Bitcoin Forum

If you want to spend your bitcoins you need to convert them into some recognizable currency, which means you need a bank to do so, which can and will be shut down by the feds.

See the case of E-Gold for a similar comparison. E-Gold was doing something very similar: letting people transfer money anonymously and untraceably, but backing it with real gold in a vault so that it had some legitimate worth. The feds shut them down.

I know I know, Bitcoin is different.....There is no vault.

But you must convert to dollars to pay for electric and hardware.

The break down is where the crypto currency gets converted into real currency. These places are easy to shut down.

A solution to this could be a Sun Powered Data center. In addition the Open source hardware movement needs to build and offer their hardware in bitcoins.

Open Source Ecology is working on low cost electric production technologies using the sun and there is a good amount of backing.

Lets show them some support and donate some coins. The future of mining is sun powered.

Also a company offering technology like this exclusively in bitcoins would be huge!!!!!!

Access to cheap production materials only through bitcoin.

http://openfarmtech.org/wiki/Crash_course_on_OSE

http://openfarmtech.org/wiki/Open_Source_Ecology

http://openfarmtech.org/wiki/Donate

i thought it was

• Lack of physical possession(thus, MUST NEED OTHERS)
• small transaction are "stress"
• quantum computing breaks public-private crypto

Not for hardware. There are people who already will purchase things from Amazon and NewEgg for you, in exchange for Bitcoins. Plato is travelling the U.S. using only Bitcoins.

It's a little bit of a pain at the moment, but as Bitcoins gain popularity more and more stores will accept them as a form of payment right along-side credit cards and PayPal.

See Bitcoin-OTC (http://bitcoin-otc.com/), which is an Over The Counter market. Trades from one person to another, and only centralized in the sense that they all need a place to meet (IRC).

Why would the Fed shut down an account?  Bitcoins are traceable through the blockchain.  Unless you are laundering that is, bitcoins or cash.  Laundering is illegal, be that bitcoins or cash.  You should be able to proof easy enough from the blockchain where you got your bitcoins from.

wasn't that a song by Regina Spektor?

quite beautiful, actually...

Brian Adams I think?

What happens during the night/winter?

And why couldn't the Fed just block IP/DNS to the server?  They're trying to enact a law to make it legal to do so, and if they do, then all the major ISPs would be forced to block any sites the government asks them to.  They could probably do it right now anyway under some "threat to the US" act.

That's just not true.  It's like saying you must convert Dollars to Euros in order to use them in Europe.  Once bitcoins are widely accepted and everybody takes them as payment, there will be no need to convert them since they ARE money.

Is Bitcoin worrying you or are you busy with some illegal stuff?

Are you buying rights of ownership to DIGITAL CRYPTOGRAPHIC KEY CERTIFICATES on a very secure network employing a very capital intensive group of machines to keep it that secure?  A network effectively rendering a very efficient, fluid, secure book keeping system.  It is not as anonymous as some people think.  Their is a block chain recording each and every transaction.  Cash laundering and bitcoin laundering is illegal.  Laundering is not a standard feature of the bitcoin network.  You would easily be able to prove where you got your bitcoins from by utilising the blockchain.  And remember to pay your taxes this year if you profit from any barter transactions in bitcoin.

If bitcoins are so publicly traceable, I dare you to try to find my current wallet balance.  Or at least, take your best educated guess at it.

I do have a couple of publicly-available bitcoin addresses, so what else can you tell about my bitcoining activity from information you can find?

I've never cashed out, not even a little.  I've bought many things besides other currencies.

With enough time (which I do not want to spend on your dare) and effort (which I would put in something more positive) and resources (which law enforcement agencies do not have a shortage of), your challenge will be met - given enough of your key transfers and some (even the slightest) transparency into the real/traceable online world from you or any of your wallet's key transfer's counter parties.  Sometimes your keys combine to make up for a larger amount and the difference from the intended value to transfer gets issued to a new key that you just maybe spent to someone transparent, and voilla! questions asked to this transparent person of how some known illegal money spent on btc transfered to you and then to the transparent person renders your identity from the interrogation maybe.  Good luck, it seems like you would have a lot of tracks to cover - is it worth the effort for the average joe who will just prove his innocence by utilising the blockchain.  Even if its not a requirement in your jurisdiction to prove your own innocence, your reluctance to do so might be a dead give away warranting investigation.

