So now TRC is really taking off, it's up 3x since 2 days ago. The Hash rate is also phenomenal. The news of BTC-E accepting TRC is thrilling for all TRC users. There is an exciting opportunity coming our way.

Total number of coins TRC to PPC and LTC:

Total coins mined so far:

PPC: 18 Million
LTC: 16 Million
TRC: 2 Million

While currently TRC is trading about 2x the price of PPC, per coin this suggests that TRC should eventually be trading at 9x the price of PPC per coin. Also it suggests there are far fewer massive coin hoarders in TRC (although there are a few to be sure) as block reward has always be *only* 20TRC. Versus PPC's current reward of 581.06 coins per block, but as the reward is always shrinking the early PPC miners earned far more- original PPC block reward was 2500 coins per block.

That said- I own both TRC and PPC. While everyone knows I'm a TRC supporter, PPC is also really an exciting addition to the Crypto world and with Sunny King at the helm, PPC is in very good hands- so no one should take my comments to be "anti-PPC".

I'm excited for the adoption of both PPC and TRC on BTC-E, exciting days are ahead of us!

Why not StakeCoin...or Steakcoin?   I'll take my coins at spot price and cooked medium, please.

to have spend a good time writing this article shows you have some emotion involved. i dont want to own.. um... ants so id never write a 3 page article about ants. so theres probably a hidden agenda why you wrote such a article highlighting only the bad and not considering the potential.

bitcoin is still new, entrepreneurs have a new economy to start fresh business, to start fresh projects, idea's where those that like regulation can create, manage or just use xyz exchange that is fully regulated. or others that don't like regulation can use abc exchange. side by side with no fighting, no wars because bitcoin is the true freedom of currency.

if you dont like the 10minute confirms then set up a service like mtgox deposit and codes..(ignoring the live trades side of mtgox for now) where people put in 1BTC while taking a shower in the morning. by the time they get to starbucks that coin is pre-confirmed. and starbucks asks for a MTGOX like code to shift the balance from the database column of customer A to starbucks balance column for digital payments, or starbucks can accept casascius coins.

now starbucks can withdraw or convert the coin at their leisure, reassured that without waiting the coin is genuine.

for every scenario in the article there is a solution. so remember this.

ITS NEW, its growing, its YOURS. so if you dont like something, your free to make a solution to the problem. if others like your solution they will use it too.

its economic freedom at its best, and the other freedom you also have is to not touch it and have no emotion towards it.

::)There are still uses for outdated ASICs....by mining litecoins instead.  Methinks Bitcoin is a victim of Gresham's law...there is so much speculation into BTC that it no longer will function as a currency...rather more like "digital gold".

I am thinking that perhaps this BL thing needs to be "outed" sooner than later.  My reasoning is that if Bitcoin continues its upward ascension (and I firmly believe that it will) then the total "loss" to the BTC community will be much much higher and the message in the main stream media will be "Bitcoin Scam nets $1 billion, instead of $100 million".  This will not bode well for the overall reputation of this digital currency that's only in its nascent stages. 

Additionally, if they decide to "cash out" and head for the hills, then we would have a flood of coins come back into the system, resulting in the decline of the value of the coins (hopefully just a temporary price decline).

Initially I was concerned about of prosecutorial jurisdiction/agency, after all, if a victim resides in Europe/Africa/Asia but sends his/her funds to BL in the US, who would prosecute? As it turns out, a law enforcement entity in the location where the perpetrator is committing the larceny can commence an investigation and if probable cause exist, affect an arrest. So since BL is located in the City of Leawood Kansas, then the Kansas State Police, Kansas State Attorney General, City of Leawood Police, FBI or even the US Attorney's Office can commence an investigation and prosecute if warranted.

