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Bitcoin could change the world

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#1 JChief

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Posted 21 November 2013 - 06:56 AM


I wonder if Longecity would consider taking donations in Bitcoin!

http://en.wikipedia.org/wiki/Bitcoin

http://www.weusecoins.com/en/

Bitcoin (BTC) is a cryptocurrency that allows for globally accepted anonymous transactions through a secure decentralized network. It is the first currency in the world that allows people to have full control over storage and transfer of their money with zero counter-party risk with no fraud, no chargebacks and no counterfeit coins. It has no governmental or central bank control and therefore is not taxable or subject to regulation. The supply of money is self-regulated and behaves similar to gold and cannot be inflated. It is designed to be deflationary. It even has advantages over gold. It can be exchanged anywhere the Internet is available.

It's an invention of a mysterious – and, to date, unidentified – programmer who called himself Satoshi Nakamoto and claimed to be a 36-year-old Japanese male. He launched Bitcoin on 3 January 2009 and disappeared entirely from the net in April 2011, saying that he was moving on to other things. A Pulitzer prize awaits the journalist who unmasks him. At the moment, all we have is the verdict of Dan Kaminsky, a leading internet-security expert who examined the Bitcoin code and concluded that "Nakamoto" was "a world-class programmer with a deep understanding of the C++ programming language" who also "understands economics, cryptography and peer-to-peer networking. Either there's a team of people who worked on this or this guy is a genius."

Bitcoin is fully detailed in the official white paper found here: http://bitcoin.org/bitcoin.pdf . The abstract begins “A purely peer-to-peer version of electronic cash would allow online payments to be sent directly from one party to another without going through a financial institution (emphasis added).” This is precisely what is currently taking place today and the potential impact this will have on the world economy and nation states are yet to be determined but Bitcoin’s latest market price of over $144 ( as of this writing) and billion dollar economy is certainly generating some buzz as media outlets, governmental regulatory agencies, and central banks all start to take notice.

"The root problem with conventional currency," wrote Nakamoto in 2009, "is all the trust that's required to make it work. The central bank must be trusted not to debase the currency, but the history of fiat currencies is full of breaches of that trust. Banks must be trusted to hold our money and transfer it electronically, but they lend it out in waves of credit bubbles with barely a fraction in reserve. We have to trust them with our privacy, trust them not to let identity thieves drain our accounts." In contrast, everything in Nakamoto's system "is based on crypto proof rather than trust".

People ask “What is it BTC backed by?” Bitcoin is backed exclusively by the public’s trust; most likely motivated either by consumers or business interests attracted to zero (or close to zero) transactional fees, full control over storage and transfer of money with zero counter-party risk, reduced risk/costs associated with fraud, no chargeback risks, no counterfeit coins, a belief in the infallible and predictable nature of mathematics, the security inherent in the currency’s reliance on cryptography, transparency derived from open source (and therefore publicly verifiable) nature of the programming code, full accounting of all transaction history stored universally in what is called the “blockchain” , and/or is attractive to users with increased privacy needs or who, if proper steps are taken, wish to send and receive payments anonymously or wish to sell or obtain goods or services that are banned or restricted by local governments. The designers have also put an upper limit on the number of Bitcoins that can be created ruling out in advance the type of quantitative easing (QE) or money printing that has worried savers throughout the developed world. This deflationary nature is appealing to those concerned about inflation brought about by governmental/central bank intervention destroying the purchasing power of savings denominated in the fiat currencies of those respective countries.

The Bitcoin phenomenon is one of the most intriguing things to have happened in cyberspace since the invention of the peer-to-peer networking that undermined the music business (BitTorrent is still widely used in spite of numerous RIAA lawsuits, for example) and enabled developments such as Wikileaks.

They are counterfeit-proof. There are about 11 million bitcoins now, with a maximum limit of 21 million, a protection against inflation. It's a currency governed by math, not governments. The transaction fees are either very low or nonexistent. It's open-source software, and it can be anonymous to send and to receive bitcoins, if certain steps are taken. It's also easy to send large amounts of value across borders quickly. And because there is no middleman, it reduces fees, such as those businesses have to pay to credit card companies.

