymore and dont miss it. I just have two accounts. I transfer a fixed lump sum to the second one each month and all the bills, standing orders, direct debits etc come out the second. Whatever is left in the first is mine.

In the loose sense of "related" (2)

fm6 (162816) | about a year and a half ago | (#41354029)

Also related: can somebody spot me $50 until Friday? You know I'm good for it.

Re:In the loose sense of "related" (0)

Anonymous Coward | about a year and a half ago | (#41354365)

I sent you a couple of bitcoins. I figured I might as well divest them before they get stolen from me. You can pay me back Tuesday.

Re:What to use for personal finance (2)

hairyfeet (841228) | about a year and a half ago | (#41355161)

I'll get hate for saying this but fuck it, get Quickbooks. They now have a free version [cnet.com] and its butt simple to use. If you were formerly using MS Money you should have no problem with QB, its even easier to set up and use and there are a bazillion tutorials on the web if you need to do anything fancy. Its quickly becoming my "go to" for customers that ask about money management and they couldn't be happier, not had a single complaint.

Tracking money (3, Interesting)

Geoffrey.landis (926948) | about a year and a half ago | (#41353475)

Bitcoin requires computer tracking of every single transaction, and requires distributing the information on each transaction to the public.

At the risk of getting flamed, I don't see how "Bitcoin as a currency and system collide head-on with the law" [requiring tracking of currency transactions]; the bitcoin system would require only trivial mods to do remove the privacy and track the "who" as well as the "what".

Re:Tracking money (5, Informative)

Anonymous Coward | about a year and a half ago | (#41353609)

the bitcoin system would require only trivial mods to do remove the privacy and track the "who" as well as the "what".

That's not how it works. First and foremost, the creation of public addresses can be done entirely offline, without connecting to the Internet and without any information leaving RAM. I can request money to be sent to one of these addresses and only the person sending it knows that it belongs to me as there is no other record of its existence. An infinite number of such addresses could be created and there is no way to tie them directly to me.

Secondly, any such non-trivial changes to the network would require nearly everyone on the network to agree, which is EXTREMELY unlikely given Bitcoin's user base and ideology.

Re:Tracking money (1)

Anonymous Coward | about a year and a half ago | (#41353627)

No, it only requires half of all of the computing power in the network to agree, which could easily be a single actor at this point.

Re:Tracking money (1)

Anonymous Coward | about a year and a half ago | (#41353973)

Uh, as far as I understand it, computational power doesn't much matter as a matter of authority, aside from the mining process. So could you explain that?

Re:Tracking money (2, Interesting)

Anonymous Coward | about a year and a half ago | (#41354325)

Suppose there was a country-wide internet blackout.. perhaps due to a civil war with the incumbent government attempting to stop communications...

As various areas set up their own wans, bitcoin would continue to operate but in an entirely fragmented way..

It is possible, during this time, for people to trade the same coins multiple times by trading them in the different fragments..

When the civil war is over and the global connectivity is re-established, that global bitcoin swarm now receives conflicting information.. after all, how could John, who only had 7 coins to his name, have made 5 different 7 coin purchases?

Someone is going to get fucked.. and who that is going to be is determined by a kind of a popularity race.

Now, whats going to really ruin your belief in bitcoin is the fact that a civil war isnt required.. only a cleverly choreographed sequence of backbone and/or router outages.

Re:Tracking money (2, Insightful)

Teancum (67324) | about a year and a half ago | (#41355085)

Hash codes can still be sent around on "sneaker net" and other ways to ensure that Bitcoins can be transmitted to each other.

You don't need a 24/7 internet connection, all you really need is the ability to get your transactions processed eventually on the global network. Eventually means just that... it just has to be incorporated into the larger chain when it becomes convenient. As long as everybody acting locally agrees upon the values being exchanged there isn't even a loss of value among the bitcoins being exchanged. About the only thing "lost" is the ability to "coin" new Bitcoins and to receive payments for processing transactions as that sub-net will not be participating with the global network until it reconnected.

It is also possible to set up a "local network" that would be processing the payments between users using the regular Bitcoin system. It would need to be noted that such a local network would be in effect a different "bitcoin" currency though in terms of coining new bitcoins and payments received. That is something to keep in mind too.... there can be more than one Bitcoin network. In fact, there is a "test network" that has a different "root block" which is being used only for testing the Bitcoin network ideas and isn't really taken seriously by the rest of the developers as having value. You can set up your own "root block" if you care to only transmit values between close friends. Good luck on getting your own private Bitcoin accepted by anybody else though. In an extreme situation such private Bitcoin currencies certainly could be created (such as an independent Bitcoin network on Mars). There would obviously be an exchange rate between the alternate Bitcoin and the main "Earth" or "global" Bitcoin, but such alternate currencies certainly could be created.

Double spending can't happen because the subsequent attempts at making a purchase (or rather transferring the Bitcions) would be invalidated and wouldn't actually happen. The person "receiving" the Bitcoins might be pissed, but that is between you and the person who thought they were getting paid and didn't. Verification that the 2nd person didn't receive the Bitcoins is public knowledge, as it is in the Bitcoin chain itself and can be verified.

As for how to transmit information about transactions for eventual incorporation into the global transaction chains, you could use a system similar to RFC 1149 [ietf.org]. This system has been implemented in the past, and certainly could be used for transmitting transaction information instead of just Internet Protocol packets instead.

All of this of course would take somebody who knows the Bitcoin protocol very well, but it isn't impossible.

It is also possible to "print" Bitcoins as paper currency, but that is a whole other subject.

Re:Tracking money (2)

jgarzik (11218) | about a year and a half ago | (#41354303)

Incorrect. Even if you have 100% of the network computing power, you still cannot force core rule changes upon users.

