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Bitcoin ... algorithms, and scams

From: Mike Robinson 
------------------------------------------------------
> Much more intelligent people than I have taken apart the Bitcoin =
algorithms
> (after all, it's all open-source), and to my knowledge, these are the =
only
> significant vulnerabilities of Bitcoin that have not already been =
addressed
> in software updates.  The first is being watched closely (for example,
> https://blockchain.info/pools).  I'm not sure what consequences the =
second
> would have, but the SHA-256 / SHA-2 algorithm has been around for a =
long
> time without showing signs of cracking.

All right, ladies and gentlemen, at this point I believe that it is =
appropriate for me to be "a great deal more specific than I have been up =
to now."

"Currency," first of all, in any and every form, is a purely =3Dhuman=3D =
enterprise.  It could be a gold coin; it could be a gold nugget; it =
could be a seashell; it could be a massive stone disk; it could even be =
a piece of paper.  It doesn't really matter, as long as it is =
(simultaneously ...): =20

- accepted
- hard to pick-up on the roadside
- (yet) widely accepted, and=20
- relatively common, such that it can be produced in (!) NECESSARY (!) =
QUANTITY.

"The perfect currency unit" today is probably "the ACH wire-transfer =
data packet."  On the appropriate, presumed-to-be-secure data network, =
such a packet is, upon receipt, sufficient to cause the "wire transfer =
of" an arbitrary "(amount)" of "(currency

=============================================================== From: Lynn Dixon ------------------------------------------------------ Wow.. Do you not realize that your entire (HARD to....RE(a)D,,,,) paragraph basicly desicribes exactly how the United States Dollar operated for a long time??? It was backed by this shiny gold nugget that someone had to dig up from the ground. The only way you could get said nugget was to either, dig it yourself, or buy it from someone whom had dug it up. Then ,since those gold nuggets were such a bitch to carry, we began to give out certificates, saying that you had X amount of these nuggets in a bank safe. Those certificates then began what we call the dollar. Hell our dollar was backed by this same shiny metalic nuggets dug up from the gound until 1971, when Nixon killed off the gold standard. Now, our dollar's value is backed by whatever a small group of men in the Federal Reserve want it to be worth. On the surface (which is where you like to focus your views) having my currency backed by what some old men say, just seems nuts.

=============================================================== From: Keith ------------------------------------------------------ Hi Mike, I'm no bitcoin expert but I do have some thoughts on the subject of currency. First of all, all currency, including physical currency, like gold and silver is a fabrication. It only has value because we assign it value. Also you are overlooking the fact that bitcoins will eventually be completely mined. There are a finite number of them. So, what you are seeing now is like a gold rush, but with a definite and predictable total supply of gold. After the supply available for mining ends, BTC will be the same as any other currency from a value standpoint, with one exception. All currencies are valued based on public perception of that currency's value. Most currencies are valued in part by the faith people have in the nation/body that issues the currency and can be directly influenced by the policies of that body. Bitcoin is the same in that it's valued by people's perception of its value, and different in that the value is not based at all on the faith in or policies of the nation/body that issued it, since there is none. I see only three watch points in bitcoin. One is that it seems like a currency with no political base could be far more volatile, with traders having a much larger impact on the value of the currency than the people using it for purchasing. The second is whether it will truly become widely adopted as an acceptable form of credit. Only time will tell. The third watch point for me is the fact that the number of bitcoins is static. Whether it's good to have a money supply that can never grow is something that has been debated for years. To me, it seems bad to be inflexible this way, but I'm no economist and I could do to read more on this subject. All that being said, I think an argument that this is somehow a ponzi scheme or a scam is probably not a good one. How the currency works is fairly well documented and it has been working this way for a while. Mining the currency while it can be mined is something that people are going to make money on, both in supplying the equipment for mining and mining itself. When all the coins are mined, that profit is over for both parties. Until then, the question of whether it will be profitable to mine is just a cost/benefit analysis based on facts that are openly available. There is probably not much use telling people that are making money mining that they are idiots for doing it. As long as they are immediately trading the bitcoins they mine for USD, I see no value in your arguments against them. Thanks, Keith

=============================================================== From: Lynn Dixon ------------------------------------------------------ Keith, Great points. But I would like to add something to them. Once the rewards for finding a block have all been used (meaning no more BTC awarded for finding a block), miners can still make money from the transaction fees. Whenever a miner finds a block, that miner will write the transactions (as in people sending/received BTC to one another) into that block. The network has a transaction fee mechanism, but most miners are not currently concerned with the transaction fee, since the rewards are still high per block. However, once the rewards evaporate, I predict miners will start using the transaction fee mechanisms to offset the loss of the rewards. Sure, miners will leave the market since there is no more reward, but this is a great example of a self balancing ecosystem. Those that think its non-profitable to mine with no rewards will leave, which allows miners that can make profit from transactions fees to reap the revenues.

=============================================================== From: Mike Harrison ------------------------------------------------------ On Sep 4, 2013, at 9:27 PM, Mike Robinson = wrote: data packet."=20 Oh dude.. you opened up a BIG can of worms. ACH is not the same as a = Wire although they are similar.=20 They are fairly well controlled "file formats" that last I looked, were = basically IBM punch card batch formats.=20 Although I see on http://www.nacha.org there are now XML variants of = CCD/PPD, etc.. As a former member=20 of NACHA (as are some others on this list) and part of one of the few = non-bank entities=20 to have an ABA routing number and a FedLine:=20 You are talking about a transport method, a file format, a set of rules = for transferring the government issued and controlled currency we = commonly call a "dollar".=20 Bitcoins have value because people agree that they do. Dollars have a = value set by the government AND various entities (other governments for = example) AND the general population reaching a consensus.=20 Gold has intrinsic value, Bullets have a more easily used by common = people (that own guns) intrinsic value. A gallon of potable water has = intrinsic value.. Food has intrinsic value.=20 Dollars and bitcoins, litecoins, and other "non-anchored" currencies = have values that we, as a society mostly agree on. They are easily = exchanged and transported.=20 If Bitcoin reaches critical mass for larger transactions it will change = international commerce in interesting way.=20 =20