Ya think so ? Without denying the direct cause effect between news, searches, and the bitcoin price, it seems this "weekend dip" of interest is quite different from the previous ones. The people searching for 'bitcoin' instead of being greeted with the familiar "the bitcoin bubble rising with no end in sight" storry, are now learning about a massive selloff that sent the price to 20% of it's peak. The first story incites greed and mania, the second story is a cautionary tale about people getting burned. It's much harder to sell the "1BTC=100.000$" story to dumb money because now they can see with their own eyes the market does not believe it. Plus, the news space is saturated, without major events like a 5x price increase there's no place for the news volume to go but down.

Call me a weak hand but I liquidated everything and I'm not touching coins for the next 3 to 6 months. There will be resistance on the way down and the occasional bull trap (like right now), but this rocket is landing. Sure, there are still money to be made in daytrading, but that's for professional traders.

Anti- money laundering legislation is not restricted to "actual money". Anything that constitutes a transfer of wealth can fall under AML if the transfer is designed to obscure the origin and destination of trade that could be illicit. Transferring deeds to a house, a bunch of diamonds, stock or gold all can be used for money laundering. So Ripple as a whole falls under AML, as does Bitcoin, as does SecondLife linden dollar. With the major difference that currently Bitcoin is the only one that can't be regulated short of a complete ban.

Since Opencoin is a US company it will accept any government interference if it wants to keep it's investment, and that's a single point of failure for a distributed currency scheme. As I've detailed in other posts, even if you publish the source there's no way for the network to fork if people don't like your newest changes; you will maintain complete control of both your ledger and any alternate ledgers for the foreseeable future.

How about this outcome: we hoard billions upon billions of XRP. If you fork our implementation and remove the government mandated deanonymization, we will spend all our XRP and crash the price of that alternate chain. It cost us nothing. If instead you remove our initial endowment from the alternate chain, you will make everybody's wallets worthless because everybody has received coins that were initially ours. So there's no possibility for mutiny and you are our bitches.


One the long term XRP is the least common denominator and people will hold it, injecting value, especially if it's stable or slowly appreciating. That's the whole business model, sell people XRP and make them seem like a good investment. They can buy USD IOUs only when they need to cash out.
That wasn't me asking.

When I say I have a dollar, most people understand that I either have a dollar in my pocket, that I have a dollar in a FDIC insured bank account, held by a bank regulated by the government and expected to adhere to minimal reserves and liabilities matching their assets, which requires a collateral and does risk assessment before lending money, and for which the Fed is ready to print unlimited amounts of green bills to stop a bank run. If I tell people that "an unregulated ecurrency market called BitInstant, ran by a 22 year old, with no financial oversight owes me 5000 dollars" they will ask me "so... when will they give you the money" ?

Without disagreeing with you, that's what I saying: the steady state for a ripple credit network is something similar to our current banking system, only without the state's (OpenCoin's) emergency assistance. A very brittle shadow banking system issuing heterogeneous money substitutes (that's an economic term). The size of Bitinstant does not matter, the amount of trust people have in Bitinstant does not matter, the fact that Bitinstant doesn't make out loans does not matter. If it walks like a bank, it smells like a bank. For all we know, all coins that Bitinstant owes have been stolen or poorly invested in Bitinstant2. And we won't know that until a bank run is under way, there is no way for the market to discover what's really in Bitinstant's coffers.

I've seen the secure exchange, from what I gather it's mainly a way to bring money into the system and pump the XRP, that's what Opencoin really cares about.


That's just half of the story. If Opencoin spends all it's XRP and fails, then yes, the network will probably continue without it. But how could Opencoin fail with such a large endowment ? I'm much more worried that the majority of coins in existence will continue to be held by Opencoin for the foreseeable future and will act as a sword of Damocles over the currency. They will have practically unlimited power and thus could act as a proxy for other entities, such as world governments.

