Bitcoin Forum

At this point, we can write off Bitcoin as a failed experiment. It's worth thinking about how a different distributed digital currency might be made workable. A few problems which have to be solved:

• Mutual mistrust between buyer and seller needs to be supported. This is the toughest problem. Right now, sending Bitcoins is not tied to receiving something in return, and is irrevocable.
• The double-spending check system has to be as least as fast as normal credit card processing. Waiting minutes for the block chain to update is unacceptable.
• Some price stability is needed. Value shouldn't change more than 1% per week, worst case. 1% per month would be better.
• A better way of launching the currency needs to be developed.

There's an approach to mutual mistrust that might work.  First, as with credit cards, there's a need for an "authorize" and a "capture" stage. In the "authorize" stage, A indicates that they intend to send value to B. This locks up the value from other use by A, and B receives a reliable confirmation that A has that value. In the "capture" stage, the value is actually transferred to B. A has to authorize the "capture". 

That's the normal case. The hard cases might work as follows:

• If A does an "authorize", and then does nothing, a "capture" automatically takes place after some number of days. So sellers don't have to nag buyers.
• If B cancels the capture, that's an agreed cancellation of the transaction, and the value becomes available to A again.
• If A does an "authorize" and later cancels before a "capture", the value becomes available to them again after some number of days. This is the tough case, and it puts B at risk of the buyer backing out after shipment of the product. To discourage backing out, when A does this, they are no longer anonymous to B, and B can publicize the cancellation, which affects A's reputation. Also, because cancellations aren't immediate, A's value is tied up for days, so they can't do this too often.

Discuss.

Assuming?

psyops.   as long as you see lots of dots, bitcoin has not failed: http://bitcoinmonitor.com/

Your premise is wrong. Bitcoin is just getting started. The problem, I think, is that too many thought it had already succeeded. These are merely growing pains. Could bitcoin still fail? Yes, in a number of ways, but on what grounds are you ready to call it so soon?

you are spreading FUD!
bitcoin have not failed(yet...)

there's no 'I' in 'we'....

Speak for yourself. I am not part of that "we."

Despite an onslaught of terrible incidents, hackings, frauds, bad news, etc., the Bitcoin protocol itself still hasn't shown a single flaw. The market price is higher than it was just a couple months ago, there are serious professional businesses blooming around Bitcoin, such as Ruxum and Bitpay, and even people who lost hundreds of thousands of dollars worth of Bitcoins (such as Bruce Wagner), have not abandoned this project at all.

Bitcoin is more valuable today than it was a month ago, or a month prior to that. It is getting stronger. Poor systems and frauds are being exposed and inoculated against. Every single payment I've made or received using Bitcoin has gone smoothly.

These are signs of a failed experiment?

Its Mr. Nagle, one of the players on this forum who goes out of his way to write-off bitcoins everytime he posts.

I sometimes wonder about hidden agendas from shitheads like this.

Professional FUD. 

Enough said.

If it failed for you, why not put your time into something else? This forum is mostly a collaboration tool for people who are positive about bitcoin. So, your time might be better invested into building up a project you actually like, build a web site for it, etc. Maybe some day, it will fly like bitcoin already does...

The thing that could easily work if bitcoin were to fail as a currency is a currency which is backed by something -- computational value.

It's not very hard to securely run a virtual machine that could offer clock cycles from your CPU or GPU to some enterprise that needs them.  These clock cycles could be measured as VM process walltime and then be used to issue currency similar to bitcoin based on this.  Initially the currency should be extremely cheap from whoever is issuing it, spurring people to buy some of it.  The currency is then exchanged with users based on the wall-time of programs running on the VM on their computer.  The VMs will basically be like shells to the outsider who can run whatever they need too, eg parallel data processing.  The end user should be able to place restrictions on the shell (e.g. HTTP port access, mail server access) to prevent illegal activities such as spam.  In time the supply will be restricted and the people who want more of this currency to run more simulations will have to buy it back from the people they'd issued it to.

If we could figure out a way to string these nodes together for parallel jobs easily, this application could overtake super computers in terms of cost of utilization...

In fact, we could keep bitcoin going if we used it like this.  But anyway.

Bitcoin I think is set to head down to $4-5 each, I give a detailed explanation here: https://bitcointalk.org/index.php?topic=34978.0
Basically the era of 100% ROI is over for BTC

I don't know why you think that, but It's still working very well for me and many others. Personally, I think your thread was a failed experiment at manipulation.

