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Comment Re:Bitcoin ended up as a pyramid scheme (Score 3, Interesting) 391

The Bitcoin thing has gone off in a different direction than its promoters anticipated. They were thinking "payment system", like gift cards. The idea was that most Bitcoins would be tied up in people's "wallets", and spent slowly. All that static value would anchor the currency.

Citation?

That's not what happened. Bitcoins turned into a speculative vehicle, with "miners" grinding away solving hashes and generating more Bitcoins,

Which in general is good. The more miners there are, the more secure the currency is against double-spending.

The exchanges are tiny; today's worldwide Bitcoin trading volume is comparable to the sales of one supermarket. The daily volatility is huge, even on days when there isn't a break-in. So no major retailer can accept Bitcoins; they don't know what they will be worth at the end of the day, let alone the end of the month.

There's no reason retailers have to wait until the end of the month or even the end of the day before cashing out their bitcoins. A retailer could cash out their bitcoins immediately, or after the first confirmation block. The volatility of Bitcoin is only a problem for speculators.

The difficulty level has reached the point where buying and powering the new hardware is not cost-effective. And that was before the price of Bitcoins crashed. (The current price is around $13.)

No it isn't. An average ATI graphics card will still net you $100 per month profit, even at the current difficulty.

Worse, they're not just "exchanges". They're depositary institutions, holding customer balances. Mt. Gox customers are now very aware of this, because they can't get at their money while Mt. Gox is down. Some people are worried over whether the money will be there when Mt. Gox comes back up.

Why anyone would store money in Mt. Gox and not immediately take it out after a trade is beyond me. Clearly some people do, but that seems like asking for trouble.

The "exchanges" represent a mis-design of Bitcoin. There should have been a way to do an exchange in a distributed way, without the exchange holding customer assets.

It's not a "mis-design". Acting as an exchange is beyond the scope of the Bitcoin protocol. If you want a distributed exchange, that's an entirely separate project.

However, I can't see how a distributed exchange would work, unless it was just some manner of trust network and actually making the trades was up to the individuals. That doesn't seem particularly user-friendly to me, so I suspect that exchanges will have to be centralized websites.

That said, it would be better if (a) people used alternative exchanges more, and (b) the exchange source code was open sourced.

The EFF was right to bail.

The EFF bailed for entirely different reasons. If the future legality of bitcoin is contested, they want to be able to fight without also being the one of the ones being prosecuted.

Comment Re:Disconnect (Score 1) 642

The main problem with current electronic voting systems is that they are not independently auditable. If a machine says that 1000 people voted for Alice, and 500 for Bob, we have to trust that the machine is correct. With a paper system, there are multiple independent systems (i.e. human beings) counting the votes, and votes can be recounted if the result is contested.

Now, there are cryptographic voting systems that get around these problems. In a good cryptographic voting system, your can verify your vote was posted, and independently verify the result. The problem is that no-one currently uses cryptographic voting schemes like this.

Bitcoin works in a similar fashion to cryptographic voting systems, in that all transactions are public and can be independently verified. In fact, there's even a financial incentive to verify them.

Comment Re:Volatility (Score 1) 476

Of course Bitcoin's success is far from certain, but there's a chance that it will succeed. Even if it becomes only as popular as Paypal is today, I'd imagine many of its proponents would mark that as a distinct success. At least we'd be free of Paypal's tendency to freeze assets without notice.

However, I'm not sure why you consider that the most successful Bitcoin can be "even in theory". As it stands, the network could scale to 10,000 transactions per second (i.e. peak VISA-level) and a total economy size of around $10 trillion without any change to the protocol. Above that and one might have to start tweaking the design, but that's not going to be a problem for the foreseeable future.

Comment Re:Volatility (Score 1) 476

You could have made very similar arguments about the early Internet.

The things that differentiated the Internet from other networks that were arising at the time, was that it was decentralised, pseudononymous and had a low barrier to entry. These are the same attributes that differentiate Bitcoin from traditional fiat currencies.

At the time, many technically adept people, most famously Bill Gates, considered the Internet to be a dead end. With hindsight, it's clear that they underestimated the power of a decentralised network that was cheap to join and easy to add new services to.

