I can't help but think Amazon.com may be Satoshi Nakamoto:
- they have a history of butting heads with regulators
- they operate a very high volume business on very slim margins
- they certainly see half their profit margin going to the banks
- they have a history of technical innovation

It would make sense to me that they would put a team of bright people on the task of inventing a better payment system that would allow them to bypass the banks and dramatically improve their bottom line.  When they worked out how to it, they would have realized they could never just launch such a thing themselves (bringing the ire of the bankers and the politicians they own down upon them).  So, instead they come up with plan b…put it out there and nuture it until such time as it's clear that it can survive on its own, then back away…wait a few years until the world gets over all it's qualms about the technology…then start using it.

I'm not sure where you get that impression.  I think this is a view that's more prevalent outside the bitcoin community.  Or are you saying that when you discuss bitcoin with people that they tend to dismiss the idea because they believe their can only be one currency?

One thing I would add to your chart is counter party risk.  Debt instruments have counter party risk (of default).  Gold and Bitcoin do not.  Cash is an interesting one…even though the paper itself does not have counter party risk, it is backed by debt.  It's valuation can fluctuate dramatically in both directions when there are systemic debt related problems (such as widespread over-indebtedness).  Also, with gold and bitcoin, while they don't have direct counter party risk, you do have valuation risk that can be intimately related to conditions in credit markets.

This debate is silly.  If you're really a purist, forget scaled decimal and use integers and fractions.  Smalltalk was invented in the 70's and by default, it preserves the original representation of numbers...  "1 / 2" yields a fraction with the integer 1 as the numerator and 2 as the denominator.  Multitply it by 3 and you get another fraction, "3 / 2".  Multiply that by 2 and you get the integer "3" (yes, it reduces fractions).  You don't get better precision than that.  A 64bit floating point number has plenty of precision to deal with anything bitcoin needs…try "21000000.00000002 / 2" …it works.  When working with floating point within its bounds of precision, you only need to know enough about math to know when it's appropriate to round.

The segment was a rerun of the one that aired back in November:
http://www.youtube.com/watch?v=YMcKE8dJEsc

Bitcoin was featured again tonight on Freedom Watch with Judge Napalitano on the Fox Business Channel.

Great stuff Erik.  Can you talk a little bit more about the bill itself?  how it came to be?  what it took to get it on the agenda for NH?

I don't think this is anything new.  There are miners out there that allow any valid transaction and don't perform an isStandard check at all.  This is why the process for upgrading is to first get a pledge of support from a supermajority of the mining power and once that's achieved, set a date in the future to start the full validation of BIP16 transactions.  Miners will have a couple weeks to upgrade and avoid mining potentially invalid blocks.

Mtgox charges 0.6% commission on trades (on each side).  Thus, the mtgox bid is 0.6% higher that what you could actually get for those bitcoin (and the ask is 0.6% lower than what you'd actually end up paying to buy bitcoins).  I imagine he's speculating that bitcoinica is showing the bid prices with the fee factored in.

As much as it's entertaining to think MasterCard is scared of the competition from Bitcoin, the explanations that it is about the risks involved in allowing the purchase of cash-like things on credit makes sense.  It's basically a way to get a cash advance without immediately incurring interest…people can take advantage of the 1 month billing cycle if it were allowed.  Still, I think as bitcoin grows, it's likely that at least some banks will take a hostile stance toward bitcoin.  They may try to neutralize bitcoin as a competitive threat by cutting it off from the traditional banking system.

Actually, I think the CommitCoin protocol may even be over designed.  All you need to do is hash the DNS transaction to something that looks like a bitcoin address and use that hash value as an output in the transaction (with zero coins if bitcoin allows it).  Alternatively, there are other places that you could put such a hash (in a scriptSig for example).  In the DNS p2p software, you just keep track of the bitcoin transaction where the DNS transaction was committed.  The Bitcoin transaction itself can also include any payment desired (such a payment for a transfer of ownership of a name).  This works beautifully because that transaction must make it into the block chain for both the bitcoin payment and DNS transfer to take effect. 

There is a "double transfer" hole that would need to be solved in some way.  Someone could create a DNS transfer transaction that they distribute, and a second one they keep to themselves…they create the bitcoin transaction for the secret DNS transaction and get it into the block chain before they distribute the fake DNS transfer transaction…after someone has paid them money for the fake DNS transfer, they announce the secret one that undoes it.  I've not given it any thought how to solve it.