So you could potentially link two addresses together because they were included in the same transaction, but without knowing which of the addresses is the "change" address, how would you know how much I actually sent out and how much I kept for myself?

And I'm not worried about being investigated - I've got nothing to hide.  I'm not in to drugs or anything that isn't legal, and if my profits turn out to be greater than my expenses from my ventures in Bitcoins, then I will pay my due taxes on it.  I believe my effective tax rate this last year was 0.66%, so I'm not terribly worried about how much that will amount to.  ;)

But really, I just want to see someone TRY to track another person's activity to see how feasible it is.  Not because I am worried about hiding myself (why would I publicly post about my website(s), and my bitcoin addresses if I was?), but because I am a curious person, and enjoy challenges, and like to see what is possible and what is not possible with technology.

It's not an issue of feasibility, tracking an address's trades are certainly feasible.  The question is resources.  An entity with unlimited human resources could track down the payments of a person, but there isn't a way to do this without human intervention.  The data just doesn't exist to automaticly tie an address to a human being, although that might be made easier using data mining techniques.  For example, in a normal transaction a human being would be able to look at the transaction and guess that the smaller of the two outputs is the change, but a computer program doing the same thing is going to be unreliable.  The idea that all of the addresses in bitcoin can be traced back to an individual real identity is rediculous because that would literally require limitless human resources, primarily in the form of trained detectives doing classical detective work.  That's simply impossible, and that is why bitcoin is as anonymous as the user is willing|able to be.  Anonimity is inconvient, and most people don't need that much of it.  Bitcoin doesn't really promise anominity, it just makes it possible.

Checkout http://blockexplorer.com/ type in some of your recent destination addresses and click on the keys in the table to explore.

I think it would be absurd to make the assumption that the smaller of the two is change.

For instance:
- I used to mine with deepbit, and when I did, I took payouts of 10BTC or more.
- I have payed other people 10 payments of 0.25 BTC, and 12-15 payments of 0.10 BTC or less.
- In each of those instances, my change would have been far greater than the sum sent out.

How else would it be feasible to figure out which address is change and which address is not?  Your entire argument that all transactions for a person are traceable seems to hinge on the fact that you can figure out what is change and what is not, but as it stands, I just don't see how that is possible.  You could use a bunch of guesswork, and perhaps get lucky if the person sent to another publicized address (i.e., I donated to a given cause, then they would know which address was change), but other than that, I just don't see how tracing a person's transactions is really possible.

http://forum.bitcoin.org/index.php?topic=11138.msg158505#msg158505

Maybe I did not clearly express myself.  I'm trying to say that the keys in your wallet are made up of lots of transactions which sometimes combines keys that you would like to hide with keys that you would like to keep secret - effectively linking the two keys and if,

as stated before:

"given enough of your key transfers and some (even the slightest) transparency into the real/traceable online world from you or any of your wallet's key transfer's counter parties"

the above quoted phrase might reveal your identity.

Ah - we were talking about two end results.  I was talking about being able to trace all of a single individual's transactions, whereas you were talking about being able to reveal the identity of a person given an address or a few addresses.

It would be extremely easy to identify me.  :P  Oh well.

Last time I went to Europe I had to convert my dollars to Euros to spend them in the store. There might be some stores that accept Dollars but even credit card dollars are converted to the local currency. Not sure what you're talking about....



Except to pay for electric.
And except you are trading them for a centralized currency. The ease of convertibility from bitcoins to dollars is not my issue.

What's the airlines bitcoin payment address?

What's neweggs bitcoin payment address?

ATI's?

What about the mining companies bitcoin address's to pay for raw materials used to make hardware?

BTC must pay for BTC in BTC. BTC cannot pay to run BTC with another currency if it wants to stand on its own and as good as another currency.

Which brings me back to the off the grid data center and Open Source Ecology. If you could get a manufacturer/raw material producer to accept only BTC for power generation equipment, it would force people to convert to from USD to BTC in order to have access to it.

This gives both technologies a competitive advantage.

Plastics? Get a hemp producer to accept only BTC for his hemp crops.
Clothes? Same thing.
Food? Get farmers to only accept BTC.

Does no one see this as an issue?