It's far from certain that Bitcoin will become as successful as the Internet; but I'm not sure I'd write it off so quickly.

Finally, tulip bulbs are somewhat different to bitcoins. One is something you put into the ground and which turns into a flower. The other is a cryptographically signed transaction history wrapped in unit of work proofs, providing a pseudononymous and decentralised way of transferring wealth across an arbitrary communications channel. The only similarity is that they were invested in by speculators.

Comment Re:Volatility (Score 1) 476

That wouldn't work. People would just swap coins between several accounts in order to reset the expiration date.

That's precisely the point. To give users an idea of how many BTC are actively being hoarded, rather than the permanently inaccessible ghosts of coins that were created when some user overwrote their wallet file.

Why?

I mean sure, it gives people a little more information about the market, albeit at the cost of increasing the number of transactions, but what exactly would it change?

Comment Re:Bitcoin is worthless in the long run (Score 1) 476

The ultimate value of Bitcoin does not seem to exist

It allows you to transfer wealth electronically and pseudononymously without the need for a centralised broker.

One might as well claim that the Internet has no ultimate value, as there's nothing apart from being electronic, pseudononymous and decentralised that sets it apart from traditional means of disseminating information.

Comment Re:Volatility (Score 1) 476

Aside from trying to play hot potato with bitcoins, what exactly makes bitcoins valuable? I can't take a bitcoin and turn it into energy, or use it to move things, or settle a tax debt.

No, but bitcoins can transfer wealth electronically and pseudonymously without the need for a centralised broker.

Bitcoins is to currency what the internet is to traditional media. It lowers the amount of initial capital needed to innovate with finances. Quite frankly the appreciation of bitcoins is relatively uninteresting to me; it's the sheer technical potential of a decentralised electronic currency that gets me excited.

Bitcoin

Friday's Big Swings, Mostly Down, Illustrate Bitcoin Value Volatility 476

An anonymous reader writes "As cool as Bitcoin is, it looks like it lost 1/3 of its value in the last 24 hours. Lots of big sells, complaints of liquidity, and pissed off nerds." The linked article goes on to explain that the value rose again, so the aggregate loss was considerably less. The author also helps defuse claims that Bitcoin is untraceable or otherwise especially well suited to nefarious activities.

Comment Re:The Doctor needs a break too (Score 5, Insightful) 332

The plots, and the Doctor himself, are so incoherent that even I barely know what the hell just happened at the end of an episode, and I'm normally the guy in the room who is explaining the plot twists to others.

I haven't had any problems understanding what happens in each episode. In fact, I find the two new series by Steven Moffat to be considerably better than the old Russel T. Davies series.

Russel T. Davies was infamous for "Doctor Ex Machina" plots, in which the Doctor would pull technobabble solutions out of his ass at the last minute. His villains were either re-introduced monsters from old Doctor Who episodes, or extremely uninteresting evil aliens who were entirely interchangeable.

Steven Moffat actually attempts to write science fiction, in that the Doctor's solutions are based on rules set up earlier in the episode, rather than rectum-derived technobabble. The viewer gets all the information the Doctor gets, so when he reveals the solution there's a genuine feeling of "Oh, now that's quite clever". Moffat's monsters also typically have some kind of interesting gimmick and often have some relation to the real world, giving them a certain scare factor that's not present in Davies' generic aliens.

Comment Re:May not work (Score 1) 858

If a party changes their public key, their coin hashes won't match their coins, and the next transaction will fail.

The user doesn't discard their old key pair, they just generate a new key pair for each transaction. A bitcoin user might own hundreds of different keys, each containing the proceeds from a single transaction. In aggregate, all of these accounts make up the bitcoin user's total wealth.

Comment Re:Not untraceable. (Score 1) 858

An electronic money issuer or a money transmission service.

I'm not sure a client in the Bitcoin network counts as either. The FSA might be interested if someone started a business for exchanging bitcoins for pounds, or vice versa, but I expect it would take a while to work out whether bitcoins were something that it should be regulating.

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