Each P2P node validates transactions and blocks on their own, and refuses to relay invalid ones. Deviating from these rules simply segments yourself away from the rest of the network.

With sufficient network power, you may DoS the network, but not force unwanted rule changes.

          - jgarzik, bitcoin core dev

Re:Tracking money (2)

Teancum (67324) | about a year and a half ago | (#41355191)

Not quite. There still is the "Cartel attack" that doesn't require 50% of the computing power of the network in order to become an actor. It is the one kind of attack that could succeed.

The attack goes something like this:

You have a "cartel" that represents a significant fraction of the network (but not 50%). Among themselves they calculate and publish among themselves successful hashes and develop chains of blocks that attempt to out compete the network as a whole. Only when a "competing" chain might overtake the cartel's internal chain would that internal chain need to be published.

The main advantage of the "Cartel attack" is that the cartel is able to capture a large number or even most of the newly minted Bitcoins and transaction fees. On the other hand, there is a risk that the cartel could lose out on a number of those opportunities as well.

As for a single computing facility or "actor" being able to capture 50% of the computing power of the whole network.... I find that highly unlikely. There have been huge server farms that have tried including significant malware bot nets that have tried. The U.S. government as a whole, if it really tried, might be able to get that to happen. It would also require the cooperation of so many bureaucrats that it wouldn't be worth the effort. You would be surprised at how many computers are calculating the hash blocks now.

Re:Tracking money (3, Insightful)

kelemvor4 (1980226) | about a year and a half ago | (#41354191)

So basically, what you're saying is that a monetary system used almost exclusively for illegal transactions was designed to keep criminals from being caught, and the existing users would not like it if it was possible to catch the criminals. Interesting.

Re:Tracking money (4, Insightful)

BenEnglishAtHome (449670) | about a year and a half ago | (#41354695)

Not just interesting. Wonderful.

You could characterize the use of cash exactly the same way. I like paying cash. It would be nice if I could pay cash over the intertubes. If Bitcoin does (the equivalent of) that, lots of people are going to like it for lots of reasons, some nice and some not so nice.

Just like cash.

Re:Tracking money (-1)

Anonymous Coward | about a year and a half ago | (#41353613)

That is because Bitcoin is a method used by the Jews to influence public policy to fight wars for Israel. There is an old Polish proverb, "Only the Jew will say ow! as he hits you." This is true, your soldiers are being turned into hamburger for Israel. And you are stupid, stupid idiots for giving support to your Zionist masters, the Jew beasts. They own the media and your banking system. They will hunt you down as an anti-Semite if you dare criticize Isreal's foreign policy.

There is one Final Solution to this problem - nuke the entire MIddle East, including Israel. All of the world's ills will be solved overnight. Africa has become a third-world wasteland thanks to Israel's influence. It will magically heal itself. JUNGLE BUNNIES!

Re:Tracking money (1)

davester666 (731373) | about a year and a half ago | (#41353625)

Because NOT tracking who held which 'bills' and what they spent them on is one of the core design points of BitCoin.

It doesn't matter how hard it is to change the system to make it legal. It was explicitly designed to not track some information, which just happens to violate some laws if it is used in certain circumstances.

Re:Tracking money (2)

Teancum (67324) | about a year and a half ago | (#41355291)

Anonymity is not guaranteed with Bitcoin, and it is wrong to suggest that it is. There is some partial anonymity built into the system, but built into the protocol is a way to track where each coin has been spent, so far as what hash addresses it has gone to and where those "Bitcoins" eventually were spent. It is possible to trace each and every bitcoin to the block where the "coin" was generated.

Public hash codes such as something published on a website (including a Slashdot signature) or posted in a public place and has other information associated with that hash code certainly does not preserve any sort of anonymity.

This said, you can move stuff around from a public hash code to a private one rather easily, or do something like move your bitcoins in and out of one of the various exchanges to hide your tracks if that is what you want to do. The real headaches with Bitcoins happen when you try to convert them from one currency to another, and seems to be where most of the actual fraud happens as well.

Re:Tracking money (0)

Anonymous Coward | about a year and a half ago | (#41353725)

The only thing that gives bitcoin value is the privacy. Anyone who signed up for such a fork would be essentially burning money on their power bill wondering why nobody wants to adopt their imaginary currency.

better than bitcoin though (0)

Anonymous Coward | about a year and a half ago | (#41353485)

yeh, cos bitcoin is so good, it can't be stolen, hakced or just deleted, right? right?

Re:better than bitcoin though (1)

Anonymous Coward | about a year and a half ago | (#41353521)

yeh, cos bitcoin is so good, it can't be stolen, hakced or just deleted, right? right?

Stolen, hacked, or deleted? Yes, if you're a fool who doesn't take 10 mins to learn basic safety precautions. Same with gold or diamonds or cash... if you're stupid with them, you risk having them stolen or lost. Bitcoin requires a degree of personal responsibility, maybe not everyone can handle that.

Re:better than bitcoin though (3, Insightful)

Nursie (632944) | about a year and a half ago | (#41354157)

So all the folks running the exchanges and other hacked services, if indeed they were hacked and not just subject to fraud by the owners, were all fools who hadn't taken 10 minutes to learn basic security?

Face it, whatever the security of the protocol, the record of the bitcoin community and the services run by said community is deservedly in the gutter.

Re:better than bitcoin though (0)

Anonymous Coward | about a year and a half ago | (#41354285)

So all the folks running the exchanges and other hacked services, if indeed they were hacked and not just subject to fraud by the owners, were all fools who hadn't taken 10 minutes to learn basic security?

Um, yes? I can't see why this is so hard to grasp.

Re:better than bitcoin though (3, Informative)

jmcvetta (153563) | about a year and a half ago | (#41355099)

A different level of security vigilance is necessary for a Bitcoin exchange operator, than for an individual holder of Bitcoins - because it's a much more tempting target for thieves. Much like a traditional bank requires rather more security than one's wallet.

newsflash (5, Insightful)

etash (1907284) | about a year and a half ago | (#41353503)

person A trying to sell product X, says all other products are inferior to his product

Re:newsflash (1)

pswPhD (1528411) | about a year and a half ago | (#41353655)

person A trying to sell product X, says all other products are inferior to his product

I agree. The words "the world operates 'on an inferior monetary system'" strikes me a bit like Lenin saying Capitalism is a bad idea.

Re:newsflash (1)

etash (1907284) | about a year and a half ago | (#41353679)

yeah, it's a standard business practice: you have to convince the potential buyers that your product is somehow better than the other products available .. if you want to earn some .. bitcoins that is :-)

Articles. (0)

Anonymous Coward | about a year and a half ago | (#41353691)

Yeah with "articles" like this Press Release the only thing we all should do is post as ACs with:

Blah blah Blah blahBlah blahBlah blahBlah blah, bullshit bullshit bullshit bullshit bullshit .

Because all I read was:

"I'm the CEO of wah wah wah wah wah wah wah wah bullshit bullshit bullshit bullshit bullshit.

It's not worth thinking about. It's not worth an intelligent comment.

Actually, I even wasted my time answering the parent.

Re:newsflash (1)

fm6 (162816) | about a year and a half ago | (#41354047)

In this case, it's newsworthy for its entertainment value [pcworld.com].

Re:newsflash (1)

maxwell demon (590494) | about a year and a half ago | (#41354497)

In this case, it's newsworthy for its entertainment value [pcworld.com].

I don't know. I mean there are entertaining 404 error pages, but this one really doesn't belong to them.

Re:newsflash (1)

fm6 (162816) | about a year and a half ago | (#41355481)

A couple of hours ago, that URL pointed to an article about yet another Bitcoin ripoff. It was a lot funnier then.

Just like... (2)

OldSport (2677879) | about a year and a half ago | (#41353511)

...Tim Cook says that we are living in a post-PC era. Does it really surprise anyone that people with an interest in seeing things change are advocating for such changes?

legal tender (0)

digsbo (1292334) | about a year and a half ago | (#41353547)

People should be allowed to choose any money they want, without having to paxes to their sovereign state when that state devalues its money. Get rid of the legal tender laws and allow competing currencies. And don't give me the BS that it's impractical to support multiple currencies. Travel outside the USA and you see it working all over the place. Even in the Dominican Republic you find cash registers that offer three currency operation.

Re:legal tender (1)

Anonymous Coward | about a year and a half ago | (#41353561)

Ah yes, Dominican Republic, the economic epicenter of, uh... the Dominican Republic.

Re:legal tender (2)

MysteriousPreacher (702266) | about a year and a half ago | (#41353727)

You'll notice that countries that have widespread acceptance of foreign currencies tend to either be heavily oriented towards tourism and/or have unstable currencies (high inflation typically). Those benefits make up for the additional risk and overhead. What are the benefits for developed economies with stable currencies?

Re:legal tender (2)

digsbo (1292334) | about a year and a half ago | (#41353795)

Developed countries with stable currencies? Switzerland? I think it's becoming clear that the dollar and the Euro are no longer considered safe. At least not in the long run.

Re:legal tender (1)

digsbo (1292334) | about a year and a half ago | (#41353807)

I'm sorry, didn't answer the question. The benefit is that the citizens are allowed to save money in a safe and secure manner of their choice, instead of in the currency that a cabal of privately-owned banks can devalue when they make bad bets.

Re:legal tender (1)

osu-neko (2604) | about a year and a half ago | (#41354073)

People should be allowed to choose any money they want...

They can. Just no one is required to accept it.

The benefit is that the citizens are allowed to save money in a safe and secure manner of their choice...

There are countries where you can't do this? I can do this in the US.

Re:legal tender (1)

digsbo (1292334) | about a year and a half ago | (#41354185)

I am not allowed to store my wealth in gold. If gold appreciates against my country's currency, I am forced to pay a portion of that appreciation in taxes. In other words, because I do not want to store some portion of my money in an alternate money without being forced to pay back to my government some percentage of the devaluation of their money they chose to cause while I was using the alternate money.

Re:legal tender (2)

Teancum (67324) | about a year and a half ago | (#41355491)

It is hard for the government of any country to know how many Bitcions you may have, as they can be stored in a "private" hash key that can only be known to you and recorded somewhere that a government can't discover. If there are laws of this nature that you must live under, it is up to you as if you want to comply with those laws voluntarily or not.

As for how to verify how many Bitcoins you may have or not have without the government discovering that quantity, that may be a bit harder. Not impossible as you could in theory even perform the verification "by hand" without a computer, or with a computer you are 100% certain has no spyware and no government agent would be able to view the calculations, but presumably a determined government might eventually figure a way out in terms of discovering the hash code necessary to find your current Bitcoin balance. It couldn't happen through a "brute force attack" (at least not until the heat death of the universe or the development of large scale quantum computers with thousands of qubits linked together) but a "TEMPEST" type attack on your computer system might be able to find the hash key necessary to investigate the current balance.

I could say the same thing about gold, but you need to take the gold and hide it in your basement or trade it in the "black market" where records aren't kept.

Don't worry. Until about the mid 1970's it was illegal for most Americans to even own gold bullion in large quantities without explicit government licenses and extensive record keeping. Your country isn't alone in idiotic laws of that nature. It wouldn't surprise me to see legislators and parliament members coming up with insane laws that prohibit transactions in Bitcoins and arresting people simply for having the software on their computer... even if from a virus or malware.

Ignoring the theoretical for a moment (2, Informative)

Blakey Rat (99501) | about a year and a half ago | (#41353599)

Bitcoin is useless from a PRACTICAL standpoint. Why?

1) Transactions aren't instant, you have to wait potentially for hours for your transaction to go through and the value in your account to change. (Even transactions between two accounts you own, because Bitcoin isn't smart enough to handle that.)

2) Every device using Bitcoin needs a copy of the Bitcoin database. As of about a year ago, this was 700 MB of data. Every device needs a copy of this. Every device needs to go through this file and parse it. Including your low-power cellphone.

I'm not against the concept of Bitcoin, but the implementation stinks.

Re:Ignoring the theoretical for a moment (3, Insightful)

tibman (623933) | about a year and a half ago | (#41353673)

My credit card has pending transactions for days sometimes.

Re:Ignoring the theoretical for a moment (3, Informative)

Anonymous Coward | about a year and a half ago | (#41353877)

Days before you get to sign the slip?

Those transactions are not actually "pending", the bank is holding your money for a few days to collect interest off of it before passing it on to the next gent.

Re:Ignoring the theoretical for a moment (0)

Anonymous Coward | about a year and a half ago | (#41354353)

Yep. People are being robbed and don't even care. It's probably a little more devious that just interest.

Re:Ignoring the theoretical for a moment (5, Informative)

Anonymous Coward | about a year and a half ago | (#41353677)

1 - Ten minutes max, usually.
2 - Not true, there are several wallet tools now that don't hold the blockchain locally.

Re:Ignoring the theoretical for a moment (1)

Teancum (67324) | about a year and a half ago | (#41355577)

1 - Ten minutes max, usually.
2 - Not true, there are several wallet tools now that don't hold the blockchain locally.

The ten minutes is the typical amount of time that Satoshi established for generating a block chain. It could be longer or much shorter before a transaction is incorporated. In theory the next block may take even days to be generated, but as a practical matter you are correct that about ten minutes is typical and longer than a half hour is almost unheard of. I have seen two blocks generated less than ten seconds apart, and some that take much longer to be processed.

If you don't bother including any transaction fee in a transaction, it may get passed over until somebody who is generous decides to incorporate your transaction into the block. Most block processors are greedy little capitalists though that will process even the most minor and insignificant transaction with the least bit of a transaction fee, so including some sort of transaction fee is almost always guaranteed to get that transaction included into the next block. Most client software won't even let you inject a transaction without a fee, but it is still possible to send them into the network.

Re:Ignoring the theoretical for a moment (5, Informative)

Anonymous Coward | about a year and a half ago | (#41353683)

I think your comments are fair, but not entirely accurate any more;
I agree with them to a degree, and have raised those issues a number of times in the #bitcoin IRC channel on freenode;

The response to 1) is well, sure, transaction confirmations are not instant. So what? Neither are credit-card transactions. They can take days, even weeks to confirm. The banks agree to go with instant-confirmation based on probability. In a real-world implementation of bitcoin, I suspect that people would accept small transactions without 6 confirms. In fact, in a real-world implementation, I think most stores could do a lot worse than go down the "Starbucks" route; you have an automated payment app on your phone (or accessible via the web, or via a payment machine at the counter that uses your card number etc.). This "starbucks" account is filled by bitcoin, by you, at home. Or in store etc. but the point being that you fill it before you need it, 9 times out of 10. Ergo that reduces the need for instant confirms. Since it's only a small amount of cash in your Starbucks account, it mitigates the worries over hyperinflation & governmental interference that running all your finances in this way would raise.
2) Not every device needs a full copy of the database now. They have thin-use clients. I'm not sure on the exact specifics of how it does it, but I know it's supported, and will become "the norm" for most domestic users; I believe the main such desktop app is called "Electrum". The network as a whole isn't endangered as long as a fair number of clients continue to use the whole block chain apps. And a lot of people will. But on your iPhone or whatever, sure, thin-client, instant usage, no waiting on downloading the block chain.

Really, the way to get BTC into common, physical-world use, is to go down the accounts system aka "starbucks". A lot of retail chains are already set up for such a system, small retailers can easily roll their own thanks to the likes of OpenTransaction, and it makes it very easy to get btc into common usage without the worries over physical terminals, having to accept low confirm levels or make customers wait for ages etc.

Re:Ignoring the theoretical for a moment (1)

raynet (51803) | about a year and a half ago | (#41354007)

Here in Europe, the creditcard transactions with Visa Electron are realtime and the amount you pay is immediately taken from your account. If the realtime reservation cannot be made (due to network problems that sometimes happen), you cannot make the payment and the merchant wont sell you the goods. With non-realtime creditcards, the CC issuer and/or bank makes sure the merchant gets her money even if the customer didn't have the funds, thus the merchant can be sure to paid. With Bitcoin, if the transaction can take tens of minutes to be confirmed, you cannot use it to buy anything where you get the goods immediately upon payment, like buying a cup of coffee etc. Or buying a PC from a store and walking out with it. And, worse, with Bitcoin the transaction can be later nullified and the merchant can lost her money. This has already happened once. With debit/creditcards you have some entity you can sue and perhaps get the funds back (or atleast you have a contract that defines who will pay who when transactions are reverted).

Re:Ignoring the theoretical for a moment (2)

jfengel (409917) | about a year and a half ago | (#41354039)

> Here in Europe, the creditcard transactions with Visa Electron are realtime and the amount you pay is immediately taken from your account.

