Every once in a while I will talk to a new person about bitcoin, and they'll actually be interested in it and want more information. In the past I have resorted to sending them an email with a bunch of links. I realized what I really needed was a web page with lots of information and links all on one page. I was not aware of any such web page existing, so I have started making one: http://diveintobitcoin.com/

So far, Dive Into Bitcoin has a nice "What is Bitcoin?" section containing 5 separate analogies on what bitcoin is. I'm writing the next section, "How Bitcoin Works," right now, and it already has a nice section on hash functions. Eventually I hope to cover basically all relevant aspects of bitcoin, like how to mine and what's the deal with altcoins, as well as provide extensive links to further information.

The source is also available on github if anyone is curious: https://github.com/ryanxcharles/diveintobitcoin.com

I would appreciate any suggestions on what content I should include in the guide, as well as any typos or grammatical mistakes I may have made, or any other improvements you think would be good.

When the service billpayforcoins.com came out, I was very excited. I had recently converted to full-time bitcoiner, and I needed to live off my bitcoin savings while I created the company that will hopefully be able to fund me in the future. I got in touch with Riley from BillPayForCoins to figure out if they were trustworthy or not. I told them I would be willing to take a gamble with them, and I would pay my June rent with them, and then if things worked out, I would write a positive review of them on the BitcoinTalk forum and reddit. (Unfortunately they had to remove the ability to pay for most bills due to legal reasons, but they still allow you to pay rent.)

I'm here to report that my landlord has officially received the check. It took three days for the check to be delivered. My landlord sent me a picture - the envelope and check were all written out by hand. (I'm not going to post the picture for security reasons.) Their checking account is titled "BILL PAY FOR COINS LLC" and they are from Westlake Village, CA. (For the record, I'm based in St. Louis, MO.)

I'm happy with BillPayForCoins and intend to use them to pay my rent for the foreseeable future (except July... I forgot to cancel my bank's automatic bill pay and so I won't need to pay rent again until August).

Service: BillPayForCoins.com
Rating: 5/5.

Also on reddit: http://www.reddit.com/r/Bitcoin/comments/1fnmdn/i_paid_my_rent_with_billpayforcoinscom/

At the recent Bitcoin 2013 conference, I was very inspired by other bitcoiners in their success in creating local bitcoin communities. I have started a new bitcoin meetup.com group in St. Louis, Missouri available here:

http://www.meetup.com/St-Louis-Bitcoin/

There were a total of 5 of us at the first meetup last Wednesday. The next meetup will be announced on the meetup.com page. Tentatively I think we'll have another one next Wednesday, since there should be enough interest for one.

Has anyone else noticed how stable the weighted average price is over the past 6 months?



Notice how the weighted price is about $10.50 going back up to 6 months. The price has been highly volatile, of course, but perhaps this price makes some kind of economic sense. If I had to guess, this is basically the price that can be supported by libertarian computer nerds with disposable income. Not every bitcoiner fits into that category, obviously, but as a sort of average, this could explain why the price has settled on this value. All the libertarian computer nerds with disposable income have already adopted bitcoin, and we'll need to invade a new demographic for the price to rise further.

I am really annoyed that I have to get a new prescription every year and have to pay ludicrously large fees for tiny pieces of plastic. Can someone please sell contact lenses anonymously on the black market for bitcoins? Surely it is possible to avoid all the regulations in this industry and sell contact lenses for cheap using bitcoin.

It's very hard to start a business in the United States without doing something illegal. I imagine it is the same in most other countries. The problem is that the number of regulations in time have grown so dramatically that they now invade every aspect of our lives. Most of the business that you can probably think of will be illegal, and thus you either have to do them illegally and probably be jailed, or just not do them. Most people don't do them. This is tragic. Opportunities are lost. Technologies are not invented. The world is not made better. All because the government does everything in its power to make the elites invulnerable to competition.

I don't advise making a company that does anything unethical. Unfortunately, the law and ethics do not overlap very much. Almost all regulations are there to entrench powers, not to ensure ethics. Bitcoin provides an opportunity to work around this problem by making anonymous companies. Silk Road is an example of this. They have established what a successful business anonymously. This is possible because payments are made with bitcoins. This would obviously not be possible with credit cards, where the identities of everyone involved would be seen by third parties.

