I will be adding you to my ignore list now.

This thread is about a DDOS. My CPU miner (1800khash/s) is not much use as a worker unless you don't pay for electricity (like a botnet operator). The CPU is, however, powerfull enough to relay valid transactions to other nodes on the network.

A worker using a pool does not make the network more resistant to DDOS attacks: the pools are easy targets because there are so few of them. I'm sure my node is an easy target was well (3Mbps would saturate the connection). But, if the attacker needs to hit 10,000 nodes at once, the "Distributed" part of a DDOS becomes less effective (3Mbps*10,000=30Gbps to take down the (hypothetical) network).

Yes, Bitcoin uses IRC for finding other nodes, much like botnets do.

Yes somebody has mentioned that before on the forum.

You are using a business connection, so it appears you actually are allowed to host servers. Most home users are not allowed to host servers.

From their TOS:

I am assuming that they mean you can't use Stripe to accept payments for those purposes, but you know what they say about assumptions... "they make an 'ass' out of 'u' and 'me'".

Ironically, botnet operators can not easily switch their nodes to solo mining. Even if UPnP is employed for firewall piercing, many users will likely notice 12 hours of disk activity as their node catches up to the block-chain.

I have 2 developer contact e-mails, but sent the following to  questions _at_ joindiaspora_com:

Edit: should have proof-read e-mail here before sending it.

Errata:

• "poster" -> "posters"
• "proof-of-word" -> "proof-of-work"

You should read one of the inspirations for the orignal Bitcoin paper:
W. Dai, "b-money," http://www.weidai.com/bmoney.txt, 1998.

If the work has value, by itself, that is a problem for establishing "Proof of work". It would essentially allow participants to sell the same work twice. If not carefully implemented, it also opens up the possibility of "banking" up work in isolation from the network in order to mount an attack on the network.

Last night, I finally got around to setting up a CPU miner with port 8333 forwarded in the wake of last week's attack. It should be caught up to the block-chain within half an hour. The connection is intermittant though: if nobody uses the computer for an hour, it goes to sleep (was originally 20 minutes).

Edit: I decided to go with to go with the most power efficient "family" computer (running win7, bitcoin is running under a limited user) after finding out another computer I was considering using draws 170W at full load and probably runs at a slower speed.

If you mean regulation, no. Regulation is the end-result (not the cause).

I am advocating a cartel of bitcoin holders willing to risk token ammounts of fiat and bitcoin in order to absorb wild swings in the price of bitcoin. For the most part, the day-to-day swings should be left alone for day traders to play with.

The problem is that the day-traders don't plan for the long-term. I outlined a strategy that allows the people that really want to buy and hold to encourage more predictable growth. For the start-up phase, the target may be to keep anual growth between 0 and 10,000%. After the block-reward drops, it may be prudent to half the growth target as well, say between 0 and 5000% anually.

Anual growth of 1000% or more is stupidly high. I just don't think it would be sustainable. Since I don't expect the weighted average price to rise more than that much per year, I would set my buy and sell walls accordingly. As Death and Taxes pointed out, I have no way of enforcing that expectation. However, I think bitcoin adoption would be encouraged if wild price swings were avoided.

I think part of my point is that the manipulators are there anyway. We (as in bitcoin holders, which I am not yet one) might as well set a soft floor and ceiling.

If the price really wants to keep climbing even after new old coins are put back in circulation, there is not much anybody can do to stop it. However, if the price spike is simply caused by a surge of interest after a news article or something similar, there is no need for the price to spike dramatically. Similarly, if Bitcoins really are worthless, any buy walls proping up the price will be pointless. However, filtering out flash crashes may be useful.

I removed the first line from my post because it was in error.

I was essentially advocating trading bots that allow wide, but tweakable price swings (with a year-long time-frame in mind) . If most bitcoin holders do the same thing, volatility should be reduced.

The point of trying to enforce a deflation target is that rapid climbs in price lead to bubbles, and make bitcoin look more like a ponzi scheme (even though it is not). If large bitcoin holders simply strategicly release coins when the price says there is demand, wild swings can be avoided. Conversely, crashes represent an opportunity to buy back in cheap, while at the same time supporting the price.

Didn't the bold "Decentralized Central Banking Proposal" hint my choice of words was deliberately provocative? My proposal combines the role of a central bank with the role of a free market.

Mulitplying the price by the number of bitcoins in existance is too simplistic. Stored bitcoins have no inherent value. Only Bitcoins being spent have value.

Edit: Bitcoin is still an experiment. The client is not really designed for general use. I personally think bitcoin should not be forked until we see what happens with the first drop in the block-reward.

It is not "worse" per se, it means the price can be regulated.

Decentralized Central Banking Proposal.

The price goes up temporarily. When you spend the coins again, they are again is circulation, so the price goes back down. The part of my IRC conversation I did not quote, I mentioned that any hoarder trying to cash in will lower the price. If the coins had been hoarded for months or years, the marklet likely already deemed those coins "lost."

With bitcoin, it is possible for a central bank or cartel of central banks to control the bitcoin money supply. The important thing to understand is that stored bitcoins are indistinguishable from lost bitcoins. Bitcoins only really have value when they are spent. This means that the Central Banks can buy bitcoin when they want to raise the price, and sell bitcoin when they want to lower the price. Through this process, they are able to control the rate of deflation up until they run out of coins to sell (run-away deflation).

