How would the shift affect scripts which use json calls to send coins? All current scrips would break, woudn't they?
Shouldn't. The bitcoin client doesn't store the decimal at all. 50 BTC is stored as a 64 bit integer representing a value of 5,000,000,000. The client only adds the decimal for human readability. Any calls to the system should be using the protocol's representation of the value, not the GUI's. |
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I am not confusing price deflation with supply deflation. I fully expect bitcoins to continue to be deflationary with regards to supply per user if it continues to grow, and eventually becomes widely adopted.
Ok, one loaf of bread is still one loaf of bread. Isn't one dollar still one dollar?
The difference is in how much currency can a loaf of bread buy, or how many loaves of bread can a currency buy. With a deflationary currency (i.e., a currency that inflates in price or value), it is theft from the holder of loaves of bread. It moves value from the holder of loaves of bread to the holder of currency. With an inflationary currency, (i.e., a currency that deflates in price or value), it is theft from the holder of currency. It moves value from the holder of currency to the holder of loaves of bread.
You are forgetting a very important factor in the real economy. That is, A needed that widget when he needed it. If he could wait for it, and thus pay less bitcoin for it, then he would. For the sake of argument, let's say that the widget in question was a refrigerator, a water heater, a washing machine; whatever. If you refrigerator dies, do you say to your spouse "we can get it for less by doing without a refrigerator for another month"? Do you think that works out? Now, if the widget is something that A actually can do without, why would he buy it anyway? The only possible answer is that it's something that he wants rather than needs. And wants tend to be even less likely to be rationally delayed. This is called the 'time preference' of money, and inflation certainly does increase the likelyhood that the holder is going to decide to spend sooner rather than later, but that is not necessarily a good thing. Would we not be reducing the GDP of our economy from needs + wants to needs only then? And why would that be a good thing? If we could have more instead of less, why would we choose less? Do it in the name of a deflationary currency? No, not really. Inflation just alters the time preferences of money not of wealth, which is notablely different. To paraphrase a character in Cryptocrimicon, 'money is not wealth, but the corpse of wealth'. This is no less true for Bitcoin. But GDP is based on money exchanging hands, which would be based on the time preferences of money, would it not? GDP is a terrible metric to depend upon. The only reason that economists even use it is because they don't have any better metrics. |
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I am not confusing price deflation with supply deflation. I fully expect bitcoins to continue to be deflationary with regards to supply per user if it continues to grow, and eventually becomes widely adopted.
Ok, one loaf of bread is still one loaf of bread. Isn't one dollar still one dollar?
The difference is in how much currency can a loaf of bread buy, or how many loaves of bread can a currency buy. With a deflationary currency (i.e., a currency that inflates in price or value), it is theft from the holder of loaves of bread. It moves value from the holder of loaves of bread to the holder of currency. With an inflationary currency, (i.e., a currency that deflates in price or value), it is theft from the holder of currency. It moves value from the holder of currency to the holder of loaves of bread.
You are forgetting a very important factor in the real economy. That is, A needed that widget when he needed it. If he could wait for it, and thus pay less bitcoin for it, then he would. For the sake of argument, let's say that the widget in question was a refrigerator, a water heater, a washing machine; whatever. If you refrigerator dies, do you say to your spouse "we can get it for less by doing without a refrigerator for another month"? Do you think that works out? Now, if the widget is something that A actually can do without, why would he buy it anyway? The only possible answer is that it's something that he wants rather than needs. And wants tend to be even less likely to be rationally delayed. This is called the 'time preference' of money, and inflation certainly does increase the likelyhood that the holder is going to decide to spend sooner rather than later, but that is not necessarily a good thing. Would we not be reducing the GDP of our economy from needs + wants to needs only then? And why would that be a good thing? If we could have more instead of less, why would we choose less? Do it in the name of a deflationary currency? No, not really. Inflation just alters the time preferences of money not of wealth, which is notablely different. To paraphrase a character in Cryptocrimicon, 'money is not wealth, but the corpse of wealth'. This is no less true for Bitcoin. |
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wareen - Good points regarding the smartphone. The market is there for a smartphone client, it's just a matter of someone actually sitting down and coding one.
Rob P - I do believe the issues will be addressed, but that doesn't mean we shouldn't start addressing them. After all, if now is not the time to address the issues, when will that time be? Are you going to wait until people start hitting their monthly download caps because they had to download the entire blockchain? In my opinion, we should be working on implementing a thin client now, not waiting until it becomes a problem and it may be too late to implement an effective solution fast enough to prevent people being turned away from bitcoins.
The BitcoinJ project is an attempt to do just that in Java for Android. If you have the skillset, feel free to participate. |
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Excellent explanation creighto, thank you.
So theoretically, as bitcoin expands, we'll see fewer and fewer people solo mining, more and more people pool mining, and more and more people connecting to the pool servers as nodes to verify blocks/transactions for their thin clients. I can see this working...
