A data plan priced in bits, like "Unlimited downloads for only 2k bits per kbit", could be pretty confusing. 2kbit / kbit? Huh? Though I like the idea. I just think a nice easy term for a millionth of a bitcoin would be good. And a bitcent could be reappropriated to be the same as a satoshi now, aka 0.01 bits. That way, like with most currencies you use every day, you would only have to deal with at most 2 figures after the decimal place. Unless the protocol is changed in the future to divide bitcoins up even more.

After reading about Bitmessage last night and remembering this post on the Cryptography StackExchange by David Schwartz (now of Ripple), I thought that perhaps it could be utilized to achieve his idea. To that end I've written up a scheme on how it might be used. All credit goes to David. Criticisms welcome.

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Using Bitmessage with Bitcoin for extra privacy

Bob wants to receive Bitcoin donations. He generates a new Bitmessage address and posts it on his website publicly. Bob's Bitmessage address, at a higher level, is considered to be a new type of Bitcoin receiving address. This address can be readily associated with his personal identity.

Alice wants to send some bitcoins to Bob. To do this, Alice first generates a new Bitcoin address and sends bitcoins to it. Alice then generates a new temporary Bitmessage address (it will not need to be stored after the payment has successfully completed). She uses this to send the Bitcoin private key to Bob over the Bitmessage network. This message is encrypted to Bob's Bitmessage public key, so only he can read it. Bob receives the message, is able to successfully decrypt it, and sees the Bitcoin private key contained therein.

To accept payment, Bob generates a new Bitcoin address and, using the private key sent to him by Alice, is able to send the funds to it. He could also choose to reject the payment by sending a message back to Alice's temporary Bitmessage address. Alice still has the private key and so she can still spend it into a new address at any time, even without this rejection message. After moving the funds into a new address, and after an acceptable number of confirmations, Bob has now received payment and Alice may delete the temporary Bitmessage address. These procedures could all be automated by the software.

If everybody were to use this scheme, there would be no Bitcoin addresses able to be readily associated with personal identities. When Bob wants to spend his bitcoins at Frank's store, he would be given a Bitmessage address by Frank to be used for payment. Bob himself would then generate a new temporary Bitmessage address to send Frank a Bitcoin private key. Bob doesn't reuse his public Bitmessage address when sending a payment to Frank, so Frank does not know that it is Bob who is paying him (unless he supplies his identity with a shipping address, email, etc.). If Bob were to simply reuse his public Bitmessage address, Frank could type it into a search engine and discover that it is owned by Bob.

Anybody can see Bob's public Bitmessage address because it is posted on his website, but they cannot simply use this to check how many Bitcoin donations Bob has received, or who has donated. Alice can see when the bitcoins are moved again on the blockchain to a new Bitcoin address, and assume that this means they have been spent by Bob, but she cannot readily associate the new Bitcoin address with Frank, even if Frank has publicly disclosed his one and only Bitmessage address on the Internet like Bob did. Only if Bob specifically tells Alice that he sent the bitcoins to Frank can Alice know that the new Bitcoin address is owned by Frank. Likewise, if Frank and Alice are able to compare notes, Frank can discover that Bob is the one who has paid him. Because of this fact, this scheme does not make Bitcoin untraceable and anonymous, but it may provide some extra privacy. It would help thwart some obvious discoveries possible with Bitcoin addresses presently, since more active collaboration would be needed to achieve the same thing.

Thankfully this scheme would be a convention built on top of Bitcoin and Bitmessage, and so wouldn't require any changes to either protocol. The old mechanism for receiving payment will still be possible, though ideally you wouldn't pool funds collected from both mechanisms into one wallet or it could leak your identity when they are associated together on the blockchain with multiple inputs to a single transaction. You would ideally keep them separate and ideally only spend Bitmessage bitcoins to other Bitmessage addresses. This would only be realistic, however, if it became a widespread practice.

One major downside to using this scheme is that Bitmessage addresses cannot passively receive bitcoins while you are offline. You will need to go online at some point to receive a payment to a Bitmessage address, because you will need to send the bitcoins to a new Bitcoin address that you own. In a GUI, this could be presented as a simple 'Accept bitcoins' button, which will automatically generate a new Bitcoin address and send the funds to it, using the private key contained in the message. Until this action is performed, however, the bitcoins are still technically owned by the original party, since they can (and should) keep a copy of the private key. In addition, the Bitmessage network deletes older messages, although they do get re-sent with a later timestamp if they were not acknowledged as being received. This resending process also requires the sender to go back online, however.

