Bitcoin Forum

http://www.washingtonpost.com/blogs/wonkblog/wp/2013/11/19/bitcoin-needs-a-central-banker/ (http://www.washingtonpost.com/blogs/wonkblog/wp/2013/11/19/bitcoin-needs-a-central-banker/)
This guy argue that bitcoin needs a central banker.  He doesn't understand that the reason bitcoin is good - it doesn't have currency manipulation via a central banker.  

This shows his level of understanding:
"Bitcoin is "mined" by technologists solving difficult problems. Which means that its supply is set to increase at a constant rate, not a rate tied to demand"

'difficult problems'?  My $8 block erupter guesses a number (nonce) @333Mhash/sec.  It's number guessing.  It is not a 'difficult problem'.  Either it's '0000000000000000' or it's not.  

"supply is set to increase at a constant rate" - didn't this guy even bother to attempt to understand the basics?  Clearly the Washington Post doesn't have any editors who even remotely care whether writers are being factual.  Such deviation from accuracy in journalism should definitely get a writer fired.

Shouldn't the Washington Post expect their writers to have some minimal understanding of the topics on which they write?

Here's another nugget. :)

http://money.cnn.com/2013/11/18/investing/bitcoin-china/index.html?iid=HP_LN

Epic fail for the mighty and famous cnn

Yeah, press is mostly useless these days.

I remember reading that one.  What a crock.

I have been in the news a hand full of times in my life.  Every single time there was at least one error in the copy/story.  Usually some small matter of fact and not that important.

When ever this topic comes up in conversation I ask people "Have you ever been in the news?"  If they say yes I then ask "Was the story 100% accurate?"  The answer is almost always no.

Accuracy is not even in the top 100 things most important to news organizations.  Selling your time to advertisers is their top 100 most important items.

I dont think there is any factual errors, the author simply doesnt "grok" that the central premise of Bitcoin is decentralization.

Articles like this by college educated professionals with big 401Ks make me think mainstream adoption might be 10+ years away.

Bitcoin is so revolutionary, people dont even get it. Their mind cant even comprehend why something like BTC could be useful, even essential.

The article is actually pretty good and for once does not focus on speculation/mining/drugs. The paragraph I quoted is clearly a misunderstanding of the author. One I had not read before and thought was funny.

I see this explanation of mining in most articles introducing bitcoins. What they should say, instead of "solving difficult problems" is "solving computationally intense algorithms" or something like that, the important part is not that the problems are difficult but that the algorithim for generating the random number requires the computer to do a specific amount of work. It is not just guessing a random number, it is running that random number through the complicated formula to see if it is the right number. It would be nice if the articles somehow mentioned that doing this work also verifies the transactional data for the network.

They should describe mining as "Verifying transactions and running random numbers through a complicated formula which requires intense computational power" Or something like that.

With regard to the constant rate of coin generation: The algorithm is meant to produce a rather constant coin generation rate over the short term. From November 2012 to about November 2016 bitcoins will be generated at roughly a constant speed of 25 bitcoins per ten minutes. Then for the next four years they will be generated at a constant speed of 12.5 bitcoins per ten minutes. So the short term rate is held constant, but the long term rate is decreasing. So he got it half right.

If you look at any system with a sufficiently powerful microscope (short enough time frame) all things are constant.  A formula 1 car is at a perfect standstill while going 220 miles per hour if you use the highest shutter speed of a modern DSLR. 

The rate is not constant - no matter how you slice it. 

Forget about the minutae - the big issue here is his argument in favor of a central banker.  What a crock.  That shows a profound lack of understanding for bitcoin.  Besides the fact that bitcoin volatility is due to many other factors not related to rate of supply creation. 

Got to agree with the OP on this one. The calculations are far from complicated. It's the same thing over and over again. The $8 block erupter does the same calculation 333 million times per second.

Imagine a sea of white marbles and in it somewhere a black marble. "Mining" is picking a marble at random and looking at it to see if it is black and then repeating that process over and over. Find the black marble and you can put all the transactions you want in it and add it to the (block)chain.