In NY we had a celebrity photographer who used his notoriety to con dozens of people out of money.  He resided in Manhattan and would put his apartment up for short term rentals on a variety of online rental sites.  Nearly everyone of his victims resided outside of the United States; they would wire transfer him the rent in advance + a security deposit. He was renting the same space to several victims for the exact same time period and would then tell them a fictitious story as to why they couldn't move in on the agreed upon date. He kept doing this over and over.  Occasionally, a victim would travel to the US and physically show up at the apartment building and of course he wouldn't be home (wouldn't answer the door or his phone).  The issue here was who could prosecute since all of the victims were from abroad and sent their funds whilst in their home country.  Simple answer --- the money ended up with the perpetrator in NYC (Manhattan) so the NYPD (10th Precinct) along with the Manhattan District Attorney's Office commenced an investigation and ultimately prosecuted him. He later plead guilty to Grand Larceny.

http://www.nypost.com/p/pagesix/celeb_fotog_rent_scam_9aOYbuOxS8FqMYd962Qu0K

So the same thing can be done in Kansas IF BL is a huge scam.  But there is no certain way to determine that unless an investigation is commenced.

The other option is to bring media attention to BL. This can easily be facilitated, especially when the value of the theft (if in fact there is one) will be in the high millions. News Reporters would be jumping over each other to get the lead. The same would be true for law enforcement. Something of such magnitude (value of theft) would have law enforcement agencies competing to prosecute, especially if someone involved is a convicted Federal felon.

Ultimately, if BL isn't a huge scam, but are just an incompetent group of people, then BL might refund each customer there FUNDS (not their BTC's). Resulting in BL still profiting by utilizing the victim's funds to net the gain in BTC's over the past several months.  Then again, they might actually deliver on what they promised or they may not.

Please share your thoughts and let me know what you think might be the best approach: contact law enforcement or contact media? 

Before we go proclaiming them "legit" check out the date on that news article...


Now check your watch...

9 Months later, this is how far they got...

http://www.youtube.com/watch?v=4C4bgho5JSI&list=HL1364777092

it returns 15 test nonces and uses 3x as much power as it was designed to use.

This mean the Jalapeno, SC Single 60Gh/s, and Mini Rig SC are all foobared outside their heat/power levels!

If you're lucky they might be able to produce some Hot Power Hungry Little Singles 30Gh/s.

But we've still not seen it able to mine anything yet!

Ironically, you posted this right after I received my BitForce SC

Ok, I've been asked enough times, here it is -- my view and analysis of "Bitcoin", which I have taken to calling "Bitcon."  That probably deserves an explanation....

Let's first define what an ideal currency would be.  Currency serves two purposes; it allows me to express a preference for one good or service over another, and it allows me to express time preference (that is, when I acquire or consume a good or service.)

All currencies must satisfy at least one of these purposes, and an ideal currency must satisfy both.

The good and service preference is what allows you to, possessing a dozen eggs from a chicken, to obtain a gallon of gasoline without finding someone who has gasoline and wants eggs.  That is, it is the ability to use the currency as a fungible intermediary between two goods and services, one of which you possess and the other of which you desire.  Without this function in an economy you have only barter and poor specialization, with it you have excellent specialization and a much-more-diverse economic picture.

Time preference is the ability to choose to perform a service or sell a good now but obtain and consume the other part of the transaction for yourself later.  With a perfect currency time preference has no finger on the scale; that is, the currency neither appreciates or depreciates over time against a reasonably-constant basket of goods and services.  Since technological advancement tends to make it easier to produce "things" in real terms, a perfect currency reflects this and makes time preference inherently valuable.  This in turn forces the producers of goods and services to innovate in order to attract your economic surplus from under the mattress and into their cash registers, since not spending your economic surplus is in fact to your advantage.  Today's fiat currencies intentionally violate the natural time preference of increasing productivity, but even yesterday's metallic standards did a poor job of representing it.  The problem here is the State, which always seeks (like most people) to get something for nothing and what it winds up doing instead (since getting something for nothing is impossible) is effectively stealing.

Unfortunately Bitcoin, as I will explain in detail, also does a*****-poor job of satisfying either of these requirements.

But before I get to that, I want to first demolish the argument for using it that is going around in various circles and media these days -- the idea that it is stateless (that is, without a State Sponsor) and this is somehow good, in that it allows the user to evade the tentacles of the State.

This is utterly false and, if you're foolish enough to believe it and are big enough to be worth making an example of you will eventually wind up in prison -- with certainty.

All currencies require some means of validation.  That is, when you and I wish to transact using a currency I have to be able to know that you're not presenting a counterfeit token to me.  Gold became popular because it was fairly difficult to "create" (you had to find it and dig it out of the ground) and it was reasonably-easy to validate.  The mass and volume were easily verified and other materials of similar mass and volume had wildly-disparate physical properties and could be easily distinguished.  (The recent claims of "salted" bars with tungsten notwithstanding!)  With only a scale and a means of measuring displacement of a known thing (e.g. water) I could be reasonably-certain that if you presented to me something claiming to be one ounce of gold that it in fact was one ounce of gold.  It therefore was "self-validating."

Likewise, dollar bills are reasonably self-validating.  I can observe one and if it appears to be a dollar bill, feels correct and has the security features I can be reasonably certain that it is not counterfeit.  The Secret Service can determine with a fairly high degree of certainty (and very quickly too) whether a particular bill is real as they can verify the serial number was actually issued and that a bunch of the same serial numbers are not being seen in circulation, but for ordinary commerce this is not necessary; the bill itself has enough unique features so for ordinary purposes it is self-validating.

Bitcoin and other digital currencies are different -- they're just a string of bits.  To validate a coin, therefore, I must know that the one you are presenting to me is unique, that it wasn't just made up by you at random but in fact is a valid coin (you were either transferred it and the chain is intact or you personally "mined" it, a computationally-expensive thing to do), and has not been spent by you somewhere else first.  

In order to do this the system that implements the currency must maintain and expose a full and complete record of each and every transfer from the origin of that particular coin forward!

This is the only way I can know that nobody else was presented the same token before I was, and that the last transfer made of that token was to you.  I must know with certainty that both of these conditions are true, and then to be able to spend that coin I must make the fact that I hold it and you transferred it to me known to everyone as well.

Now consider the typical clandestine transaction -- Joe wishes to buy a bag of pot, which happens to be illegal to transact.  He has Bitcoins to buy the pot with.  He finds a dealer willing to sell the pot despite it being illegal to do so, and transfers the coins to the dealer.  The dealer must verify the block chain of the coins to insure that he is not being given coins that were already spent on gasoline or that Joe didn't counterfeit them, and then he transfers the pot to Joe.  There is now an indelible and permanent record of the transfer of funds and that record will never go away.

This creates several problems for both Joe and the dealer.  The dealer can (and might) take steps such as using "throw-away" wallets to try to unlink the transfer from his person, but that's dangerous.  In all jurisdictions "structuring" transactions to evade money laundering or reporting constraints is a separate and unique crime and usually is a felony.  Therefore, the very act of trying to split up transactions or use of "throw-away" wallets in and of itself is likely to be ruled a crime, leaving any party doing that exposed to separate and distinct criminal charges (along with whatever else they can bust you for.)

Second, due to the indelible nature of the records you're exposed for much longer that with traditional currencies to the risk of a bust and in many cases you might be exposed for the rest of your life.  In particular if there is a tax evasion issue that arises you're in big trouble because there is no statute of limitations on willful non-reporting of taxes in the United States, along with many other jurisdictions.  Since the records never go away your exposure, once you engage in a transaction that leads to liability, is permanent.

Third, because Bitcoin is not state-linked and thus fluctuates in value there is an FX tax issue.  Let's say you "buy" Bitcoins (whether for cash or in exchange for a good or service you provide) at a time when they have a "value" of $5 each against the US dollar.  You spend them when they have a "value" of $20 each.  You have a capital gain of $15.  At the time of the sale you have a tax liability too, and I'm willing to bet you didn't keep track of it or report it.  That liability never goes away as it was wilfully evaded and yet the ability to track the transaction never goes away either!

Worse, most jurisdictions only permit the taking of a capital loss against other gains, and not against ordinary income taxes.  This really sucks because it's a "heads you pay tax, tails you get screwed" situation. This is the inherent problem that gold and other commodities have as "inflation hedges"; the government always denominates its taxes in nominal dollars, not inflation-adjusted ones.  The only currency against which there is no FX tax exposure is the one the government you live under uses and denominates its taxes in.  That is why the government's issued currency will always be the preferred medium of exchange irrespective of all other competing currencies.

Incidentally, all of this exposure which you take with Bitcoin is very unlike transacting a bag of pot for a $100 bill -- or a gold coin.  Unless you're caught pretty much "in the act" once the pot is smoked and the dealer spends the $100 the odds of an ex-post-facto investigation being able to disclose what happened and tie you to the event fades to near-zero.  

This never happens with a Bitcoin transaction -- ever.

If that dealer is caught some time later, but still within the statute of limitations for the original offense, you could get tagged.  And if the statute of limitations has expired you're still not in the clear if you had a capital gain on the transaction.

There isn't any way to avoid these facts -- they're structural in all digital currencies.  And they don't just apply to buying or selling drugs -- they apply to any act that is intended to evade a government's currency or transaction controls.  The very thing that makes Bitcoin work, the irrefutable knowledge that a coin is "good" predicated on digital cryptography, is the noose that will go around your neck at the most-inappropriate time.

Those who are using Bitcoin as a means to try to foil currency controls or state prohibitions on certain transactions are asking for a criminal indictment not only for the original evasion act itself but also the possibility of a money-laundering indictment on top of it, and the proof necessary to hang you in a court of law is inherently present in the design of the currency system!

Now let's talk about the other problems generally with all such currency systems in terms of an ideal currency and how Bitcoin stacks up.

First, the ability to use Bitcoin to express good and service preference.

Here the fundamental problem of wide acceptance comes into view.  This is the problem that the proponents of the system are most-able to address through various promotional activities.  Unfortunately it also leads to deception -- either by omission or commission -- of the flaw just discussed.  To the extent that the popularity of the currency is driven by a desire to "escape" state control promotion of that currency on those grounds when in fact you are more likely to get caught (and irrefutably so!) than using conventional banknotes is an active fraud perpetrated upon those who are insufficiently aware of how a cryptocurrency works.

Cryptocurrencies have a secondary problem in that because they are not self-validating there is a time delay between your proposed transaction using a given token and when you can know that the token is valid.  Bitcoin typically takes a few minutes (about 10) to gain reasonable certainty that a given token is good, but quite a bit longer (an hour or so) to know with reasonable certainty that it is good.  That is, it is computationally reasonable to believe after 10 minutes or so that the chain integrity you are relying on is good.  It approaches computational impracticality after about an hour that the chain is invalid.

This is not a problem where ordering of a good or service and fulfillment is separated by a reasonable amount of time, but for "point of transaction" situations it is a very serious problem.  If you wish to fill up your tank with gasoline, for example, few people are going to be willing to wait for 10 minutes, say much less an hour, before being permitted to pump the gas -- or drive off with it.  This makes such a currency severely handicapped for general transaction use in an economy, and that in turn damages goods and service preference -- the ability to use it to exchange one good or service for another.  What's worse is that as the volume of transactions and the widespread acceptance rises so does the value of someone tampering with the block chain and as such the amount of time you must wait to be reasonably secure against that risk goes up rather than down.

Then there is what I consider to be Bitcoin's fatal flaw -- the inherent design and de-coupling of the currency from the obligation of sovereigns.  Yes, obligation -- not privilege.

Bitcoins are basically cryptographic "solutions."  The design is such that when the system was initialized it was reasonably easy to compute a new solution, and thus "mine" a coin.  As each coin is "mined" the next solution becomes more difficult.  The scale of difficulty was set up in such a fashion that it is computationally infeasable using known technology and that expected to be able to be developed in the foreseeable future to reach the maximum number of coins that can be in circulation.  Since each cryptographic solution is finite and singular, and each one gets progressively harder to discern, those who first initiated Bitcoin were rewarded with a large number of easily-mined coins for a very cheap "investment" while the computational difficulty of "extracting" each additional one goes up.