You and everyone else in this thread responded.....he got what he wanted....what ever that is?  ???

Please don't feed the troll's.

Bitcoin is a big success :

Transactions last 24h    6,858
Transactions avg. per hour    285.75
Bitcoins sent last 24h    418,176.80 BTC
Bitcoins sent avg. per hour    17,424.03 BTC

This statement is pretty nonsensical. Or what was the era of 100% ROI for USD? Or for RUB? A currency is not an investment.

If you were talking about mining, then this is a very fortunate development because it will help people to focus on actual BTC businesses rather than hoarding GPUs.

Some of your points are valid, but I would not consider them criteria for a failure.
However, they do deserve comment.

So basically, you'd prefer if the functionality which is currently offered by third-party escrow services, would be built straight into the protocol -- in a manner that:

- a transfer occurs in two stages
- first the sender gives up their coins, but the receiver doesn't get them yet
- the receiver has certainty that the sender HAS given up their coins, and only they may receive them
- now if the receiver cheats, and doesn't send goods, the sender loses their coins, but the receiver doesn't gain
- whether anyone gains them (generator of the next n-th block, where n is sufficiently large to give a long waiting period?), or whether the coins are lost forever, is an interesting technicality
- if the receiver is honest, the second stage is entered -- and on final confirmation by the sender, the receiver gets their coins

I agree that this functionality on the protocol level would be neat. This transaction mode would have to be optional, though, or it might be incompatible with your second wish -- that is, faster transactions.

However, it would likewise be complex. Perhaps at some moment, a non-destructive way will be found to introduce this. I would not, however, hold my breath waiting. In this regard, Bitcoin is indeed less than perfect, and that's why we have escrow services.

That could generate a lot more network traffic, and I'm not sure how much leeway do developers have. It would be neat, though, for retail purposes.

In wishing this, unfortunately I suspect you wish for flying ponies. Price stability can't be had at such an early stage of adoption. Consider the size of the world economy, and the Bitcoin economy, and the uncertainties in the future of the latter. No way could it be stable at this point. It is fit for use by those who can live with that.

I wish there was one. I truly wish. But I haven't thought of one.

Currently, you have to trust the escrow service.  This has not, either in the Bitcoin world or the PayPal world, worked out all that well. Many of the "escrow services" turn out to be crooks.

Some more efficient system than the Bitcom blockchain may have to be developed to do this. But it's essential.  You can't keep people hanging in their browser for minutes, waiting for transaction approval.


The launch price needs to be anchored to something. It doesn't have to be tangible, but it has to be useful independent of the currency. It could be music tracks, or land in a virtual world.  In the early stages, you need a market maker, someone who is both selling the currency units and accepting them.  "Beenz" actually tried that. 

It's worth looking at what went wrong with "Beenz". (http://en.wikipedia.org/wiki/Beenz.com)  Beenz achieved far more acceptance than Bitcoin did, and still tanked.

In other words, somebody with assets of some kind is needed to start the thing.

«... good enough for our transatlantic friends ... but unworthy of the attention of practical or scientific men.»
British Parliamentary Committee, referring to Edison's light bulb, 1878.    ;D

Similar thought after getting familiar with this game, hope that some new version of bitcoin or new digital currency will address these weaknesses:

1. Wallet.dat operation complexity and security concern
2. unstable exchange price
3. deflation nature

All these makes it a perfect speculation tool for IT/Gaming enthusiasts ;D

I happened to be an IT/Gaming enthusiast, it is fun to play around

so smart ass OP.  why is Bitcoin ramping right now in response to a plunging stock mkt and USD?

No. You has.

I read the title of this thread:


So, if Apple stock, or any other popular stock halved in value, the stock (ie. company) has failed?

If you look at this in a longer view.. Earlier this year, the btc traded against the usd dollar for 0.8 btc/usd. So, say we didn't have this "bubble" at 30ish, and we just had a steadily increase from 0.8 to 8, would bitcoin still be a failure?

Bitcoin in itself has not failed. Some services seems to have failed though. And that's bad in and of it self.

Your posts are always negative against bitcoin, although written rather profesionally usually. I do not know who are paying you, because you surely is not doing this on your own free time?

So bitcoin has increased tenfold in value since I first got involved somewhere in April this year, and that's a failure?

