Bitcoin Forum
October 06, 2022, 05:04:47 PM *
News: Latest Bitcoin Core release: 23.0 [Torrent]
  Home Help Search Login Register More  
  Show Posts
Pages: [1]
1  Other / Off-topic / Online poker sites shutdown; seized by the FBI on: April 15, 2011, 10:34:21 PM
Breaking news:
2  Economy / Economics / A "resource based economy" in practice on: April 11, 2011, 12:41:06 AM
I found this article interesting:
3  Other / Off-topic / Will that be cash or ... cash? on: July 18, 2010, 06:57:59 PM
I read an interesting commentary today that has some relevance to Bitcoin.

Will that be cash
4  Bitcoin / Development & Technical Discussion / iPIG private internet gateway on: July 18, 2010, 05:14:44 PM
I remember using this in the past, and one of the advantages it had over Tor and I2P is that it automatically encrypts and reroutes all network traffic without requiring any application configuration. I believe it does this by creating a virtual network adapter and sending all traffic through the adapter.

What do you guys think about this? I think Tor/I2P could learn from the network adapter approach, as it gets rid of the whole problem of having to configure applications and wonder if any applications are still "leaking" completely.
5  Bitcoin / Bitcoin Discussion / How do I merge my wallets? on: July 17, 2010, 03:39:52 AM
Between Windows, Linux (on same PC), and my laptop?

I don't want to lose payments cause I dropped a few addresses Smiley
6  Economy / Economics / Who's going to make out like a bandit... on: July 16, 2010, 02:38:13 AM
... when Bitcoins are used by at least 10 million people, are at a supply of 10 million, and represent an economy of 10 billion?

1BTC = $1000 USD?

 Shocked Huh Grin
7  Economy / Economics / First bubble? on: July 15, 2010, 05:54:10 PM
50 BC = $2.50? Surely this isn't sustainable even at the current difficulty Wink

Then again, all about supply and demand. If this is what the market demands, then go get your PCs ready, cause there's a gold rush in town!
8  Economy / Economics / The economics of Bitcoin: How does it work? on: July 15, 2010, 04:33:09 PM
This post is meant to delve into the monetary aspects of Bitcoin, and the differences between Bitcoin and the dollars in your pocket. Please feel free to correct and add to the discussion.

What is fiat money?

From Wikipedia:

The term fiat money is used to mean:
any money declared by a government to be legal tender.[1]
state-issued money which is neither legally convertible to any other thing, nor fixed in value in terms of any objective standard.[2]
money without intrinsic value.[3]"Fiat money, such as paper dollars, is money without intrinsic value: It would be worthless if it were not used as money."

Bitcoin clearly does not fit definitions #1 nor #2. In my opinion, definition #3 is misleading, since nothing has intrinsic value. Sure, Bitcoins might not have value if not used as money, but it does not follow that because they have no value if not used as money, that they therefore also have no value if used as money.

Therefore, Bitcoin is technically a fiat currency per definition #3, but I see this as a "weak" definition, and not a strong one.

If Bitcoin is not the same as sovereign fiat currency, then what is it?

Bitcoin is a digital currency which shares many of the properties of money, namely, scarcity, fungibility, and a means of exchange. The pattern of digital bits and the mathematical conventions in place enforce these aspects. Bitcoin is far more similar to a digital version of gold than it is to a sovereign fiat currency.

But what backs Bitcoin? How can it have any value if it is not backed?

I would ask "What backs gold?" The answer is that the question is starting from the wrong assumption: Bitcoins do not need to be hard-linked to anything else. The need for a distributed, anonymous, and decentralized currency drives initial adoption. The value of Bitcoins will be driven by supply and demand; in essence, it is backed by what people are willing to trade for it; the same as gold.

What is the difference between monetary inflation/deflation and price inflation/deflation?

Monetary inflation and deflation occurs whenever there are changes in the supply of money. Increasing the money supply is the definition of monetary inflation, and decreasing the money supply is monetary deflation.

Ok, but what is price inflation/deflation?

Price inflation/deflation is what most people commonly refer to as "inflation" or "deflation", and it occurs when the general level of prices increases or decreases. In reality, price inflation and deflation is a consequence of the change in money supply, it is the effect and not the cause.

Prices can go up and down without there being changes in the money supply. For example, computer prices have been steadily declining, but this is due to increasing efficiencies and not decreases in the money supply. Oil prices have risen greatly over the past decade, but this is in part due to increasing demand in China and elsewhere, and is not solely due to monetary inflation.