I skimmed the proposal…it seems to be actually putting the name mapping data into the block chain.  You don't need to do this.  All you need to do is put a hash of a DNS transaction into the block chain.  There would be a completely separate p2p DNS software that communicates and remembers DNS transactions.  It would only interact with bitcoin by hashing those transactions down to something that looks like a bitcoin address (but actually isn't) and creates the bitcoin transaction necessary to timestamp the DNS transaction.  I believe outputs in bitcoin transactions can have a zero value (which means you don't even have to burn any bitcoins to implement it).  All of this will work without any modification to the current bitcoin protocol or software.  See CommitCoin for how it works:
http://eprint.iacr.org/2011/677.pdf

You're not storing the actual DNS (or other) transaction data in the block chain, you're only storing the hash of those transactions.  As for whether anyone is for or against such use, it's not really for anyone to decide…it can easily be done and there's nothing anyone can do to stop it from being done.  The block chain is a distributed time stamping service.  It timestamps bitcoin transactions, but it can also timestamp anything else.  To use this time stamping service requires that you pay with bitcoins (either in the form of the 50BTC block reward, or a transaction fee, or fees paid directly to miners).  If this use grows in popularity, it will drive the cost of transactions up as such transactions start to compete for space in blocks.  It will also push the price of bitcoin higher since there will be demand for the bitcoins necessary to timestamp things.  These developments are probably inevitable and in my view, very good for bitcoin.

"We had been in discussions with our banking partners, Mastercard and our auditors for the last couple of weeks, and on Friday our banking partners ended the discussions with us and stated that it was too much of a potential risk to continue doing business with Bitcoin and Bitcoin Exchangers and instructed us to close all Bitcoin-related accounts." --RuthB of Paxum

Yes, the potential risk is to MasterCard's business model.   

I wish this hadn't been moved to Alternate crypto currencies.  It's not about namecoin, but about a better way to more directly use bitcoin to implement a decentralized DNS system.  So, basically, the way it works is:

1. you define several types of DNS transactions…a) initial claim of a name, b) update to the name->address mapping for a name, c) transfer of a name to a new owner (i.e. another address)
2. you come up with a standardized way of hashing those transactions such that they can be included in a bitcoin transaction and embedded in the block chain (like the CommitCoin approach)
3. you implement software that creates, distributes and validates those transactions…transactions are ordered accorded to the bitcoin block in which they appear and within a block according to their position in the merkle tree of bitcoin transactions (depth first, left right traversal)…if there are two conflicting DNS transactions in the block chain, the earliest one wins
4. you implement other software that provides the DNS resolution (based on the validated set of transactions)
5. you convince people that this is a better approach for DNS and to start using it

The cost of an initial claim would just be the cost of getting the bitcoin transaction into the block chain.  The cost of an update to the mapping for a name would also just be the cost of getting the bitcoin transaction into the block chain.  The cost of transferring a domain name to someone else would be the cost of getting the transaction into the block chain, plus whatever the seller is asking.  Note, because the DNS transaction only becomes effective once the corresponding bitcoin transaction is in the block chain, such a transaction would be the means of paying for a DNS transfer using bitcoin.

This concept can be generalized to any form of property.  I really think the block chain, and its ultimate use for this purpose, and the fact that you need bitcoins for all of these transactions, is the biggest asset that the bitcoin system has and will ultimately prove to be the thing that ensures bitcoin has intrinsic value.

If no one implements this, I will.  I post it here in the hopes someone else will beat me to it (I've sat on it for a while because I had hopes that I could implement it myself, but alas, there is too much work and too little time).

I think the whole namecoin idea is flawed.  They've implemented a separate currency to trade for domain names.  However, as CommitCoin has demonstrated, it's possible timestamp any document using the bitcoin block chain.  If you further establish a depth first, left right rule regarding the merkle tree of transactions, then it's possible to establish a community agreed upon ordering of arbitrary documents.  These documents could be anything, including contracts for the initial claim of a domain name and the subsequent transfer of those domain names.

I think that should be all the clue anyone needs to implement a better namecoin system.

That's correct.  Only the cabbie would need to setup a merchant account.  The rider can use any bitcoin wallet service (though, be aware, some of the mobile wallets can have delays in sending out transactions that make them unsuitable for such in person transactions).  We are committed to providing solutions that are based on the open bitcoin protocol.  We believe that the open standard nature of bitcoin is what will make it succeed.  If we were to require the buyer (rider in this case) to have a bit-pay account, then we would have no advantage over the walled garden solutions that the various mega-corporations currently offer.

Jared, can you inquire with Paxum regarding the regulations that they say are affecting their ability/willingness to work with bitcoin exchanges?  I think many people in the bitcoin community would like more insight into the regulatory environment that seems to be affecting the exchanges.

I don't think you know Gavin.  That said, diversity in client implementations is not a bad thing.

Is that still true?  I've heard of people using the bank account and routing number to print fraudulent checks in the past, but I thought check printers and the check printing technology has eliminating that security hole.  I don't think someone can pull money out of a bank account electronically having only an account and routing number.

Bitcoind has a JSPN RPC interface that you can interact with from virtually any language…there are a lot of different approaches you payments that you could use (a unique address for each payment, one address for repeated deposits, etc).  Bitcoin even has it's own account management capability, but it has some scalability issues.