Bitcoin: global peer-to-peer currency system

[AllAWD]

Originally Posted by Chromer

All fiat currency is invented. Read the story of how Brazil transitioned to the Real sometime. It was pretty much exactly like that, except theirs was called a 'Unit of Real Value' instead of bitcoin or Euro.

I'm a total novice at this, but from what I've read, I understand what you are saying. The world's monetary system is a major concern to me. I think most wealth far outstrips any real worth. The bitcoin is just an additional complication to a fragile system and opens up non-governmental monetary forms as a viable concept. I don't know if that is worse or better than the current system "managed" by governments.

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[Chromer]

Originally Posted by drkwtsn

sorry, long day haha.... it just doesn't seem feasible that something like this would work..... would there be bitcoin insurance?

Now there is an interesting business proposition. FDIC for bitcoin....

[dmross]

Originally Posted by rogue

This thing's going to take off just due to the sheer number of stupid people who won't understand it and thus will buy in to it to try and seem smart.

Profit from speculation doesn't need to be stupid or smart, it just needs to be lucky.

Conspiracy theory - someone (or ones) smart already cracked it and are deliberately causing a bitcoin market frenzy to drive up the value and cash out before destroying bitcoin. People will lose money, but some unknowing dumb lucky speculators can still ride the wave and profit.

Hedge funds and banks do it all the time in "real" world. Maybe the developers can create a P2P TARP network.

[Spheris]

Don't worry, Apple's newest computer in 2018 will knock a coin out in five minutes.

[Kebo]

Originally Posted by dmross

Profit from speculation doesn't need to be stupid or smart, it just needs to be lucky.

Conspiracy theory - someone (or ones) smart already cracked it and are deliberately causing a bitcoin market frenzy to drive up the value and cash out before destroying bitcoin. People will lose money, but some unknowing dumb lucky speculators can still ride the wave and profit.

Hedge funds and banks do it all the time in "real" world. Maybe the developers can create a P2P TARP network.

This MIT guy who started it all...what was to stop him from giving himself a 'headstart fund'?

Or talk to one of his buddies and have them open up an exchange service.

MIT GUY: Hey Mike, I've got a business opportunity for you. You open an exchange service to convert a fictional, electronic currency to cash. People will PAY YOU a fee to convert this currency to dollars. Then over time you'll build up a huge stockpile of this currency, we'll generate some buzz and demand will rise, so you can sell the currency for a massive profit.

Mike: This would take an incredibly gullible group of people to buy into this. I'm in.

[severe]

Originally Posted by Kebo

And you would have no way to prove if someone stole your wallet?

None that I'm aware off.

Originally Posted by Kebo

Then how is the 'address' linked to your 'wallet'?

Well I guess some info for the wallet is stored locally on your HDD, the transactions are part of the processed blocks. There's more questions I have along those lines as well but would require reading the whitepaper, which I haven't done yet. So I certainly don't have all the answers.

Originally Posted by Kebo

Until you put money in or take money out, in which case there is a link to a name, bank account, etc.

Well the same might hold true to some extent with bitcoin if you purchase them or sell them for gov't issued currency. I can't be 100% certain as I haven't bought or sold any bitcoins but I think it's safe to assume the exchange website would track your account activity in their database. To what extent I don't know, maybe someone else here has used the bitcoin forex can provide more info.

Difference being people are 'mining' bitcoins, and they transfer them between themselves as well. You don't necessarily have to 'put money in' from another known account.

[sorbee711]

Ok, so it sounds like I could store my bitcoins on a thumb drive. So what if I took 1000 bitcoins and put it on a thumb drive and locked it away in a safe deposit box. How does the system know that there are 1000 fewer coins (say permanent loss of thumb drive) and the value of the remaining ones goes up vs. them just not being "in the mix" for a while? It seems like the potential for volatility is high and allows for a good bit of price manipulation.

[Kebo]

Originally Posted by sorbee711

Ok, so it sounds like I could store my bitcoins on a thumb drive. So what if I took 1000 bitcoins and put it on a thumb drive and locked it away in a safe deposit box. How does the system know that there are 1000 fewer coins (say permanent loss of thumb drive) and the value of the remaining ones goes up vs. them just not being "in the mix" for a while? It seems like the potential for volatility is high and allows for a good bit of price manipulation.

Right...so basically, the way the network verifies that your bitcoins are yours is based on the level of agreement between other servers right? So if 1 'node' says Sorbee has bitcoin x, but 5 nodes say I have bitcoin x, then the network basically says I have it. Right?

So what's to keep someone from from trying to bruteforce a lot of 'counterfeit' bitcoins into the system? The coins are verified using an algorithm that is available opensource, so creating the hack wouldn't be hard.