The only failure I can see around here, with all due respect Nagle, it's not bitcoin, but if you have a look in the mirror, you might have some more luck at spotting a failure. You bashing bitcoin is starting to get rather boring, I must say. Why don't you contribute to the community to make things better? It seems you have some ideas on your hand, and that you have a lot of free time as well.

+1

If in another year there aren't any 3rd party solutions that have popped up to those problems (instant money xfer being a big one, and most easily taken care of) AND there is very little BTC volume then we can talk about failure.

First phase of bitcoin speculation may be over, by bitcoin as a cluster of projects is just getting started. Christ it takes longer than a few months to build a decent website, much less solid financial software

Bitcoin may not have failed, but it did crash.  And the reason is very simple - there is no trusted exchange to trade bitcoins.   Every currency including bitcoins needs a liquid and trustworthy market to act as the secure middleman to match anonymous buyers/sellers.  Look at the list of frauds and hacks to the few and only exchanges for bitcoin in just the last couple months.  When people lose faith in the market to securely buy/sell/trade bitcoins, they lose faith in bitcoins.  And that's what is happening - why would you want to hold a bunch of assets with no intrinsic value that cannot be securely sold as needed?  answer: you dont.

We need a real secure exchange to be established by a legit company where people can safely trade and transfer bitcoin/money in and out, not a bunch of guys in their basement running some php scripts and/or committing frauds.  

Actually the experiment is quite successful. We learned a lot from it and thats the purpose of an experiment...

Bitcoin has not failed. Its just starting and will continue for years.

In a couple of years we will know.

Whats happening is that there are 7500 new coins each day. Some miners can mine these for free.
Meaning that a price of $14 is hard to keep up, since it needs huge new investments each day.

Don't forget, the mybitcoin thieves are probably dumping what they stole, not a small amount.

fixed!

Don't bother.  People are unwilling to consider fatal flaws in the system.  This isn't a forum of logical, factually-interested intellectuals it is the Church of Bitcoin & Libertarianism.  Either praise its name or be labeled an apostate.

Exactly.  For all those willing, they have had a lot to learn from this experiment.

lol OP doesn't know jack for shit.

I don't see how you can logically deduce that a projects failure for not having strengths it never claimed to have.  I believe there has been intense discussions and current development in many, if not all, the aforementioned weaknesses well before this became a widespread issue.  This seems to indicate that the majority of the development community is working in the right direction as far as prioritizing the next round of features.

I can see plenty reason for Nagle not to have faith in the bitcoin project.  His fault is not speculation, or the forum he chose for speculation, but his insistence that his opinion is in fact, fact.

The bubble Scheme


Definition : A well known internet-double-your-money business model.

Requirements:
1) forum with 50 friend in.
2) your own new money system.
3) 100 Million USD to buy yourself first and raise prices 300% then sell off when all others start to buy in.
4) Some media coverage. (best if they are suspicious!!).
5) Wikipedia page to refer to.
6) self wiki,blog,helpdesk.


wolaaa! you got 30%+ of your money at least then disappear and let the media talk about the bubble. :D


Happy bitcoinig!!!.


note. I am a bitcoiner .. true one .. i was just talking about "others"

It is simple to secure a compute node against running malicious code, but not at all straightforward to secure a customer against a malicious compute node.  At least not without huge overhead.

A marketplace for 'compute cycle futures' is also subject to default risk if the compute node cashes out and never delivers, so they will have to be bonded (or something equivalent).

But despite these challenges, I think this would be a great direction.

Silly premise. Bitcoin has not failed yet, instead it is in early stages. It's certainly possible that it will fail but nothing fundamental of that sort has happened yet. The "value crash" or the issues with E-wallets or the problems with exchanges and the stolen BTC etc. has done absolutely nothing but slowed down the progress of Bitcoin, it has not failed.

It's certainly true that there are issues and it's going to be a long road, but it's very far from failure at this point.

The community is still strong and the long term looks good. Here's a good article on the stages of Bitcoin, we're currently at the end of stage one (of 5). http://vermorel.com/journal/2011/8/3/bitcoin-thoughts-on-a-nascent-currency-system.html

Next it is time for stage 2 and 3 which I hope the community is working on. I definitely am. Stage 1 is covered pretty much.