What I was trying to say is that it is a problem which makes the computer work hard, how do you describe that quickly without calling it a "difficult problem"?

More knee jerk reactions from bitcoin zealots. The first article is an opinion piece, and the writer thinks that bitcoin needs a central authority due to the wild volatility that we`ve all been witnessing for the past few weeks.. and years. From the standpoint of a currency, bitcoin is a disaster. Nobody is going to have faith in a form of currency that fluctuates 50% or more in a day. He has a point. I know that destroys one of the fundamental tenants of bitcoin, but it`s called reality, guys.

Well, mining is fairly easy to explain. It is a lottery every 10 minutes where lottery tickets are distributed according to processing power of the participating computers. The issue with this is that people actually understand something and start to ask questions or outright doubt that it is that easy. However, if you tell them it is vastly complicated they just nod and accept it.

I get what you are saying and I understand why the press use it that way. It just makes it frustrating to try to explain details to people, who have made up their mind that it is something terribly complicated.

How would you start a virtual currency? The goal is to get a portion of it to many people, so they can use it as a currency.

The wild swings you see is money being distributed. People buy and sell units. The trend is an increasing value per unit. If every person holds similar value of bitcoin, the number of participating people increases. People who buy their units early have a higher risk of loss incase the system turns out useless, but they also benefit from a rising value once they redistribute parts of their units. Overall, it's quite beautiful.

Relative price swings in the past have been much more drastic than today's. Expect the magnitude of swings to decrease as total market value increases.

Mining gets about 90% of the press' attention.  What is really interesting is not the mining.  The wonderfully cool part of bitcoin is the uncorruptable ledger.  An uncorruptable ledger which is maintained by a network of machines is what allows us to fire all bank managers necessary to maintain trust.  This is the sexy bit.  

But everyone wants to talk about the complex math - which of course is nonsense.  SHA256 is not complex math.

Describing it that way lacks some of the scale to the amount of processing power needed. It is also confusing how mining is reported in units like GHs, which is completely different but looks similar to the usual unit for processor speed, GHz.

Agreed. It seems to have gotten better though lately.

Then again, the question where Bitcoin comes from is an understandable one. Calling it mining might have been a bad idea. Instead, saying a with time decreasing number of Bitcoins are given away every 10 minutes in a lottery, would have made the whole process much less interesting (but actually more accurate) and would have shifted focus to more relevant topics.



More processing power = more tickets. If you want to explain the GH, you can say a Hash is a ticket. I think people are smart enough to figure out what GHs stands for and seeing that as 10^9 tickets per second is just fine to understand how the block reward is awarded.

Can we TP this guy's house?  We all know he was paid to write this article, nobody is this stupid.

Instead of calling it mining, call it "transaction processing", that is a more descriptive term for what the work actually goes toward.

I totally disagree with this.  Who cares where it comes from.  Who cares what rate it comes.  This does not effect bitcoin in any appreciable way.  It was all about a fair distribution.  But even if it was all given away randomly in one day - the remarkable function of bitcoin is the uncorruptable ledger.  The means of distribution is boring and dumb.  Who the fuck cares about 'mining' - that is just dumb.  Of course, it was a cleaver way to get thousands of guys to set up a node.  So that part is a little bit interesting.  But otherwise, mining which gets all the press attention - is simply a distraction to the remarkable part of bitcoin - the blockchain.  

To begin with, Satoshi and the other early adopter `whales` should ease up on their enormous cache of coins. Satoshi, with his million coins, could act as a pseudo central authority until bitcoin gains some degree of stability. But that`s unlikely to happen, because just like the Winkevoss twins and others, he`s in this to make money, obviously.

So you think having Satoshi's coins in circulation would make the price stable? That would mean once another million coins are mined, the price would be stable?

This is one of the better explainations I've seen, thanks. I like this description because it emphasizes how the currency is initially created and distributed in a fair manner. Everyone has an equal chance at a lottery giveaway fixed every 10 minutes, and lottery tickets are distributed according to how much processing power you contribute.