The XRP currency is somewhat similar to bitcoin, a fixed supply of coins that are owned by the company. The same deflationary characteristics only with a central issuer that hopes to earn money from seigniorage. So instead of individual speculators riding the deflation bubble, there is a single company dedicated to this, conjuring money out of thin air and playing the role of the central bank. I have to say the scheme is pretty sleazy and smart at the same time, but hardly revolutionary. If Ripple is successful there will be tremendous pressure from regulators to break or cripple it's anonymity and the company will have no choice but to comply. It's utterly irrelevant if the source is open, since the company owns the "central bank" keys, and there will be no reason to move to a different network with other keys where none of your money are valid anymore.

The one part I find exceptionally interesting is how the network achieves consensus without burning resources, using a darknet approach: nodes trust each other on an individual basis and keep their trust network secret. It's great that research and practical experimentations goes into this area, and I absolutely love the continuous ledger closing. I am a bit skeptical that the particular approach can achieve long term consensus in the face of network splits and deliberate attack, and I have my bets on prof of stake as the correct approach to this problem. But still, a practical way to run a distributed cryptocurrency without mining is a great experiment, proving there's no need for waste. If the scheme withstands scrutiny, it could form the basis of a truly open currency, where the minted money can go to the keys of a set of predefined charities, instead of private investors. (anyone interested can send my a message to brainstorm about this)

As for the credit network functionality, my primary gripe with "ripple type" systems is that they break the fungibility of money. I no longer have X amount of coins, I have a portfolio of credit lines of varying solvency. So instead of just trusting the bitcoin network (developers, miners etc.), I have to trust the ripple implementation (Opencoin, etc.) and on top of that I need to trust individual credit issuers when accepting credit from them and that their credit lines will remain solvent for some time until I will spend them. When you say "X dollars in ripple", the "dollar" there just fulfils the "unit of account" function of money. It's not a store of value and it's not a (fungible) means of exchange, in other words I can't reliably express my time and purchase preferences as I can with a dollar or a bitcoin.

Once people understand how ripple works (probably never for most people) the natural response is to settle al credits immediately to the entity trusted by most people, so the credit market will tend to form a cartel or a complete monopoly. This is not unlike the current banking landscape, only without state regulation. When a trusted entity will fail - and it has allot of incentives to do just that - it will wreck havoc. Maybe there's value in the ripple credit network, but ripple credit is not "money" in the common sense of the word: debt issued by an indisputable single entity with the sole purpose of serving as an exchange medium and with zero incentive for manipulation.

PayPal exchanges really are a scam since the sender can invert money at will. Reputation is essential for PayPal trades, you should not send  more than say 10% than someone received in total during his reputation history and exchanges should enforce this. You should wait at least a week before releasing the escrow, to minimize the chance of chargeback from a stolen account. And even so, there is a non-negligible chance of fraud from an initially honest guy who simply decides he doesn't want your bitcoins any more sometime in the next 6 months, for example after a price correction.

Cash in person or bank transfer are golden on p2p bitcoin sites.

rKEy7SjWj72YS3K63DLvMJzrsmWePg9gQY

DDGox should put the million or so dollars it made yesterday into DDoS protection. Crap, they can rent 1000 different 10Gbit servers at different data centers around the world with a mere fraction of the money they make. Try to sink a 1000 IP, 10 Tbit site.

I can understand the need for compromise but where in your paper is this tradeoff made explicit and it's security/efficiency improvement analyzed ? You simply assert that proof of stake is Good, and build from there. The same for the PPC paper, it's all hand-waving spiced with low level implementation details. Don't view it as an attack on you or your objectives, I am a fan of getting rid of wasteful hashing; however this is a very hard computer science problem (Byzantine consensus vs. the Sybil attack) and I expect a hairy analytical paper with all sort of funny symbols and equations, not implementation details.

It seems to me the cryptocurrency community needs more thinkers than doers. Not enough analysis goes into these bitcoin forks, and the results up to now are half baked and flaky.



So what ? A modern FPGA can include over ten million gates (virtex 7). A large 22nm ASIC can contain hundreds of millions of simple gates. Indeed it's a bit more work to get the first device done (a fixed cost), but once you have the mask the marginal cost to multiply it is the same as a simple Bitcoin mask which uses a single type of hash. What you should be targeting for is that each chip cannot be much more efficient than a CPU, and scrypt, a password derivation technique, is NOT a proper primitive for this task, the same for you multi-hash scheme.

