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Author Topic: Writing an article about bitcoin... posting it here first for feedback  (Read 1249 times)
notig
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February 12, 2013, 06:17:43 AM
Last edit: February 13, 2013, 02:35:09 PM by notig
 #1

I want to get this published so let me know what you guys think. Any feedback is welcome.

Why Bitcoin is better than gold


    First a quick introduction: Bitcoin is a relatively new digital currency. Its rules are enforced by math and open for anyone to see. Its security comes from those who participate
and dedicate a portion of their computer's resources to the bitcoin network. They in turn are rewarded for this and so the network is reinforced and self-sustaining.
Already it is the largest distributed computing project the world has ever seen, despite being in its infancy still.

    Currently there is one key area where gold beats bitcoin. That is confidence. The track record of gold spans thousands of years and it has been valued highly for
generations. Such a reputation is respectable. But it is also not something that can't be beaten. Bitcoin has trodden along for only 4 years now, and it is beginning to garner more trust with the reliability the network has shown.

    You might think that gold has more practical use than some "digital money". It is decorative and pretty to look at to some people. It conducts electricity very well.
But that pales in comparison to the practical usage of bitcoins. Bitcoins can be used like a currency, but one more versatile than has ever been seen. To illustrate
this I will just give a few examples of how someone can utilize bitcoins as a form of money.

    Say that you work in the United States and have family in South America. To help support them you send them money. Doing this, however, is typically a slow process and it is rife with fees for doing something that should be rather simple. With bitcoin, you can send bitcoins to your family, and they will arrive almost immediately.  The fee for this would be minor, if any. As another example, say that you are a seller of some good or service. Routinely you have been scammed by people who buy what you offer when they later issue a "chargeback" on their credit card. With bitcoin this kind of scam is impossible because payments are irreversible. And one more example: say we enter another Great Depression. During the Great Depression of 1929 there was no shortage of people. There was no lack of skills or willingness to work. There wasn't a lack of materials and resources. There was a shortage of money. Banks have the power to contract the money supply, and with that comes dark times. If bitcoin was used on a wide scale then such a contraction would be relieved(something that gold couldn't really solve as well as bitcoins, because of their high divisibility which enables them to perform like a currency. Try buying a loaf of bread with a gold coin worth 500 loaves of bread for instance.). To demonstrate another example.... you, the reader, if you had bitcoins you could even "tip" me right now for writing this article. You could from the seat at your own computer send any amount to the address that I will post at the bottom of this article. All you would need are some bitcoins... and with my address and no other information you could send bitcoins to me immediately. >: )

    You might think that since gold has such great confidence it beats bitcoin as a store of value.... well it does for now. However, I believe bitcoin is poised to take the lead eventually. There is a hard limit of 21 million bitcoins that will ever be created. Counterfeiting and duplicating them is impossible. Bitcoins are created at a predetermined rate. That rate is halved every 4 years until no new bitcoins will be created. The current amount of bitcoins that have been created so far is 10.772 million (so a little over half that will be created have been).

    There are a few characteristics that make something a great store of value. Rarity is the main characteristic. If something is rare enough then it doesn't take a large amount of it to represent great value. If something is rare then that also typically means it can't be duplicated or overproduced. Gold fits this description well. The rarity of gold can't directly be compared with bitcoins. There will only be 21 million bitcoins. There is already over 21 million pounds of gold mined. The amount of gold that has been extracted from the earth is an estimation, and the amount that will be further extracted is also an estimation. Additionally, in the future companies are already looking to mine asteroids and other extraterrestrial objects. So any gold sourced from there will dilute the value of all other gold by some margin. So while I can't say bitcoins are more rare than gold or vice-versa exactly, I can say that at any point in time you know how many bitcoins exist and you know how many will exist later. And there are few enough that 1 bitcoin ,if needed, can store a great amount of value.

    Even though only 21 million can be created... one bitcoin can store more units of value than a dollar. For example a dollar is 100 cents. 1 cent being the smallest unit.  A bitcoin is 100 million "satoshi's".
A satoshi is the smallest unit. So the smallest bitcoin unit looks like this 0.000 000 01  . The smallest unit in USD is .01  . This divisibility will allow bitcoins to be usable as a form of money even
if they reach a price parity with gold.


    To add to how bitcoin compares with gold as a store of value... I will mention storage now. The storage of bitcoins is more versatile than gold. You can store bitcoins embedded into a bar of metal, or a coin.
You can print them on a paper bill in the form of a barcode. You could even write them down and store them on a napkin and put it in a safe. While it's stored in the safe you can even add to your bitcoin collection
without opening the safe. You might wonder how this is possible. To possess bitcoins you need a private key. From this key, you generate a public address that can be shared with anyone. Bitcoins can be sent to this address and the bitcoin network will assign them to your private key even while it is held locked away. The only time you need your private key is when you spend your bitcoins. Furthermore, you can store them on a computer that is offline. Or you could even store them entirely inside of your head if you wanted (but which I don't recommend since without a backup your bitcoins would become lost if forgotten).
There are a variety of ways to store bitcoins and how secure that storage will be is up to you.