Edited by JChief, 21 November 2013 - 07:13 AM.

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#2 JChief

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Posted 21 November 2013 - 07:02 AM

The bitcoin protocol can be used for more than just money:


At the heart of bitcoin is a fundamental innovation: a distributed public ledger. A ledger in accounting is a book that you cannot edit once you have written in it. Instead, if you have made a mistake, the only way to fix it is to add another transaction to the ledger that undoes the error. As we know from accounting fraud, problems arise when people figure out ways to transact without recording it in the ledger or making ex post changes to the ledger (this is why Quickbooks isn't really an accounting system). The bitcoin ledger is the so-called blockchain which uses the fact that there are many copies of it that are broadly distributed combined with a fair bit of math to ensure that once a transaction has been recorded in the blockchain that transaction can not be changed after the fact. There is no other widely used protocol in the world today that accomplishes this: with bitcoin anyone can make a statement (a transaction) and have this be recorded in a globally visible and fixed ledger.



http://www.usv.com/posts/bitcoin-as-protocol



Could Bitcoin be as transformational as the World Wide Web?

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#3 Artificiality

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Posted 23 November 2013 - 03:56 AM

Bitcoin are at over 800 usd each now. I beat myself up when they went from ~10 to ~150 and now I'm beating myself up again for not buying twice.

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#4 theconomist

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Posted 25 November 2013 - 04:36 PM

As an investment medium I think it can work as well as anything else, all you need to increase price in a speculative market is demand (or the myth of demand) and unpredictable supply.
As a transactional currency it's scope is de facto very limited.
We laugh at the tulip bubble and at pets.com, I don't see how (or why) bitcoin will be different.

I'm not against this currency, it's just ironic how the people who seem to be it's staunchest advocats, are in it for confirmation bias in hopes that price will keep going up and 1- own bitcoins and 2-vout it's merits as a transactional currency which is paradoxal; it cannot become a transactional currency until the price is fixed (or at least indexed understood here as predictable) at which point it will stop being an interesting speculative medium which will reduce it's perceived value and in extenso it's price.
To recap: I'm not saying it will fail, it just won't succeed the way most people want (wish) it to succeed.
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#5 niner

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Posted 26 November 2013 - 02:17 AM

I have to agree with theconomist here. I love the idea of bitcoin, but I think the claim that it's immune from inflation is beside the point, at best. Currencies need a degree of price stability, and neither bitcoin nor precious metals are price stable. There's a lot of hyperventilation about Quantitative Easing, and how we're going to be Weimar Germany any day now. So... Where's the inflation? I don't see it.

#6 nowayout

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Posted 26 November 2013 - 04:58 PM

Well there is a fixed maximum number of possible bitcoins that is not very high, which rather limits its usability as a currency I would think.

#7 Artificiality

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Posted 30 November 2013 - 01:58 AM

You don't have to buy or sell in full bitcoins, 1 microbitcoin (0.001 bitcoin) at this point is around 1 usd.

#8 niner

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Posted 30 November 2013 - 02:24 AM

Wouldn't that be a millibitcoin? Well, whatever it's called, my worry would be in waking up one day and finding that it's now worth a tenth of a cent...

#9 JChief

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Posted 23 December 2013 - 05:27 PM

I have to agree with theconomist here. I love the idea of bitcoin, but I think the claim that it's immune from inflation is beside the point, at best. Currencies need a degree of price stability, and neither bitcoin nor precious metals are price stable. There's a lot of hyperventilation about Quantitative Easing, and how we're going to be Weimar Germany any day now. So... Where's the inflation? I don't see it.


Andreas really does put the price thing into perspective.



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#10 AgeVivo

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Posted 01 January 2014 - 06:11 PM

once it has reached its limit (=soon), what will happen to it?

