The following is an Alt-coin forum sticky from Gavin in 2011: I haven't seen anybody post about what would be my biggest worry if I were trying out alternative block chains. I realize this may be perceived as "Gavin is FUD'ding anything that isn't bitcoin!" (FUD == Fear, Uncertainty and Doubt) But I think some of you might be forgetting some basic computer security fundamentals in the excitement to be early adopters.
When I first heard about bitcoin, my questions were:
1) Can it possibly work (do the ideas for how it works make sense)?
2) Is it a scam?
3) If it is not a scam, could it open my computer up to viruses/trojans if I run it?
I answered those questions by:
1) Reading and understanding Satoshi's whitepaper. Then thinking about it for a day or two and reading it again.
2) Finding out everything I could about the project. I read every forum thread here (there were probably under a hundred threads back then) and read Satoshi's initial postings on the crypto mailing list.
3) Downloaded and skimmed the source code to see if it looked vulnerable to buffer overflow or other remotely exploitable attacks.
If I were going to experiment with an alternative block-chain, I'd go through the same process again. But I'm an old conservative fuddy-duddy.
If you want to take a risk on a brand-new alternative block-chain, I'd strongly suggest that you:
1) Run the software in a virtual machine or on a machine that doesn't contain anything valuable.
2) Don't invest more money or time than you can afford to lose.
3) Use a different passphrase at every exchange site.
Just sayin |
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And some people still doubt the value of Litecoin which mines blocks at 2.5 min each  |
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Yeah, I think localbitcoins.com is key. People often say Bitcoin exchanges are the weakest link since they can be targeted to some degree, but person to person transfers will always exist. |
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Alt-coins don't necessarily compete with Bitcoin, but rather strengthen cryptocurrency in general. I doubt Bitcoin will ever completely be replaced (where it disappears), not without some fundamental flaw discovered an alternative can solve or some superior feature Bitcoin can't emulate.
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The same would apply to bitcoins. Once you have an economy that primarily transacts bitcoins you won't be able to drive down the purchasing power of bitcoins with external systems, no matter what they do, because there are only a certain quantity of actual bitcoins each participant can have.
Bitcoins are designed to can hold a fracture to at least eight digits: The Satoshi. (the "satoshi" is the smallest denomination currently possible 0.000 000 01 BTC = 1 satoshi (pronounced sa-toh-shee. https://en.bitcoin.it/wiki/FAQ) So my thought is that this fact a bit of help. You can break gold down into fractions and microscopic amounts too. That doesn't change my point. There are only a limited number of whole bitcoins you can have (or a limited number of satoshis if you prefer). |
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Congrats both of you! Sounds like a win win!
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Well,
Same is told about gold and silver. I believe without using dirty tricks the price would be much higher. And NOT on a limited extend. Every form of manipulation, even for a short period, should be banned.
EDIT Price of gold is manipulated since Nixon closed the gold window. That was not yesterday :-). So they could bring down prices for a long, long time...... Way too long
You have a good point here, but here is the key thing you're missing: "the price would be much higher" Right there you're measuring against something else, presumably dollars. In a gold only economy where people exchanged only physical gold then 1 oz of gold would get you a certain amount of goods/services and that wouldn't be affected by external systems, at least not in a way that drove down the purchasing power of the gold, because there would only be a certain quantity of physical gold each participant had. The same would apply to bitcoins. Once you have an economy that largely transacts bitcoins you won't be able to drive down the purchasing power of bitcoins with external systems, no matter what they do, because there are only a certain quantity of actual bitcoins each participant can have. |
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"People can buy things with Amex points. That's a real kind of currency that's created by American Express to allow them to have a greater piece of consumption that they otherwise wouldn't get," said Bremmer.
To
"People can buy things with Dollars. That's a real kind of currency that's created by the Federal Reserve to allow them to have a greater piece of consumption that they otherwise wouldn't get," said Bremmer.
Yeah, that guy really understands what's going on. </ sarcasam>
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Sorry if this is covered elsewhere. But with an allowance of only one search per minute, I gave up trying to find it.