Thus, we see that bitcoin has solved the most important remaining problem preventing anonymous companies: payments can now be made anonymously (or at least pseudonymously) over the internet. This is huge. Go back and think of all those business ideas you had, but didn't do, because they were illegal. They are now made possible with bitcoin. Again, I don't advise anyone do anything unethical - just illegal. Take patents, for example. They are a ludicrous regulation that shouldn't exist. So ignore them. Just make your business anonymous, and no one can enforce the patent on you. You will be immune.

I believe it will become mainstream to create anonymous companies, insofar as that is necessary to avoid corrupt regulations. It is only a matter of having the relevant technologies in place, and bitcoin is probably the most significant advance along this front in recent history. The success of Silk Road is evidence that all the relevant technologies are now in place. Being able to ignore regulations is an enormous advance. Everything will be cheaper and rate of innovation will accelerate. Anonymous or pseudonymous companies are the future. The economic pressure for this just means it is a question if how fast this happens, not if. It will be anarchy. In a good way.

http://www.bloomberg.com/news/2011-08-04/hackers-take-1-billion-a-year-from-company-accounts-banks-won-t-indemnify.html

Let us all note that the existing banking system is not immune to theft. Bitcoin is no different from dollars in that respect.

He lost 10,000 BTC in the MyBitcoin scandal. From now on he's going to use the standard client, and encrypt the wallet.dat with truecrypt, and back it up on Dropbox. And he's looking into deterministic private keys. That might be the safest way to save his horde.

Banks originated as goldsmiths who stored people's gold and gave out paper certificates representing the quantity of gold that was stored. This was a valuable service, because storing gold was hard, and paying people with gold was hard. Bitcoins are very different. Storing them is in principle easy, especially if you have a bitcoin-only device as I advocated here, and paying people with them is easy. All of the reasons for putting your gold in the bank are thus irrelevant for bitcoins.

* People can steal your gold out of your house, and thus it is wise to put your gold in a secure bank. Not so with bitcoins, so long as you encrypt them with a password. Criminals could steal your computers and not be able to access them because they wouldn't know the password. Further, if they did steal your encrypted bitcoins, you could have them backed up elsewhere and thus you would not lose them. You have absolutely nothing to gain from storing your bitcoins in a bank in terms of security. You are actually making things less secure by giving 100% access to your money to a third party who can never care about your money as much as you do.

* It is hard to lug gold around to pay people with it. This is completely irrelevant for bitcoins since you can instantly pay anyone anywhere in the world. Nothing is easier to carry around than bitcoins. Especially with smartphone clients. Banks do not in principle make bitcoin transactions easier. If places like MyBitcoin make anything easier, that simply represents the difficulty of using the standard client. But that is not a fundamental problem - it is a problem that can be fixed by making a more user-friendly client. So again, what made sense for gold makes no sense for bitcoins.

Banks are unnecessary for bitcoin. You do not gain anything by giving someone else responsibility for your money. In fact, given the recent MyBitcoin and Bitomat catastrophes, it appears that not only are bitcoin banks unnecessary, they are harmful. Outsourcing your finances will always be a poor financial decision in the same way outsourcing your intelligence will always be stupid. If you opt-out of your responsibility, you are unlikely to come out ahead. Keep your bitcoins as close to you as possible.

(Note that I am not arguing you should never store any of your money in online services. Just that you should only store small quantities that are as small as your level of trust for those services. If they ever have most of your bitcoins, then you are probably making a mistake.)

Hey guys, if I get rich off my bitcoins, I would like to live in a bitcoin-focused community with other bitcoin visionaries. Where in the world shall we live? I'm partial to Portland, OR, which I hear Plato is partial to as well: http://therealplato.com/

Ideally this will happen in about a year from now.

When I introduce people to bitcoin, some of them immediately assume they are worthless. They say things like, "oh, come on!" as though bitcoins are play money. Then I tell them that there are only 21 million, and then their attitude changes. Suddenly, bitcoins have value to them. Then they say things like, "so if I have just one bitcoin, when everybody uses them, I'll be rich."

Another thing that comes up time and time again is that bitcoins are divisible down to 8 decimal places. When I tell people this, they say things like, "oh, I see. So they really could be a global currency."

So once you explain the big picture facts about bitcoin to people, they often get it, and they realize that bitcoins have value.

I went to a friend's wedding tonight and introduced bitcoin to 6 people. Here are some stats:

1) Three people (half) seemed not to be very interested. These people ask questions like "what's the point?" They are consumers, and are not interested in bitcoin because they can't buy anything with it that they can't buy with dollars. They are not investors or entrepreneurs.

2) The other three new people seemed pretty interested and told me they plan to Google it.

3) Of the interested people, one seemed particularly interested and twice said he plans to buy some.

4) No one I talked to had already heard of bitcoin except people I had already told about it. And these are people that are not technically illiterate. So bitcoin is pretty far from mainstream yet.

Dear Bitcoiners,

How do you know if you can trust 1CU8KRSTcrYKyjfeGRTjpJ1S57jViwqrnh? If you don't know the reputation of this person, you can't know if you can trust them. This problem doesn't just apply to bitcoin, but to any person or organization. Whenever you meet a stranger, you have no idea what their reputation is. I believe this is a giant problem---perhaps the biggest impediment to commerce anywhere, on the internet or in real life. We need a global record of reputation. eBay has solved this problem in a centralized way for their own service: Sellers have rankings. You can be pretty sure how trustworthy someone is based on their rating.

However, eBay ratings only work for eBay. We need a general purpose reputation tracking system. Users need to be able to specify how much they trust one another, then the trustworthiness of any other person can be computed based on the web of trust. It could be like the #bitcoin-otc web of trust. But it shouldn't be centralized, because we don't want to have to trust some arbitrary third party before knowing if we can trust the stranger we are interested in. We need a decentralized trust rating system. We need to solve the problem of trust in a decentralized way like bitcoin solved the problem of currency in a decentralized way.

Part of the problem is solved by using public/private key pairs to represent identity. A person can simply sign that they trust another person with a certain raiting between 0 and 1. Other people can confirm that only the person with the private key could have signed that rating. However, how do other people get the information about who you trust? We need some sort of decentralized information sharing service. BitTorrent exists for this purpose. Unfortunately, BitTorrent (so far as I'm aware) only works with static files. But who you trust will constantly change without end. Bitcoin technology might also work, if we could store trust ratings in an on-going block chain. Perhaps we could make a new currency, Trustcoin, to encourage miners to apply proof-of-work to the trust rating block chain.

I believe there is a simpler, more appropriate way to share information. We just need a broadcast network, where users log on to a channel, and broadcast messages. Just like bitcoin broadcasts transactions on a P2P network, we could broadcast trust ratings on a P2P network. However, there is no reason to limit a broadcast network to trust ratings. It could be a general purpose information broadcast system. Trust ratings would be just one of the things you could broadcast.

The problem with this is that any information broadcast network would likely be flooded with spam. We could possibly solve this problem by paying nodes to rebroadcast your message. But then you would have to know if you trusted them first, defeating the purpose of the network. We need nodes to rebroadcast messages without having to trust them first. Thus, we can use proof-of-work. Messages with higher proof-of-work are considered more valuable, and nodes will give preference to them when rebroadcasting. I have described this system, Proofnet, here: https://forum.bitcoin.org/index.php?topic=31038.0

The trust network will work by containing messages that say in effect "I, user with public key X, do hereby rate User Y with A" where A is a number between 0 and 1. Any user can then compute how much they should trust other users through the web of trust. So long as everyone is connected somehow, you could determine the likely trustworthiness of another user. (Ratings must be relative. Objective ratings are meaningless because anyone could create new identities and rate themselves up.) If User X trusts User Y with 0.9, and User Y trusts user Z with 0.5, then User X would know to trust User Z with about 0.45 that is, not very much). It would be more complicated than this in reality, because User X might be connected to User Z in more than one way. But this is not a problem, because all of this information would be valuable in helping User X decide if they trust User Z. If someone scams you, give them a rating of 0. Your friends will then know to avoid them. People would have an incentive to use this system, if it were popular, because they would want to increase their trust ratings so they could get more business.

The problem with a broadcast system is that you would need to be online continuously to record the trust ratings, or whatever other information was being broadcast. However, services could be established that record the broadcasts continuously, and you could download them from them. They could charge for this, but they might be willing to offer this service for free since trust ratings are a nice charity service to offer. And people who use the system would probably be willing to let you download their trust ratings and their friends' trust ratings directly. They would not be able to tamper with the ratings because the messages are signed.

