The libertarian in me likes a market based solution.  First, determine a rate per day that BFL would like to sell the products (this would be based on a lot of factors including manufacturing capacity, need to raise capital to fund the manufacturing, etc).  On day 1, list the items for a very high premium over the announced prices.  If nothing sells on day 1, or less than the targeted amount sells, then on day 2 they lower the price.  If more sold, then you raise the price (although the objective would be to steadily lower the price each day until you hit the announced prices).  Trade-ins would be treated no different than cash buyers.  Shipping then happens in order of purchase.  BFL would also ship in a steady flow rather than huge batches at once (and agree not to use hardware in there possession for mining while it awaits shipment).  The reason for this is that the early buyers are seeking to get the hardware earlier and start mining before everyone else gets the hardware…and they are paying a premium for it.  So, if BFL gets a shipment of 30 mini rigs and expect to get another shipment of 30 the next months, rather than ship all 30 at once, they would ship 1 per day (in purchase order).

A somewhat non market based twist on this is that they might want to restrict the number of units one person can order…this would prevent someone with deep pockets from buying a very substantial portion of the hardware, costs be damned.  Of course, there are ways such a rule could be circumvented and I wonder whether such a rule would actually work counter to the goal of distributing the hardware.  Someone successfully circumventing the process might gain an unfair advantage over someone else with a lot of capital, but abiding by the rules.  So, I tend to think it's actually better not to have such limits.

With a small USB plug and play device at $150, mining will become more accessible.  People with limited time and/or money will have an easy option for contributing to the security of the bitcoin network.  GPU and FPGA mining made bitcoin mining more cumbersome and costly as compared with CPU mining.  But I think this transition reverses that trend and will make mining more accessible.  That's good for Bitcoin, but I can see how it might threaten the profits of existing miners.

I don't think that and I didn't say that.  Companies are in it for the money.  Bitcoin and its security model are what make it attractive.  If Bitcoin could help low margin companies like Amazon.com double their earnings (and it can), and it can be trivially secured (by applying hardware to it), I can tell you that is worth billions of dollars to them.  This is why I say that people are looking at it the wrong way.  People worry about the 51% attack, but I think it's relatively straightforward to protect Bitcoin from such an attack and that's what companies are going to find very attractive.

It's difficult to predict a lot of the future dynamics around bitcoin mining.  Regardless, ASIC appears to be the future of mining.

I've come to the conclusion that people are approaching mining with the wrong perspective.  A lot of people worry about the 51% attack on Bitcoin and ask themselves how easy is it to attack Bitcoin?  I believe this is the wrong question to ask.  What people should be asking is how easy is it to secure Bitcoin?  And the answer to this is what makes me very excited about Bitcoin's future.  Any companies investing in Bitcoin will be asking this question.  And eventually, I think governments will as well.  Theses entities will have a lot at stake and will want assurance that the network can be secured against attack.  They will invest in mining operations with 90% of their hardware sitting idle and ready to come online at a moments notice to thwart any attack.  They will negotiate with each other (or enter into treaties) regarding the amount of hashing power they apply to securing Bitcoin.  As the block reward dwindles and as the difficultly rises, it will become increasingly difficult to profit directly from mining.  Instead, these mining agreements will be about providing adequate security to the Bitcoin network to support reasonably low cost transactions to facilitate commerce while simultaneously keeping the electricity costs minimal.  

I think a lot of people might buy the $149 ASIC purely to contribute to the security of Bitcoin, without much regard for its profitability.  Companies might do the same with the $30k box, but view it more as insurance against an attack on the network.  They'll mine while it's profitable and shut down when it's not, but will always be on the ready to flip it back on if there's ever any kind of threat to the network.  Still, I think even with the difficulty rising and with increasing adoption pushing the exchange rate higher, a 25 BTC reward per block for the next 4 years is going to ensure that it's pretty profitable for a lot of people for quite a while yet.

What happened to the video?  It says the submitter shut down his YouTube channel…or something like that.  Man, this video was awesome.  I wanted to post it to Facebook.  When the book of bitcoin history is written, RawDog needs to get his own chapter.  Man, this has to be the funniest video I've seen in a long, long time.