In response to the OP,

We all should be thanking the Washington Post and other members of the MSM. It is because of them that we still have the ability to purchase undervalued bitcoins. The truth will get out despite the MSM's best efforts, but we don't need to worry about that because in the end the truth always does get out there.

It`s basic supply and demand. Mining coins isn`t the answer now, because mining requires such a large initial upfront cost that miners have no recourse but to hoard the fruits of their labor. Even then they`re lucky to make any ROI.

I`m not saying Satoshi should release all his coins at once. This would cause a market crash obviously. But he needs to put some out there during periods of high demand to keep the price a bit more steady.

i'm not shocked that the press is dumb. they just push along their boss' agenda.. all for profit. their whole shtick is to think for you instead of letting you come to your own conclusion. people are lazy and don't want to dig deep, so they outsource it to the media.

If a miner finds a block, they receive value, based on the exchange rate at that time. If the exchange rate rises from there, that profit is not from mining but from speculation. The miner makes the conscious decision not to sell the coins.



If you understand supply and demand, then you should understand that it does not matter where the coins come from.



You mean like 25 every 10 minutes or so?

I'm thinking on making a bitcoin bullshit generator for journalists. (Something like the corporate bsg: cbsg.sourceforge.net.) Journalist goes to the site, deposits 0.1 BTC press "More bullshit, please" button, will get a lot of bitcoin related factual bs.

You realise the idea that bitcoin subject to a different style of manipulation is actually not such a big deal.

I bet you weren't saying "well done to the central banks when they were raising interest rates and removing money from the economy"

It's a basic economic problem involving open market operations.

So, tell us, were we all rooting for the central bank when they were raising interest rates, making it effectively a better investment than bitcoin? Rather than a fixed amount of bitcoins, there would be a reduction in the amount of dollars in the system.

I'd choose a reduction of dollars. In fact, many countries are looking to raise interest rates now!

Long term bond yields are rising... It doesn't make bitcoin look any better for the speculators.

In the long run, interest rates go through mean reversion, i.e. return to the average. So, it's up to you to decide whether bitcoin really is an optimal investment. You are trading one type of manipulation for another. Bitcoin is artificial, it's not even natural.

What exactly do you mean by natural?

Bitcoin Bullshit Generator
http://freedomfeens.com/bs/

This has to be the dumbest article ever. Bitcoins were created precisely because the creators wanted government out of the monetary system. To those who don't like don't use it, after all it's a "free" country

I actually believe that this person really believes this to be true. Thank Satoshi that it's simply impossible since these people's fingers are itching to 'pump Bitcoin into the system'.

Adoption and volume will stabilize the currency. What bitcoin doesn't need is an external force pushing the price in one direction or another.

All these complaints about price volatility of bitcoin are stupid. Obviously the volatility results from current market conditions in which Bitcoin is not yet universally regarded as a standard payment option and not yet used in commerce on the scale on which national currencies are used.

If Bitcoin should survive to reach its adulthood, then voluminous use in international commerce will stabilize prices and speculation-driven fluctuations will become a relatively small influence.

Are you referring to the market manipulation in December 2013, by Mark Karpeles and his friends in Mt Gox? Bitcoin will always be vulnerable to such manipulation, as the number of exchanges are limited.

Here's what they've missed. 
While there is a limit on the number of Bitcoins, there is no limit to the amount and type of crypto-currencies that can be created. So it is that if Bitcoins are hoarded, and demand for virtual currencies grow, new ones can be created (and have been ie Litecoin). So, there is no issue with liquidity in the world of crypto-currencies.
 

Deflation is not a problem at all. Deflation provides opportunities for working class humans to move up the economic food chain. Imagine how much better of average everyday Americans would be if everyone simply let their mortgages go, banks were forced out of business, and the houses or underlying properties went up for auction at pennies on the dollar.

Regular people would have been able to buy houses in cash for $3,000 or less at county tax foreclosure auctions. It would have been a bust for bankers and a boom for average citizens. If Bitcoin should happen to crash to $0.05 again, that would simply be a 2nd chance for more average people to get on board the money wagon!

