Are you talking about big traders operating under such system, or the system itself?
Because saying the latter is like saying e-bay is legally responsible for, say, regulatory compliance in the selling of every electronics (or whatever) that goes through them. I know some jurisdictions are that authoritarian (Brazil comes immediately to my mind), but there must be some others where you could place your business and just be fine...


I've used localbitcoins sometimes, and I doubt they have any AML compliance on their side. I obviously don't have on my side, I'm just an individual trading a few bucks, not a professional. So... are you calling me dumb? 

Indeed I am... I can barely follow the most discussed topics here and on reddit. The devlist I barely read at all.

Thanks for the update anyways!


Perhaps the most authoritarian ones will attempt, but I don't think they'll manage. They can't even stop file-sharing. There will always be jurisdictions in which mining will remain an unregulated activity, and block generators would just put their servers there. I don't think that'll ever be a serious problem.


If you're really worried about this - IMHO you shouldn't worry that much - perhaps it'd be better to focus on more scalable darknet protocols instead. Perhaps using bitcoin for funding darknet nodes, I don't know... Anyways, it looks to me your problem here isn't simply "keep block generation decentralized", but more like "being able to communicate without significant latency and without revealing your physical location". In other words, a way for dissident pool operators to hide themselves in a highly totalitarian world. The solution is probably outside the Bitcoin protocol.

Wait, so you've managed to come up with a way for SPV nodes to satisfyingly verify that an "evil cartel of block generators" isn't defrauding everybody? The debate of whether to keep the crippling 1Mb limit for blocks or to let it grow by removing said limit is finally over?

That's brilliant! It's great to see you've managed to found some common ground. Seriously, no irony, that's a relief to me. I was confident an actual fork (with two different blockchains surviving) was inevitably ahead of us.

Blockchain.info says it's a double-spent: http://blockchain.info/rejected (Ctrl+F your tx id)

What if the backdoor is in a piece you chose not to validate?
(just so this is crystal clear: I don't believe this is a serious danger, as I do believe in open source.. my point is just to show that the same applies to the blockchain, which is also open)


I'm not sure which modifications you're talking about (that long thread from the author of Armory perhaps?), but with the current Merkle Tree I believe this is already possible to some extent. I can validate the coinbase transaction only to certify no miner is inflating the money supply more than what's allowed by the protocol. I could perhaps also request past transactions in order to validate that the output crediting my address really does have the money it claims to have, all the way until a coinbase. By only doing that to transactions that concern me - and always checking the headers, PoW etc, ain't I doing a "validation in pieces"? If every user´s client does at least that, doesn't the chain gets entirely validated in the end?

No structural changes would be needed, AFAIK. Unless by "protocol changes" you mean new network messages in order to exchange such partial data, in case they don't exist already.


It's done continuously by a machine, not by human beings. The actual work of sporadically auditing the code is probably bigger than the work of letting the full node running.

When you don't read and fully understand the entire source code of your bitcoin client, you are trusting developers to always follow the rules faithfully - to not steal/spy from/on users by inserting a backdoor etc. But if users are not reading and fully understanding the source code, because they're incapable or not willing to do so, what incentive is there for developers to behave quite so faithfully?


I'm repeating myself, but it seems important to do so: there will always be more honest people willing and capable of running a full node than there will be honest people willingly and capable of reading and understanding such a complex C++ code as that of bitcoin. The barriers are incomparable. Running a full node is simple, and will be always cheaper than either hiring a C++ expert to do the code-parsing for you, or going through the huge learning curve yourself. Actually the option of hiring someone only transfers the trust, so you have to go through the learning curve if you want to be 100% sure. There's no multiple years learning curve necessary for someone to run a full node.

So, please, let's quit the drama. If the "everybody can validate the source because it's open" sentence is really true and justifies the trust we have on open source software like Bitcoin, then there's no reason for the sentence "everybody can validate the blockchain because the data is open/public" not to be equally true, and an equivalent justification for SPV clients to trust in its integrity.

I've been saying this for a while too. But I haven't seen any list of all currencies' M0s so far.

@btcdrak, the point I'm trying to make is: right now, the only truly safe way of storing bitcoins is by doing it yourself, and offline.

It will not always remain like this, obviously. Hardware-wallets, combined with multi-sig and probably also nLockTime would certainly allow a great level of security for everyone, including those who have no idea of what I'm talking about. Perhaps even those twins' ETF would as well.

But that's not the case right now. So, if you're day-trading, you should consider into the risks of your operations that your account may just be emptied. Even if you take all possible digital-hygiene measures, the exchange's account may be hacked/seized/etc, and your money will be gone.

All that said, I'm also curious as to how has this hack happened, as it settles a dangerous precedent.

My mistake then. But again, the risks are almost the same. MtGox fiat account could be seized, the entire site hacked and become insolvent, or his personal account hacked. If he intended to keep a fiat balance, it would be safer to do so in a traditional bank that can reverse transactions.

Perhaps he was keeping his fiat there because of MtGox's liquidity problems. Or perhaps he was a day-trader. These possibilities make it much more understandable.

But if you have fiat on Gox and you're not willing to spend this money any time soon, then I'd advice to withdraw it. Even if takes months to come to your bank account, it's safer like this than letting it sitting there. I'd say that MtGox is more vulnerable to account seizures than most banks... it has already happened to their US-domiciled accounts, are you so sure it won't happen to their main accounts in Japan?

EDIT: By the way, my post above is not entirely incorrect when you consider only the quoted part I was replying to:


You should not trust the largest exchange with your coins, but that doesn't mean there's nothing you can do.

Were you doing any operation at the site that would require the Yubikey code?

Advanced malwares could put themselves in between you and MtGox, and if you request a withdraw to address A, they could change that to address B without you noticing, and make you authorize that via the Yubikey code. That'd be a very advanced malware though, as it would have to somehow replace your browser by a bogus one.

EDIT: Just saw your post on reddit saying that you were not awake while this happened, what rules out my supposition.


Come on. Not wanting to be mean, it's a shame that you've lost your money and I hope this mystery gets solved, but of course there was something you could have done, and you know it very well: you could have stored your coins yourself, offline.

This is to everyone who stores their money on Gox and others: Seriously people, Bitcoin empowers you to be your own bank. To have no counter-party risk. And you keep letting your money in bank-like institutions? What's to prevent MtGox servers to be hacked, and eventually even its cold wallet stolen like bitfloor? Or, even more likely, what if they're raided and all the money seized, à la Cyprus?

Store your bitcoins yourself.

If that sounds "too geeky" and you're not willing to go through the learning curve right now, then perhaps Bitcoin and you are not ready for each other for the moment. Interesting projects like Trezor are on development, and they could bring the two of you together again soon enough.

Again OP, don't take my post in a bad way, I am really sorry this has happened to you. But please don't claim that you haven't been warned - I'm definitely not the first one saying this -, or that there are no ways to hold Bitcoins safely, because you know that's not the case.

Actually, there shouldn't be any significant difference in that case. Unless you do lots of telnet, ssh and other frequent-tiny-packets protocols, Tor shouldn't really increase your bandwidth usage.

Not really: https://bitcointalk.org/index.php?topic=186038.msg1944078#msg1944078

But anyway, I was just trying to explain why I think Panamá is a decent candidate, not criticizing you for not having put it there from the start.

I can't answer the question, but shouldn't Panamá at least be on the list?

They have no central bank. They're also "dollarized". The Panamanian government has much less motivation to resit Bitcoin than most others, as it doesn't control money supply (so it doesn't feed itself from inflation) and it doesn't even have a central bank cartel to look after. Of course, when pressure comes from uncle Sam, they may eventually fold. But that applies to all of them.

A few years ago a German family got asylum in US for exactly this reason (being persecuted by their home government due to their children's education choice).
Too bad this particular family didn't get the chance.

What will they do with these kids I wonder? They are old enough not to accept this slavery. Will the government just throw them in prison if they resist coercive indoctrination?

Do you know who is the maintainer by the way?

The first 50 BTC produced in the genesis block are not spendable, that's not false. But other UTxO sent to the same address are, that was my confusion. (see CYAM's post above)

Thanks for clarifying.

IIRC, the genesis block coinbase is not spendable. So, not even Satoshi could send them back to you.

Well, fixed exchange rate is what they seek, but how do you call the institutions themselves? Currency board is, to my knowledge, the widely used terminology.


Okay, that's a good point.

But what about currencies like the Bahamian Dollar or Panamanian Balboa?
The former is decades old, and the latter is more than a century old already. And they're both pegged to the USD.


Sorry, can't watch the video right now.


Interesting. Thank for the example.


Well, small volatility is far from being the norm on the cryptocurrency world. We can't expect MasterCoin being any different.


Even when you exclude the cases of currency boards acting like a central bank, i.e., manipulating interest rates as well as the exchange rate? This combination has shown to be very dangerous, but if all you want is to keep the exchange rate, I don't know....


Do The Bahamas or Panamá hold such large war chests? All the examples of currencies pegged to the euro?

Anyways, it's clear that high reserves will be very important in MasterCoin's case. Good thing the reserve volumes are public knowledge, at least.

Well, that's exactly what a currency board is, and there are many in the world which have managed to keep operating for decades now. Even Hong Kong, considered the freest economy both by the Fraser Institute and the Heritage Foundation, uses a currency board to issue HKD.

The biggest difference, tough, is that currency boards normally have reserves in the same asset they tie the exchange rate of their currency to. So, if your currency board wants a fixed exchange rate with the dollar, it will hold dollar reserves, if it's with the euro, it will hold euro reserves and so on.
Here, the reserves are in one asset (mastercoin), while the exchange rate is supposed to be pegged to another asset (gold, fiat, whatever). I know no example of a currency board operating this way and I ignore whether it's feasible or not.


This is true, but remember that such criteria only influences the demand side of the equation. Prices comprise both demand and supply. If the demand is lower, just make a lower supply until you get the same price.

Think of water and diamonds, for instance. The former is much more valuable to human beings than the latter, but due to its extremely higher supply, its price is much lower.


I'm not sure I follow your reasoning. Could you explain me like I'm five?