The trick is just attempting to put the counterfeits into circulation when the true holder is offline...hence throwing as many combinations out there as possible, and hoping that some of those people are offline, which means that the 'nodes' would only see my information, and with nothing else to compare to...how does the system know the difference?

[Kebo]

Originally Posted by severe

Difference being people are 'mining' bitcoins, and they transfer them between themselves as well. You don't necessarily have to 'put money in' from another known account.

True...but unless you're doing something with the bitcoins, they actually are worthless. They only have value when they are exchanged for something, otherwise it's all imaginary value.

[Chewyguru]

Originally Posted by Kebo

Right...so basically, the way the network verifies that your bitcoins are yours is based on the level of agreement between other servers right? So if 1 'node' says Sorbee has bitcoin x, but 5 nodes say I have bitcoin x, then the network basically says I have it. Right?

So what's to keep someone from from trying to bruteforce a lot of 'counterfeit' bitcoins into the system? The coins are verified using an algorithm that is available opensource, so creating the hack wouldn't be hard.

The trick is just attempting to put the counterfeits into circulation when the true holder is offline...hence throwing as many combinations out there as possible, and hoping that some of those people are offline, which means that the 'nodes' would only see my information, and with nothing else to compare to...how does the system know the difference?

May be harder then it sounds. Establishing a counterfeit is difficult due to the system. You'd have to get it in the stream when it's already registered as being somewhere else.

[mrmojoRISING]

in the not so distant future. an army of foreign mercenaries paid in full with bitcoins. thx mr prince.

[Kebo]

Originally Posted by Chewyguru

May be harder then it sounds. Establishing a counterfeit is difficult due to the system. You'd have to get it in the stream when it's already registered as being somewhere else.

If that were the case then A) It would not be so anonymous, and B) Personal theft of the thumb drive or computer, etc. would not be an issue. Correct?

If the money is simply an ID tag based on an available algorithm, what's to stop someone from doing this? Based on the FAQs on the site, 'ownership' of the coin is really just the level of agreement between nodes.

[Chewyguru]

Originally Posted by Kebo

If that were the case then A) It would not be so anonymous, and B) Personal theft of the thumb drive or computer, etc. would not be an issue. Correct?

If the money is simply an ID tag based on an available algorithm, what's to stop someone from doing this? Based on the FAQs on the site, 'ownership' of the coin is really just the level of agreement between nodes.

I'm just addressing the counterfeit issue and don't know ****. But my point is that the money is all registered upon introduction. I think it would be difficult to validate any new money due to timestamp issues primarily. I think a bigger issue is payment diversion to a currency that exists digitally.

[AllAWD]

Originally Posted by mrmojoRISING

in the not so distant future. an army of foreign mercenaries paid in full with bitcoins. thx mr prince.

Virtual mercenaries fight online wars for bitcoins?

Halo is a vital training ground.

[Kebo]

Originally Posted by Chewyguru

I'm just addressing the counterfeit issue and don't know ****. But my point is that the money is all registered upon introduction. I think it would be difficult to validate any new money due to timestamp issues primarily. I think a bigger issue is payment diversion to a currency that exists digitally.

Right, but as near as I can tell, the 'money' is a string of numbers, right? And that string of numbers is based on an available algorithm.

So when you put the 'coin' on your thumb drive, and turn off the computer, how does the system know where that 'coin' is? So if you turn off your computer, and somewhere else, that 'coin' shows up in someone else's account in the form of that ID number being there, does the system validate the coin?

Basically, can money be moved using the physical medium? Or can it only be transferred over the P2P network?

[Howl]

Originally Posted by delongedoug

I think that's what they're counting on. People "buying in" on the idea being novel and hip, which is really the only way to make the system remotely valid since it's completely arbitrary.

. . . just like every other pyramid scheme.

[Chromer]

The problem of 'rogue nodes' is fairly serious, should enough of them be connected to the system to "outvote" the real nodes. A little hack of Amazon's cloud could probably create enough nodes to subvert the entire system.

[severe]

Originally Posted by Kebo

And that string of numbers is based on an available algorithm.

Simply knowing the algorithm is not enough, it's kind of the point of cryptography.

[sorbee711]

I'm still not getting the idea of "if money disappears it just raises the value of the rest of the money". How does anyone know the money is gone? Couldn't it just be sitting on a drive somewhere? Also, what is to stop some millionaire from buying up a significant portion of the bitcoin and messing with the whole system? Drive the price up and then dump it at a high cost suddenly flooding the system and driving it down for others. It seems like this is open to a lot of manipulation. I also agree that there is nothing backing this. The US has lots of guns and planes, this system has nothing. Seems risky beyond what I'd be inclined to trust, having lived through the dotcom years, I'm getting eerie flashbacks.

