The only modern "true" free market experiment

bennmann · Post by **bennmann** » Mon Aug 20, 2012 7:34 pm

Anyone here follow bitcoin?

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

Currency with no backing just like the dollar but with no inflation possible and nothing physical a person can steal from you.

A truely free market with no regulation - should be an interesting experiment to watch.

choff · Post by **choff** » Mon Aug 20, 2012 8:50 pm

I've seen reference to it by fiat currency advocates as a means of conducting international trade and currency transactions.

kunkmiester · Post by **kunkmiester** » Tue Aug 21, 2012 2:02 am

The bitcoins are in a file on your device--if someone hacks you and steals the file, they've stolen your bitcoins. There are ways to make this harder, but it is a vulnerability.

There is an expanding bitcoin economy that has been the subject to quite a lot of analysis by just about everyone.

Betruger · Post by **Betruger** » Tue Aug 21, 2012 3:01 am

No 2nd amendment in cyberspace. None as accessible to all as the dirt simple brass tacks of real physical guns, anyway. There is no worldwide network-accessible back door to a 1911's trigger and powder charge.

But maybe there are after the fact counter-measures to somehow mitigate inevitable cyber damage... the way credit card fraud is dealt with everyday - call owner and identify fraudulent items. Maybe such methods could tip the cost/benefit scales to cyber$$$'s side.

kunkmiester · Post by **kunkmiester** » Tue Aug 21, 2012 3:11 am

Certain forms of encryption were once considered munitions for some purposes.

There are plenty of ways to mess with someone in cyberspace. It can be rather more traceable than a bullet though.

bennmann · Post by **bennmann** » Tue Aug 21, 2012 4:56 am

kunkmiester wrote:The bitcoins are in a file on your device--if someone hacks you and steals the file, they've stolen your bitcoins. There are ways to make this harder, but it is a vulnerability.

You can even eliminate this problem: http://bitcoinmagazine.net/brain-wallet ... d-the-how/

But most people still keep their wallet.dat sitting on an unencrypted space.

palladin9479 · Post by **palladin9479** » Tue Aug 21, 2012 9:47 pm

Problem is that it's not governed by any single country and thus it's existence and value is not protected by anyone's laws / military. BTC's are literally created "out of thin air". And while the central exchange tries to regulate it by changing the value of each created block, it can't do that forever.

Once it gets popular, each of the worlds large governments will move to shut it down, most likely using the "war on drugs" as a cover for shutting it down. After all anyone wanting to do business and avoid all government tracking would do well to use BTC's.

paperburn1 · Post by **paperburn1** » Tue Aug 21, 2012 10:32 pm

bennmann wrote:Anyone here follow bitcoin?

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

Currency with no backing just like the dollar but with no inflation possible and nothing physical a person can steal from you.

A truely free market with no regulation - should be an interesting experiment to watch.

I thought I read something on a bitcoin theft a while back. see if I can dig it up. http://www.forbes.com/sites/timworstall ... -bitconia/ here ya are.

kunkmiester · Post by **kunkmiester** » Wed Aug 22, 2012 2:25 am

And while the central exchange tries to regulate it by changing the value of each created block, it can't do that forever.

It's not official, it's called deflation. IIRC there are no central anythings for Bitcoin. The big problem with deflation is that you'll eventually be using a LOT of zeroes behind the decimal point, and as the economy grows, the deflation rate will rise slowing it, and it might slow down more than would be good. While Bitcoin isn't commodity based, it's not fiat since you can't just print as much as you like.

Hopefully at that point though there will be a replacement better suited to following wealth generation.

palladin9479 · Post by **palladin9479** » Thu Aug 23, 2012 12:03 pm

kunkmiester wrote:
And while the central exchange tries to regulate it by changing the value of each created block, it can't do that forever.
It's not official, it's called deflation. IIRC there are no central anythings for Bitcoin. The big problem with deflation is that you'll eventually be using a LOT of zeroes behind the decimal point, and as the economy grows, the deflation rate will rise slowing it, and it might slow down more than would be good. While Bitcoin isn't commodity based, it's not fiat since you can't just print as much as you like.