A word on the value crash as well, the price is still high compared to what it used to be last year. And it will continue to be. A true crash would be going back to $1-$2 which I think has absolutely no chance of happening unless something drastic happens to Bitcoin fundamentals. Currently the demand for cheap coins at the $5-$7 range is large and for below $5 it is absolutely massive.

As far as value goes we will be in for hard times for a while now, might even hit a new bottom before truly stabilizing and eventually rising. There has been so many issues with Bitcoin and still it's going relatively strong compared to long term average price so I think it's rather likely that the price will go up as those issues are slowly worked out and the stages 2 and 3 advance, as stated in the article I linked in my last post.

Cars are a failure because they don't fly.

/thread

Use a trust network to ensure the people you're trading with are already trustworthy. Use an escrow or arbitration service to protect yourself from disputes. One doesn't exist? Sounds like an opportunity for profit.


Use a centralized payment processor for large value instant transactions. Accept payment without confirmations (listening for double spends for a short time) for small value items.


Stability comes with volume. Arbitrarily fixing exchange rates does not work.


What?


How do you know that the block in which the authorization resides is not going to get rewritten by a double spending attack? You have to wait for the same number of blocks in either case...

The USD value of Bitcoin has nothing to do with the currency, how many people are using it, or it's success or failure.

No one prices goods or services based on Bitcoins. They price it based on USD, EUR, CHF then convert it to Bitcoins ON THE FLY. There's lots of apis that will auto update Bitcoin prices for your goods.

What does that mean? If someone sells a $50 bong it does not matter if BTC is $2 or BTC is $20. It's the same thing. Buyer goes and buys $50 worth of Bitcoins, sends them to seller. If that's 2 bitcoins or 25 bitcoins it doesn't change anything. The real strength of BTC is people using it as a currency, not leeching off it trying to make a quick buck.

Funny how no one from the silk road is on here crying about prices. One of the biggest underground sites powered by bitcoins, yet they're not here crying and whining at the price volatility. Because it doesn't matter to them in the end. BTC could be $2 and the silk road will keep on trucking as well as it did when BTC was $20.

There's a lot of miners, speculators, day traders who lament the good ole days and feel the need to hang out on the forum reminding everyone. The good ole days when a select few raped the community for profit. No one cares that a group of 800 hardcore miners are now making less money per day. Boo fucking hoo. The good ole are people using Bitcoin as a currency. Those days are now and it's getting even better.

Sorry playing the BTC exchange didn't make you rich, go move onto gold bullion. BTC is just fine and will chug right along regardless of the price.

This is cryptographically solved in Bitcoin by use of a trusted third party.  However, it is not widely implemented yet. (see: https://en.bitcoin.it/wiki/Contracts)
This can be solved by having the coins come from a trusted source.
Any new currency not tacked to an existing one will suffer this; I don't consider it an issue.
What do you mean by this?

Interesting that the "failed" Beenz is mentioned.  In other posts I have seen talking about failed currencies or electronic systems they have the single point of failure flaw.  That is, if the sponsoring company fails, so does the currency.  Airpoints/airmiles or store loyalty schemes are like that, as are gift vouchers that become worthless when the store fails.  Anyone want to buy some shares in  WorldCom or Enron?

Bitcoin will actually have a hard time failing because it lacks that similar single point of failure. 

IN no way shape or form has bitcoin failed.  THe system itself is flawless, the difficulty in making them, people wanting to recover there money, and avg joes that panic, are causing it to lose value.  More businesses are accepting it, it is still a very young currency and is worth triple what it was months ago, so FAIL is far from the right word.  Recession, maybe, bubble burst recovery, probably.  30 is too high, 5 is too low, I think its still just a young currency and is balancing out still.  Hopefully will land around 13 bux stable. Thats what we need a 13 dollar stable market for months, then businesses and people will trust it more and use it more.  Hard to sell products for bitcoin when that same bitcoin could be worth half what it was when you sold your product for bitcoins, thats going to hurt the economy for sure.

In a free market, if this model is so attractive and have long term potential, then there will be another type of P2P currency competing against it, but there is still no competing currency until today, seems no one take it seriously

i take it seriously. :P

and you are dumb, there is no need for a another p2p currency competing with bitcoin.
its a currency, its a trade-able object that have a certain value. just like gold.
why isn't there second "gold"? competing with real gold?

go away troll. just go away.

Well, there are all sorts of different materials people buy and sell pretty much just like gold, gold's just among the most famous of them.