I seek assistance in trying to understand how bitcoin can last. My main concern is what happens as difficulty increases, transaction load increases, and the computational power needed to confirm transactions increases. We're beyond the point where CPU based mining is feasible. GPU mining is only possible in pools. ASICs are coming online that have more power, but when will that end?
It seems there will come a point in the future when only pools of $25,000 ASICs will be able to get anything done - and at what return? After many hours of reading on the topic, I'm left with the following questions:
1. Am I wrong that if no one is mining, no transactions get confirmed and nothing moves?
2. If the computing power is owned by only a few who can afford it, the integrity of the project is lost, isn't it?
3. Am I completely misunderstanding the way this works?
Yes, it can last. The first thing you have to understand is Bitcoin is an experiment. A lot of what will happen with it is simply unknown. Being experimental isn't necessarily a depressing negative. The http protocol now used everywhere was experimental too. Bitcoin is a new model so it can't help being experimental. What Bitcoin has in its favor, though, are three very powerful assets: populist support, alliance with free markets, and very smart people working for its success. Answering your questions: 1. Correct. As long as Bitcoin exists there must be someone mining. 2. Not necessarily. The composition of miners may change, but there will still be many of them. Also technology historically gets cheaper over time. 3. No you have a pretty good understanding. You also have to understand Bitcoin is no longer alone. There are viable alt-coins now with the same desirable features as Bitcoin (anonymity, irreversibility etc.) like Litecoin which uses the Scrypt algorithm that made cpu mining again effective, and Novacoin. Movement toward overly centralized outcomes can move the market to support more decentralized versions. |
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Guys, countless Bitcoin spinoffs were seen waaaay ahead of time. You don't think they were?
What gives a coin value isn't simply announcing one and hoping people that want to get rich start valuing/pumping it. That doesn't work because there is nothing to stop that cycle recurring repeatedly.
Instead, a coin has to have something other coins can't easily emulate, something of real value. When it comes to money, what gives money value in the first place is that a large enough base of users accept it as such. That's why spinoffs can't kill Bitcoin without offering something super superior. Bitcoin already has one of the largest, if not the largest, base of users/merchants that accept it as valuable. Litecoin is second or nearest that. Novacoin offers proof-of-stake with proof-of-work, which is pretty novel, so I think that one might hang around too.
All of this happening now was completely predictable (just as Bitcoin's price rise was). We're now just watching things play out.
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rpjR18C5v3kKvmeBBZB4zce2B9b8FJ4ABP
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This is a good thing, which actually would empower Bitcoin.
Bitcoin should have two sides, one in the light perfectly transparent side, and one more hidden less controllable side, just like cash and the dollar. Except of course Bitcoin has even more flexibility than cash.
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I have downloaded the bitcoin client and the client has synced with the network. I have made a few transactions with my wallet, both inbound and outbound. I have also encrypted my wallet with a password. I have also backed up my wallet, locally, and also emailed it to my gmail account. Two questions...
1. will the wallet address that I have used in the past continue to be mine forever? Or will it change after X number of transactions?
2. If I backed up my wallet 2 months ago, then made several more transactions after the backup, then my PC crashed, then restored from a 2 month old backup, would my restored wallet be 100% exactly the same as the one that crashed? Would I have the transactions that occurred after the backup?
Your first question is tricky to answer, because wallet software isn't what core Bitcoin is. Understand that Bitcoin works based on public/private key pairs that are cryptographically linked. You start with a private key which is a 256 bit number - a really really big number, so big in fact the chance anyone else randomly picks your same number is infinitesimally small even if they make thousands of guesses per second for years. The private key is what gives permission to spend/send bitcoins and only you know it; so if you lose it you lose that ability. So the answer to your first question is yes, any address you generate is yours forever as long as only you know the private key. However, the Bitcoin wallet software you use generates new addresses for some transactions and when you click to generate new addresses. These addresses are taken from a key pool (containing 100 keys by default) so if you make a backup which knows all of the addresses in your key pool, but then do 150 sending transactions, for example, your wallet software will replenish the key pool back to 100 with some keys your backup doesn't know about. It will use the oldest addresses first, but if you ever receive coins to one of the addresses not in your backup and your computer crashes then you lose those coins. That's why it's good to refresh your backups periodically depending on your usage patterns. Here is backup advice from Gavin: Backup every 30 sendtoaddress or generatenewaddress and you'll be fine-- you should always have at least 3 backup copies of all your keys.