Finally, the important question: What are the dynamics of Bitcoin, and how do they differ from sovereign fiat currencies?

To be fair, any currency should treat all holders of the currency equally. Whatever happens should affect everyone equally. Let's look at the differences:

Sovereign fiat currency:
* Regime of monetary inflation
* Monetary inflation is great enough to cause price inflation
* The new money is never distributed to everyone equally, therefore, some people's holdings depreciate faster than other people's holdings. This entails a real redistribution in wealth between holders of the currency, and receivers of the newly-printed currency.
* As governments have a monopoly on the printing press, they can expand the supply of money far beyond the demand, thus setting up the stage for a credit bubble and bust.

Bitcoin currency:
* Regime of exponentially decreasing monetary inflation, then monetary stability. The inflation is distributed equally among hashes/second, with some variance due to the randomness of the problem to be solved.

Once the supply is stable, there will be a slight monetary deflation as Bitcoins are lost. This deflation will redistribute wealth equally to all other holders of Bitcoin.

* As the money supply does not inflate, prices of everything in Bitcoin will slowly decline. This benefits all holders of Bitcoin.

* New money creation is always distributed equally, in proportion to resources expended.

* There is no monopoly on the ability to create new Bitcoins, no government enforcement, and no arbitrary allocation schemes. The currency's value is driven entirely by supply and demand.

Bitcoin appears to be similar to gold in terms of monetary dynamics!

This is true. The main difference is that gold is a very slightly inflationary regime, but again, it benefits people based on resources expended. The inflation rate is also very low. Gold also has commodity uses apart from its uses as money.

Bitcoins, on the other hand, will be a very slightly deflationary regime. Should the currency be successful and the value skyrocket, I fully expect that very robust backup and replication schemes will be put into place.

But Bitcoin is not a commodity! It is impossible for it to be used as money!

Not true. Bitcoin is distributed, anonymous, and decentralized: All features that the market is looking for. This does not preclude a better alternative coming along, but neither does it disprove Bitcoin! I see Bitcoin as the next step on our path to a digital future, and I believe that it can succeed.


Please feel free to comment and/or add to the discussion!
9  Bitcoin / Bitcoin Discussion / Hashing slowdown on: July 15, 2010, 04:05:40 PM
I've noticed that after running Bitcoin for a while, the hashing seems to slow down by a significant amount.

For example:

310 khash/sec -> 250 -260 khash/sec
2450 khash/sec -> 2150 khash/sec

Noticed on two seperate machines, in Windows and Ubuntu. Any idea why this could be happening? Has anyone else noticed this?
10  Bitcoin / Bitcoin Discussion / Distributed reputation system on: July 13, 2010, 03:30:28 AM
I propose an idea for a distributed reputation system for Bitcoin. It is based on a "marking" of the public transaction history. Here is how it would work:

Every Bitcoin transaction can be voted either positive, neutral, or negative. Only addresses directly involved in said transaction can tag said transaction. Comments can be attached to the vote.

An address' reputation can be the sum of (positive votes x BTC amount) - (negative votes x BTC amount). Each address owns their own votes.

Since the transaction history is public to all, transaction amounts can be easily verified. All that is needed is transaction tagging. In order to avoid coupling this functionality into Bitcoin, it should ideally be part of a standalone package and call Bitcoin externally (or at the very least, should probably not be part of the Bitcoin core API). That is why Bitcoin needs to be standardized into an API so that third-party apps such as this can be developed; I understand that JSON is a step in this direction, but it has security risks and cannot be public by default. Perhaps what is needed is a tiered approach so that public data can be publicly exposed by default, whereas the full JSON lib needs to be unlocked.

This is just an idea that popped into my head, and I thought that I should write it down. What do you guys think? Please write down your own ideas here, as well!

11  Bitcoin / Bitcoin Discussion / Bitcoin roadmap on: July 11, 2010, 07:37:07 PM
Is there a roadmap in place for future development of Bitcoin? Let's discuss the features we believe would improve adoption and usability of the client:

* Seperation of Bitcoin API into a standalone embeddable module

I believe this is important so that third parties can port Bitcoin to different platforms, with different UIs, etc.... look at how many platforms we now have for Bittorrent, and the functionality is also embedded into different applications.