Personally, I predict that trusted peer services will spring up, eventually, with the promise that transactions sent from paying users' clients will continue to be processed by the "bitcoin bank's" own pool and/or datacenter for free, even if it might take some time. This might also become a privilage of pool contribution. How difficult would it be to implement a new "thin" client? Or does one already exist?
I'm not a programmer, but my understanding is that it's already part of the protocol, but isn't yet included in the standard client for several reasons. Not the least of which is the lack of urgency as compared to other concerns, such as encryption of the wallet.dat file. |
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I am not confusing price deflation with supply deflation. I fully expect bitcoins to continue to be deflationary with regards to supply per user if it continues to grow, and eventually becomes widely adopted.
Ok, one loaf of bread is still one loaf of bread. Isn't one dollar still one dollar?
The difference is in how much currency can a loaf of bread buy, or how many loaves of bread can a currency buy. With a deflationary currency (i.e., a currency that inflates in price or value), it is theft from the holder of loaves of bread. It moves value from the holder of loaves of bread to the holder of currency. With an inflationary currency, (i.e., a currency that deflates in price or value), it is theft from the holder of currency. It moves value from the holder of currency to the holder of loaves of bread.
You are forgetting a very important factor in the real economy. That is, A needed that widget when he needed it. If he could wait for it, and thus pay less bitcoin for it, then he would. For the sake of argument, let's say that the widget in question was a refrigerator, a water heater, a washing machine; whatever. If you refrigerator dies, do you say to your spouse "we can get it for less by doing without a refrigerator for another month"? Do you think that works out? Now, if the widget is something that A actually can do without, why would he buy it anyway? The only possible answer is that it's something that he wants rather than needs. And wants tend to be even less likely to be rationally delayed. This is called the 'time preference' of money, and inflation certainly does increase the likelyhood that the holder is going to decide to spend sooner rather than later, but that is not necessarily a good thing. |
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But Rob, we're still going to run in to hard drive space limitations if every client has to have a copy of the blockchain, even if it is only an eventual copy of it.
So the question is, does a client need a copy of the entire blockchain to run with 100% confidence and security in its balance?
No, a thin client can operate without a trusted peer by keeping a full copy of just the block headers. At 80 bytes per block, that about 4 megabytes of space per year. Add to that, the thin client must be able to request and verify the blocks that contain the history of the coins that it possesses, but only has to keep what parts of each of those blocks that represent the transactions that are important to it's own coins and the merkle tree branch that proves that transaction belongs there. The thin client doesn't need to have a trusted peer to count upon, because it can randomly choose a couple of peers that it can see on the network and compare their independent responses to it's queries. If an attacker can surround the thin client, then a spoof could happen, but if the client is just an average Joe's wallet on his smartphone, what's the point? There is no way to identify a particular client on the network (via the bitcoin network anyway) to find a high value target, so the best that this could do is trick a random user to accepting an invalid transaction, not steal his coins.
What would a blockchainless client look like, and how would it verify its account balance with accuracy?
I still stand by my argument that, as currently implemented, bitcoins have a theoretical user maximum of around 4 million people. But now I see there may be some fixes to that problem.
In addition to the headers only client, a blockchainless client can also exist by choosing your trusted peer. The nature of Bitcoin also means that if you choose to trust a peer, you are not limited in your choices of peers to choose from. |
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At the moment I do not see the motivation to try to destroy bitcoin for a government. And even if they would try such a stunt, I doubt that mining all bitcoins is a reasonable strategy. It's also impossible. The Us government could throw all their capacity at Bitcoin and either attack it or participate in it, but they cannot just mine all the remaining coins and hoard them. It would still take till about 2129 to mine all the coins no matter what they threw at it. |
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OPs question is what i'm asking myself for a couple of days now and i've found no reasonable explanation yet, besides "BC is teh future!".  Exchange rate is fluctuating extremely and is too easily influenced by lots of factors right now, which makes it a pure gamble to accept bitcoins for goods that you've payed real money for, imho. Bitcoin exchange rate needs to be somewhat stable, before i'd personaly would accept them as a payment option. You never know what they will be worth the next hour/day. Playing around with the money on the exchanges is something for banksters, not merchants. At the end, as a merchant, you've payed real money for the goods you sell and you have real bills to pay. What am i missing? The price has been volitile as of late do to the massive influx of new users, like yourself, who only recently discovered Bitcoin. Only some of those new users are going to be concerned about buying a few bitcoin now, but enough that with a market as thin as Bitcoin is at present, that's enough to move it quite a bit. There are vendors who accept Bitcoin, however, by using a price update script that takes the 24 hour weighted average price from bitcoinwatch.com and changing their prices automaticly one or more times per day. Those who are concerned about the voltility of bitcoins can then sell those same coins on MtGox automaticly at that same price almost immediately by using their MtGox business account to produce their bitcoin addresses. Most vendors have started out in Bitcoin by selling all or part of their received bitcoin immediately in this fashion, but most move to the point of accumulation of Bitcoins. |
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If any government were to begin to accept Bitcoins directly as payment of taxes, this would be a defacto legal tender declaration; thus putting Bitcoin on par with the nation's own fiat currency. If the US were to ever do this, it would be an admission of the declining nature of the US $ as an international reserve currency. They are never going to do this.