It's a present cost of aquiring Bitcoins, and adds to the present risk, but it will slowly resolve itself as the Bitcoin economy grows.  So no, it's not really an issue.

I love the idea of solar datacenters. More efficient solar panels would be nice.

You could take surplus cargo containers and wire them up with mining rigs, solar panels, MondoNet repeaters, whatever, then ship them around on rail to customers

Check out Open Source Ecology and what they are doing with solar concentrators and steam engines.



Ok the "it will magically solve itself" is not an answer. It didn't magically solve itself for any of the other digital currencies that have failed and for all of the it was the need to convert them back to Centralized currencies.

We as a community need to invest in the technologies that will detach bitcoin from having to convert to centralized currencies.

I never said it was magic, even though to some it might appear as such.  It's economics.  It's the 'network effect'.  As the Bitcoin economy grows, and thus comes to represent a greater portion of the total economy of any given region, the need of bitcoin holders to exchange out to a national fiat currency will decrease.  In the future, if you can spend bitcoin at Wal-Mart for your daily needs, you don't need to pay transaction fees nor trust some distant counterparty dealer.  You simply go to Wal-Mart and buy what you need directly, probably using your smartphone.  That is the end goal of this whole thing.  Fiat currencies have real limitations that make their use in cyberspace risky or difficult, but the reverse will soon no longer be so.

I would be surprised if the Euro existed in 10 years (in any recognizable form) even if Bitcoin didn't exist.  Now I think that not only will the Euro not exist in any dominate fashion, Europeans won't even care.  The US FRN will last longer, for many reasons, but will eventually fade away.  The governments that persist will have to adapt to a world wherein they have near zero control over the monetary system.

More of a feature than bug ... if every man and his dog was easily able to get into bitcoin right now the value would be through the roof and all the usual loudmouths would be screaming blue bloody bubble murder.

As for solar tech., when it is efficient enough to be viable the fat govt. subsidies won't be necessary.

Do you see anybody getting subsidies to buy high-tech mining equipment? ... that is what real tech. progress looks like, it's messy, it's chaotic, competitive but profitable.

Once bitcoins come on to the scene in a serious way smart governments would smart to put their super computers to work generating bitcoins.  They could suddenly start hogging all the mining revenue.  And after bit coins can't be made any more they would be collecting most of the transaction fees.  At the end of the day they may not need to tax any more.  I think smart governments won't have too much of a problem if they embrace bitcoin instead of outlaw it.  They will have bigger problems with the emerging decentralized internet powers.

As far as I'm concerned, they ccan go right ahead.  In fact, I'd expect that from a small, responsive and truly representative government such as Iceland.  Most governments, however, can't deal with new ideas.

... you lost me at this point here ...

Kinda a contradiction in terms.

I see the biggest drawbacks as lack of physical presence and value fluctuation. The others seem to me to be soon fixed.

someone has yet to answer my question of electricity.

It's a problem.  I've said so before.  Most people here don't see it as a problem, though.

What exactly is the problem? Electricity? The world is running out of electricity now? Lights are still on here.

I read somewhere that someone was using diesel generators for his Bitcoin rig. Sounds like a damn fine idea if you have the capital cost already sunk in the kit and all you need is diesel to run it.

The problem is that you can't buy electricity with Bitcoins.  You are dependent upon exchanges, which can be shut down.

Diesel doesn't help, it hurts.  Paying $0.30/kWh is ludicrous.  And you can't buy diesel with Bitcoins either.

Maybe we can get a state to officially accept it as legal tender.  Utah just passed a law that makes gold a legal tender in their state.  Raise enough awareness in one state and that may be doable for bitcoin.

Bio-diesel? From switch-grass?

As long as you can convert to some other form of exchange and then buy the necessary equipment it is boot-strapping itself. Not being able to buy electricity or equipment with BTC is a moot point if the network resources can be got with alternative exchange mechanisms, albeit with fees and friction, not ideal but no biggie. The exchanges are a central weakness but there is the otc, f2f exchanges and other avenues springing up every day, it will work around any obstacles thrown up, the incentives are velly strong.

If you have to rely on the national currency to pay for the electric. The bitcoin is only as good as the dollars you have to get to pay for the electricity to run the system. The OTC and f2f exchanges don't address the issue. You still have to convert to the currency you seek to replace to fund the currency you want to see in its place.

The problem is you're using a centralized currency to pay for centralized electric to run a decentralized system.

It's a weakness.




Look at Fator - E - Farm and their solar concentrator and steam engine.

This are a tiny cost in comparison to solar and wind and biodiesel.

though to run a data center you would need a combination of technologies.

At present the system has a lot of weaknesses. There is no bitcoin economy in which a lot of goods get traded that independent of the central economy.

Electricity alone wouldn't help you anyway. Bitcoin depends on global internet access. If the intercontinental cables would be cut Bitcoin would probably be dead.
Full independence could take a decade.

Till then it's much better to focus on providing goods and services via Bitcoin that people actually want to buy.

Having the underwater cables cut vs. overcoming the problems that caused other digital currencies to fail are two different things.

Not doing anything about these weaknesses and letting them go is what makes projects like this fail.

If bitcoin did not have to pay for it's electricity, it would have a major advantage over previous digital currencies. The sun, wind, and water flowing, would be running it. Not oil secured through war and shipped back or some other finite controllable resource like natural gas or coal.

It's a strategic separation.

Bitcoin's value rests on the whole underlying system of dollars, which it seeks to replace, to function, in order for it to pay for its electricity.

So what. It is using the old system to bootstrap the new. Wouldn't be the first tech. to do that ... or maybe you can start marketing solar/wind/hydro tech. to miners instead of just talking about "it'll never work", if you are genuinely concerned that is.

Yes thats what I want to do. But the technology is in development. They need donations to finish production runs. They accept bitcoin donations. If enough support is shown it maybe enough to convince them to offer their products in bitcoins.

     This is a highly valuable topic.
Thank you, Anderxander, for thinking about it and posting.
As a "thank you" tip for doing that, I have just sent 1.14 Bitcoins to the address in your signature line.

     Now to dig into the topic more.
I'm a newcomer to Bitcoin, but I have half a century of experience with computers and networks.
Forgive me, and please correct me, if, in what follows, I make some conceptual mistakes about the structure of Bitcoin.

1.) The word "downfall" introduces confusion to a very important subject.
The main worry here is "risk".
Bitcoin may or may not "fall down", but there are always risks.
If we analyze risk, then we have a chance of mitigating it.
Not eliminating it, but reducing the probabilities.

     A solar powered data center is very trendy concept.
But, no, a solar-powered data center is not a good idea.
It doesn't mitigate any risk other than lack of power-line electricity.
And it adds the risk that a data center could be destroyed by accident, by weather, or by deliberate attack.

2.) To spend Bitcoin, there is no requirement to convert to any national government currency.
It may be easier to spend by converting first, but it's not required.
And, if Bitcoin grows as many here expect it will, there will be even less need to convert in the future.
I'll offer you 5,000 Bitcoin for your 1957 Corvette.
Or, you offer me 1 Bitcoin for a cheese and sausage pizza from my pizza shop.
Deals, big or small, can be done without any currency, without any banks at all.
And without any "Feds" at all.

3.) Yes, operation of Bitcoin does require the Internet, or some network than can transfer data.
So one risk factor is that all data networks disappear.
An asteroid striking earth could do that.
Or electromagnetic pulse attack at key points around the world.
But if an event destroys all of the Internet, then our problems are much greater than could be solved with solar-powered data centers.
So I'm not going to try to lay-off the risk that the Internet will suddenly disappear.

4.) The biggest risk in the Bitcoin system is the risk of market manipulation.
Market manipulation would be easy to do, quick, and cheap.

     Let's put ourselves in the place of the "dark side" and think this through.
The central banking powers will hate Bitcoin, guaranteed.
They will want to destroy it, and plow salt into the concept so nothing like it ever grows again.

     It would not take any laws at all to completely destroy Bitcoin.
The dark side would simply take advantage of Bitcoin's single point of vulnerability: it's small market size.
What could they do?
Simple: The dark side will buy Bitcoins.

     Bitcoin's small market can be "cornered" easily, for only a few millions of US Dollars.
The dark side could simply allocate those millions from their petty cash fund.
Then place orders on every exchange and every forum to buy up every Bitcoin offered for sale.
The price of Bitcoin would shoot up to the sky.
Wouldn't take much.

