Bitcoin as a viable currency?

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Re: Bitcoin as a viable currency?

#121  Postby purplerat » Feb 07, 2018 3:57 pm

minininja wrote:
purplerat wrote:What you seem to gloss over is that (at least in the implementations we are discussing) it is incorruptible and truly democratic.

That's only true if your definition of "incorruptible and truly democratic" is "whatever occurs under an entirely laissez-faire system". The reality, if such systems were used globally to a significant amount, would be a recipe for even more extreme wealth inequality, which among other things can encourage all sorts of corruption. How is it democratic to remove the right of people to vote for a government that can manage its own currency supply? Why would you want governments without that power when it would mean countries with a trade deficit could literally go bankrupt?

Who said anything about stopping governments from managing their own currency? Or suggested that everybody be forced to use cryptocurrency?
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Re: Bitcoin as a viable currency?

#122  Postby Macdoc » Feb 07, 2018 4:21 pm

How is it democratic to remove the right of people to vote for a government that can manage its own currency supply? Why would you want governments without that power when it would mean countries with a trade deficit could literally go bankrupt?


Governments don't manage their own currency to any degree at all anymore ...the central banks are independent of governments as it should be.
Even interest rates are not open to political interference which is also as it should be.

They are set by the governor's of the central banks.
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Re: Bitcoin as a viable currency?

#123  Postby zoon » Feb 07, 2018 6:55 pm

Macdoc wrote:
How is it democratic to remove the right of people to vote for a government that can manage its own currency supply? Why would you want governments without that power when it would mean countries with a trade deficit could literally go bankrupt?


Governments don't manage their own currency to any degree at all anymore ...the central banks are independent of governments as it should be.
Even interest rates are not open to political interference which is also as it should be.

They are set by the governor's of the central banks.

As you say, modern governments of major countries allow the central banks a good deal of freedom, for example in setting interest rates, because this does help the smooth running of economies. At the same time, ultimate control is firmly with the governments, and the banks' "freedom" is heavily regulated. I would expect that the regulations which control international trading and the management of currencies used for this are the result of treaties between governments, not banks?

As far as I can tell, Bitcoin is only used as a serious currency by drug dealers and other criminals, who have their own reasons for wanting to avoid governmental oversight, so they have to put up with the fluctuations in value.
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Re: Bitcoin as a viable currency?

#124  Postby Macdoc » Feb 07, 2018 7:00 pm

It's blockchain that is the disruptor ...Bitcoin is only an example of the technology.
I can certainly tell you cash is king in the underworld.

Florida ended up with $5 billlion more in banks than could be accounted for by GDP.

Where blockchain would work wonders is small payments P to P.
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Re: Bitcoin as a viable currency?

#125  Postby purplerat » Feb 07, 2018 7:14 pm

Doesn't the argument that only drug dealers and criminals use it kind of undercut the argument that it has no value/isn't viable as a currency and vice versa?

What I mean is that drug dealers and organized crime in general typically don't fuck around with getting paid. So if they are using it to the tune of hundreds of billions of dollars then it must have some value and viability, right?
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Re: Bitcoin as a viable currency?

#126  Postby zoon » Feb 07, 2018 7:29 pm

Macdoc wrote:It's blockchain that is the disruptor ...Bitcoin is only an example of the technology.
I can certainly tell you cash is king in the underworld.

Florida ended up with $5 billlion more in banks than could be accounted for by GDP.

Where blockchain would work wonders is small payments P to P.