    Lastly, bitcoins have already won the online currency war before it has even begun. They have so much momentum... so much entrepreneurial spirit behind them that even a duplicate currency with identical code
couldn't compete with them at this point. Expect to hear more about them in the future.


Here is my public address: 1P3RQHZEBa2ncLRCiw8Zm2cZNTqdbxvpNc
(please note:  in time an address like this will be changed to a more "user friendly" looking one... similar to how an email address looks).
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February 12, 2013, 06:42:46 AM
 #2

Already it is the most powerful and widespread network the world has ever seen ...

I think this bit needs a little reworking.
While I've heard bitcoin referred to as the most powerful distributed supercomputer  (which is itself debatable  - as that's pretty much just raw crunch power for a very narrow task) - it seems a real stretch to refer to it as the 'most powerful' network.   It also seems to me that there must be other networks which are more widespread (the internet itself springs to mind).


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notig
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February 12, 2013, 06:44:57 AM
Last edit: February 12, 2013, 06:56:32 AM by notig
 #3

Already it is the most powerful and widespread network the world has ever seen ...

I think this bit needs a little reworking.
While I've heard bitcoin referred to as the most powerful distributed supercomputer  (which is itself debatable  - as that's pretty much just raw crunch power for a very narrow task) - it seems a real stretch to refer to it as the 'most powerful' network.   It also seems to me that there must be other networks which are more widespread (the internet itself springs to mind).



True...... the internet itself violates what I said. I was trying not to get too technical...... but that will definitely need to be changed. How about if I just replace network with "program" ?
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February 12, 2013, 06:56:59 AM
 #4

Quote from: notig
There is no fee. Yes, that's right... transferring the money across countries to another part of the world costs nothing.

I know you're not the only one to claim this, but I'm uncomfortable describing it this way.   The fee is minimal - and sometimes optional, but when a new user decides to try to split a wallet with some nice round number of Bitcoins into parts - they might be annoyed to find that shuffling their own money around can give them unexpected fractions.  

Imagine too; someone who has received 1BTC as an experimental introduction to Bitcoin and finds something online to buy for exactly 1BTC.  It doesn't matter how tiny the fee is - that experience is going to be frustrating when they read about it as 'no fees'.

Also, you begin too many sentences with the word 'But', but that's somewhat open to personal writing taste I guess.

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February 12, 2013, 07:02:01 AM
 #5

Already it is the most powerful and widespread network the world has ever seen ...

I think this bit needs a little reworking.
While I've heard bitcoin referred to as the most powerful distributed supercomputer  (which is itself debatable  - as that's pretty much just raw crunch power for a very narrow task) - it seems a real stretch to refer to it as the 'most powerful' network.   It also seems to me that there must be other networks which are more widespread (the internet itself springs to mind).



True...... the internet itself violates what I said. I was trying not to get too technical...... but that will definitely need to be changed. How about if I just replace network with "program" ?

I don't think it can legitimately be described as the 'most powerful and widespread program' either.  Undoubtedly things like skype have a vastly bigger userbase and are thus more widespread - not to mention operating systems like Windows and Android etc too!

You probably have to be quite specific to describe it as 'most powerful'.   Something like 'the most powerful distributed computing system in terms of sheer number-crunching'.
I dunno. Maybe others have better rewording suggestions.


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February 12, 2013, 08:23:47 AM
 #6

Just some comments:

It's rules are determined by math.

You mean "its".  "It's" is a contraction of "it is".  The rules were determined by its designer.  You could say they're enforced by math though.

Quote
It's security comes from

You keep doing this.  I won't point them all out.

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Already it is the most powerful and widespread program the world has ever seen

How do you measure the 'power' of a program?  And I'm sure notepad.exe is a more widespread program than bitcoin.

Quote
to your family, and they will arrive almost immediately.  The fee for this would be optional.

Fees are sometimes required.  If you're spending a lot of small, recently received inputs you'll have to pay a fee.

Quote
If bitcoin was used on a wide scale..... then such a contraction would be relieved. (something that gold couldn't really solve).

What's the fundamental feature of bitcoin that gold doesn't possess that makes bitcoin better than gold as a currency during a depression?

Quote
demostrate

Spell check if you're aiming for publication.

Quote
Bitcoin is better. Here is why: There is a limit of 21 million
bitcoins that will ever be created.

There's a finite amount of gold too.  So why is bitcoin better?

Quote
Over time...

...?

Quote
bitcoins are created at a fixed rate. That rate diminishes over time

The thing about fixed rates is that the rate doesn't diminish.

Quote
You know exactly how many bitcoins are in circulation at any moment in time. Currenly it is around 10.7 million.

'exactly' and 'around' look odd together.  Also, spell check.

Quote
you can even add to them without even opening the safe.

Is it worth saying how or why?  Seems strange that I can put more bitcoins into the safe without opening it.