This is the best solution to the problem of trust I have come up with. It involves broadcasting trust ratings, where identity is tracked by public keys. One public key signs their trust rating of another user, and gives it to everyone. For this to be possible, we must first have a broadcast network. So I have designed one, called Proofnet. I think the problem of trust is extremely important. This is the best solution I have come up with. If you have a better proposal, let's hear it.

Astrohacker

[The message format]

Proofnet: a P2P broadcast network based on proof-of-work to minimize spam

There is no standard decentralized way to broadcast information around the world. After trying to solve many other problems, particularly the problem of trust, I've realized it would be extremely useful to have such a system. The basic idea is to have a peer-to-peer (P2P) network where anyone on the network can broadcast any kind of information to their peers, who rebroadcast the information, until everyone has it. The problem, of course, is spam, since if such a system ever became popular, it would be flooded with valueless spam. One way to solve this problem is to use bitcoins to pay people to rebroadcast your message. But it would be hard to know if you can trust anonymous nodes and thus no one would be willing to spend bitcoins on it. Another method is to attach proof-of-work to each message. This is the method that I propose. Nodes rebroadcast all the messages they can, but give preference to greater work. It would still be possible to spam this network, but it would be expensive. The protocol I've designed for this is called "proofnet". In this article I will explain how the basic message format looks, and describe some applications. If people are interested in this, I will create an example implementation in Python.

The message format

The nodes will be connected to one another in a web. The nodes will then broadcast messages to one another. A message might look like this:

(proof-of-work hash)(message)

The (proof-of-work hash) is a SHA-256 hash of the message that follows. The lower the hash, the more work went into it. Nodes rebroadcast as many messages as they can, giving priority to messages with high proof-of-work (i.e., a lower hash). There are problems with this simplistic format, however. The only way to increase the work would be to change the message. So we should include a nonce:

(proof-of-work hash)(nonce)(message)

The nonce is just a random number that is iterated until the proof-of-work hash is low enough that other nodes are likely to rebroadcast it. Another problem is that spammers might find one high proof-of-work message, and then rebroadcast it again and again. People who just joined the network would be duped by the spam messages. Thus, we should include a timestamp.

(proof-of-work hash)(nonce)(utc timestamp)(message)

Nodes will only rebroadcast messages that 1) they've never seen before, and 2) are fairly new, say within the past 10 minutes. That way, we can be sure no one is just spamming the same old messages. All nodes will need to keep their clocks accurate otherwise their messages will be ignored.

Another problem is that if this protocol became popular, the network would be saturated with messages, and many users would not have enough computing power or bandwidth to be able to participate. So we'd like to allow for separate channels.

(proof-of-work hash)(nonce)(utc timestamp)(channel hash)(message)

The channel hash is a SHA-256 hash of a string like "Proofnet1" or "My awesome channel". The reason for using a hash of the string is to make the format simpler since the hash will always be a constant number of bytes (32), and for some level of privacy, since only people who are privy to the channel name will know what the channel is about (they cannot practically invert the hash to find out).

It's worth noting that the nonce, UTC timestamp, channel hash, and message must all be included in the proof-of-work hash: 1) The nonce must be included to easily allow people to compute different proof-of-work hashes until they get a low one. 2) The UTC timestamp must be included so that you can't just change the UTC time without redoing the proof-of-work, thus you can't just spam old messages. 3) The channel hash must be included so that spammers can't just take a message from one channel and spam it on all others without redoing the proof-of-work. 4) The message itself must obviously be included in the proof-of-work hash so that spammers can't just change the message and rebroadcast it without redoing the proof-of-work. In summary, all information must be included in the proof-of-work hash so that every new broadcast message requires new work.

There is one more piece we need. Since this is going to be a general information broacast network, we need to support different message types.

(proof-of-work hash)(nonce)(utc timestamp)(channel hash)(message type hash)(message)

The (message type hash) is a SHA-256 hash of a string describing the message, like "UTF-8 text" or "JPG Image". We take the hash so that the format is simpler and also to allow for some secrecy, just like with the channel hash. If a client doesn't know what string goes into a hash, it doesn't need to know.