The news is generally written at a 9th grade level. There are some news outlets that may write at a slightly more advance level, however it is unlikely that you will find any mainstream news written even at a college level.

The news is also written towards the masses (they need ad revenue to pay their bills), this is done by the above as well as trying to sensationalize the news.

In essence any news article will be dummied down significantly.

The concept of Bitcoin is inherently advanced, and uses concepts that are usually taught when obtaining an advanced degree. The result of the news writing about advanced concepts to an audience of the masses at a 9th grade level will inevitably result in some inaccuracies and oversimplifications.

The press is doing Bitcoin a big "favor" as it gives it exposure to the masses which will hopefully lead to more widespread adoption by the masses and become accepted by more merchants/vendors/stores.

I put the word "favor" in quotations because the news is getting something out of the stories as well (readership, ad revenue, and the like).

It continues to amaze me how the government and MSM promote the idea that increases in the price of housing is beneficial for people, which is completely absurd. All it means is that it is more and more expensive for the next generation to survive and that the next generation has to pay more interest to the banks.

For fucks sake they are now talking about 50 year and interest only mortgages for "home owners" who are in reality anything but and are in actuality permanent renters to the banking class.

I've come to believe that future generations will look on these times as the dark ages and bitcoin will be viewed as the savior for humanity from the barbaric (and by then acient) banking class.

I remain unshocked (https://www.youtube.com/watch?v=acLW1vFO-2Q).

No, the dumbest article is when two people said Bitcoin won't be the best electric currency, but the USD will.

These media hacks should be embarrassed. Remember the good old days when journalists actually researched a topic before making an ass of themselves?

The press usually tries to write at a roughly 9th grade level so enough of their readers will understand what they are saying.

Bitoin is an extremely advanced technology.

IMO the press does a pretty good job of explaining BTC when considering they must write at a 9th grade level even if what they say is not 100% accurate.

What ultimately happens when the press writes about bitcoin is that more people get interested and buy.

Seems like this person just didnt mind to really investigate the issue? They just publish.. to publish?

Almost entirely useless (https://www.youtube.com/watch?v=zV5UTHRx0a4). Careerists and cowards. A bad joke.

True investigative journalism is nearly dead, because it has been systemically de-funded.

Anyone old enough to remember or grow up in the good old days when you could turn on the news or read the paper and just get the fucking story and the point without having 37 channels of pageant losers and fat blow hards giving us commentary on their opinions, like anybody gives a shit what they think?

I rarely watched the news anyway but I definitely know that there was a moment somewhere when "the news" shifted to crackpot commentary and somewhere in that shift journalists and reporters and investigative reporters started faking the news and fabricating fictions and all but do away with "fact checking".

And now, in so called reputable newspapers (now zines online) I am subjected to what I'd once assumed was a real college educated journalism or communications/media major actually still a journalism/comm major doing this shit here:

"In other news, there not going to be able to loose there job's before the big strike in the battle to bring better microchip's to the world"

And I think, "wow...are you seriously that fucking retarded somebody gave your dumb ass a real job??"

And it makes me sad. Sad that at least America celebrates and gives a platform to illiterate dumbass fools trying to fear monger me into toeing the party line. Even worse, I'm now so hyper aware how illiterate and retarded most Americans are, what with their inability to process 3rd grade grammar and adding apostrophes to everything ending in an "s" (makes me want to throat punch someone)...that I automatically assume it'll be a lazy dumbass American doing it and not a foreigner with a poor grasp over our language. I understand why someone in Algiers might sound like they're not playing with a full deck trying to use English...but it's disturbing to me that I can't tell the difference anymore between that and...one of my own  ;D

This was not bitcoin related and I apologize but it is related to the OP title...

SO to get on point, or at least the one as of page 2, why give a complex explanation for mining to anybody, nobody needs to know all that unless they want to mine. What's wrong with the suggestion someone gave previously, just saying miners basically are processing the transactions in the ledger? Even if it's a little wrong it's not nearly as wrong as the article guy said...