Matt, this is fantastic…I also just wanted to say how great the magazine turned out.  I can only imagine how much hard work went into it.  I hope you guys pick a sustainable pace to produce them…a lot of successful magazines started out as quarterlies…hitting deadlines every 4 weeks is a breakneck pace for a small team.  Anyway, keep up the great work…and I can tell you this is a great marketing tool for bitcoin businesses.

I'm going to assume they're change addresses (no time to mess with pywallet).  I didn't realize RPC doesn't list all of them…though curiously it lists more than in the UI).

I presume you're just doing a simple analysis that looks at all transactions where that address is an input and gathers all the other input address from those transactions.  That got me thinking…how would you make that more private?  Maybe you could devise a "sprinkling service" …you could craft a transaction that sent coins to wherever and then send it to the service…the service would add some additional inputs and output ...basically moving some additional coins between some wallets that the service owns.  The service could require that some coins be offered as a fee.  There's probably some way of making that work with p2sh such that the service never has access to the coins being sent.  With something like that, you could no longer assume that all the inputs of a transaction originate from the same wallet (you can't really assume that now, but I imagine nearly all transactions are like that today).

I'm sure.  I checked against all addresses, even the change…I certainly didn't go through all of these addresses by hand, I dumped them using RPC and checked the list against that.

Well, considering your inclination to post your findings in such a public place, no.  But, I am glad you're trying to determine just exactly what kind of analysis is possible.  Wouldn't the gap be explained simply by the fact that there are people I transact with that no one on these forums would even know exists?

Well, that's pretty good, but not quite there…of the 76 you listed, I control 22.  Still it's quite interesting.

I think 100% certainty is a bit strong (obviously).  For example, do you really know that I control the address in my signature?  What if some of the keys to some of the addresses were given away others?  I think you'd have to have some kind of proof that someone sent a transaction in order to prove that they owned the address(es) associated with the inputs.

If you can build up a database of people and addresses that you're pretty sure they control, you may be able to infer some things with high, but not absolute, confidence.  Maybe you want to have a confidence factor…for example, if someone was in your presence and sent you coins, you'd know with almost certainty that they control the input addresses and the change address…assuming of course they are using a standard client that uses known behavior and not sending from some shared wallet or routing through a mixing service.  However, if someone just listed an address in the signature, you'd still have high confidence they own it, but maybe 90% instead of 99%.  Other sleuthing methods might yield associations with even lower degrees of confidence.  

But if you had this database and came access some new address, you could infer where that address intersects with addresses in your database.  You wouldn't know that it was all one person that is responsible for those intersecting transactions, but you could at least say some coins flowed from that address to some addresses with which you have some degree of belief that you know who owns them.

You are missing the point.  What good is any of that when virtually no one accepts your anonymous transactions because they are compliant with a government that threatens their liberty or even life if they are non complaint.  It's not a technical issue.  Technically speaking, it's software and we can make it just about as anonymous as we want…or we can make it completely non anonymous.  As I said before, it's up to people to decide the level of privacy afforded to our financial transactions.  If we want financial transactions to be allowed to be private, then we must convince the majority of people to agree with that point of view and assert themselves when confronted by people or organizations that do not believe there should be any right to free and private financial transactions.

It's important to keep in mind that Bitcoin could be completely de-anonymized if governments desired that.  They could require that all bitcoin transactions be accompanied by a signature using a government issued identity linked to your DNA.  If someone steals your identity, you simply go to the nearest government facility and provide them with a strand of hair and they revoke your old identity and generate a new one for you.  They can also require that the software maintain full records of the identities associated with every transaction and that it get upload every 5 seconds to some government agency.  They can enforce compliance with the removal of one digit after every offense and death after three offenses.  Comcast go down?  You failed to deliver your latest transaction data inside of 5 minutes?  Sorry, you lose a pinky finger.

Bottom line: it's up to people to decide the level of privacy afforded to our financial transactions.