An extra possible upside to this scheme is that there would be no need for users to generate a new receiving address each time for extra privacy, although they can still do so if they wish. This would make managing payment addresses much easier. For sending, however, users should create a separate temporary Bitmessage address each time. In a possible GUI, Bitmessage could be abstracted away along with Bitcoin addresses. You could present only a single Bitmessage address to the user for receiving. This address, along with all of the Bitcoin addresses used behind the scenes, could be generated in a deterministic manner from a passphrase, allowing for wallet backup to be very simple.

+ easy transaction, no fuss, trustworthy

rsLjhunnmsgfBuKVTe12g6oUjYsfhfiqRY

Processed really fast. No fuss. Definitely recommended! Thanks.

Aw thanks! 1GVPy6p4PtTiGoc1BW14ZMPLMKDRDABDVS

Oh nice I thought this was gone for good! Glad to see it's back.

I don't see the big deal with this as other manufacturers are sure to move in if there's so much profit to be made there. Though is it possible to patent something like 'ASIC SHA-256 hashing' in general, so nobody else is even legally allowed to compete? That could be disastrous for Bitcoin as BFL could then have >51% at any time, and nobody would be legally allowed to challenge it by producing their own ASICs. I assume this isn't a potential problem though, or somebody would have mentioned it already?

You think in terms of 'societies' as some fundamental unit, and as such your understanding of them is always going to be flawed because you have your own assumptions about what societies are, and those assumptions really have no basis behind them. Methodological individualism gives a basis for what societies are, but you're just stopping at the group level and assuming that it's just a thing that exists and is something that can't be reduced down further to individual action/motivation/behaviour/nature. So you don't understand the limits of social cooperation: that it's not just a 'given' that vast swathes of unrelated people just mutually come together and agree on things, and commit to do massive social projects together. But that isn't a given at all. You have to explain, in a more fundamental way, how and why those things happen, and what is necessary for those things to happen, otherwise you're just being lazy about it.

You just assume that the problems you see in today's society are attributable to what you don't like, and you assume this on an instinctive, common-sense level, but you can't really explain it in a more compelling way. I admit that it's somewhat intuitive to think that the 'money system' is somehow structurally problematic, and complex division of labour. We evolved in small human-scale tribes where cooperation and collective ownership is easy and natural. People for whatever reason have an instictive reaction (or maybe it's just cultural baggage, not sure) to think of 'making money' as a bad thing, and people think too highly of inefficient not-for-profit organizations just because profit is a dirty word. But the holistic, common-sense answer isn't always correct, as we can see by the monty hall problem. And to me it sounds like you're giving the reactionary, holistic, common-sense answer to the monty hall problem as 50% (which practically everybody thinks when they first hear it -- even brilliant mathematicians like Paul Erdos). And when it is shown to you in a reductionistic way -- by explicitly mapping out the probabilities -- that the answer is really 66%/33%, you simply assert 'nope' without explaining where the reductionistic explanation went wrong. Hopefully you can see with this analogy why what you're saying is not compelling at all.

As an anarchist (of the ancap pursuation), I think that when I attribute problems to the state I can explain it as being how the state interferes -- with aggressive violence -- with emergent market mechanisms (like the price mechanism), and this makes things inefficient and wasteful, leads to less social cooperation, etc. I think there's a complete chain of descriptive explanation there, going back to individual action, and even the existence of states is considered with methodological individualism, so it's not exempt from it. And I do believe that we can all be as fantastically wealthy as the venus projectors think (though I wouldn't go as far as to say 'post-scarcity', because human desire is unbounded). It just won't happen without money and prices, because as I believe I have explained that would cause more waste and more scarcity and poverty, and wouldn't occur naturally anyway without violent intervention from a state.

That's not what methodological individualism means; don't confuse it with a sort of prescriptive individualism of going off by yourself and being selfish, etc. And you absolutely can explain community by methodological individualism, by explaining that man is a social animal and has instincts that lean that way. In fact that is the whole point:


The economic calculation problem explains, with money and the price mechanism (both of which have an even more reductionistic explanation), how entire societies -- and even the entire world now -- are able to cooperate together well beyond Dunbar's number, economize on a macro level, and how this cooperation would not be possible without those price signals. After all we are not linked by a hive mind: we are fundamentally still individuals, and groups only form when individual action coincides to make groups form. You still have to give a satisfactory explanation of why and how that happens, and a holistic one isn't sufficient.

But you realize you're not actually saying anything meaningful? Unless you can take a more reductionist approach to your explanations you're not going to convince anyone, except people who also think the way you do. You're just speaking in this meaningless holistic way that makes no sense to someone who knows to use methodological individualism as a basis for the explanation of social phenomenon.