[Silverpike]

Originally Posted by Howl

. . . just like every other pyramid scheme.

There's a huge fundamental difference though between pyramid scheme and Bitcoin. Pyramid schemes are mathematically unsustainable, since they require the introduction of new users into the pyramid for it to keep functioning. This is not the case for Bitcoin. Indeed, Bitcoin is already a closed ecosystem. If no new users for Bitcoin ever started using them, it would still function just fine as long as users use them for transacting business.

Originally Posted by sorbee711

Ok, so it sounds like I could store my bitcoins on a thumb drive. So what if I took 1000 bitcoins and put it on a thumb drive and locked it away in a safe deposit box. How does the system know that there are 1000 fewer coins (say permanent loss of thumb drive) and the value of the remaining ones goes up vs. them just not being "in the mix" for a while? It seems like the potential for volatility is high and allows for a good bit of price manipulation.

There will be periodic losses of Bitcoins when users lose their wallets (wallet.dat files). This has already occurred. The solution is encrypted wallets as well as better wallet management for backups. These enhancements are already being developed for the next release of the client.

Bitcoins can indeed be removed from circulation by putting wallet files on a drive and putting it in storage. This has the same effect as removing coins from circulation in a traditional sense. It could only lead to price instability if you managed to do this to a large amount of coins, in which case you would have to be fairly "rich" to pull this off in the first place. Removing coins from circulation essentially would drive up the conversion rate, since scarcity is increased.

Originally Posted by Chromer

The problem of 'rogue nodes' is fairly serious, should enough of them be connected to the system to "outvote" the real nodes. A little hack of Amazon's cloud could probably create enough nodes to subvert the entire system.

It's not a matter of having more P2P nodes -- that would be a very easy attack. Gaining control of the block chain requires cryptographic hashing power, which cannot be faked. Hashes are checked for validity by all nodes, and any invalid hashes immediately invalidate any transaction. This system is an implementation of a proof of work system. This is algorithmically neat because it's very hard to come up with the correct answer, but trivially easy to verify it.

Originally Posted by drkwtsn

maybe this has been said..... but im going to state it anyhow....

what if someone has 100,000 bitcoins, obviously this is a lot... especially given that there are only 21mil... what if somehow, some hacker (or hell, a fire) breaks in, and destroys the computer(s) holding these coins? now since there is no tracking system, the coins are gone forever? thus there can only be a total number of 21,900,000 coins ever?

Yes, any theft of wallet information is "real". Bitcoins can be lost or stolen if the wallet gets corrupted or someone transfers bitcoins out of your wallet (which can't be done accidentally). The total bitcoin count right now is around 10 mil IIRC, and the total for the whole system will be the 21.9 mil number you have.

Originally Posted by Kebo

I don't think you can have it both ways.

Either the transactions are trackable, or they aren't.

If the 'benefit' of this system is that it is totally anonymous, then you can't turn around and say 'but you're safe because everything is public'.

If 'anonymous' really just means that the end user is defined by a number or nickname, then that's not 'anonymous'.

Anonymous and traceable are two different ideas with Bitcoin. It's anonymous in the sense that any transaction you make cannot be conclusively linked to you as an individual unless you freely divulge that information. However, any and all transactions are traceable; nobody knows the identity of the persons involved in the transactions.

[TGC]

So how many of you are currently mining bitcoins?

This whole thing is very interesting...someone (the founders?) is going to make a huge profit off this currency, I'm just wondering if they are betting for or against the success of the bitcoin.

[Chromer]

Originally Posted by Silverpike

It's not a matter of having more P2P nodes -- that would be a very easy attack. Gaining control of the block chain requires cryptographic hashing power, which cannot be faked. Hashes are checked for validity by all nodes, and any invalid hashes immediately invalidate any transaction.

What about attacking the other way... Have your rouge nodes claim other people's valid bitcoin transactions are actually invalid. That could destroy coins, raising the value of the remaining ones...

[Chewyguru]

Originally Posted by Chromer

What about attacking the other way... Have your rouge nodes claim other people's valid bitcoin transactions are actually invalid.

Same level of difficulty. Except you're driving in reverse.

[DeusExMachina]

In this thread are a lot of people that do not comprehend mathematics in the slightest, and also a lot of people that do not realize the concept of currency.

[Chewyguru]

Originally Posted by DeusExMachina

In this thread are a lot of people that do not comprehend mathematics in the slightest, and also a lot of people that do not realize the concept of currency.

Nice. What's your point?