Quote
inside of your head if you wanted(but which I don't recommend).

Why not?

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notig
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February 13, 2013, 03:41:13 AM
 #7

Your criticisms were very helpful. I have now rewritten parts of it.
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February 13, 2013, 04:01:37 AM
 #8

Your bitcoin collection or wallet is basically just a "private address" and you don't need that address to add to your collection.

A wallet is really a collection of private keys, not just one.

I wouldn't use the word 'address', since that's already used to describe the hash of the public key that's used to receive coins.  I see you're trying to avoid the use of the word 'key', but maybe it's better to just use it. 

I think I'd say that each bitcoin address is really a pair of keys.  A public one and a private one.  The public one corresponds to the bitcoin address, can be shared with anyone without risk, and is needed to add coins to an address.  The private one allows you to spend the contents of an address, and should be kept secret.

Quote
You can store them on a computer that is offline and not connected to the internet.

"offline" and "not connected to the net" are the same thing, no?

Quote
Or you could even store them entirely inside of your head if you wanted(but which I don't recommend since without a backup your bitcoins could become lost if forgotten).

Not only 'could', but 'would'.

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notig
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February 13, 2013, 04:20:48 AM
 #9

Your bitcoin collection or wallet is basically just a "private address" and you don't need that address to add to your collection.


Not only 'could', but 'would'.

Is that a preference of yours or am I making a mistake?
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February 13, 2013, 04:47:14 AM
 #10

It is great but maybe you should explain a bit better the 21 million limit imposition. And to say that coins only exist associated with bitcoin address balances and that what you actually keep is the private key that is like a password, consisting of 256 bits, that is: a string of 256 zeros and ones.
And that importantly, you can derive the bitcoin address from a private key but not the other way around.

I find it very useful to explain bitcoin to say that it is like a digital open book listing balances and that people that maintain such book are rewarded, and that that reward is what creates bitcoins, that is, what puts bitcoin in circulation, adding up balance to a designated bitcoin address of a 'miner'.

Would be great there was a torrent file of all referenced materials of the paper: "How to Build Time-Lock Encryption" by Tibor Jager. And having its magnet link published on bitcoin blockchain!
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February 13, 2013, 05:23:56 AM
 #11

I took some of your suggestions and made modifications. I think the quality of this article is improving.
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February 13, 2013, 06:12:21 AM
 #12

beginning to garner >> beginning to gain

Would be great there was a torrent file of all referenced materials of the paper: "How to Build Time-Lock Encryption" by Tibor Jager. And having its magnet link published on bitcoin blockchain!
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February 13, 2013, 07:51:11 AM
 #13

beginning to garner >> beginning to gain

Hmm i'm not sure. Usually "garner support" is used. Garner trust is sort of the same thing unless I am mistaken... it means accumulate.
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February 13, 2013, 09:14:15 AM
 #14

Your bitcoin collection or wallet is basically just a "private address" and you don't need that address to add to your collection.

Not only 'could', but 'would'.

Is that a preference of yours or am I making a mistake?

You quoted me oddly.  The could/would distinction was re. forgetting your brain wallet password.  If you only store the coins 'in your head' and forget the passphrase, you will lose your coins.  No 'could' about it.

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February 13, 2013, 09:16:58 AM
 #15

I find it very useful to explain bitcoin to say that it is like a digital open book listing balances and that people that maintain such book are rewarded, and that that reward is what creates bitcoins, that is, what puts bitcoin in circulation, adding up balance to a designated bitcoin address of a 'miner'.

But that's not what miners do.  There's no concept of a 'balance'.  There are only individual transactions, with inputs and outputs.  The client shows a balance, but does so by adding up all the unspent transaction outputs it owns.

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February 13, 2013, 11:35:34 PM
 #16

Your bitcoin collection or wallet is basically just a "private address" and you don't need that address to add to your collection.

Not only 'could', but 'would'.

Is that a preference of yours or am I making a mistake?

You quoted me oddly.  The could/would distinction was re. forgetting your brain wallet password.  If you only store the coins 'in your head' and forget the passphrase, you will lose your coins.  No 'could' about it.

Oh I see. Thanks!
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February 14, 2013, 03:13:48 AM
 #17

Does anyone have a link for where it is posted that some future bitcoin client will start using more user friendly public addresses for receiving funds?
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February 14, 2013, 03:51:52 AM
 #18

Editing service: https://bitcointalk.org/index.php?topic=120820.msg1300763#msg1300763

Saying that you don't trust someone because of their behavior is completely valid.
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February 14, 2013, 07:12:11 AM
 #19

I have several issues with this article. However I don't now where this article is supposed to be published or in wich place to situate it.
So could you please situate it, at who are you directing this?
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February 14, 2013, 07:21:19 AM
 #20

I published it at reddit  http://www.reddit.com/r/Bitcoin/comments/18hidg/why_bitcoin_is_better_than_gold/  . It would probably look better in a blog post.
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