Decentralized Central Banking Proposal

The OP was interested in a floor price. It is possible for a group of people to cooperate and share the risk of setting a "soft" floor price. Buy strategy shamelessly stolen from a post I saw months ago. Let's say each participant agrees to invest $10 USD for each "soft" floor. Using your favorite exchange, the buy orders would look something like this:

• Buy 100 BTC at $0.1 USD/BTC
• Buy 200 BTC at $0.05 USD/BTC
• Buy 400 BTC at $0.025 USD/BTC
• Buy 800 BTC at $0.0125 USD/BTC
• Buy 1600 BTC at $0.0625 USD/BTC
• Buy 3200 BTC at $0.03125 USD/BTC

The above buy walls each cost $10 USD for a total of $60 USD. Two people cooperating in this manner don't even need to agree on a specific floor price to share the risk. For example, somebody can invest $10 in a Buy for 142.86 BTC at $0.07 USD/BTC. The above buy walls would absorb a sell of up to 242.86 BTC while keeping the price above $0.05.

Where it gets interesting is when you start trying to use these unwanted bitcoins to try to control the rate of deflation. Anybody with a significant amount of bitcoins can use the same strategy to set a sell wall going in the opposite direction. For the purposes of discussion, let's say we want to limit the rate of deflation to 1000%/year (during the initial growth period). Without checking, I am going to pretend I found the weighted average price from a year ago was $0.30 USD/BTC. 11 times that corresponds to $3.3 USD/BTC (which until recently was below the average price). If you wanted to sell up to 127BTC, you could set up the following sell walls:

• Sell 1 BTC at $3.3 USD/BTC
• Sell 2 BTC at $6.6 USD/BTC
• Sell 4 BTC at $13.2 USD/BTC
• Sell 8 BTC at $26.4 USD/BTC
• Sell 16 BTC at $56.8 USD/BTC
• Sell 32 BTC at $105.6 USD/BTC
• Sell 64 BTC at $211.2 USD/BTC

The sell walls should probably be re-evaluated/replenished daily. As before, several individuals can share the risk of setting a ceiling, even if they disagree what exactly the ceiling should be. For example, somebody who thinks deflation should be 10,000%/year may set their ceiling to $30.3 USD/BTC.

Edit: Central banks actually use Interest rates control economic growth.

Yesterday I was talking on IRC with somebody who took a few more economics courses than I did. He was very concerned by hoarding, which would possibly make the early adopters stupidly rich. We agreed Shatoshi cashing out would probably signal the end of bitcoin.

Anyway, at the end of our discussion, I came up with a theory that explains the price of bitcoin over that past year or so:

Essentially, your bitcoins are only really valuable if they are being spent. Coins stored in a savings wallets are indistinguishable from lost coins from the network's perspective. This implies that people hoarding coins can "issue" coins back into circulation any time they wish. That is to say, the early adopters can act as a central bank, regulating the rate of deflation.

I plan on exploring this further is the Why doesn't somebody set a floor price? thread.

I decided full-drive encryption, at least for my portable computer, is important in case of loss. I don't want to worry about transient remenants of the plain-text wallet being stored on the drive. The SSD I have been looking at getting also clears data that looks like deleted files in an NTFS/FAT32. Encryption will make the data look more random and hopefully protect it from drive tampering.

The backups need to be verified because restore time is not the time to find out your back-up strategy failed. In fact, when I tested Dump/Restore using DVD+R disks on my fileserver, data near the end of the disk was lost. I have yet to figure out why. DVR+R disks/drives are supposed to support lossless linking in the even of a buffer underrun.

PS: I wasn't competely truthful earlier: I also don't use online banking because I don't trust my computer to keep proper records (not being backed up and all). Bitcoin raises the stakes and forces competence.

I am an RBC customer. I expect my wire transfer to Tradehill to cost $45 CAD.

I don't use their online banking because they require you to use an antivirus on your computer if one is available for your OS. Domestic Money orders at RBC cost $7.50, forget how much international money orders cost, but it is probably comparable to the price quoted.

I am looking forward to using bitcoin for online banking. I still have not set up my computer with full-drive encryption, and off-site, verified backups yet.

I also have to look into how much legal backing the the FINTRAC guidelines for a Money Service business have. They claim that "Money services businesses include alternative money remittance systems (such as Hawala, Hundi or Chitti), (Bitcoin)," but they may be relying on voluntary disclosure rules for that. If just relaying transactions makes you a MSB, the guidelines are impossible to follow. The guidelines are merely unreasonable to follow if only actual exchanges need to be recorded.

Kill it with fire.

I returned a $200 printer, possibly a $400 dollar printer sold "at cost", because the box claimed that by using the printer I was subject to a patent license (which required using the print catridge exactly once, then mailing it back to Lexmark). I now avoid the store I bought the printer at becuase they are willing to sell products that impose unreasonable conditions on their customers.

Bitcoin is still experimental. If bitcoin really is good, a pyscological price barrier won't last long. If you think there is such a barrier and that bitcoins are undervalued, you should be buying them up cheap.

I think people generally don't like being told they need to prove the provenance of cash transactions over $10,000.

Most people will keep two sets of books. If they need to launder small ammounts of cash, they can simply send it to one of their "whitelisted" addresses. Large transactions would obvioulsy get the attention of authorities.