http://www.minyanville.com/investing/articles/financial-literacy-high-school-finance-teaching/10/27/2010/id/30798

Now this is the Bitcoin generation.

That's only true if there is a practical monopoly on printing, which is the case for every fiat currency in the world.  In the case of Bitcoin, this is not so.  It may, or may not, be profitable for you to generate depending upon your specific situation; but you could do so at a loss if the goal was to undermine a major player attempting to overtake the network.  The same problem would have occured with gold or silver, if one particular entity had monopoly control over a majority of the mines in the world; which actually happened for a short time when Spain had control of central America and the Phillipino mines.

First off, don't quote me and then alter the quote without saying that you did so.  As it is, it looks like I was stressing that point.

Second, I am aware that Austrian Economic Theory requires sound money, not necessarily hard money.  As a praxeologist myself, I think that Bitcoin qualifies; but most of the Austrian economists that we are speaking of have been in the battle with Keyesnians for decades.  So as a result, they can be a bit jaded and suspicious of new systems that claim anything near what Bitcoin aims to accomplish.  For many, who also have public reputations to maintain, if it's not a naturally occurring form of money, they are not likely to give it much consideration.

That said, it doesn't even matter what these guys are thinking about Bitcoin, if they are thinking anything at all.  Whatever will be, will be.  If Bitcoin has a future at all, then it does not depend on the advocacy of anyone in particular.  If it needs advocacy to succeed, then it has no long term viability anyway.

I'm sure that some are quietly watching from a politically safe distance, waiting to see what a few crypto-geeks and other early adopters can make of it.  In any case, those Austrians with a public image to cultivate aren't going to advocate for a currency still inflating at the current rate of about 60% APR anyway.  By the time Bitcoin is crossing trendlines with major fiat currencies, we will all know with a measure certainty whether or not we have been backing the winning racehorse or the nag headed for the glue factory, and so will they.

Currently the client forwards transactions that it considers valid as long as it is the first time that it's seen it.  It doesn't have to.

This might be a valid attack at the moment, but it's not like it can't be handled by real people should the need arise.  There is nothing that says that a particular generating client can't be set to ignore transactions based on certian parameters beyond the current Bitcoin settings.  One particular client that ignores transactions over half a meg in size, for example, does nothing; but as other generating clients take take a similar approach that kind of attack becomes progressively less successful.  It's not like the rules are set in stone, this is a community.  The majority will rule.

That said, it's not a particular problem now because there is nothing that says that the spamming agent is the one to benefit from his efforts.  Classic game theory, so I don't think that it's ever going to be an issue, as that would imply collusion, or at least that one particular generator has begun to monopolize the network.


There is no way to cancel a transaction, nor should there be.


Transactions are not persistent per se.  The client can be modified to clear the transactions older than an arbitrary time limit, or simply rebooted.


Bitcoin doesn't have many countermeasure against spamming, because there is little real evidence of what kinds of attacks are effective against it.  Try and break it, you will help future users.

Because not everyone will use such a client, there will always be some generation that is not entirely profit motivated.  Search for the thread about generation for heat.  Some will always be motivated in other ways, such as keeping the other major players honest.  This is an open source project after all, no one has produced such a client yet, thus far the reward is enough of an economic incentive to get people to generate honestly; the additional transaction fees are tears in the ocean compared to that reward.  All that added to the fact that the regular block reward doesn't expire for about 120 years, after which the competition will set the price for transaction fees.

Yes, but that future is a long way off.  Likely we will all be long dead.

I doubt it, more likely it will just be extended as neccessary.


This assumes a static fee schedule.  If such a thing started to become a problem, the fee schedule could be altered to deal with it; perhaps even in an automatic fashion like the difficulty level.


Interesting situation, but it's not likely to matter.  If a transaction needs to be included in a block, the design allows the client to issue a fee anyway, which encourages that transaction to be included in any generator's block that sees it.  And unfeed transactions might have to wait until a less busy block to be included, but don't disappear.  Re-issuing a transaction with a fee would be another transaction.  If you desperately need your transaction processed, in a Bitcoin future, you are likely to click the "add a fee" option.  If you are sending money to someone who trusts you, to someone for which you can wait for the processing, or as a gift/donation; there is no need to pay a fee.  This is a major advantage of Bitcoin over other methods of electronic payment.

Cute, and the voice of Alice must be from Wasila, Alaska.

Peter Schiff was, for a short while, my financial advisor.  Well, his company, not him in particular.  I have a lot of respect for the man's insights, particularly with regard to overseas investing, but he's been crying inflation for about a decade.  Mish seems to be a more accurate a forecaster of monetary issues than Schiff, and I already know that he doesn't regard Bitcoin very highly, but he is aware of it at least.

Austrian economics is a tight field at the national level, I'd bet dollars to donuts that a great many are already aware of Bitcoin and are either watching it from a quiet distance or have written it off because it's not backed. 