Now now... People... Mr.Nagle here is not a troll.... He is a reputable finance professional who made a very interesting and popular (14 pages of replies) introduction to our forum!


He even published all his professional analytics and predictions in his website http://www.downside.com  !
How fortunate of us to have his guidance here.

Namecoin, Beertokens, Weeds, Martian BotCoins, United Kingdom Britcoins and Canadian Digital Notes to name a few.

There's a whole special branch of the bitcoin client (multicoin) to handle more than one at a time, and while I haven't researched the others, Namecoin has its own full-blown block explorer, miner calculators/tools and even an exchange where they can be traded for bitcoins.

"Google before you post" is the new "Think before you speak"

Looking again at his website reminds me that a more suitable name would be http://www.downsyndromeside.com

It's a shame. If those API designers realized how they damage bitcoin through distributing these, they would probably do something more productive. Unfortunately, you don't have to have a clue about finance when hacking up such logic.

Please do also see https://bitcointalk.org/index.php?topic=34874.0 for discussion of a more reasonable trading approach.

Exactly. Though for this reason, some people get scared and try to lure the community into similar currencies with a single point of failure added, e.g. https://bitcointalk.org/index.php?topic=29135.0

Bitcoin will only fail when people stop believing in it, which is.... never? ^^

OR when people stop buying them with other currencies/commodities.

Most people have indeed never believed in bitcoin ^^
(And also never will)

Some observations:
 - There are a few central bank currencies (physical notes and coins) where the locals refuse to take them for goods and prefer another currency (like USD).
 - The volatility of the exchange rate is simply reflective of an early stage.  If I look at other currency cross rates (JPY/USD or GBP/USD) they are also volatile, but at a different level, and people still price cross-border goods like amazon in multiple currencies.
 - There are a few physical stores accepting multiple currencies.  I had the choice of paying for my burgerking in an airport in at least four currencies last month (JPY/EUR/USD/SGD), and when I booked a flight yesterday had the choice of using real or fake dollars to pay for the ticket.
 - I also used BTC to quickly transfer some USD to someone this week at a reasonable exchange rate, that's a function I like.

Actually, that is probably a significant threshold to consider Bitcoin a success, when people start using it as their everyday money instead of interfacing back and forth with govt. money

IMHO, it's too early to discuss possible succcess or failure.
Failure is just wishfull thinking on the part of some bankers that are so technologically illliterate that they have yet to realize they can in fact find opportunities in bitcoin.
Bitcoin is an alternative 1/to gold as a hedging investment 2/to transaction nettworks like Visa or Mastercard. In these two categories, there is a LOT of room for improvement and bitcoin does bring obvious benefits.

I give in. I will immediately sell all my BTC now and forget it ever existed!

If this is the case where would be a forum for logical factually interested intellcutals interested in discussing bitcoin?

its pretty stable

Problem is already solved. The introduction to secure bitcoin banks will let you deposit bitcoins to a bank vault. Once you send bitcoins to the bank, the coins will be confirmed, and your account will be credited. When you buy something, you will send funds to the merchant who has a Bitcoin Bank Merchant Account. The account will be with your bitcoin bank, or another bitcoin bank.

When you transfer funds from bank account to bank account, the system substracts the number of bitcoins in your account and simply adds the number of bitcoins to the merchant account.

• The transfer is 100% safe.
• The bitcoins are already confirmed/verified at the time they are deposited.
• There are no actual transfer of bitcoins during a merchant transaction since the bitcoins are sitting in the vault the whole time.
• The transfer is instantaneous.

The problem is solved but we're at the stage that someone has to create a bank from scratch and secure it.  I think Mt. Gox is "bank-level" secure now so we know it's possible. Don't get me wrong, there will be breaches, you can't plan for everything. Over time, the security will get stronger and stronger with every breach.

Yeah, right.  The "Bitcoin banks" to date are rather slimy operations.  Two "Bitcoin wallet" operations have failed. "Global Standard Bank" is clearly a scam.  Dwolla reversed transactions after saying they were irrevocable. Mt. Gox has now operated for almost two whole months without a disaster.

The whole point of Bitcoin was supposed to be that you didn't have to trust a central organization.  If the system needs "banks" merely to handle routine transactions, the design is broken.

On the other side, if you have reliable "banks", you don't need Bitcoin.