This allows anyone to broadcast any kind of information, and the more computational power they have, the more people will get it. Messages with higher work (lower proof-of-work hashes) are declared more valuable and thus given preference to being rebroadcast. There is no guarantee a given message will make it to every node. The format allows for different channels to exist while not allowing messages on one channel to be rebroadcast on another without redoing the work. It also allows information of any kind to be broadcast and is not limit to text. It allows messages of any size to be broadcast, but longer messages take more work to hash, and thus smaller messages will be easier to broadcast.

Proofnet can broadcast any kind of information, but the standard Proofnet client will include a few applications by default: 1) Text broadcast. 2) Signed text broadcast, like a decentralized IRC. 3) Signed, encrypted messages, like encrypted email, except the recipient is not guaranteed to receive the message. 4) A trust-declaration broadcast system, like decentralized eBay rankings.

1. Text broadcast

Text broadcast is the simplest application. The message type is the string "proofnet:text". And the message is just UTF-8 text. When a client receives this, they can immediately read the message. They will also know how much work went into the message. Messages with more work will look more impressive. The author will be unknown.

2. Signed text broadcast

It is often valuable to know who is sending a message. The message type for this will be "proofnet:textfrom" and the message will take this form:

(message)=(from public key)(public key signature of utf-8 text)(utf-8 text)

This would be like a decentralized IRC. A slightly more sophisticated version could encrypt messages with a password, and only people who know the password could decrypt the message.

3. Private messages

It would be nice to send private messages over this network. The message type will be "proofnet:textto". The message looks like this:

(message)=(to public key)(encrypted message)
(encrypted message)=encrypted[(from public key)(from public key signature of reply-to public key and utf-8 text)(reply-to public key)(utf-8 text)]

People would know they are receiving a message by spotting their public key, but no one else would know who sent it or what the message is. A new reply-to address is included to encourage further privacy. Conversations could take place where the main identities of the participants aren't known, and what they are saying isn't known, except to the people participating.

4. Trust rankings

The internet is filled with scammers. We need a decentralized ranking system, like eBay rankings but on a P2P network. We can do this by allowing public keys to advertise how much they trust other public keys on Proofnet. A "trust ranking" is a ranking between 0 and 1. User X might trust User Y with 0.9, and then User Y trusts User Z with 0.5, and thus User X would know that User Z should be trusted with about 0.45. Trust is relative; objective rankings are meaningless because new identities can be created at will and thus someone can cheaply rank theirself up. Only relative rankings through the web of trust make sense.

The message type is "proofnet:trustrank". The message format looks like this:

(message)=(from public key)(public key being ranked)(signed decimal and message)(fixed point decimal from 0 to 1)(optional utf-8 text message explanation)

To send out a scammer alert, you can give someone a ranking of 0 and put an enormous amount of work into the message. To know trust rankings, you would need to monitor the network continuously, or download them from a service that saves all of them. There could a be a channel devoted specifically to trust rankings, e.g. "Proofnet Trust Channel".

A similar application could be created for a social network, e.g. expressing someone as a friend rather than expressing how much you trust them. The social network could include any arbitrary features we wanted, like posting messages on a wall, posting and labeling images, etc. Since most people will not be on the network continuously, there would need to be services that are on it continuously and will give you the information later. Or rather than using centralized services for this, old broadcasted data could be shared via BitTorrent.

Bitcoin

Proofnet is useful to bitcoin in at least two ways. 1) It might be valuable to encode bitcoin transaction broadcasts in this format, making it harder to spam the network with transactions. 2) The trust network would enable people to know who they can trust on the internet and thus who is worth giving bitcoins to.

Other applications

It is fun to consider how many applications of Proofnet there could be.

* It would be possible to implement decentralized torrent trackers and indexes on Proofnet, eliminating the only central weakness in BitTorrent file transfers. Peers who are seeding a given torrent could broadcast themselves on the "example.torrent" channel. Torrent files could be searched for, requested, and sent via broadcasted messages, in a way that is completely anonymous, except for the IPs that you connect to for file transfer.

* A decentralized data storage service. A request could be sent out to save a file of a certain file size, and responses would come back from public keys with a price given in bitcoins. The user could look at the trust ranking of the public keys of the responses, and also at the prices, and decide who is worth saving their data with. This would be a completely anonymous file storage service, but you would still know if you can trust the people you are dealing with.

* A decentralized replacement for DNS. Names could be assigned to IPs by using the information on the trust network or social network. e.g., if your friend who has a trust rating of 0.9 thinks wikileaks.org points to some address, and your enemy with a ranking of 0.001 thinks wikileaks.org points to another IP, you would trust your friend. This is very different than Namecoin, which aims to establish objective control over names. But in this case, names would be controlled by popular opinion.

* A decentralized Twitter. The message format is just like "proofnet:textfrom" except limited to 140 characters. Messages longer than that would not be rebroadcast. To follow someone, just log on to the channel and display broadcasts from that user, or use a website that logs the history of that channel.

* It would be possible to broadcast images, streaming audio, and streaming video. It would be necessary to put information about the chronological order of a piece of information for anything that is streamed, and there would be no guarantee that every piece would reach every node. There are also bandwidth limitations; one channel would probably only be able to support one streaming video at a time.

* It would be possible to send alerts about important events. If a very important event occurs, then put a lot of work into the message, and people will quickly learn about it all over the world. The more work, the more impressive the message, and the more people will notice.

The P2P network

It does not actually matter what technology is used to connect peers together, although the standard client will obviously support TCP/IP and could be extended to support IPv6 in the future. Nodes can find each other in many ways: 1) An IRC channel could be established for the purpose of allowing nodes to find each other, like with Bitcoin. 2) Nodes could broadcast themselves on the network that they are allowing connections to get more nodes connected that are already on the network. 3) Lists of nodes could be pasted on the web or shared in torrents.

PyProofnet: The first client

I have not actually written a client for Proofnet, but I will if people express interest. It will be written in Python.

Conclusion

Proofnet is a decentralized, general purpose information broadcast system operating on a P2P network and based on proof-of-work, where anyone can send a message to their peers, but messages are only rebroadcast by their peers if they demonstrate enough work. Any kind of information can be broadcast. It is reasonably secure against spammers since spammers would need to do a lot of work to spam their messages. There are many conceivable applications that could be developed on top of this system. Since it is decentralized, it has the advantage over centralized systems that no one can limit what you do with it. I will write an example implementation in Python if people are interested. Comments and criticisms appreciated.

Bitcoin is, for some reason, highly polarizing. For every person who loves it, there is a bitcoin critic who hates it. I believe the bitcoin critics suffer from Stockholm syndrome. Stockholm syndrome is a "paradoxical psychological phenomenon wherein hostages express empathy and have positive feelings towards their captors; sometimes to the point of defending them," according to Wikipedia. Bitcoin critics have fallen in love with the bankers who pillaging them and lash out at the solution to their problem.

It is technically difficult to use bitcoin in a safe way. Even for people who are technically skilled, it is still wise to run the bitcoin client on a computer separate from your main web-browsing computer to ensure your bitcoins aren't stolen by malware. Thus the idea occurs to me that we could design bitcoin-only devices that are incapable of running anything but bitcoin software, ensuring they cannot be infected with malware, and ensuring your bitcoins remain in your control. Ideally, bitcoin-only devices would have these properties:

1) Easy to send and receive bitcoins for people who are not technically skilled
2) Easy to backup the bitcoins, in encrypted form, to a cloud backup service

There is no reason to design an entire device just for bitcoins since touch-screen based smartphones already have the hardware necessary for this. We could simply run a stripped down version of Android that comes with a bitcoin app, a backup app, and no other apps. No web browser, no Angry Birds, etc. Just bitcoin.

There would be one password to encrypt/decrypt the wallet file, and a separate, shorter password (a PIN) to access the wallet file any time you want to use it. The backup app could be Dropbox; the wallet file (preferably in a form compatible with the standard client) would be backed up, in its encrypted form, to Dropbox.

When browsing websites on your regular computer, you may wish to pay for something with bitcoins. The website would display a QR code with your would scan to send payment and you would send directly from your phone. The same process would work for real-life vendors.

To receive payments, the phone could display bitcoin addresses and QR codes on the screen. To receive payments over the internet, we would need a way to send the receiving address to the person sending you money. We could do this with email. The bitcoin app would just email the bitcoin address and QR code to the person who wants to send you money.

All of this could work with regular smartphones rather than a dedicated device. The point of having a dedicated device is entirely for security, to ensure that at no point malware is run on the phone that steals the bitcoins. Keep the device physically secure and you can be sure your bitcoins will not be stolen (as long as there are no remote exploits for the software on the phone), just like with real cash.

The Nexus S is a good device for this since it can be purchased unlocked. It might seem expensive to buy a $400 device just to serve as a bitcoin wallet, but it would be extremely convenient and secure. Many people pay $400 for leather wallets to store their fiat currencies, so $400 to store bitcoins is not unreasonable.

If your phone is stolen, they would need to know the password to access the bitcoins. That's even better than if your fiat currency wallet is stolen, since your fiat currencies would be gone for good, but your bitcoins would actually be safe (although you'd be out the $400 device).

Most of the software for this already exists, since I believe there are two Android bitcoin clients. Dropbox already exists as a backup service. All we're missing is a way to send the encrypted wallet file to Dropbox (again, preferably the wallet file should be in the same format as the standard desktop client, so that the bitcoins could be accessed on a regular computer if necessary).

We could sell the final product in this form:

* The device is a Nexus S with a custom version of Android where all apps are removed except a bitcoin client and Dropbox
* The bitcoin client is based on existing clients, except also includes the ability to backup the encrypted wallet to Dropbox
* The user logs in to their Dropbox account to sync the wallet file
* The user has one password to unencrypted the password file which they type in when the device is turned on
* The user has a separate, shorter password (a PIN), which they use every time they want to unlock the phone to send a payment
* The device would work over WiFi to connect to the bitcoin network
* The user could pay for 3G/4G internet access to be able to send money when they are not on a WiFi network

We could sell all this in one package. All the software would be open-source, naturally.

We could also offer all the software for download to use on any unlocked phone. All the software would also work on any Android phone, without having to remove all other software on the phone, but then it would be more susceptible to having the bitcoins stolen by malware.

In conclusion, we desire to make bitcoin more user friendly for regular folks and even technical folks who don't want to go through a bunch of trouble to use bitcoin. Having a device specifically designed for use with bitcoin is a solution to this. We can use any smartphone for this, and the Nexus S is a good choice since it comes unlocked. The device would have only bitcoin software and backup software on it. You could send payments to websites and merchants by scanning QR codes. You could receive payments by displaying a QR code/bitcoin address or by emailing the QR code/bitcoin address. The wallet file would be backed up in encrypted form to Dropbox, or another backup service. If the device is lost or stolen, your bitcoins are safe. Further, you would not have to worry about having your bitcoins stolen by malware because only the bitcoin software would be running on this device. This would make it easier and smoother for everyone to use bitcoin.

The only problem I see with this is that it would not be very easy to receive payments over the internet, since getting your address to the person who is paying you would be cumbersome.

Thoughts? (Apologies if someone has already had this idea.)

Today I will be buying stuff with bitcoins. The first thing I'm going to buy are some of those neat tangible bitcoins. Then I'm going to buy some t-shirts. Probably I will also buy a USB stick if I can find one, some food, and anything else I want. I will post my status here.

Economy, prepare to be stimulated.

I've written a new article on bitcoin. Feedback appreciated!

http://astrohacker.com/ahc/central-banks-are-the-scam-not-bitcoin/

People regularly argue that bitcoin is a “scam” (e.g., 1, 2) because early adopters got a lot of bitcoins for cheap, and they can now sell their bitcoins to new adopters for a profit. Thus it sounds vaguely like a pyramid scheme or Ponzi scheme, because adopters from one generation only profit at the expense of the next generation. Except, it’s not. Adopters from later generations are not losing to the early adopters; they, too, are profiting. In this sense, bitcoin is not fundamentally different than any appreciating asset, like stock in Google. No one argues that Google is a scam because early investors profited. Thus, bitcoin is not a scam either, because people profit through exactly the same mechanism.

Further, not only is bitcoin not a scam, it is actually relief from the giant scam that is central banking and fiat currencies. With bitcoin, your money appreciates in value and no central organization can confiscate your wealth by printing more money and giving it to themselves. But with fiat currencies and their associated central banks, central organizations actually do print more money, constantly, and give it to themselves, and to organizations that are well-connected (in particular, other banks), which has the effect of confiscating wealth from everyone who uses the currency and who is not well-connected enough to get the new money. Bitcoin is not a scam—central banks, and their associated inflating fiat currencies which redistribute wealth to a well-connected elite, are the scam.

Fractional Reserve Banks

Fractional reserve banks (FRBs) are such a common, established kind of institution that it might be hard to believe, at first, they are actually scams that do not create wealth but actually steal it. However, it’s true. They do this by writing down that they have more money than they actually have. If their reserves are 20%, what that means is that they actually have, say, $20 million, but they have created an additional $80 million by editing the number “20” in their computer and changing it to “100”. Of course, the reality is a little more complicated, because they do not create all this new money at once. But the end effect is the same; they have counterfeited 80% of the money supply, and given it to themselves. They then loan this new money out, and charge interest for it. In effect, they have stolen 80% of the money, and charge a toll for anyone who wants to use it.

Fortunately, FRBs are voluntary, so you do not have to use them if you don’t want to. But the most devious of bankers fixed this flaw in their scheme by creating central banks that people are forced to use. You cannot legally opt-out of central banking.

Central Banks

Central banks, like the Federal Reserve in the United States, are banking cartels and/or monopolies that print fiat currencies that everyone is legally required to accept for payments and legally required to pay their taxes with. Anyone who attempts to create a competing currency is jailed. There are limits to the amount of money that FRBs can create out of thin air, because if they try to create too much, fluctuations in daily withdrawals would reveal them to be insolvent, and they would collapse. Thus, FRBs keep a certain amount of “reserves” to prevent that from happening. Central banks, however, have no such limit, because they can create new reserves by literally printing money (or having the Treasury print it for them). Like FRBs, central banks declare themselves owner of most of the money and charge a toll (interest) for using it. But central banks are even worse than FRBs because they constantly inflate the money supply with no end, so that its value asymptotically approaches zero while they get all the new money, which has the effect of constantly channeling wealth from everyone else to them. Central banks will also literally put you in jail for attempting to compete with them, which non-monopoly FRBs can’t do.

The fact that the US dollar has lost 95% or so of its value since the invention of the Federal Reserve shows that 95% of the people’s wealth has been irrevocably snatched and given to bankers. To call this a scam is a understatement. It is the greatest theft in the history of the world.

Bitcoin—Finally, Relief

There are only 21 million bitcoins, and it is impossible for greedy bankers to make more and give it to themselves. The only way to get bitcoins is to ensure the security of the network by mining, or by doing something else productive for them.* This is a tremendous, revolutionary advance in the technology of money. Finally, wealth created by productive hard work cannot simply be confiscated by the people who control the money supply. There is no understating how important this development is. Hard work and savings will actually be rewarded! Productive people everywhere should literally let out a sigh of relief upon realizing this fantastic fact.

The only people who should be worried are bankers. They will not be able to continue snatching wealth from everyone by printing more money. Their giant scam now has a time limit—as bitcoin grows, they will shrink. They will have to learn how to actually produce wealth rather than steal it if they want to survive.

Conclusion

Bitcoin is not a scam. Bitcoin is a solution to the giant scam that is central banking. The sooner you realize this, the sooner you can be freed from banking tyranny.

* Of course you can also steal bitcoins, but assuming people take proper security precautions with their money, that is much harder and less effective than the printing of new money that central banks do.

I would like to be able to hide certain trolls' posts. Is this possible? If not, can we somehow add this feature?

For some reason people are really worried about how the government is going to continue to tax them after bitcoin takes over:

* http://forum.bitcoin.org/index.php?topic=13622.0
* http://owni.eu/2011/05/30/the-information-policy-case-for-flat-tax-and-basic-income/
* http://falkvinge.net/2011/05/19/the-information-policy-case-for-flat-tax-and-basic-income/

However, this is not our problem. I propose another solution. Now is the time for private cities. We will design these cities on the internet. In these cities, every thing is free market, including the cities themselves. You live in which city you decide is best for you.

Bitcoin is a free market solution to the problem of centralized control. Why in the world should we be trying to solve government's problem of how best to coerce us into paying for their wars? Instead, let's solve the problem of taxes the bitcoin way: with a free market. You decide which city you live in. Some will charge higher fees than others. If you don't want to pay for wars, then don't live in cities that charge you for them.