Evoorhees has explained with methodological individualism the Mengerian account of why money is a naturally emergent phenomenon that serves an actual purpose, and how it would come about naturally even to a society of people who have no prior concept of money. He's not even really being prescriptive about it; he's being descriptive. It is explained by reducing the account to simple non-controversial statements, i.e. so that the explanation doesn't even assume some hyper-rational cooperation of people to come up with it. It just comes about on its own by individual humans being merely rational actors, and that is to say human action isn't just arbitrary action but goal-driven. Now, this isn't a rejection of the existence of collective groups -- of numbers of people lower than Dunbar's limit at least -- but it's just saying that any form of collectivism isn't even necessary explain money in a sufficient way.

And the Wikipedia link on economic calculation explains -- again using methodological individualism -- why money prices are needed for profit/loss accounting, and why profit/loss accounting is needed for a society to rationally economize and allocate resources, and for entrepreneurs to coordinate, on a macro scale. Prices actually mean something; they're not just arbitrarily set things (at least in a free market). They're a bottom-up reflection of the intersubjective valuations of things to the people in an economy, and of the availability of such things. Without prices you lack the necessary information to be able to calculate what is economically profitable to produce and what isn't. You won't get that information any other way than through the emergent processes of the price system. Certainly no central computer could have it because it doesn't have access to the dynamic minds of everybody in the society. So when you say 'Economic calculation is an abstraction and distorts our perceptions and values', I don't even know what that means. I'd say it's the complete opposite, but I'm not merely asserting it like you're doing. You can't just holistically dismiss any inconvenient economic explanation outright that comes your way as being some mere historical baggage. You actually have to criticize it, and use the same reductionistic approach to explain why what we're saying isn't actually true and why the Venus project ideas are right

Lecture: Calculation and Socialism | Joseph T. Salerno

If nobody works or needs to work because machines are doing everything then you're already living in utopia. What's the problem? Isn't that the whole goal of the Venus project you're so fond of? A fine goal, but the thing is without money you have no way to do economic calculation and so no rational way to allocate resources to where you're going to get the biggest bang for your buck. You get more scarcity, not a magical post-scarcity utopia.

Division of labour is good, and having a common medium of exchange brings more opportunities to trade. There are no downsides to money.

I see, thanks. Strange though because I sent another transaction later of 0.1 BTC and this time it did ask me to add a 0.005 fee. Was that for a different reason than the <= 0.001 BTC output rule?

Now I have another problem though. I'm tying to send a third transaction of 0.2 BTC from the same paper wallet address, but after I scan the QR code it says 'Insufficient Funds'. There's 5 BTC there so something must be going wonky. At first I thought maybe I had to wait for confirmations from the previous transaction, but it has over 100 now.

Why is this transaction not picking up confirmations?
http://blockchain.info/tx-index/4791008/d1f07a42fc38671403879883f34e5c86c8fb767b262bece49dbab6042ccad2dd

Did it not get broadcasted? It was created on the Android app by scanning a paper wallet.

EDIT: I guess it's because there's no miners fee? Was it supposed to add the fee and warn me?

Cool feature, though if you hit cancel on that screen it keeps asking you over and over. Any way to choose which address you want to send from, like with the web client? That would really round out the paper wallet functionality I think.

EDIT: Also, why not allow your watch only addresses to be used with the 'request bitcoins' feature? I'm also not sure about 'active' addresses and such, because that terminology is not used on the web client. Is it necessary? My watch only addresses appear on the 'sending addresses' tab, even though they're addresses I own. This seems weird to me. However I could always request bitcoins to an active address and then send them manually to one of my paper wallet addresses, but it'd be cool if it supported your paper wallets directly my phone camera is better able to scan QR codes than my webcam is.

http://blockchain.info/address/1Q7h5g82uoZDHUe6oSQ3mpp7ej16iT3Nus

Here the total received metric is counting 5 BTC twice, giving 11 instead of a total of 6. I guess it's technically correct, but it's not as though any extra wealth was added to that address from the second transaction that wasn't already there before. So for human understanding, maybe it makes more sense to ignore that in the calculation. What do people think?

It's working now. Turns out my wallet account was old and was still in some old format or something. If anyone else is having this same problem, open up your wallet in your PC browser and go into account settings and then run the integrity check. After the check (which was valid for me), pairing worked.

Getting the same thing unfortunately.

I'm pretty sure I just this moment downloaded a new version from the Play store, but I want to make sure. This might sound dumb but where do I check if the version I have installed is 87? It still says 2.8, but I don't know if you incremented that number.

EDIT: I'm on 2.9 now but still the same error. Here's the exception report: