Honestly, I don't think it matters. If the coins are never used as a currency, it doesn't matter. If they are, the value of every coin once is a tiny drop in the bucket compared to the value of the currency as a means of exchange as each coin is turned over hundreds and hundreds of times.

It does mean the coins are less useful as a store of value because their value might drop if those coins are introduced into circulation suddenly. And it does mean a small increase in risk using the coins as a medium of exchange, again because of the risk you will be holding the "hot potato" on the day a large number of coins are dumped.

But compared to the value of a currency as a means of exchange, this is peanuts.

It's essentially the same thing. If the seller has a significant risk of being ripped off by the payment processor, they'll have no choice but to pass that cost on to the buyer. That why if you try to buy Bitcoins and pay with PayPal, you'll wind up paying more.

It leads to a death spiral. Say Bitcoins are selling for $10 each. But due to the additional risk, I'll have to charge $12 if you're going to pay with PayPal. Well, scammers don't care if they have to pay extra because they aren't actually going to pay anything. But this will cause some legitimate users to go to in person or major exchanges instead. So my ratio of scammers to legitimate users will go up. Soon I find that $12 isn't enough and I have to charge $14. Scammers still don't care, so I don't get rid of any scammers. But now, even fewer legitimate users are interested in using PayPal, so the price again has to go up.

A certain quote from Cyrano Jones comes to mind.

I predict this will do almost as well as the "milliday".

http://zapatopi.net/metrictime/

I don't completely agree.

a) You can somewhat change the minting rate by falsifying the timestamps of your blocks.

b) You can control the coins of other people by changing an old transaction that indirectly gave them those coins in the first place. You could probably put yourself in the path of a significant number of coins by alternately withdrawing and depositing from a site like Mt. Gox.

e) If you have 51% of the hashing power, you can modify transactions right at the last checkpoint. You just start mining your own chain right at that checkpoint and yours will always be longer.

If lots of people want to run a program that tells them they have a million bitcoins, more power to them. It won't hurt anyone who isn't running such a program.

Unlike most other systems which determine what data is valid by who holds it or where it is held, Bitcoin has a set of objective rules for determining what data "wins" that looks only at the content of that data. So introducing bogus or nonsense data into the system does no harm. If it wins by the rules, then it's valid and not bogus or nonsense. If it loses by the rules, then it will be ignored.

If I create some chunk of data that says I have a million bitcoins, one of two things will be the case:

1) By the rules, this data is valid. In this case, I actually *do* have a million bitcoins because that's what it means to have a million bitcoins.

2) By the rules, this data is invalid. In which case, everyone will ignore this data because it's invalid. It doesn't matter who I send it to or where it's stored.

Bitcoin does *not* rely on any central authority of what is valid and what is invalid. Data is validated by objective rules that look only at the content of that data. The only exception to this is blockchain checkpoints.

The Satoshi client enforces all these rules. If sent data that doesn't comply with the rules, the client ignores it. If sent data that does comply with the rules, it accepts it. It isn't reliant on trusting some authority to tell it what data is valid or invalid.

The two vulnerabilities the system has in this area are the 51% attack (where more than half the computing power conspires to undo a transaction) and the Sybil attack (where someone cuts you off entirely from any source of data).

The first thing to do to troubleshoot this kind of problem is go to blockexplorer and see if the transaction exists in the block chain. If you see a transaction, you can also tell what block it was included in. If you have that block, you should see that transaction.

For the example you posted, there is no such transaction yet. http://blockexplorer.com/address/1YzCWkVD2hAW1ovubVsf3JbjED1qck7sT

That's equivalent to doing nothing at all, so why bother? If you think inflation is needed, this won't provide it. If you don't think inflation is needed, why bother going to all this effort?

Right. If we have inflation, why would a gas station sell me any gas today when he knows he can sell me that same gas tomorrow for more money?

The simple fact is, whether we value gas in terms of a basket of commodities, ounces of gold, an inflationary currency, or a deflationary currency, gas is worth more to me than it is to the gas station. And so long as there's no particular reason either of values a currency *differently*, we can use that currency to trade gasoline. If we both think the currency will be worth more tomorrow, we can both take that into account and agree to exchange less currency because we'd both like to hold the currency.

The properties of the currency, so long as it is predictable and affects both parties equally, will have no effect on whether the parties are willing to trade or not.

The better counter-argument is this: The guy trying to sell me gas also knows it will be cheaper tomorrow, so he'll do whatever he has to do to get me to buy it today.

The mistake people made (other than the fact that it was obviously a Ponzi scheme) was primarily in increasing the amount of trust incorrectly. That is, it was an algorithmic failure in the amount of trust extended.

Pirate clearly had a strong incentive to run off as soon as he was holding the maximum amount of other people's money. There had to come a point where payouts exceeded pay ins, and at that point he has a strong incentive to run off with everyone's money.