That means that if you were one of the early adopters you get paid through the difficulty of those who attempt to mine coins later!  That is, your value increases because the later person's expenditure of energy increases rather than through your own expenditure of energy.  If that sounds kind of like a pyramid scheme, it's because it is very similar to to how the "early adopters" in all pyramid schemes get a return -- your later and ever-increasing effort for each subsequent unit of return accrues far more to the early adopter than it does to you!

The other problem that a cryptocurrency has is that it possesses entropy.  

Entropy is simply the tendency toward disorder (that is, loss of value.)  A car, left out in the open, exhibits this as it rusts away.  Gold has very low entropy, in that it is almost-impossible to actually destroy it.  It does not oxidize or react with most other elements and as such virtually all of the gold ever dug out of the ground still exists as actual gold.

Fiat currencies, of course, have entropy in both directions because they can be emitted and withdrawn at will.  We'll get to that in a minute, and it's quite important to understand.

Bitcoin exhibits irreversible entropy.  A coin that is "lost", that is, which the current possessor loses control over either by physically losing their wallet or the key to it, can never be recovered.  That cryptographic sequence is effectively and permanently abandoned since there is no way for the entity who currently has possession of it to pass it on to someone else.  This is often touted as a feature in that it inevitably is deflationary, but whether that's good or bad remains to be seen.  It certainly is something that those who tout the currency think is good for the value of what they hold, but the irreversible loss of value can also easily lead people to abandon the use of the currency in which case its utility value to express goods and service preference is damaged, quite-possibly to the point of revulsion.

This is not true, incidentally, for something like a gold coin.  The coin can be lost or stolen but unless it's lost over the side of a boat at irretrievable depth it can be recovered and the person who recovers it can spend it.  What constitutes "irretrievable depth" has a great deal to do with exactly how many coins might be there too -- what's impractical for one coin is most-certainly not when the potential haul reaches into the thousands of pounds!

I mentioned above about fiat currencies being able to be issued and withdrawn.  There is often much hay made about the principle of seigniorage, which is the term for the "from thin air" creation of value that a state actor obtains in creating tokens of money.  Seigniorage is simply the difference in represented value between the cost of emitting the token (in the case of paper money, the paper, security features and ink) and the "value" represented in the market.  There is much outrage directed at the premise of fiat currency in this regard but nearly all of it is misplaced because people do not understand that in a just and proper currency system the benefit of seigniorage comes with the responsibility for it as well, and it is supposed to be bi-directional.

That is, in order for time preference to be neutrally expressed, less the natural deflationary tendency from productivity improvement, the government entity issuing currency gets the benefit of seigniorage when the economy is expanding.  But -- during times of economic contraction they also get the duty to withdraw currency (or credit) so as to maintain the same balance, as otherwise the consequence is inflation -- that is, a generalized rise in the price level and the destruction of the common person's purchasing power.

That this is honored in the breach rather than the observance does not change how these functions are supposed to work, any more than the fact that we have bank robbers means we shouldn't have banks.  This, fundamentally, is why currency schemes like Bitcoin will never replace a properly functioning national currency and are always at risk of becoming worthless without warning should such a currency system arise, even ignoring the potential for legal (or extra-legal) attack.

Simply put there is no obligation to go along with the privilege that the originators of a crypto-currency scheme have left for themselves -- the ability to profit without effort by the future efforts of others who engage in the mining of coins.

Those who argue that state actors creating currencies get the same privilege are correct, but those state actors also have the countervailing duty to withdraw that currency during economic contractions associated with their privilege, whether they properly discharge that duty or not.

For these reasons I do not now and never will support Bitcoin or its offshoots, nor will I accept and transact in it in commerce.  I prefer instead to effort toward political recognition of the duties that come with the privilege that is bestowed on a sovereign currency issuer in the hope of solving the underlying problem rather than sniveling in the corner trying to evade it.

The latter is, in my opinion, unworthy of my involvement.

As soon as the US wakes up the media will soak this up and probably double or triple this.