I think it's easy to spot the following cut-off points in your sample dataset:
- a fee over ~5300 s/byte will guarantee inclusion in the next block
- a fee over ~3000 s/byte will guarantee inclusion in the next two blocks
- a fee over ~500 s/byte will guarantee inclusion in the next three blocks (*)
- etc.
- even txns with 0 fee are picked up in less than ~35 blocks

(*) The only exception for this a single transaction with a ~2000 s/byte fee that took about 7 blocks; I suspect it didn't have all it's inputs confirmed and that's why it's an outlier. So the  correct block delay should be computed from the moment when all inputs are confirmed.

"Guaranteed" should of course be understood "in light of historical data". You can make no guarantee that a transaction will be picked up, but absent a major shift in the behavior of miners or transaction rate, historical data is our best chance to compute a "fair" fee that won't waste money for a given confirmation speed. If the client sets a fee that is too low for current conditions, the resulting delay will signal to other clients the new market conditions and they will increase the fee accordingly. A fee that is too high can also be detected by the clients, if they target say a 90-95% inclusion at a given block instead of 100% guarantee of inclusion.



Given the full set of transactions as you have provided us, the algorithm to compute the correct fee seems a simple binary search :
   start with a guesstimate fee F = maxfee/2
   set search step S = F
   set delay target T (ex. 3 blocks)
   set inclusion confidence L (ex. 90%)
   set precision of fee determination epsilon (ex. 1%)
   loop
      n = count(transactions with fee <= F AND confirmation delay <= T)
      N = count (transactions with fee > F AND confirmation delay > T)
      compare n/(n+N) with L
      F=F+/-S (sign depending on the compare)
      S=S/2
      break if S < epsilon*F
   continue loop
   return F

So I basically split the data into four quadrants depending on fee and delay, as compared to our delay target and current fee. Since they bring us no information, I discard transaction with low fee and high delay, as well as those with high fee and low delay. Then compare the data in the remaining quadrants with our target and continue to search for the optimal fee for achieving our goal. I don't have any functional code but this should work. At least that's how the theory goes

The trouble with this algorithm is that it doesn't scale too well because it needs to walk all transactions multiple times. At high rates it could be a killer. So instead of walking actual transactions, you could sample them in discrete bins just once, then run the algorithm on the bins. The bins would form a 2D table, and each bin will consist of a single integer that records how many transactions match the given fee interval and delay. For the fee axis I would go with an exponential pace, for example each bin represents a 10% increase in fee. Of course the precision of fee determinations drops but you only need to build the table once and after that it's just a few kB to download from a central location for example.

An even better algorithm could take into consideration current unconfirmed transaction rate and adjust the fee (linearly ? needs experimentation); this is especially important when the block limit is reached and fee ceilings transition from a fixed ceiling set by the miner ("don't include transactions with less than x BTC fee") to a dynamic rate set by the market ("include the transactions with the largest fees possible in a given block size").

Yes, but do they have the stake to influence the vote ? Debitors, by definition, lack money and have little voting power. Banks, unintuitively, only have limited power because it does not make business sense to hold large reserves idle - reserves are obtained from depositors and interest must be paid. Bank depositors don't have the power either since they lost control of the base money by depositing them in a bank, and now hold a piece of paper, a  certificate of deposit that claims the bank will reimburse them with basemoney on demand. The people who have most the power to vote in such a scheme are the ones holding basemoney, coins in cold storage, current accounts, business working with allot of coins cash etc. These people have very little incentive to demand inflation, if anything the voting is pro-cyclical and will choke the money supply exactly when expansion is most necessary, during a recessionary bout.

An acceptable compromise would be a minimal expansion of 3-4% a year (the Friedman k% rule), and if a higher expansion is necessary it can be voted upon. This will insure in the worstcase a moderate stagflation.