Satoshi Nakamoto, are you here? it would be nice to have your skills be used against aging. Eg by raising money for projects against aging or deciphering aging through commputers (denigma.org)

#11 Brainy

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Posted 09 January 2014 - 02:03 PM

once it reaches is limits, it think it will start gaining even more value. I have bought and use bitcoins. Bitcoins were at 650$ each 3 weeks ago, now about 900$ it will keep going up i think. As it get more and more popular, the price will increase... A lot of people don't know about bitcoins. I can see it going to 2000$ very soon.
p.s.im not as economist at all and this is just my 2 cents :P

#12 dunbar

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Posted 10 January 2014 - 08:26 PM

Where can you buy bitcoins? And havent bitcoins recently be stolen by hackers? Sounds unsafe to me.

#13 Brainy

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Posted 14 January 2014 - 02:40 PM

yes you can get them stolen just like anything else but It is super safe for what it is meant for... make transaction unstoppable. In the Us you cannot lets gamble money online with your credit card because it is illegal and credit card just wont allow the transaction to happen, with bitcoin you can transfer money to anyone, and theres a ledger so you can prove that transaction are being made! :) you can send money to other people in other country so easily with very very minimal fees. just youtube this:
"Everything You Need to Know About Bitcoin" it is a video from Vice about bitcoins, it last an hour and it is the best hour i spent watching something in a long time :) Cheers :)

#14 niner

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Posted 14 January 2014 - 03:21 PM

and theres a ledger so you can prove that transaction are being made!


I was surprised to hear this a few weeks back while listening to a radio show about bitcoin. Since there's a ledger, the transactions aren't anonymous. You have to trust that the ledger keeper will not rat you out, or that some government won't get a hold of it and see that you bought a bag of dope on Silk Road.

I heard that there's at least one currency system, built using bitcoin software tools, that is truly anonymous, I forget what it was called, but it was something secret-y sounding...

Funny, but cash is actually more anonymous than bitcoin. That's kind of ironic.

#15 Invariant

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Posted 16 January 2014 - 05:47 PM

and theres a ledger so you can prove that transaction are being made!


I was surprised to hear this a few weeks back while listening to a radio show about bitcoin. Since there's a ledger, the transactions aren't anonymous. You have to trust that the ledger keeper will not rat you out, or that some government won't get a hold of it and see that you bought a bag of dope on Silk Road.

I heard that there's at least one currency system, built using bitcoin software tools, that is truly anonymous, I forget what it was called, but it was something secret-y sounding...

Funny, but cash is actually more anonymous than bitcoin. That's kind of ironic.


Some misconceptions here. There is no 'ledger keeper': the ledger is distributed. Everybody who runs the full bitcoin client stores a copy of the whole ledger. The reason this doesn't break anonymity is that the ledger only stores the public keys related to each transaction, not the names of the account holder. Everybody will know that "2334bn2k3lh4bsd7fgsdfbun2ljhb" sent 100k bitcoin to "12jn43wkl3ijnbksiudhbco8shg34", but that's not very informative. It is in principle possible to trace-back where a bitcoin came from, to see if it was once in a crime-related acocunt. But this by itself is probably not enough to implicate someone. In fact, a similar thing happens with real money: almost all dollar bills have minute amounts of cocaine on them..
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#16 niner

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Posted 16 January 2014 - 09:17 PM

and theres a ledger so you can prove that transaction are being made!


I was surprised to hear this a few weeks back while listening to a radio show about bitcoin. Since there's a ledger, the transactions aren't anonymous. You have to trust that the ledger keeper will not rat you out, or that some government won't get a hold of it and see that you bought a bag of dope on Silk Road.

I heard that there's at least one currency system, built using bitcoin software tools, that is truly anonymous, I forget what it was called, but it was something secret-y sounding...

Funny, but cash is actually more anonymous than bitcoin. That's kind of ironic.