LOL bitcoin has failed. Thats funny cuz every month there are $$$ in my bank account from bitcoins. Can anyone explain this?

Bitcoin is failing.  It's doing more or less what I've been predicting for the past 2 months.  It'll hover at around $10 for a while longer as it is a psychological barrier to break before it goes under it.

Reasons for this failure are numerous but one of the primary reasons is that the process of mining bitcoins IS NOT productive work.  Neither is the role of securing the network.  Both these (in a society) would be referred to as 'socially necessary functions', but they are not productive.  There is a critical distinction to be made here.  I hope the members of this forum can recognize it, since I believe this is the primary flaw of the system and if resolved would really give BitcoinII the incredible potential that we all hoped it would have had the first go around.  Yet, the more time we spend not recognizing this failure and stamping our feet in disagreement and denial isn't helpful and will only prolong the day before progress can be made.

The currency must fundamentally represent useful work.  I'm curious if there would be a possible way to use certificates and this technology to have the 'coins' or units of value store useful work rather than simply meet all the other requirements of what a currency must do.  Because, Bitcoin does, quite successfully, do nearly everything else that is required of it as a currency.

This is the strength of the fractional reserve system or better yet simply debt-issued central bank credit.  Take Putin's Russia or Korea or many other nations whom have issued debt into the system to provide for useful work.  Our banking system is presently totally out of control due to lack of regulation and a central bank that works for Wall St., but in the past and in other parts of the world a bank operated as a means to grow the economy by directing credit to useful enterprises.  If we choose not to have a deflationary monetary standard (and there is a lack of reasons as to why we should, but this is a point of another discussion) the money must originate from somewhere.  In the present Bitcoin system it is issued simply for providing the necessary service of securing the network, yet that isn't of itself enough (or at all fair) to constitute it being worth anything.  Debt issued currency, used properly in the Hamiltonian, Friedrich List style of dirigistic high-value high-capital intensity work creates wealth.  Such is how many nations have rocketed themselves to 1st world status in the course of a few generations.  But in the Bitcoin system the primary recipient of the currency isn't providing useful work, they function similarly like a bank - charged with the task of securing the system.

If there would be someway of 'securitizing' useful and productive work that was performed and could be exchanged through the infrastructure in a Bitcoin like fashion that would be something that could shake the system to its core. 

Of course this would probably be harder than just becoming politically active, reading a few dozen history books, a few dozen economic books and then coming to the correct solutions regarding our problems.  But if there are people here that would like to direct their energy in this direction (Bitcoin, or Bitcoin-like solutions) then this is how to make the system actually functional.

Ever wonder why Gavin's visit to the CIA came to naught?  Why it completely dropped off the radar of the political establishment?  I think they had a few analysts figure out what it was and where it was going and then realized that it would implode on its own and simply went about their business.

Dead Wrong.

What IS the difference between a necessary function and productive work? Do you mean productive as in producing something new as opposed to maintaining what exists?

There is no way to automate such a process if this is what you mean so we either need a comitee of the entire bitcoin community which would get bogged down as most rule by comittee does, or a central authority which is anethema to what alot of people believe bitcoin is about.

 Of course If I am wrong about what you mean by productive work you can ignore all that bit.

The "productive work" problem is related to the launch. But that's not why Bitcoin is failing. The fundamental problem is that it's not a very useful medium of exchange. It's risky to use for online ordering, because Bitcoin sends are irrevocable. Technically, transactions are too clunky; waiting minutes for transaction confirmation, and sometimes having it fail, is inferior to existing credit card technology. That part has to "just work".

Any successor to Bitcoin has to work better than credit cards or PayPal for routine transactions, or it will never get any customer acceptance.

Why shouldn't it?

If it doesn't, then what gives it its value?  Having it literally represent work rather than the existing USD --> Bitcoins --> Goods or services (still denominated in USD) is the crux of the problem here.  Everyone is concerned about the exchange rate to USD, as they should be in the existing system; since Bitcoin isn't implicitly 'backed' by productivity it seeks to find something that is, in this case USD. 

This is a (not the only) primary fallacy of Bitcoin.

If the "coins" would instead represent hours of work, for example, I think it would be a much improved system.  Of course how to determine pay rates for labor of different value would be another challenge, although it would invalidate the need to be 'backed' via USD.

Well and that whole other problem that banks DO provide a socially useful function if properly regulated and directed (by law) toward productive or otherwise useful lending.  The ability to borrow is critical to any modern economy.