I really don't understand the rationale behind these hybrid PoS/PoW systems. You can either solve the Byzantine consensus problem with proof of stake, or you can't. In the first case there's no need for wasteful proof of work. In the second case it makes no sense to complicate the design with something that does not add security. It's as if the designers want PoS, haven't quite figure it out how to achieve it, and add PoW for good measure just in case their PoS scheme turns out to be vacuous.

The same can be said about the baroque "polymorphic" hash. If your goal is memory hardness and a small performance opportunity for custom hardware, you should design a scheme specifically tuned for CPU implementation - if such a thing is indeed possible. A hodgepodge of all hashes under the sun while hoping the ASIC designers won't bother to implement them all is security through "copypasting lots of code".

Challenge accepted, what about this: You watch the last few days of transactions and build a histogram, delay vs transaction fee. Delay is expressed as blocks mined from txn broadcast to inclusion (starts from 1, the txn in included in the next block) and the fee is expressed in satoshi/byte. Using such a histogram and the correct algorithm you can spot the minimal fee that has say a 95% chance of getting you into the next block, or the next n blocks. You can expose this to the user via a slider and he can chose to pay a high fee for 99% chance of catching the next block or a lower fee for 80% chance in the next 10 blocks.

The miners could send high fee transactions among themselves all they want, they will not affect the probability of other genuine transactions of getting in. If the fee market is competitive the histogram will reflect the true minimal fee that gets you in. The only avenue of manipulation is for miners to prioritize special low fee transactions and make it appear as if the entry fee is lower than it really is. But there's little incentive for miners to create that perception.

The difficulty of the shares you submit is checked thus you can't submit junk, you need to mine using the pools block otherwise you earn nothing. The pool's block has the generation hardwired to the pool's wallet so there's no way to redirect a winning share to your wallet.

And what are those, pray tell ? We've yet to see a convincing model for pricing Bitcoin on it's "fundamentals". A currency is valuable only in as much as it's being used for trade, more so for a digital asset such as Bitcoin which has no real world use. And if you look at actual trades being facilitated, they are puny compared to the billion dollar valuation. Judging by what we know from real world currency and it's typical M1 velocity, the "GDP" of the Bitcoin economy should be in the 10 billion range to justify the current valuation; maybe less because there's no banking. In reality it's much less than one percent of those 10 billion.

So what people are actually speculating on is the eventual size of the Bitcoin economy. Sadly, by pumping the price they are actually preventing real world adoption and preventing the eventual size to ever be reached; regular people will think twice before buying an asset that today has the purely speculative value that it might be used to facilitate trade tomorrow.

You are making a confusion, I've only recently started to speculate real money on the BTC price - and even that by accident. What I've indeed said at the height of the first bubble was something like "relax, there will be plenty of buying opportunities bellow 1$" to folks who thought they lost the get rich quick train. I think the lowpoint was around 2 USD, so I was 50% right

As for this time around, there's no telling where the bubble will peak, it's an entirely stochastic phenomenon. What we now for sure is that the "dumb money" flow will eventually stop and a precipitous correction will ensue. No "agenda", just taking the pulse of the community to better sync my divestment and hopefully learn something from the smarter people around here.

Mtgox to USD, 6 months from now USD to bitcoin and hold for the next bubble. If you need money now, post an ad to localbitcoins and meet face to face with a fellow saudi.

Who's making those accusations ? "You are just profiting from the misery of others", or maybe the less melodramatic "You are just parting fools with their money" seem more apt. There's just about zero chance in hell the current prices are holding much longer and the fools who are buying at $100+ will soon realize it.

Could it be that Instawallet went full "Tom Williams" on the user's accounts ? Or maybe something like this: trade the coins on mtgox, wait for the bubble to pop, buy coins back, profit.

As you can deduce from my presence in your midst, we're into a full blown speculative bubble again. No one knows how to price Bitcoins and there's no fundamentals to speak of - perfect setup for media-induced irrational exuberance.

To my shame I've actually made a small fortune this time around, simply by holding to some coins that were almost worthless when I acquired them to play around with the technology. I fell dirty to have participated in this "greater fool" hunt, but I think I will survive.