However, it might make sense to risk $1 on someone who appears to have been stable for a long time. It's possible that they'll collapse while they owe you $1, but since they've been stable for a long time, your exposure window is short, and you're only risking $1, then what the heck. Now, suppose by a series of transactions in which you only had $1 at risk at any one time, you made a profit of $3. Now, you can risk $4 with this guy. If he defaults, you'll lose $4, but since you've already made $3, that's still only a $1 net loss to you.

In this case, not only are you making money, but they guy you trust is making money too. So he doesn't have such a strong incentive to run off with your money because then he'll have to abandon the valuable trust network he has accumulated. If the network is worth more than he owes, he has no incentive to default at all. In contrast, Pirate was sustaining only losses from day one. There was no evidence he ever made any profit, and so nothing of value for him to have to walk away from. He lost nothing by defaulting.

In other words, the problem may just be using the right algorithm to decide how much trust to extend such that the maximum loss in the event of betrayal has a small bound and people generally have a greater incentive to honor their commitments than to default.

However, I don't think people will transact in this way any time soon, largely because it's complex and people are risk averse. Maybe I'm wrong, but I don't see this as a significant application in the short to medium term.

Sure it is. You might want to look up "self-defense" in a good dictionary. (However, I would still argue that the legitimate uses of violence extend beyond the boundaries of self-defense and include all kinds of retaliatory and defensive uses of force.)

Isn't killing inherently just as ethically neutral as cutting things into useful shapes or eating? Antibiotics are designed specifically for killing.

This is nonsense. A trade occurs because a product or service is worth more to one person than another. If an apple is worth .9 bitcoins to you and 1 bitcoin to me, then it makes sense for us to exchange apples at some price between .9 and 1 bitcoin. It makes no difference what the expected future values of bitcoins are because that affects how I value the apple, how you value the apple, how I value the bitcoins, and how you value the bitcoins equally. If I valued the apple more in gold, I'd also value it more in bitcoins, and so I'd still want to buy it from you, whether for gold or bitcoins.

As a simpler way to explain it: Anything that makes people want to hold onto bitcoins more also makes others want to encourage them to part with bitcoins more. So it perfectly cancels out.

See 10 USC 311 for the composition of the militia of the United States:
http://www.law.cornell.edu/uscode/text/10/311

Per unit time, yes. But the time you spend to travel a given distance goes down. The longer you spend on a road, the higher your chances that some drunk will plow into you.

A road owner has the right to set whatever speed limit they want for their road, assuming they haven't contractually bound themselves otherwise. If the government is going to own and operate roads, then it will have to set the rules for the use of those roads. I think governments have historically done a poor job of setting sensible speed limits. I think this has made roads more dangerous, caused significant disrespect for the law, discouraged technological innovation, and wasted huge amounts of people's time.

I think most legal systems would decide that you don't have that right. I don't think any ethical principle compels one decision or the other. Certainly you have the right to endanger people to some extent -- you couldn't do anything if you couldn't endanger people at all. But legal systems have to draw the line somewhere and that certainly seems over the line to me.

Individuals defending themselves and legal systems don't have to wait for harm to be done to act. You don't have to watch your mentally unstable neighbor accumulate a massive hoard of weapons and explosives and wait until he detonates them to act against him.

In any system, you can work out the easiest way for the system to betray its users, and then determine what resources it would take to do that and whether the payoff would be sufficient to justify the effort. A system will be safe provided it has the right margins between the cost to make the attack work, the benefit to the attacker of a successful attack, and the harm to the victims of the attack. Think about what would happen if someone who wanted to hurt Bitcoin managed to collect 51% of the mining power. With explicit trust, it's just as hard to accumulate 51%, but everyone else can just stop trusting all the entities they see cooperating in the attack, and the attacker has to start over from scratch.

For currencies based on a commodity or a central issuer, if they are functioning as currencies, any given unit of currency will change hands so many times during its life that how it was originally introduced into commerce is basically irrelevant. You can ignore the very first use of a particular unit of currency because it's drastically outweighed by all the re-uses of that same currency unit. That's not to say it's not important how new units of a currency are introduced -- scarcity is a significant factor in determining a currency's value and if new units can be introduced easily, the currency will be a lousy store of value. But it doesn't meaningfully affect the operation or meaning of the currency.

For the US dollar, all the physical currency in existence equals about 1/12,000th of the total value of all dollar transactions in a single year.

Think of a room full of people who all agree with each other. To enter the room, you must agree with them. To disagree with them, you must leave the room. They all sit in this room maintaining continuous agreement on everything. Each of them who is honest puts their first priority on enforcing the rules of the room, their second priority on maintaining agreement with everyone who is also willing to follow the rules, and their third priority on accepting legitimate transactions provided they don't violate the first two rules. The rules of the room make it infeasible to agree to a transaction once a conflicting transaction has been agreed to -- such an agreement cannot be formed and be valid according to the rules.

You would make a terrible bookie.