     Countless people would try to catch the trend and pour their life savings into Bitcoin.
Many others would run up their personal credit card debt to buy mining rigs.
Some might quit their normal jobs to be "day miners", trying to make a living digging for Bitcoin.
The price would go parabolic, due to dark-side money pouring in week after week.

     Then what?
The dark side would sell.
And sell, and sell, without stopping until they had sold every last Bitcoin they had.
They would overwhelm every exchanger and every forum, with sell orders.
Bitcoin would plummet to the depths.
Countless Bitcoin faithful, who had invested their money and dreams in Bitcoin ventures, would be destroyed.
And all Bitcoin miners would suffocate.

     It could be accomplished in a month or two.
Maybe it has already started with the recent jump in the price of Bitcoin.

     And the final chapter would be written by the mainstream news media.
They would relentlessly attack the foolishness and risks of Bitcoin.
And that would bury the concept for at least one generation, maybe more.

     The only way to mitigate the risk of small market size, is to grow big quickly.
Personally, I think Bitcoin can get big enough, fast enough, to stay ahead of the risk of an attack from big money.
So I'm buying Bitcoin.
But I'm not sure about this.
It's a gamble: for me and for all who are investing in Bitcoin.
Only time will tell if Bitcoin can survive the attack which is sure to come.

     At this stage, Bitcoin's biggest risk is the small size of its market.
It is vulnerable to deliberate attack by those who wish to destroy it.
I wonder what are other risks inherent in Bitcoin, both now and in the near future.
And, please, what are the shortcomings in my risk analysis here?

Good points Marcus and well put.

The entry ways into the market are tiny so I don't think they could perform the manipulation you describe without opening exchanges for themselves. Maybe the entries to the market will only grow at the same rate as the network? Who knows.

Thanks for the time you took to respond. Finally some thought put into a response. I appreciate the donation.

1.) Couldn't agree more with risk being a much better word and way to look this.

Solar may have been too pointed of a word. Distributed generation would be a better term. The combination of alternative technologies to sustain power.

When I say solar I am also not speaking of panels. I am talking about steam engines and solar concentrators.

I don't see how a data center that is off the grid is anymore susceptible to being destroyed by accident, by weather, or by a deliberate attack.

Amount of power-line electricity is not the issue. Right now power is generated centrally. Remember those blackouts all over the place a few years ago? We also use nonrenewable resources to power the grid. Cuba in 1990 is a perfect example of what happens

Our control of nonrenewable resources to continue power generation relies on American Military power to secure the physical land where the resources are. This is a house of cards.

The risk it mitigates is not having to rely on a central source of power.  If there were deliberate attacks on major power generation sources as things stand today, you could wipe out power for millions.

With a distributed electric generation grid, if one data center loses its power source, the rest are unaffected.

Its the same concept of the distributed database.


There is a requirement by power companies that you pay them in a national government currency. You must convert your bitcoins to dollars to pay for your electric.

My proposal for the distributed generation data center seeks to eliminate the need to convert totally.



As you said,  if an event destroys all of the Internet, then our problems are much greater than could be solved with solar-powered data centers. I am not making the argument that solar powered data centers are going to solve all our problems. Just a small number of problems that particularly pertain to the stability of bitcoin and advancing it to a currency that can stand on its own and replace national currencies.


Why is the gold market unaffected by this scenario? What's the difference between bitcoin and gold?

"What if somebody bought up all the gold in the world? Well, by attempting to buy it all, the buyer would just drive the prices up until he runs out of money.

Not all Bitcoins are for sale. Just as with gold, no one can buy a Bitcoin that isn't available for sale. "

So yes they can keep buying and holding them and driving up the price but this just make the holders with less have more value. Once they dump sell orders, well now you've just made a ton of bitcoins really cheap to a bunch of people who want them and want to buy them up on the cheap. What's so bad about that?

That's part of the reasoning behind the distributed generation data center. By removing all national currency dependence the bitcoin can stand on its own and survive price fluctuations and being to price goods and services in its own terms just like gold.

    
Couldn't agree more that the network needs to grow in size fast for the mentioned reasons.

They also no longer have a way to pay for their power.

Bitcoin must be removed from the grid, and the exchange expanded to commodities and decentralized