+1  …I think a lot of merchants even in the traditional Visa/MC systems have started to move in this direction.  Subscriptions are a big source of charge backs and can sometimes completely negate any benefits.  Still, there's nothing that says you can't make a wallet that would support a subscription billing model.

You can do a lot of stuff with software, including track every penny that everyone spends.  The question is, what will people try to track and what will people tolerate having tracked.

Thanks for the link!  It looks good.

I think I may play around with Multibit on a private testnet…that might do the trick.

They have internet access…but on a DMZ,  with parental controls, and in a common area.  Regarding the chicks, I think you have me confused with Tony.  But, of all the things on the internet they might see, girls in bikinis isn't one I worry about.

I've setup private testnets many times (we use them for pre-production testing of bitpay).  The problem with those is that it only takes a small configuration slip up by any one of the nodes and the whole block chain will get whacked by the real testnet.  On our testnet servers I've had to very carefully configure iptables to ensure only specific nodes are allowed an inbound connection.  I once messed that configuration up and despite being careful about the outbound connections, somehow another node on the real testnet managed for find the server and connect to it.

Still, this is a good idea.  Maybe something could be built on top of the testnet support to make this easier…it would be nice to simply specify the ip address of the central node and the client establish a block chain specific to that node (that wouldn't get whacked if you accidentally connected to another testnet node or another node running a private chain).  It would also be good if it could do block generation, but where it's configured to only use say 0.5% of the CPU for hashing and no other nodes are allowed to hash.  This would be kind of like a third mode of operation…privatenet.

I was thinking about allowances, awards, and such for my kids…in the past we've used a regular bank account, this has proven to be a hassle and incur silly fees.  The point was to teach them about banking, but given the hassles, we just started keeping track of a balance outside of a regular account.  I'd also like the kids to learn about virtual currencies.  In particular I'd like them to get accustomed to securing a wallet and sending and receiving bitcoins.  However I don't want them using real bitcoins until they're a bit older.

At first, my thought was that it would be great if there was some software that worked basically like Bitcoin, but uses a centrally issued coin (no blockchain, etc).  I could issue them and they could use them or redeem them if they wanted to buy something, etc.  I thought of open transactions (and maybe I'll still look into), but I really want something very simple that works very much like a typical Bitcoin client works (with similar a addressing scheme, etc).

My second thought was maybe I should use Bitcoin, but scale it down such that 100 satoshis can be redeemed with me for 1 bitcoin.  But then I have the issue of having yet more copies of the block chain.  Are there any clients that support running one node in the house, but allowing multiple other wallets on other computers to connect to it (so that I only need one copy of the block chain for them)?  A second issue is that such small value transactions may take a long time to confirm (and might be considers spammy…a fee wouldn't work because the fee would be worth more than the few satoshis themselves).  I think I would want to avoid using web wallets…all of the ones I know about seem to be unsuitable for one reason or another.

The ideal here would probably be a version of the bitcoin client that worked with a centrally issued coinage and block chain.  It would be nice if it even simulated block generation every 10 minutes like the real Bitcoin system, but of course didn't actually use processing power to secure it…I'm fine just having a computer in the house that is the central authority.

First and foremost, don't let the bullies in this thread silence you (and shame on them).  Your opinion is just as important as mtgox trying to work within the current system.

I think we have to view the situation for what it is…mtgox is trying to operate out in the open and within the confines of the existing law…whether that law is legitimate or not.  At BitPay, we do the same.  Above a certain threshold and we require identifying information before we'll process transactions.  We even turn away many merchants trying to sell things of questionable legality (they really shouldn't even be considering use of a third party processor like us in the first place).  Some of these merchants are already accepting payment from paypal or visa/mc.  As a libertarian, I don't agree with the prohibition and criminalization of drugs, yet we have to turn away those businesses.  As a Bitcoin business, you really have to make a decision, either you operate in the open and comply with the existing laws, or you completely mask yourself (as Silk Road has done).  There's really no middle ground.  Any business trying to operate in a middle ground is going to fail.