Sure it does, the transaction fee schedule is written with the purpose of limiting DOS attacks upon the network by making compunding transactions increasingly expensive, without actually prohibiting them.  Not only does this make DOS/spamming the network prohibitively expensive for the attacker, it also provides an incentive for honest clients to throttle their transactions whenever the network is loaded down (delaying additions to blockchain, not preventing them) as well as provide an additional incentive for generators to accept the burdens.

Kids these days, always thinking that their revelations are original.

I think we have found the disconnect.  Canada isn't a capitalist society, it's a social market democracy like many in Europe.  You're blaming capitalism for problems not caused by it.

My faith in the future of humanity, and in particular the Millinial Generation, is again renewed and rewarded.  I have faith that, should my generation fail to fix Social Security and the social nets of America, as those who have come before have failed; the Millinials will simply destroy the welfare state by whatever means neccessary.

Yes, there was anarchy; but it was a short lived, and particularly hostile, form of national anarchy.  Which led to France being taken over by a short dictator for a while.  We always think of the German Nazis as the worst example of collective madness, but the Germans still don't have anything on the French.

That was one of the examples that I was thinking of.  In the modern world, the only definitive examples of limited government emerging out of anarchy that I can think of are the United States after the Constitution was ratified (i.e. the Articles of Confederation were as close to anarchy that any nation could have maintained, and the framers had already determined that the Articles would lead to an early break-up of the Union, which is why the Constitution was promoted to begin with) and the Swiss.

I am amused by this debate.  However well entertained I may be, there is no political ideology that reflects upon Bitcoin or vice versa.  There are likely to be some political structures that are encouraged, and other discouraged, by the widespread use of Bitcoin; but Bitcoin itself is neither good nor evil.  It is simply a modern tool of commerce.  The intent is not in it's design, but in it's users.

That said, any debate about the relative merits of ideologies is futile, as participants are (almost certainly) not using the same definitions.

And there is a difference between Capitalism (an economic ideology) and capitalism (an economic term that generally describes a set of economic laws operating in smooth conjuction without outside influences).  IMHO, Anarcho-Capitalism is as unlikely a long term possibility as is Anarcho-Socialism, and Anarcho-capitalism is just anarchy in it's natural state, and just as short lived.  I am not an anarchist of any flavor; because even though I can accept that a large minority of the population could thrive without any government beyond self-government and self-disipline, there will always be another minority of the population that craves and clamors for a perception of order in an otherwise (apparently) disorderly world.  In every case wherein anarchy became dominate, there were always those who would choose to take advantage of (or sow) disorder for personal gains, which would lead to the public clamoring for a more authoritarian government.  The case of anarchy leading to a peaceful, lasting social contract with limited governance is exceedingly rare.  So you young ones should temper your enthusiasm, for I have lived long enough to know that 'abolish and replace' of government is a risky endeavor.

A stable monetary unit is ideal because it is perfectly predictable.  A gently inflating or deflating currency is no harm, so long as the trend is predictable.  The more predictable that it is, the better for the long term.  The true irony of this discussion is that this has little to do with Bitcoin.  The monetary base of Bitcoin at any particular time in the future is highly predictable, but the base isn't stable yet.  I believe that it's still inflating at about 60% APR at this moment, give or take.  It will approach 'stable' about 2012, and by 2015 will be at least as stable as any fiat currency on Earth, but that is not so today.

It is advisable to backup the wallet.dat, yes, but using ~/.local... adds the problem of proliferation of copies of your wallet.dat, increasing the risks of a copy of it becoming available to a thief.  Currently, the wallet.dat file is not encrypted while in use, so backing up the wallet.dat file anywhere is akin to leaving your checkbook on the counter at Wal-Mart while you go out to your car. 

It's not odd at all, it's very much how money works in the real world.  BTW, you are an early adopter, just not as early as some others.  Everything is relative.



Bitcoin is intended to be a cash-like system for online commerce.  It does this very well, even at it's early stage.  However, there is nothing stopping Paypal (or any other payment processor) from adding Bitcoin to their existing currencies.  Someone will do it eventually, but that is not the point of Bitcoin.  That fraud protection has an overhead that Bitcoin does not, allowing a customer to buy "direct" from an online vendor that he already trusts, or send money to a friend without cost.  As for the possibilities of fraud, "Let the buyer beware".  Would you buy a Rolex from some guy on the street for half price, unaware that it could be a fake or stolen?  Most of us would not, but it's a possibility with paper money.  Would it be wise to offer that same guy your credit card as payment?  I wouldn't, but that is exactly what VISA has to deal with regarding online commerce, which is why the overhead of fraud protection is quite high.

Such a thing could slow it down, but not break it.  Those are exactly the conditions that transfer fees come into play, and the attacker would have to be willing to keep paying the block generators for as long as the attack continued.  Eventually, it becomes too expensive to flood the network with friviolous transactions.