* Flat file format for coins

Coins should be exportable into a flat file format, which will be readable by the core API and thus re-importable to other clients. This flat file format should be encrypted natively (though people can choose to embed it in another encryption format, thereby providing double encryption).

* Full security audit of Bitcoin

This will be needed in order to provide a measure of trust.

* Increased anonymity/privacy features

Simply integrating with Tor/I2P, like BitTorrent programs allow, should help. Experts in these domains could point out simple optimizations that could be done and would not slow down the network significantly.

* Protocol obfuscation/encryption

This is a simple manner of survivability, in case ISPs or other agencies attempt to monitor, filter, or block Bitcoin traffic.

I believe these are the most important features. Other features could be implemented by third parties as they embed the Bitcoin module into their apps. Witness the vast proliferation of Bittorrent clients, each with their own sets of features on top of the base Bittorrent featureset.

Other things that will help to drive adoption:

* Increased exchange methods. It is not that easy to get Bitcoins right now!
* Increased payment sites. This is a manner of advertising Bitcoin and getting people to accept it. Again, if Bitcoin was a standard module that people could just drop into their web apps, this would be much easier.

Satoshi, what do you think about development bounties and the like? I wouldn't mind donating a few resources to help get these things done more quickly. I would code myself, but my C++ is rather rusty Wink
12  Economy / Marketplace / Wanted: Bitcoins. In return: USD$ on poker sites. on: July 10, 2010, 04:21:28 PM
FreeMoney is selling USD$ on poker sites for Bitcoins. See below for details.
13  Bitcoin / Bitcoin Discussion / Defending Bitcoin against interventionists on: July 09, 2010, 04:12:41 PM
You know who I'm talking about.

"Bitcoin is a fixed currency! That means deflation! Deflation is the boogeyman! Therefore, we MUST create new bitcoins in pace with node growth and maintain price stability!"

"I don't like how feature X is implemented in Bitcoin. I'm gonna fork the project and who cares if the current nodes get confused!"

"Bitcoin is prone to speculative attacks! Therefore, we must prevent one node from accumulating too many bitcoins in order to maintain price stability!"

I could go on and on...

In my opinion, since unlike government fiat currencies, Bitcoin is entirely voluntary and not obligatory, the moment someone tries to make Bitcoin behave like a fiat currency, it will lose all value and all holders will have their holdings wiped out. That should be reason enough not to intervene, but people will still have their arguments and try...
14  Bitcoin / Bitcoin Technical Support / Certificate error? on: July 07, 2010, 11:07:11 PM
I get a certificate error when accessing the bitcoin forums; tells me that has an invalid certificate.
15  Bitcoin / Development & Technical Discussion / Security on: July 07, 2010, 02:53:00 PM
Has there been a concerted effort to attack, subvert, or break Bitcoin? One way to test that it is secure from attack would be to actually try to undermine it, by double-spending coins, creating fake coins, posting false transactions, etc... and if flaws are found, better that they are found now than later, when the bitcoin economy is potentially larger and there is more to lose.
16  Bitcoin / Development & Technical Discussion / Standardizing the API, and proliferation of different types of clients on: June 28, 2010, 03:51:22 AM
One of the best things that could happen to Bitcoin is for there to be an explosion of apps which support the API, and allow Bitcoin transactions. I am thinking of the explosion that we saw with BitTorrent; it was a great boost for the format. We had a standard client, and then we saw an explosion of many additional clients that also supported the format. Here are some things that could help:

- Standardization of the wallet file. Tools to extract coins and send them into other wallets. There are already tools to back up and restore files, and encrypt files, so the coins just need to be exposed somehow so they can be manipulated as individual entities.
- Exposure of all of Bitcoin functionality in a standard API. It should be possible for users to perform all types of queries in order to extract all visible data (i.e. where a coin has passed by before). Everything that is visible should be externally exposable.
- Seperation of UI from the engine. This ties into the previous point.

Once the API is standardized, it could then be ported to other platforms, such as Java, and deployed on a mobile phone to perform transactions.

The danger is that with the proliferation of different clients, control over the currency is reduced. What if two different clients decide to handle the generation of new bitcoins differently? Will bad currency drive out the good?

What do you guys think?
Pages: [1]
Powered by MySQL Powered by PHP Powered by SMF 1.1.19 | SMF © 2006-2009, Simple Machines Valid XHTML 1.0! Valid CSS!