If you're running a very busy service so backing up every 30 is too often, then run with -keypool=1000 and backup at least every 300 sends/generates. ...
You might check out that thread on the subject anyway if interested as it may be cool to read a thread Satoshi actually participated in  |
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I think this thread is spot on. First, let me say I don't like using XBT. Although I understand the reason behind it I believe it will confuse people (the majority that use it); already in this thread people are putting the X in different places. BTC makes sense and is the most widely adopted. Second, I do think we should make a concerted push toward mBTC (we shouldn't skip all the way to Satoshis). Newer people will not know that we had a large discussion about moving the decimal place early in this forum's and Bitcoin's life. Some of the exact same reasoning about perception being key was brought up, including by myself. In fact, if you look at the chart on this page you will see there was one weird spike in Bitcoin's price history where it went from around $1 to $30 and back to around $1-2 in a short timespan. Guess what. That spike, if you look at this forum's history, corresponded with discussing moving the decimal place in a concerted way. People understood that if 1 mBTC reached dollar parity then owning whole bitcoins would mean a lot of value (1 thousand times more, to be precise), and the price shot up, then crashed. We mostly didn't move the decimal place. I think because it wouldn't have made sense. We had only recently reached dollar parity, giving Bitcoin that crucial credibility boost. It wouldn't make sense to hide that by referring to everything with mBTC which would then be worth about $.001. Now, however, things are different. We've reached $100, and I think perception is one reason we're sort of stuck there. If we go to mBTC now they would be worth $0.10 each approx, which is easy to comprehend. I think we need to push the exchanges to do this. If they do so everyone else will follow. |
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There's nothing wrong with a bank, just banks connected to a federal reserve of some sort?
24/7 private vaults for example is a 100% anonymous bank.
Why not develope a BTC vault?
Yes, I believe that's right. For example I think this recent comment has a point: ...
Physical security. Not often thought about seriously, I know. But I think it needs to be. There is a fundamental difference in security between getting rich off Bitcoin overnight and say winning the lottery overnight. The lottery winner would have his winnings in a bank.
Generally rich people aren't strategically physically robbed for this reason. Just because a guy has a ton of stocks and bonds, and is worth a whole bunch of money doesn't mean that putting a gun to his face is going to get an attacker much more than his wallet.
This is why if Bitcoin succeeds, it doesn't mean that banks are going to die, just that their roles will change.
...
Securing bitcoins properly is not the easiest thing in the world. That means a market probably exists for doing this reliably, and possibly even with insurance. |
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We already have one US exchangers no one seems to be using - campbx.com (1% volume of gox).
Problem is who knows when it will pull a "bitfloor" or ZhouTonged when it gains popularity, I would put money at a company that has VC support (coinbase, coinlab). They are less likely to have their bank account banned for playing exchange as a teenager, or get hacked due to lack of technical expertise. Agreed. For me a legitimate exchange must be insured or bonded and be licensed as a money transmitter. FinCen has already stated that exchanges are going to need this. Any new startups that think they can avoid such regulation are not going to survive. It sucks to see guys who deserve credit get none. CampBX.com is one of the only exchanges to never be hacked, as far as I know. They made security part of their image from day 1. They seem to be the epitome of responsibility and honesty. They have been around now for what well over a year? Without a single incident. As for regulation the FinCEN guidance is taking the entire Bitcoin community a while to digest, at least those based out of the US. Other than Gox and Intersango (which hardly exists anymore) I believe they are the oldest exchange that's still around. I started trading there in July of 2011. I've never used campbx before, but after reading this thread I decided to give it a try, so I moved some money off MtGox and onto CampBX, let's see how it goes. Nice!  As I said before as a community we should make a conscious effort to support more exchanges. Centralization, 80% of all trades at one exchange, is a weakness. It's a weakness economically - note the price drop on the Gox lawsuit, or ddos, etc. - and it's a weakness from a security and regulation standpoint. |
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We already have one US exchangers no one seems to be using - campbx.com (1% volume of gox).
Problem is who knows when it will pull a "bitfloor" or ZhouTonged when it gains popularity, I would put money at a company that has VC support (coinbase, coinlab). They are less likely to have their bank account banned for playing exchange as a teenager, or get hacked due to lack of technical expertise. Agreed. For me a legitimate exchange must be insured or bonded and be licensed as a money transmitter. FinCen has already stated that exchanges are going to need this. Any new startups that think they can avoid such regulation are not going to survive. It sucks to see guys who deserve credit get none. CampBX.com is one of the only exchanges to never be hacked, as far as I know. They made security part of their image from day 1. They seem to be the epitome of responsibility and honesty? They have been around now for what over a year? Without a single incident. As for regulation the FinCEN guidance is taking the entire Bitcoin community a while to digest, at least those based out of the US. It's true that I had forgotten about CampBX. I will have to take another look at them. Hopefully they are working on becoming a transmitter. Oh, and +1 to Proudhorn's comment. I like them. I posted a thread about the community supporting other exchanges besides defaulting to Mt.Gox, and I promised to try myself. CampBX.com I think has a great foundation, but they need to work on usability a bit. Their site isn't smooth feeling to use, and their depth table, with the increasing volume, is now pretty useless in practice. They need a visual chart. I agree about proudhon's comment too. |
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We already have one US exchangers no one seems to be using - campbx.com (1% volume of gox).
Problem is who knows when it will pull a "bitfloor" or ZhouTonged when it gains popularity, I would put money at a company that has VC support (coinbase, coinlab). They are less likely to have their bank account banned for playing exchange as a teenager, or get hacked due to lack of technical expertise. Agreed. For me a legitimate exchange must be insured or bonded and be licensed as a money transmitter. FinCen has already stated that exchanges are going to need this. Any new startups that think they can avoid such regulation are not going to survive. It sucks to see guys who deserve credit get none. CampBX.com is one of the only exchanges to never be hacked, as far as I know. They made security part of their image from day 1. They seem to be the epitome of responsibility and honesty. They have been around now for what well over a year? Without a single incident. As for regulation the FinCEN guidance is taking the entire Bitcoin community a while to digest, at least those based out of the US. |
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You forgot a "both" option. What if you replaced bitcoin with gold in the question, as in has gold been a currency or commodity?
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Yes, it is possible to store arbitrary data in the block chain. The block chain can store text, which in turn can be used to represent various forms of data. You have to understand that data is just data. It only means something when put together a certain way, sometimes for intentional meaning, sometimes hidden meaning. Also understand that because binary (1's and 0's) can be represented many ways (like tapping your feet timely, or etching tick marks somewhere) it's possible to store information on basically anything in almost any medium. There is in fact ascii art hidden in the block chain of Ben Bernanke and Len Sassaman: http://pastebin.com/raw.php?i=BUB3dygQYou can also put more nefarious text there too, but there are many ways to be nefarious. If you don't want people to be able to store possibly nefarious data with you then you have to do much more than stop running a full Bitcoin node (note you can use Bitcoin without storing the block chain, e.g. blockchain.info). Most Internet users accept browser cookies, which are files that allow sites to store text info on your computer. You can put links to child pornography, ascii art, encoded picture files etc. in cookie files just as you can in the block chain. The usual size limit on cookie files is 4KB. The image below is 2KB:  So if you want to be sure you're not inadvertently storing information in a form you're not aware of you better stop using any cookies (or check every one in countless formulaic ways). But the fun doesn't stop there. Most browsers also store a history of sites you've visited. Guess what? The Internet runs on text as in Hyper TEXT Markup Language. Any web address you visit can append an arbitrary amount of text data to the URL after the ? as in goodsite.com?arbitraryhiddenchildpornencodedtext so you have to also stop letting your browser store any information on sites you visit. Your browser also downloads Javascript, Java, and Flash files to name a few things often downloaded while viewing ordinary Web pages. Any of these can be used to store arbitrary data on your computer. Just as there is cocaine on physical cash many people are unaware of, so to are there ways to "dirty" things people usually consider clean without them even being aware of it. That didn't start and won't end with Bitcoin. |
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