Some misconceptions here. There is no 'ledger keeper': the ledger is distributed. Everybody who runs the full bitcoin client stores a copy of the whole ledger. The reason this doesn't break anonymity is that the ledger only stores the public keys related to each transaction, not the names of the account holder. Everybody will know that "2334bn2k3lh4bsd7fgsdfbun2ljhb" sent 100k bitcoin to "12jn43wkl3ijnbksiudhbco8shg34", but that's not very informative. It is in principle possible to trace-back where a bitcoin came from, to see if it was once in a crime-related acocunt. But this by itself is probably not enough to implicate someone. In fact, a similar thing happens with real money: almost all dollar bills have minute amounts of cocaine on them..


Thanks for the clarification, Novotropic. This seems more sensible than what I heard. It would be pretty weird if people were making illegal transactions in a way that was grossly non-anonymous. I guess it all boils down to the difficulty of the back-tracing. If it's possible, I'd suspect that the NSA could do it if they really wanted to.

#17 Invariant

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Posted 16 January 2014 - 10:04 PM

and theres a ledger so you can prove that transaction are being made!


I was surprised to hear this a few weeks back while listening to a radio show about bitcoin. Since there's a ledger, the transactions aren't anonymous. You have to trust that the ledger keeper will not rat you out, or that some government won't get a hold of it and see that you bought a bag of dope on Silk Road.

I heard that there's at least one currency system, built using bitcoin software tools, that is truly anonymous, I forget what it was called, but it was something secret-y sounding...

Funny, but cash is actually more anonymous than bitcoin. That's kind of ironic.


Some misconceptions here. There is no 'ledger keeper': the ledger is distributed. Everybody who runs the full bitcoin client stores a copy of the whole ledger. The reason this doesn't break anonymity is that the ledger only stores the public keys related to each transaction, not the names of the account holder. Everybody will know that "2334bn2k3lh4bsd7fgsdfbun2ljhb" sent 100k bitcoin to "12jn43wkl3ijnbksiudhbco8shg34", but that's not very informative. It is in principle possible to trace-back where a bitcoin came from, to see if it was once in a crime-related acocunt. But this by itself is probably not enough to implicate someone. In fact, a similar thing happens with real money: almost all dollar bills have minute amounts of cocaine on them..


Thanks for the clarification, Novotropic. This seems more sensible than what I heard. It would be pretty weird if people were making illegal transactions in a way that was grossly non-anonymous. I guess it all boils down to the difficulty of the back-tracing. If it's possible, I'd suspect that the NSA could do it if they really wanted to.


Actually, I don't think the back-tracking would be very difficult, and I bet all my bitcoins on it that many people are working on this right now. The only practical problem is that one would need to have some 'seeds': account numbers that are known to belong/have belonged to a criminal. These could be obtained either when a criminal with a bitcoin account is caught and forced to give it up, or by police infiltrating the criminal organization and proposing to pay/receive bitcoins, at which point the account number would have to be reveiled. Once these seeds have been obtained, I suppose it would be very easy to come up with a list of accounts that the seed account has done transactions with. It is then not known who owns those accounts, but it will be either the same person or someone s/he's done bussiness with. The main risk to the criminal is that once their identity is linked to their account, the law enforcement agencies can find out how much bitcoin went through that account.

#18 PWAIN

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Posted 17 January 2014 - 12:15 AM

You probably can't get true anonymity but you can get deniability.

Lets say you have 10 bitcoins and want to buy something for 2 bitcoins. You create a new number key and transfer the 2 bitcoins there. Then you simply pay using the new number key and dispose of the number key afterwards. Probably best to let a bit of time pass before doing the second transfer. Do the same thing for all your transactions and there is no way to prove that you paid to anyone but the now deleted keys which could be anyone.

Sure they can show that you were one back in the transaction list but that doesn't prove anything. You can simply claim that you transferred to someone else that you don't know and they must have done the illegal transaction that followed.

#19 Luminosity

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Posted 22 January 2014 - 05:59 AM

It's good for governments to think they could have competition in the money business. They have to much power to dilute currencies and even manipulate gold prices behind the scenes.

Here's some of my thoughts on the economy in my blog, if you are interested:

http://www.longecity...on-the-economy/

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#20 JChief

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Posted 28 September 2017 - 11:51 AM

Bitcoin still looking good ;) 


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