Doesn't that make it a debit card? We have those in the US, too.

Re:Ignoring the theoretical for a moment (1)

raynet (51803) | about a year and a half ago | (#41354145)

Could be, I was assuming the AC used the fastest example available in his comparison...

Re:Ignoring the theoretical for a moment (2)

zyzko (6739) | about a year and a half ago | (#41355155)

> Here in Europe, the creditcard transactions with Visa Electron are realtime and the amount you pay is immediately taken from your account.

Doesn't that make it a debit card? We have those in the US, too.

Yes, but Visa Electron and Mastercard Maestro are always verified, you can't simply spend something you don't have.

Visa / MC Debit have an option to be verified, but it is not mandatory and when used in a non-instant way they will show up on your account either immediately or maybe 3 days later, depending on the chain of payment processing.

Re:Ignoring the theoretical for a moment (2)

gl4ss (559668) | about a year and a half ago | (#41355209)

yeah it's a debit card. technically you shouldn't be able to overdraw it (it's possible when traveling, to some extent - it shouldn't be though).
but visa isn't really consistent with it's branding nor with it's actual rules globally. it's also supposed to be used only with the chip if possible, but the main point about "electro" part is checking it live if you have enough balance.

but visa electron, when travelling, works exactly like a credit card - whoever is charging it is just supposed to check that it has balance, however all hotels and such accept it as a credit card, metro system booths accept it as a credit card, online vendors accept it as a credit card(steam & etc), american atm's give cash with it as if it were a visa card... because it carries normal visa numbers, you don't really need more than the numbers to charge it.

Re:Ignoring the theoretical for a moment (1)

JoeMerchant (803320) | about a year and a half ago | (#41354239)

Here in America the merchant is mostly on the hook for credit transaction problems.

Re:Ignoring the theoretical for a moment (1)

raynet (51803) | about a year and a half ago | (#41354297)

Here I would only accept Visa Electron type cards as a merchant as I would be fairly sure that I would always get to keep the funds.

Re:Ignoring the theoretical for a moment (1)

gl4ss (559668) | about a year and a half ago | (#41355123)

cc is for practical purposes instant.
the vendor who you're buying from is instantly promised money by the system(in most cases even checked&verified promise) and you get your purchase instantly.

though if bc was used commonly for everyday things, then for things like coffee you would load up credits on your coffeeshop card with it, same with bus etc.

Re:Ignoring the theoretical for a moment (3, Insightful)

Anonymous Coward | about a year and a half ago | (#41353705)

1) For low-value transactions (say, $50), 0 confirmations is usually fine. For higher value transactions, 1 confirmation (average of 10 minutes, sometimes more) is pretty good. If you're buying a car or a house, waiting an hour or two for more transactions is reasonable. You'd spend at least that time on paperwork.

2) There are several thin clients now that do NOT require the full blockchain. For example, MultiBit, Electrum, Blockchain.info, various cell phone clients... the implementation depends on the client, but there's more than one way to tackle the size problem.

Re:Ignoring the theoretical for a moment (1)

Rockoon (1252108) | about a year and a half ago | (#41354399)

If you're buying a car or a house, waiting an hour or two for more transactions is reasonable. You'd spend at least that time on paperwork.

Who in their right mind is going to be signing paperwork before the money, or a legally enforceable promise of money, is confirmed and in their hands when talking about very large sums?

...perhaps the same idiot that didnt get a lawyer when you was buying or selling a house.

Re:Ignoring the theoretical for a moment (1)

maxwell demon (590494) | about a year and a half ago | (#41354549)

Who in their right mind is going to be signing paperwork before the money, or a legally enforceable promise of money, is confirmed and in their hands when talking about very large sums?

Who in their right mind is going to pay the money before the signed contract is confirmed and in their hands when talking about very large sums?

Re:Ignoring the theoretical for a moment (2)

jmcvetta (153563) | about a year and a half ago | (#41355181)

Who in their right mind is going to be signing paperwork before the money, or a legally enforceable promise of money, is confirmed and in their hands when talking about very large sums?

Afaik, house sales usually involve an escrow process. Buyer & seller make a contract; buyer puts money into escrow account; seller completes deed transfer paperwork; then escrow company releases money to seller.

No reason this couldn't be done with Bitcoin, or any other type of payment mechanism.

Re:Ignoring the theoretical for a moment (0)

Anonymous Coward | about a year and a half ago | (#41353715)

>1) Transactions aren't instant, you have to wait potentially for hours for your transaction to go through and the value in your account to change. (Even transactions between two accounts you own, because Bitcoin isn't smart enough to handle that.)

So, it's exactly like debit, credit, and cash, then?

We all know banks can be very slow on debit and credit transactions. How about cash?

Well, that one is slow too. Your cash isn't real until some of several things happen: It is independently verified as real by the bank it is drawn on (In Canada, the bank of Canada would need to verify it), or your bank releases the hold on your deposit (this can be as quick as waiting in line at the bank, or it could take a few days if you deposit the cash at the ATM and it takes time for the deposits to go through a clearinghouse. Even if the bank says it's verified, they still have a while (days, or is it a full month?) during which they can reverse the deal if the bills are found to be fake later on.

>2) Every device using Bitcoin needs a copy of the Bitcoin database. As of about a year ago, this was 700 MB of data. Every device needs a copy of this. Every device needs to go through this file and parse it. Including your low-power cellphone.

Oooo! 700 MB! That's a lot... For my hard drive 20 years ago. Also, I expect an intermediary would appear to help make bitcoin go a little faster (and they would charge a percentage as insurance against transactions that fail and screw them out of money).