Looking at the Wikipedia article here, many people would agree with you that blockchain technology has considerable potential, but nobody seems to be clear yet exactly how it would work if it's to supersede the usefulness of the standard types of currency. A large blockchain system uses massive amounts of energy and computing power, because every node has a copy of the entire blockchain:
Every node in a decentralized system has a copy of the blockchain. Data quality is maintained by massive database replication[9] and computational trust. No centralized "official" copy exists and no user is "trusted" more than any other.[4] Transactions are broadcast to the network using software. Messages are delivered on a best-effort basis. Mining nodes validate transactions,[35] add them to the block they are building, and then broadcast the completed block to other nodes.[37]:ch. 08 Blockchains use various time-stamping schemes, such as proof-of-work, to serialize changes.[47] Alternate consensus methods include proof-of-stake.[35] Growth of a decentralized blockchain is accompanied by the risk of node centralization because the computer resources required to process larger amounts of data become more expensive.[48]

If this is avoided by using smaller blockchains which are not open to everyone, then someone is controlling them, and they are merely "cumbersome databases", without the advantage of freedom from manipulation. From the same Wikipedia article:
Permissioned (private) blockchain
Permissioned blockchains use an access control layer to govern who has access to the network.[60] In contrast to public blockchain networks, validators on private blockchain networks are vetted by the network owner. They do not rely on anonymous nodes to validate transactions nor do they benefit from the network effect.[61][better source needed] Permissioned blockchains can also go by the name of 'consortium' or 'hybrid' blockchains.[62]

The New York Times noted in both 2016 and 2017 that many corporations are using blockchain networks "with private blockchains, independent of the public system."[63][64][better source needed]

Disadvantages
Nikolai Hampton pointed out in Computerworld that "There is also no need for a "51 percent" attack on a private blockchain, as the private blockchain (most likely) already controls 100 percent of all block creation resources. If you could attack or damage the blockchain creation tools on a private corporate server, you could effectively control 100 percent of their network and alter transactions however you wished."[55] This has a set of particularly profound adverse implications during a financial crisis or debt crisis like the financial crisis of 2007–08, where politically powerful actors may make decisions that favor some groups at the expense of others.[citation needed] and "the bitcoin blockchain is protected by the massive group mining effort. It's unlikely that any private blockchain will try to protect records using gigawatts of computing power — it's time consuming and expensive."[55] He also said, "Within a private blockchain there is also no 'race'; there's no incentive to use more power or discover blocks faster than competitors. This means that many in-house blockchain solutions will be nothing more than cumbersome databases."[55]
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Re: Bitcoin as a viable currency?

#127  Postby zoon » Feb 07, 2018 7:38 pm

purplerat wrote:Doesn't the argument that only drug dealers and criminals use it kind of undercut the argument that it has no value/isn't viable as a currency and vice versa?

What I mean is that drug dealers and organized crime in general typically don't fuck around with getting paid. So if they are using it to the tune of hundreds of billions of dollars then it must have some value and viability, right?

Given the choice between fucking around with getting paid, and fucking around with government enforcement backed up by the military, I suspect that many criminals will go for the former. Yes, Bitcoin evidently has its uses for those who are desperate to avoid governmental scrutiny, but that doesn't mean it's yet overtaken the convenience of standard currencies for the more law-abiding majority.
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Re: Bitcoin as a viable currency?

#128  Postby purplerat » Feb 07, 2018 7:55 pm

zoon wrote:
purplerat wrote:Doesn't the argument that only drug dealers and criminals use it kind of undercut the argument that it has no value/isn't viable as a currency and vice versa?

What I mean is that drug dealers and organized crime in general typically don't fuck around with getting paid. So if they are using it to the tune of hundreds of billions of dollars then it must have some value and viability, right?

Given the choice between fucking around with getting paid, and fucking around with government enforcement backed up by the military, I suspect that many criminals will go for the former. Yes, Bitcoin evidently has its uses for those who are desperate to avoid governmental scrutiny, but that doesn't mean it's yet overtaken the convenience of standard currencies for the more law-abiding majority.

Kind of sounds like the "if you have nothing to hide then you won't mind the government surveilling you" argument.

Of course, that's a crap argument and there are legitimate reasons for wanting privacy that don't include being a criminal.

Specifically, with making online transactions I've come to expect that if I'm using traditional methods of payment that I just have to assume my information is probably going to be stolen at some point. At least once a year for the past 10 years I get at least 1 letter from some company telling me that they had a breach and my personal information was stolen because I'd had a transaction with them at some point. Typically it means have to close accounts open new ones but at least a couple of times it's result in money being taken from my bank account or spent on a credit card. So it's more than just a minor annoyance.

With Bitcoin transactions, there's really no worry of that. The only information of mine associated with a transaction is my wallet address and the worst somebody can do with that is send me money.

As Macdoc pointed out this has great implications for small P2P transactions as it allows those who can't be bothered with massive security measures to easily exchange money.
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Re: Bitcoin as a viable currency?

#129  Postby zoon » Feb 07, 2018 8:13 pm

purplerat wrote:
zoon wrote:
purplerat wrote:Doesn't the argument that only drug dealers and criminals use it kind of undercut the argument that it has no value/isn't viable as a currency and vice versa?

What I mean is that drug dealers and organized crime in general typically don't fuck around with getting paid. So if they are using it to the tune of hundreds of billions of dollars then it must have some value and viability, right?

Given the choice between fucking around with getting paid, and fucking around with government enforcement backed up by the military, I suspect that many criminals will go for the former. Yes, Bitcoin evidently has its uses for those who are desperate to avoid governmental scrutiny, but that doesn't mean it's yet overtaken the convenience of standard currencies for the more law-abiding majority.

Kind of sounds like the "if you have nothing to hide then you won't mind the government surveilling you" argument.

Of course, that's a crap argument and there are legitimate reasons for wanting privacy that don't include being a criminal.

Specifically, with making online transactions I've come to expect that if I'm using traditional methods of payment that I just have to assume my information is probably going to be stolen at some point. At least once a year for the past 10 years I get at least 1 letter from some company telling me that they had a breach and my personal information was stolen because I'd had a transaction with them at some point. Typically it means have to close accounts open new ones but at least a couple of times it's result in money being taken from my bank account or spent on a credit card. So it's more than just a minor annoyance.

With Bitcoin transactions, there's really no worry of that. The only information of mine associated with a transaction is my wallet address and the worst somebody can do with that is send me money.

As Macdoc pointed out this has great implications for small P2P transactions as it allows those who can't be bothered with massive security measures to easily exchange money.

As far as I can tell from quick perusal of the Wikipedia article on blockchains (linking again here), the structural problem for Bitcoin is that its blockchain has to be totally replicated at every node. This is already using up fairly insane quantities of computing power and energy, and as Bitcoin gets larger the problem gets worse, I think exponentially (more nodes and more information to be held at each node). This is a structural problem because the privacy and trust which, as you say, are wonderful features of Bitcoin, are dependent on this full replication of all data at every node. I think, but I'm far from clear, that the transparency and trust also depend on the whole thing being too large to be replicated by any one computer - I'm not clear that a mini blockchain would be safe from hacking. Private, controlled blockchains are no safer than any other database (again, going by the article I linked above).
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Re: Bitcoin as a viable currency?

#130  Postby newolder » Feb 07, 2018 8:15 pm

So I did a search on - bitcoin hack - that returned: About 2,950,000 results (0.38 seconds)

One recent example is:
4 Jan 2018 - Another day, another wild mystery in the world of crypto. Reddit has confirmed it is investigating a possible internal security threat after several members of the Bitcoin Cash subreddit – more commonly known as /r/BTC – reported their accounts were purportedly hacked and emptied out of their funds.
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Re: Bitcoin as a viable currency?

#131  Postby purplerat » Feb 07, 2018 8:37 pm

newolder wrote:So I did a search on - bitcoin hack - that returned: About 2,950,000 results (0.38 seconds)

One recent example is:
4 Jan 2018 - Another day, another wild mystery in the world of crypto. Reddit has confirmed it is investigating a possible internal security threat after several members of the Bitcoin Cash subreddit – more commonly known as /r/BTC – reported their accounts were purportedly hacked and emptied out of their funds.

Yes, there are hacks involving cryptocurrency. I stated earlier that there are additional risks that come with less oversight. That should be obvious to anyone. What I asked, and thought fairly clearly so, was if blockchains themselves were being hacked. That would be very difficult to pull off. But gaining access to reddit users computers is hardly a noteworthy feat.
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Re: Bitcoin as a viable currency?