This thread and many others could have easily been labeled "the US dollar has failed" given the arguments put forward.  The US centric arguments also get a bit tiring when we are dealing with global views - reference the arguments about central government intervention in the direction of capital spending.

There is a lot of work done that is not productive.  Many financial activities (forex trading) could be argued as non-productive.  Maybe if you thought about currency as a means of exchange from apples to oranges, then you would be less concerned about the underlying.

I suppose it depends on what you want to do with Bitcoin.  If you want it to represent productive, primary industry production, then look for something else.  If you want a mechanism to swap value internationally, then is seems to do that just fine for something so new.

It's challenging when your ideas aren't some regurgitation of something you've read, it makes you have to explain things in such exhaustive detail that people don't want to read it; the alternative is of course to try to be brief to which people read into what you posted all manner of things neither said nor implied or simply point out what should be obvious to all.  Maybe this will be solved if I get a time to write a book.  =]

I'm not flaming you mind you, I'm just complaining in general that I'm unable to strike a balance between detail and brevity that is going to please everyone on this forum.

Unto your post,

The USD actually does represent work achieved, at least in a much larger proportion that Bitcoin where literally every new 'coin' issued is for doing non-productive 'work' of 'mining' 'coins'.  Sure, the existing system is abused, of course, but I'm just showing you the framework that is the issuance of currency.  Central banks have, as well as private banks, fund useful work.  If you wanted to go get a loan to do something pointless that wouldn't yield any useful function (and therefore no profit) I'm sure they wouldn't give it to you.  This means that these currencies are 'backed' by work/labor/productivity/useful-work, that money will be issued into the system for something worthwhile.  Of course with the deregulated banking system and 50-to-1 leverage and inter-bank lending this system is presently a madhouse, hence the social unrest and immiseration of the population.  

What you're missing here is that even if the 'currency' that represents BTC took off and became widespread it would still function as what it is: a virtual commodity.  It would still be denominated in dollars.  People would still check the value of BTC to USD before trading anything for it.  That isn't independence, it would be much like Gold, where we say it is increasing in value because we are valuing it in USD.

I'm saying that unless this system can somehow directly represent work performed (which is a radical change from how existing BTC are brought into the system) then I don't expect it to really ever be adopted as a 'currency'.

I'm realizing a problem here that nobody addressed toward my idea. 

This (labor based) currency wouldn't work either because of the wide spreads of the value of work that exist in the world for the same labor performed.  A programmer in India and a programmer in the US that do the same work get paid a vastly different amount of money. 

If it was hours of labor between these two places why would either party engage in it?  The US programmer would simply buy in USD the services of the Indian.  As this downward trend would exist not only between these two countries but the entire world then effectively only the country with the lowest currency would benefit from using the system.  Clearly this is broken from the outset.  Funny that nobody picked up on that.

LOL

I really guess there is no alternative to just becoming politically active.  Truly our only solution.

Wow, for those still holding out hope:

http://www.alexa.com/siteinfo/bitcoin.org#

Going down in flames.

Once you've been to bitcoin.org you don't need to again (except to update the client).

This one looks hopeful: http://www.alexa.com/siteinfo/mtgox.com (http://www.alexa.com/siteinfo/mtgox.com)

great now I have a headache

Let's apply your theories to some real-world situations. If you aren't a primary producer (farmer), your work and thus your life are a joke? Precious gems, aside from diamond and quartz, have little to no industrial value and their collection and cutting and polishing is a HUGE industry. The same could be said for gold, silver, and other precious metals. They have industrial uses, but not in the quantities we are mining. So, is it productive work to collect gold from the ground and stick in in some bunker under the rockies at a cost of billions and billions of dollars?

I am just going to ballpark a figure and say 90% of all work done in first world nations is equivalent to jacking off with a belt around your neck; someone needs it done, but a passerby on the street watching you do it will probably think you're retarded. Bureaucracy. That about sums it up. Unfortunately, it got us where we are.

I've been told the KG of wasted computer hardware has more gold than the KG of ground at pretty much any gold mine out there...

(kinda  unrelated i guess, but i felt like saying that)

I didn't think that was right because I've seen gold recovery articles before.  But I found this pretty picture/link.  http://rossdawsonblog.com/weblog/archives/2010/06/infographic_use.html

Maybe we could send all our old phones to OP