Re:Ignoring the theoretical for a moment (0)

Twinbee (767046) | about a year and a half ago | (#41353749)

Thank you. That's automatically put me off BitCoin in future, so I won't be following it anymore (and hence, save lots of time). I can't believe I haven't heard these disadvantages before, and that they don't get even the basics right.

Re:Ignoring the theoretical for a moment (0)

Anonymous Coward | about a year and a half ago | (#41353889)

> That's automatically put me off BitCoin in future

Glad to see the ignorant and incompetents can still be swayed by an in accurate forum post. Marked you as such.

Re:Ignoring the theoretical for a moment (1)

Twinbee (767046) | about a year and a half ago | (#41353945)

Maybe they can improve, but to have that kind of bloatedness and overhead at any stage (even if it was somewhat exaggerated in the OP's post) is too much for me. I love the concept, but I'm sure others can do it better and more efficient.

Re:Ignoring the theoretical for a moment (0)

Anonymous Coward | about a year and a half ago | (#41353775)

"(Even transactions between two accounts you own, because Bitcoin isn't smart enough to handle that.)"

It only takes so long because it wants to ensure that the recipient isn't getting conned by a sender using the same bitcoins multiple times.

This is quickly and easily solved by putting more processing systems (miners) online (provided they are independent and not controlled by one organization.)

"Every device needs to go through this file and parse it. Including your low-power cellphone."

Not true at all. All of this can be outsourced. You can setup a bitcoin "server" on your home system that does this and your phone can merely relay the transactions. That or you can pay for a service (or use a free service) that does the same.

It's still in it's infancy. A lot of the problems are not yet solved. That doesn't make them unsolvable.

Re:Ignoring the theoretical for a moment (-1)

girlintraining (1395911) | about a year and a half ago | (#41353797)

You forgot something: Bitcoin supply decreases exponentially over time.

They're based on prime numbers, which become increasingly rare as the numbers increase. While it's believed the number of prime numbers themselves are infinite (it's not easy proving anything in mathematics with the word 'infinite' in it), the amount of processing power required to find them with existing algorithms is not; There is a practical upper limit to the number of prime numbers the human race can ever find. This is a problem unique to bitcoin as a currency -- every other kind of currency can be mass-produced, or is tied to a natural material of limited abundance (ie, gold).

What this means, practically speaking, is if the currency were ever widely-adopted, due to limited supply, the price will become so high that most people won't be able to afford them in any quantity, if at all. It also means that microtransactions aren't possible: You can "break" a $20 bill. You can't break a bitcoin. So as it becomes more popular, fewer and fewer items can be purchased -- it becomes a currency for only high-value transactions, and only affordable by the rich. And that presupposes that vendors are going to want to participate in the system when they have to round their goods and services to the nearest thousand dollars.

Re:Ignoring the theoretical for a moment (0)

Anonymous Coward | about a year and a half ago | (#41353921)

You can break bitcoins into the eighth decimal point or so; this gives at the very least enough resolution to buy a cup of coffee with it without need to round.

Re:Ignoring the theoretical for a moment (2)

Coryoth (254751) | about a year and a half ago | (#41353991)

While it's believed the number of prime numbers themselves are infinite (it's not easy proving anything in mathematics with the word 'infinite' in it)

Yes, if only we could prove there is an infinite number of oprimes rather than just believing, presumably from some famous named conjecture. I'm sure any such proof would require extremely deep and difficult mathematics and not be something that is used in textbooks as a first example of mathematical proof as copied straight out of Euclid.

Re:Ignoring the theoretical for a moment (1)

girlintraining (1395911) | about a year and a half ago | (#41354031)

Yes, if only we could prove there is an infinite number of oprimes rather than just believing, presumably from some famous named conjecture. I'm sure any such proof would require extremely deep and difficult mathematics and not be something that is used in textbooks as a first example of mathematical proof as copied straight out of Euclid.

I'm sensing a high level of sarcasm here. I can prove that the angles of the three sides of a triangle add up to 180 degrees. I cannot prove that parallel lines never cross. That's the difference between something proven, and something posited. A conjecture is one step below even that: It's something that all the data points to being true, but it can't be derived directly from mathematical laws. In other words, it's a really good guess.

Re:Ignoring the theoretical for a moment (1)

maxwell demon (590494) | about a year and a half ago | (#41354765)

But you can prove that there are infinitely many primes. And indeed, it has been proven quite a long time ago. By Euclid. There's absolute no need to guess here. And the proof isn't even complicated.

Re:Ignoring the theoretical for a moment (2)

Coryoth (254751) | about a year and a half ago | (#41355017)

I thought you might have taken the time to look things up, but apparently not. Let's recap then; Euclid proved that there are infinitely many primes in approx. 300 BC. The proof is very straightforward and has been repeated many times. See here [utm.edu] for a canonical example. But wait, there's more. Bored mathematicians have found other proofs, usually perverse ones for amusement value. See, for example Goldbach's proof [utm.edu], or Furstenberg's topological proof [utm.edu].

Perhaps your going to say that those are just a touch hand-wavy and not "derived directly from mathematical laws". That would be a mistake, but we can cover that too: here is a proof [metamath.org] that is conveniently completely machine verifiable and traceable back to formal axioms -- specifically first order predicate calculus and Zermelo Frankel set theory (we don't even need the axiom of choice!).

There are infinitely many primes. But don't trust me -- work through the metamath proof in all the gory details if you really still don't believe.

Re:Ignoring the theoretical for a moment (1)

subanark (937286) | about a year and a half ago | (#41353997)

Proof that there are an infinite number of primes:
If there were a largest prime number, p, then p! + 1 is not divisible by any number between 2 and p!. Thus p!'s prime factors are numbers greater than p!.

As for practical upper limit, that is hard to say. Technology improves all the time. If a usable quantum computer came out, it could find a lot of bit coins and greatly devalue the current value.

Re:Ignoring the theoretical for a moment (3, Informative)

TeknoHog (164938) | about a year and a half ago | (#41354155)

You forgot something: Bitcoin supply decreases exponentially over time.

They're based on prime numbers, which become increasingly rare as the numbers increase.

Can I have some of what you're smoking? The exponential decay curve of Bitcoin supply has nothing whatsoever to do with prime numbers. It is simply a planned feature that after every 210000 blocks produced, the block reward will halve.

Also, as others have already corrected you, Bitcoins are fine for microtransactions. There are currently 8 decimals, with a possibility to increase in the future.

Re:Ignoring the theoretical for a moment (1)

osu-neko (2604) | about a year and a half ago | (#41354169)

Right. Ultimately, BitCoins can become (and in fact have become, to a limited extent) a commodity. They can never really function effectively as a currency.

Re:Ignoring the theoretical for a moment (0)

Anonymous Coward | about a year and a half ago | (#41354177)

What this means, practically speaking, is if the currency were ever widely-adopted, due to limited supply, the price will become so high that most people won't be able to afford them in any quantity, if at all. It also means that microtransactions aren't possible: You can "break" a $20 bill. You can't break a bitcoin.

I believe you're mistaken about the divisibility of bitcoins, see here:
Bitcoin Myths [bitcoin.it]

Re:Ignoring the theoretical for a moment (1)

sFurbo (1361249) | about a year and a half ago | (#41354531)

There is an infinite number of primes, the number of primes have got nothing to do with new bitcoins, and you can break a bitcoin into smaller bits. You couldn't get it more wrong if you tried, so I am going to call Poes law.

Re:Ignoring the theoretical for a moment (0)

Anonymous Coward | about a year and a half ago | (#41353873)

tim cook is also a crook ... dont give apple your $$$ you see what they tried already sheish..

Re:Ignoring the theoretical for a moment (0)

Anonymous Coward | about a year and a half ago | (#41353937)

Fix it kiddo if you're one with a big brain. The world could use it.

Re:Ignoring the theoretical for a moment (0)

Anonymous Coward | about a year and a half ago | (#41354035)

Indeed, when free cash transactions can be guaranteed within 2 hours between banks, bitcoin is a dinosaur harking back to the 80's when these things took days.

Also bitcoin takes an apparently random few % of each transaction - when I cashed up it around 15% of my total bitcoin stash just vanished into the ether in 'taxes', and if you tried to send more than about 10 (about £50 at the time) at at time you just got a 'transaction too large' error.. that's just not scalable - business would want to send thousands. (I ended up just about covering the cost of my mining rig + electricity one I'd sold it.. so it was a fun hobby but not one I'd repeat).

Re:Ignoring the theoretical for a moment (1)

JoeMerchant (803320) | about a year and a half ago | (#41354213)

A year ago, processing 0.00001% of the world's commerce was 700MB - how big would it be if they handled Visa's global transaction volume?

Re:Ignoring the theoretical for a moment (3, Informative)

jgarzik (11218) | about a year and a half ago | (#41354393)

Wrong on every detail.

1a) Using the "move" RPC command, bitcoin makes an instant transfer between two accounts that you control.

1b) All transactions are published instantly, and available instantly, via the bitcoin P2P network. There are also several websites like http://mtgox.com/ which facilitate instant transfers. After that, you wait on average 10 minutes per confirmation, each of which makes your transaction exponentially more secure. While not recommended, yes you can spend zero-confirmation transactions.

2) Did you bother to look at Android Market before posting? Only full nodes require the full block chain database (2+ GB now). Lightweight software exists for phones, or you can use a web wallet from places like http://blockchain.info/ or http://instawallet.org/

          - jgarzik, bitcoin core dev

Re:Ignoring the theoretical for a moment (0)

Anonymous Coward | about a year and a half ago | (#41354737)

Sorry Blakey Rat, you don't know what you're talking about.

1) Transactions ARE instant. My business accepts BTC payments instantly on a daily basis.
2) Devices can use thin clients which don't require the blockchain.

Do some basic research please before posting.

Yeah right (-1)

Anonymous Coward | about a year and a half ago | (#41353601)

The single biggest users of bitcoins are pedophiles, drug addicts, and criminals. It is the currency of lower-class scumbags who's illegal dealings couldn't otherwise be easily carried out with conventional money.

Bitcoin isn't a currency, it's an enabling tool for crime and a pyramid scheme to boot. Fuck bitcoin users and supporters.

Re:Yeah right (1)

Bert64 (520050) | about a year and a half ago | (#41353947)

And criminals also makes extensive of cash, existing banks, existing money transfer systems etc... Criminals always want to stay one step ahead of the law, is it any wonder they would embrace a new payment system before anyone else?

Re:Yeah right (1)

slashrio (2584709) | about a year and a half ago | (#41355323)

Oh man! You won't believe what dastardly devils are using cash for their low and criminal acts.
Drugs, prostitution, corruption, weapons deals, whitewash, all done with cash.
It's an outright miracle that 'the authorities' haven't yet forbidden the use of cash altogether!

Slow speed of analogue money is the savior (1)

G3ckoG33k (647276) | about a year and a half ago | (#41353653)

The slow speed of analogue money is the buffer we all need, as electronic money move around too fast.

With ultrafast transactions only we would have the stock markets crash every few minutes, albeit after a few hundred millions, or billions of transactions.

The differently paced transactions may be a pain in the rear for stock brokers, but they have saved us all from even more disasters. Slow human brains cannot react within seconds to a system running amok.

Now, go away Bitcoin. It doesn't matter how much you track your Bitcoins. Speed kills. But this time it will be our common, globalized economy.

Agreed (0)

Anonymous Coward | about a year and a half ago | (#41353805)

I use bitcoin and it's so much easier than dealing with banks, their bullshit fees, fees to keep money, fees for NFS, fees just for plain not having a min balance requirement met, fees for recieving international money xfers, fees to exchange currencies, fees to send money/ wired or etf even by just cheque. extreme wait times, holidays they are closed, weekends they are closed usually. ..etc etc... Hell, some banks just plain have monthly fees just to have the account, >

Bitcoin it doesn't matter where or when.. click and it shows up almost instantly and fully verified in around an hour or less usually, but certainly less than the near week it can take banks to process deposits or withdraws made on say like a friday night going into the weekend, especially if monday is part of a holiday... it can take ages to get your money. It's spreading, slowly but surely it's still spreading to various online and even brick and mortar store merchants. Especially when they see how easy they can add it to their system and how fast and easy it is to get their money. It also is nice in that it allows easy payment by tablets and smartphones which are everywhere today. just scan the qr code or whatever and enter in the price to pay and all done. in bitcoins or automatically converting on the fly to the currency or currencies of your choice.

I like it. The people that don't are many times the ones who lost money by putting valuable information or wallets with bitcoins in them on new 3rd party website without knowing how reliable or trustworthy they are or were. like bitcoinica? that was nice while it lasted but it was like a 13-15 yrd old or something? what do you expect? OH NOES the site ate my money. Yeah... not a big shocker. but compared to major financial banking or corporation breaches where hundreds of millions of peoples info, credit card numbers, private info.. whatever have been stolen. like SONY having it's ps3 network compromised... I mean billions have stolen accounts compared to the small drop of bitcoin accounts.. and note it wasn't bitcoin that was ever in danger of having it's security cracked... it's the end user trusting unknown third parties.

To in your face (1)

IgnitusBoyone (840214) | about a year and a half ago | (#41353867)

This article show a great deal of pro Bit Coin bias. Sever farms for generating coins may not be common yet, but bot nets are already an issue. However the real stickler point that the Legal Council is trying to get acknowledged in my opinion is the point of Exchange. In this case the point of Exchange from Bit Coin's to USD. (e.g https://en.bitcoin.it/wiki/MtGox [bitcoin.it] )

For now you can stay anon as long as your jacked in the system and buying goods that people will exchange for Bit Coins (I've personally never been on a website that accepts them, but I may not be paying attention). But the moment you want to trade with someone outside the system you will have to report that exchange to the proper authorities. I think the acknowledgement that BitCoin does have an issue where legal entities can require all sorts of gating protocols at the boarder points is at least worth debate.

Re:To in your face (0)

Anonymous Coward | about a year and a half ago | (#41354973)

But the moment you want to trade with someone outside the system you will have to report that exchange to the proper authorities.

This is totally false. I can go hand someone cash on the street for Bitcoins sent to my wallet, or wire them money across continents for the same purpose. No reporting whatsoever. It is possible that people are -supposed to- report these things, but Bitcoin doesn't require it in any way.

Monopoly money is better than real money! (0)

Anonymous Coward | about a year and a half ago | (#41353887)

Film at 11!

Digital currency is only as good (2)

future assassin (639396) | about a year and a half ago | (#41354119)

as the network. Network goes and and you're fucked. People need to learn how to barter again and save on taxes and remove the usless currency. To me there's more value in buy/sell type websites than digital currency.

Don't squat when you're wearing spurs (-1, Offtopic)

Hognoxious (631665) | about a year and a half ago | (#41354273)

The other day, I was walking down the road and I heard this voice behind me go, "Hey, long time no see - almost didn't recognize you. Did you become a hippy or something?"

I looked round and would you believe it, it was my barber!

Re:Don't squat when you're wearing spurs (0)

Anonymous Coward | about a year and a half ago | (#41354559)

Given how utterly irrelevant this was to the topic at hand, I was fully expecting it to devolve straight into generic racial slurs (with a few homophobic lines thrown in just for good measure), like what usually happens when the public school kids are left unattended for too long. Now I'm strangely disappointed it didn't, because that just means it was complete gibberish that both came from and went nowhere.

Fiat currencies are on their way to their death. (1)

Anonymous Coward | about a year and a half ago | (#41354481)

Remember that you read it on slashdot first :)

Bitcoin, as well as real money like gold and silver of cause, might atleast save some people when the s***t hits the fan.

It's tragic that most people in the west doesn't understand that fiat curriencies, bits of paper with digits on them, are not the same thing as real money, gold. If they did they would protect themselves now while it's still possible. Dollar, euro and the rest are on their way for their destruction, mark my words.

It might take a couple of years more but the current fiat currencies will not be celebrating 50. 2012 it was 41 years ago the gold standard broke down and the bretton woods agrement was destroyed.

NACHA?! (0)

Anonymous Coward | about a year and a half ago | (#41355133)

It's a good thing NACHA is an "association" and not an "organisation". Imagine the confusion when you arrive at a NACHO conference and only find sushi on the menu!

Yet again ... (0)

Anonymous Coward | about a year and a half ago | (#41355711)

... we see everything from the USA's point of view.

A presentation by Senior Legal Counsel to the Federal Reserve titled: 'The Implications of Dodd-Frank Section 1073' sheds light on requirements that need to be fulfilled by "Remittance Payment Company" (RPC) guidelines. This law requires such companies to disclose a lot of information about money transactions.

So, move your financial operations overseas. Don't use dollars.

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