#132  Postby newolder » Feb 07, 2018 8:43 pm

That was just the first example I picked. Here's another: https://edgylabs.com/2017-bitcoin-ether ... ode-flawed
2017 Bitcoin and Ethereum Hack due to Flawed Code, not Flawed Currency

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Re: Bitcoin as a viable currency?

#133  Postby purplerat » Feb 07, 2018 8:52 pm

newolder wrote:That was just the first example I picked. Here's another: https://edgylabs.com/2017-bitcoin-ether ... ode-flawed
2017 Bitcoin and Ethereum Hack due to Flawed Code, not Flawed Currency

Burglars don't tend to worry about how they nick your stuff.

Literally the first sentence from that link:

A hack resulted in millions in Bitcoin and Ethereum being stolen recently, but this isn’t because the cryptocurrencies themselves are susceptible to hacking.
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Re: Bitcoin as a viable currency?

#134  Postby purplerat » Feb 07, 2018 8:54 pm

newolder wrote:Burglars don't tend to worry about how they nick your stuff.

They may not but I do. If burglars are gaining access to homes because people aren't locking their doors versus getting in because of faulty locks that is certainly a piece of information I'd care to know about and take into consideration with my own security.
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Re: Bitcoin as a viable currency?

#135  Postby newolder » Feb 07, 2018 8:58 pm

purplerat wrote:
newolder wrote:That was just the first example I picked. Here's another: https://edgylabs.com/2017-bitcoin-ether ... ode-flawed
2017 Bitcoin and Ethereum Hack due to Flawed Code, not Flawed Currency

Burglars don't tend to worry about how they nick your stuff.

Literally the first sentence from that link:

A hack resulted in millions in Bitcoin and Ethereum being stolen recently, but this isn’t because the cryptocurrencies themselves are susceptible to hacking.

And as I already wrote - thieves don't give a shit about their methods - only that they work. The rest of that article goes on to explain that more levels of security are easier to get through so that's not really a deterrent.
Simply put, the more complex security protocols are, the less safe they become. Since codes are written and peer-reviewed by human beings there will inevitably be answers in the code. This is why simplicity and testing are the backbone of digital security.
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Re: Bitcoin as a viable currency?

#136  Postby purplerat » Feb 07, 2018 9:08 pm

newolder wrote:
purplerat wrote:
newolder wrote:That was just the first example I picked. Here's another: https://edgylabs.com/2017-bitcoin-ether ... ode-flawed
2017 Bitcoin and Ethereum Hack due to Flawed Code, not Flawed Currency

Burglars don't tend to worry about how they nick your stuff.

Literally the first sentence from that link:

A hack resulted in millions in Bitcoin and Ethereum being stolen recently, but this isn’t because the cryptocurrencies themselves are susceptible to hacking.

And as I already wrote - thieves don't give a shit about their methods - only that they work. The rest of that article goes on to explain that more levels of security are easier to get through so that's not really a deterrent.
Simply put, the more complex security protocols are, the less safe they become. Since codes are written and peer-reviewed by human beings there will inevitably be answers in the code. This is why simplicity and testing are the backbone of digital security.

They are discussing the platforms, not the blockchain. You, like the thieves, may not care how a risk occurs. I do. If you refuse to understand risk then it really doesn't matter why type of currency you use, you'll find yourself coming up short either way.
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Re: Bitcoin as a viable currency?

#137  Postby newolder » Feb 07, 2018 9:32 pm

purplerat wrote:...
They are discussing the platforms, not the blockchain. You, like the thieves, may not care how a risk occurs. I do. If you refuse to understand risk then it really doesn't matter why type of currency you use, you'll find yourself coming up short either way.

I know of one secure communications network in current operation and even that may prove "not totally secure" under special circumstances. Any other talk of classically secure networks or methods is a risky call.
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Re: Bitcoin as a viable currency?

#138  Postby purplerat » Feb 07, 2018 10:00 pm

newolder wrote:
purplerat wrote:...
They are discussing the platforms, not the blockchain. You, like the thieves, may not care how a risk occurs. I do. If you refuse to understand risk then it really doesn't matter why type of currency you use, you'll find yourself coming up short either way.

I know of one secure communications network in current operation and even that may prove "not totally secure" under special circumstances. Any other talk of classically secure networks or methods is a risky call.

I'm not sure what you are getting at here. Are you suggesting that security risks in electronic communications mean a blockchain transaction is vulnerable to being hacked? Like if I send some amount of bitcoin from my wallet to another address there is a risk of that transaction being compromised and those funds getting diverted elsewhere? Or that the keys in the transaction would be susceptible hackers making unauthorized transactions on their behalf?

I do think that is what most people who aren't familiar with the technology think of when they talk about it being hacked but a basic understanding of the technology would quickly clarify that those aren't real risks. That's not to say there aren't any risks but it's not those types of scenarios.
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Re: Bitcoin as a viable currency?

#139  Postby zoon » Feb 07, 2018 10:11 pm

Bitcoin is already using as much energy as a small country, while processing a tiny fraction of financial transactions across the globe. The energy per transaction, as far as I can tell, will go up rather than down as Bitcoin grows.

From the Guardian on 17th Jan 2018 here:
Bitcoin’s electricity usage is enormous. In November, the power consumed by the entire bitcoin network was estimated to be higher than that of the Republic of Ireland. Since then, its demands have only grown. It’s now on pace to use just over 42TWh of electricity in a year, placing it ahead of New Zealand and Hungary and just behind Peru, according to estimates from Digiconomist.
.........
Burning huge amounts of electricity isn’t incidental to bitcoin: instead, it’s embedded into the innermost core of the currency, as the operation known as “mining”. In simplified terms, bitcoin mining is a competition to waste the most electricity possible by doing pointless arithmetic quintillions of times a second.


From here, the value of Bitcoin transactions yesterday, 6th February 2018, was 1,758,323,361.25 (just over 1.75 billion) in US dollars.

From a 2012 article here, which I think is on the Federal Reserve Bank's website:
Transactions denominated in U.S. dollars flow around the clock and around the globe, filling the pipelines that support commerce. On a typical day, more than $14 trillion of dollar-denominated payments is routed through the banking system. Critical to a well-functioning economy are the timing and smooth flow of dollars for large-value transactions and the infrastructure that enables that dollar flow.
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Re: Bitcoin as a viable currency?

#140  Postby purplerat » Feb 07, 2018 10:28 pm

zoon wrote:Bitcoin is already using as much energy as a small country, while processing a tiny fraction of financial transactions across the globe. The energy per transaction, as far as I can tell, will go up rather than down as Bitcoin grows.

From the Guardian on 17th Jan 2018 here:
Bitcoin’s electricity usage is enormous. In November, the power consumed by the entire bitcoin network was estimated to be higher than that of the Republic of Ireland. Since then, its demands have only grown. It’s now on pace to use just over 42TWh of electricity in a year, placing it ahead of New Zealand and Hungary and just behind Peru, according to estimates from Digiconomist.
.........
Burning huge amounts of electricity isn’t incidental to bitcoin: instead, it’s embedded into the innermost core of the currency, as the operation known as “mining”. In simplified terms, bitcoin mining is a competition to waste the most electricity possible by doing pointless arithmetic quintillions of times a second.


From here, the value of Bitcoin transactions yesterday, 6th February 2018, was 1,758,323,361.25 (just over 1.75 billion) in US dollars.

From a 2012 article here, which I think is on the Federal Reserve Bank's website:
Transactions denominated in U.S. dollars flow around the clock and around the globe, filling the pipelines that support commerce. On a typical day, more than $14 trillion of dollar-denominated payments is routed through the banking system. Critical to a well-functioning economy are the timing and smooth flow of dollars for large-value transactions and the infrastructure that enables that dollar flow.

There's much discussion around this. Not just that it's a problem but many possible solutions. If you're truly concerned about it there is plenty of information out there.
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