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I think that if the government attempted to do all of those three things, I'd be extremely wealthy by 2020 and living on a private island somewhere. If they just tried to do #3, I'd probably only be able to retire at 50.
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For once I agree with you.
With a 2 BTC handgun a 3-year-old child can easily kill his/her abusive 6' 300 lb father. No other piece of technology brings about this sort of social equality.
Oh Noes! Somebody please think of the children! Wow, you really went deep to find the straw to stuff this one. |
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Wow thank you for all the responses.
So I am seriously considering accepting bitcoins for virtual goods in my companies upcoming Free2Play shooter/RPG. So assuming from a financial perspective that bitcoins are dependable, is it LEGAL to support bitcoins? (Keeping in mind that the game is not a gambling game, and the virtual products are bought and then kept by the user)
I know that bitcoins themselves are not illegal, but in the depths of US law I am concerned that there is some vague all encompassing restriction that bitcoins may fall under. Now I understand that the question itself is somewhat speculative, since we don't really know how the government will react to bitcoins when it grows out of its niche, but is there any legal concerns I should be aware of?
Yes. The most likely classification under US tax laws that Bitcoin would fit into is a "stored value" digital asset. So as a business openly engaging in Bitcoin trading for goods and services, there is the possibility that the law could interpret part of your company as a money services business, and thus subject to such laws. But from a legal standpoint, is it really any different than all the other MMO's out there that sell a virtual currency for their game which can be used to buy in-game items? Hell, Entropia Universe from Mindark has a real in-game economy tied to the USD, with 10 PED = 1 USD, and the PED's can be exchanged back out for money directly from MindArk. I think they even opened a real world bank based around it tied to the in-game bank. That game has been running for many, many years and is well known. So if they haven't been pursued by the government yet, I doubt OP would be. Bitcoin is probably not legally different than from any in game currency, just accepted wider by design. Still, just because the US Treasury Department isn't concerned about the tiny market that Mindmark oversees doesn't mean that those same regs don't apply to them. The yprobably do, regardless of whether or not the USTD has ever intervened into that market. |
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I don't know, then. Either it's a fee schedule imposed by the creator of that client fork, or you had a massive number of inputs. Transaction fees are imposed for two reasons: 1) The "age" of the inputs being used 2) The amount being sent Had you just received these funds into an address and then immediately turned around to send them to another address? Then that requires a fee, especially if the amount is "small". The mainline code had the minimum transaction fee set to 0.0005 on June 5th: https://github.com/bitcoin/bitcoin/commit/352b4ea5b924412f3485290123fdf538cfdd8aa8From Gavin on Transaction fee charges: https://github.com/bitcoin/bitcoin/issues/170Low-priority transactions (where priority is determined by bitcoin amount and age of the inputs) require a fee. You sent a very-small (0.03 BTC) transaction that came from a few-hours-old transaction.
That is by design, to discourage sending lots of very-small transactions (also known as "penny flooding"). This is true, but some of the expected fees are 'soft', and should not force the sender to include them. If the fee is not paid on a low priority transaction, then the transaction is simply ignored by the miners until it's old enough that it's priority is above the minimum. I've done this many times when not under time pressure. This fee must be required by his client for some reason. |
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It was bound to happen, today someone was trying to reset my password to MtGox. Make sure your passwords are strong. MtGox really needs a multi stage captcha.
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"purists" usually picks Slackware [&derrivatives], Free/Open-BSD or even go TinyCore or other LFS-alike distros  Gentoo |
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Wow thank you for all the responses.
So I am seriously considering accepting bitcoins for virtual goods in my companies upcoming Free2Play shooter/RPG. So assuming from a financial perspective that bitcoins are dependable, is it LEGAL to support bitcoins? (Keeping in mind that the game is not a gambling game, and the virtual products are bought and then kept by the user)
I know that bitcoins themselves are not illegal, but in the depths of US law I am concerned that there is some vague all encompassing restriction that bitcoins may fall under. Now I understand that the question itself is somewhat speculative, since we don't really know how the government will react to bitcoins when it grows out of its niche, but is there any legal concerns I should be aware of?
Yes. The most likely classification under US tax laws that Bitcoin would fit into is a "stored value" digital asset. So as a business openly engaging in Bitcoin trading for goods and services, there is the possibility that the law could interpret part of your company as a money services business, and thus subject to such laws. |
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Any method of moving funds from Paypal to BTC is dangerous for the person selling BTC. No honest seller is going to do it without a significant risk premium. It's possible that you could find bitcoin users in your city, particularly if you live on the East coast of the United States, and trade cash in person. Or you might be able to find someone on the OTC network via IRC, but that's still risky.
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