Hopefully at that point though there will be a replacement better suited to following wealth generation.

Incorrect. BTC's are given as credit for solving very long mathematical problems and while most of the work is done via "peer to peer", in order to actually acquire goods and services you need an exchange.

It's incredibly prone to manipulation and as it has no major government's military protecting it there is no one to settle disputes. "Currency" could easily be mass produced with specialized hardware that is capable of 100~200x (2000x is possible with custom HW) the generation capacity of the most powerful consumer CPU. All it would take is an enterprising individual willing to invest the money into making a suite of machines designed to pump out BTC's at an astronomical rate. It would be identical to running your own home made printing press for USD, and legal. Inflation would explode and would require the designers to refactor the currency, otherwise it would eventually become worthless.

For the most part, bitcoin is about an idea, it's an experiment, nothing more. It's like IPv6, not nearly as good in practice as it is in theory.

kunkmiester · Post by **kunkmiester** » Fri Aug 24, 2012 12:33 am

IIRC someone has already tried to bubble crash it, and it survived.

Bitcoin is entirely peer to peer. The math problem is to create the actual "coin" which is a small bit of code. That is transferred around in the network, and the peer-to-peer network sends info on every transaction around the web, including when someone "mines" a coin.

The cryptography and mathematics involved limits the number of bitcoins possible, so while they're getting harder to solve for, there's an upper limit to the number you can get.

Nakamoto's rules specify that the amount of bitcoins in circulation will grow at an ever-decreasing rate toward a maximum of 21 million. Currently there are just over 6 million; in 2030, there will be over 20 million bitcoins.

http://www.technologyreview.com/news/42 ... t-matters/

Diogenes · Post by **Diogenes** » Wed Sep 05, 2012 5:15 pm

kunkmiester wrote:The bitcoins are in a file on your device--if someone hacks you and steals the file, they've stolen your bitcoins. There are ways to make this harder, but it is a vulnerability.

There is an expanding bitcoin economy that has been the subject to quite a lot of analysis by just about everyone.

When I first heard of this idea (in this thread) I thought this seems too risky to me. I like the idea of having a currency outside of government, but the notion of letting it exists as files on someone else's computer? Eh, no.

As with everything else, my judgement was sound.

BitFloor exchange robbed of US$250,000, all trading halted

The fourth largest BitCoin (BTC) exchange market BitFloor has temporarily ceased trading and shut down, following an attack that has seen over US$250,000 stolen from the pool of coins that the organisation uses to execute trades.

http://www.zdnet.com/bitfloor-exchange- ... 000003736/

ScottL · Post by **ScottL** » Wed Sep 05, 2012 6:28 pm

Beat me to it Diogenes, but yeah this is a universal bad idea. The problem is that the transactions can't be rolled back and there is virtually no tracking on individual coins. There is discussion of digitally signing coins such that you'd need authorization from various points to transfer, but even then, it's still exploitable. Of course the exchanges are always an ideal target as well and so far, some rather large sums of money have been taken without repercussion.

hanelyp · Post by **hanelyp** » Thu Sep 06, 2012 2:46 am

Money in the form of ledger entries predates the US constitution, and works well when backed by the stock of a reputable merchant keeping the ledger. I don't know what, if anything, backs bitcoin other than someone else willing to accept it.

kunkmiester · Post by **kunkmiester** » Thu Sep 06, 2012 4:00 am

How is the dollar any better? It's only accepted because the law says to.

Securing a digital currency is just like keeping cash in a safe instead of under your mattress. People are apparently having to learn the hard way that you have to keep digital money in digital safes, same as cash. In some ways, people trying to steal bitcoins underscores their value--you don't generally try to steal something you see as worthless.

Bitcoin 2.0 or whatever will probably be the place to really get in on the scene--the flaws found with working with bitcoins will be fixed to the extent they can, and it will allow for greater fluidity in the market.

Talk-Polywell.org

The only modern "true" free market experiment

The only modern "true" free market experiment

Re: The only modern "true" free market experiment