The reality is that money is information and, like any other form of information, it can be sent anywhere in the world in the blink of an eye and in complete privacy.  Many of the laws governing money simply ignore this basic reality and that's a dangerous situation that we must work to change.  People have to come to terms with the idea that financial transactions need to be allowed to be private if we value freedom at all.

Law enforcement has become accustomed to using the financial system to catch criminals, but this is only a relatively recent phenomenon.  It wasn't that long ago that the world didn't have computers or the Internet and the world still turned and law enforcement still managed to do their job.  We need to acknowledge that innovations around money are likely to take this tool away (Bitcoin or no Bitcoin) from law enforcement.  While I don't agree with all laws, I do agree with the concept of laws.  While I may not believe we need a government that consumes (and largely wastes) 25% or more of our economy, I do believe that even in a completely anarchistic society, we need a legal structure and we need law enforcement.

So, back to mtgox and Bitcoin businesses operating in the open in general…voices like yours are very important and highly valued.  You express an opinion that even people running businesses that try to remain in compliance with laws largely agree with.  These businesses need your voice and voices like yours in order to have a dialog with regulators that moves things in the right direction.  The thing I fear most is that Bitcoin and software like bitcoin will be banned.  I don't fear the collapse of Bitcoin, Bitcoin was designed to be unstoppable.  I fear it because I fear what such a course of action means for the fabric of society.  I fear what would happen when governments collapse.  I know some people believe that's inevitable and that we simply have to brace ourselves and manage the best we can.  I don't think it necessarily has to go that way, but we do need people that can listen and can understand.  

It's not even so much about ideology as it is about acknowledging reality.  Unfortunately for mtgox, BitPay and others, we may find that the market ultimately just routes around us.  The regulators might like the fact that mtgox is collecting all this information, but that's not going to do regulators any good when their volume is 0.

It's a common misconception that block frequency has anything to do with the risk of accepting a transaction.  It's the amount of computing power behind the confirmation that matters.  Increasing the frequency of blocks also increases the chance of momentary splits in the block chain, which actually increases the risk that you accept a transaction that gets reversed in a later block.  To shorten "confirmation times", or more accurately, to reduce the risk associated with accepting a transaction after a given amount of time, it is necessary to increase the amount of computation being performed by the mining network in that time.  It would be far more risky to accept a transaction after 10 confirmations in a currency that issues a block every 3 minutes, but which has 1/100th the level of difficulty as it would be accepting a Bitcoin transaction after just 3 confirmations.

Also, I think home mining is already very easy and getting even easier.  I think we'll soon see boxes that you just plug into a wall and that connect to wifi and start mining right way (you just plug in your bitcoin address or direct deposit info and you're done).  And, Bitcoin does not have any scaling issues that can't be overcome with relatively minor effort.

Complementary crypto-currencies will certainly co-exist.  A centrally issued currency that clears instantly and is backed by bitcoin certainly has a place.  Namecoin or similar that serve a unique purpose will probably survive.  Perhaps other currencies designed to enhance privacy or hedge against a failure or attack on Bitcoin will have a place.  Other currencies that don't offer any compelling advantage over bitcoin might survive, but will basically be irrelevant.  It has already been shown that the upside potential for those currencies is capped by bitcoin, but the downside is basically zero.  Hence, anything beyond short term trading in such a currency would be unwise (and I'd argue pumping such a coin is unethical since any gains would basically come at the expense of other people that may not be aware of the dynamics involved).

The real test will come when some alternative to bitcoin comes along an offers a real advantage over Bitcoin.  If Bitcoin is able to adapt and match that coin's features, then Bitcoin will survive and the new coin will have just been a good testing ground for those new features, but probably won't be consequential in the long run.  Also, it's not just the Bitcoin software itself that a competitor has to match and exceed, it's also the ecosystem of people, companies, software and services around it.

I prefer to use something that generates a password from a master instead of storing any passwords anywhere.  Here's one such solution:
http://passwordmaker.org/passwordmaker.html

You enter a master password and other details (like the domain name and user id) then it uses a hash function to generate a password that doesn't need to be stored anywhere.  It does all of that on the client, in the browser and you can access it from any computer with an internet connection and a browser (only on a computer you trust of course).