Bear post of the Day

[ElectricMucus]

This post is dedicated to security and plausible deny-ability of Brain wallets. 

[notig]

Todays myth regards the usefulness of Bitcoin in the case of an economic collapse.

It is claimed that Bitcoins would be very useful in economic uproar because they cannot be counterfeit.
The problem with that is that it is problematic to use Bitcoins in such a scenario in the first place. It pretty much depends that the infrastructure continues to be operational through the crisis.
Once the power grid and the Internet are affected the usefulness is pretty much done for. Proposals to rely on things like solar panels and off-line wallets is pretty much irrational because the mining infrastructure would grind to a halt. Transaction times would be beyond a day and the risk of an attack by the establishment which brought up the crisis severe.
I'd take a silver coin over a bitcoin transaction the next day, and I guess you would too...

Only in a situation where the infrastructure continues to be operational along with a steady high inflation (no deflation) can Bitcoin shine. These are mostly periods of good economic growth, in real cases of economic crisis ppl wouldn't have enough cash to keep the bitcoin price up.

wouldn't it take a global economic collapse?

[ElectricMucus]

Todays myth regards the usefulness of Bitcoin in the case of an economic collapse.

It is claimed that Bitcoins would be very useful in economic uproar because they cannot be counterfeit.
The problem with that is that it is problematic to use Bitcoins in such a scenario in the first place. It pretty much depends that the infrastructure continues to be operational through the crisis.
Once the power grid and the Internet are affected the usefulness is pretty much done for. Proposals to rely on things like solar panels and off-line wallets is pretty much irrational because the mining infrastructure would grind to a halt. Transaction times would be beyond a day and the risk of an attack by the establishment which brought up the crisis severe.
I'd take a silver coin over a bitcoin transaction the next day, and I guess you would too...

Only in a situation where the infrastructure continues to be operational along with a steady high inflation (no deflation) can Bitcoin shine. These are mostly periods of good economic growth, in real cases of economic crisis ppl wouldn't have enough cash to keep the bitcoin price up.

wouldn't it take a global economic collapse?

Well isn't that the scenario we ought to look out for? That's what the leprechauns told me.

If the collapse isn't global wouldn't there be the possibility to use foreign currency in affected countries like we historically have seen?

[Melbustus]

It's myth debunking time again.

This time it's gonna be one of the most represented facts about Bitcoin, so misrepresented that it may even be fraudulent.
It's the "Bitcoin is modelled after Gold in it's initial distribution from the block reward." -myth

...[graphs]...

So to turn up an analogy if Gold would have behaved like Bitcoin stone age people would have picked up watermelon sized nuggets with their bare hands at a rate you pluck a goose.
Long story short: Stop spreading this myth, not only is it totally wrong it is misleading and from the perspective of an uninformed user fraudulent since it tries to talk away the substantial early adopter benefit.

Whoa, what? Where is that myth? People (myself included) say all the time that bitcoin has properties similar to gold, but I don't recall anyone saying that the initial distribution follows the same pattern. Since you're quoting this specifically, I assume you can probably dig up some threads with people who said as much, but I have to say, hanging out mainly in the Spec forum, Economics forum, and the General forum, I've NEVER noticed anyone claiming similar initial distro.

Are you just trying to re-cast people's assertion that bitcoin is similar to gold into a different but specific statement that's obviously false?

[Melbustus]

Todays myth regards the usefulness of Bitcoin in the case of an economic collapse.

It is claimed that Bitcoins would be very useful in economic uproar because they cannot be counterfeit.
The problem with that is that it is problematic to use Bitcoins in such a scenario in the first place. It pretty much depends that the infrastructure continues to be operational through the crisis.
Once the power grid and the Internet are affected the usefulness is pretty much done for. Proposals to rely on things like solar panels and off-line wallets is pretty much irrational because the mining infrastructure would grind to a halt. Transaction times would be beyond a day and the risk of an attack by the establishment which brought up the crisis severe.
I'd take a silver coin over a bitcoin transaction the next day, and I guess you would too...

Only in a situation where the infrastructure continues to be operational along with a steady high inflation (no deflation) can Bitcoin shine. These are mostly periods of good economic growth, in real cases of economic crisis ppl wouldn't have enough cash to keep the bitcoin price up.

You're keeping me busy tonight :-)

In the various discussion about bitcoin vs. gold, it's always acknowledged by both sides that gold is superior in the true disaster scenario, obviously because of bitcoin's required infrastructure. Again, bitcoin's requirement for functional infrastructure is NOT ignored in these discussions. I think you must be misunderstanding what people probably typically mean when they say "economic collapse" or "economic disaster". They're pretty much referring to a scenario a bit worse than 2008/09, where finance stops, people lose wealth, but the structure of day-to-day life largely stays the same (whether that would actually be the case is a different discussion). I hardly think people are arguing that bitcoin makes sense in one of the near apocalyptic scenarios. You may get a few folks claiming mesh-networks or something, but most understand the necessity of big infrastructure for the foreseeable future.

[ElectricMucus]

Are you just trying to re-cast people's assertion that bitcoin is similar to gold into a different but specific statement that's obviously false?

No i am saying it is fundamentally different not similar.They have totally different mathematical structures.
They converge to a certain value, that's all. What I am saying is that stating that bitcoin is similar to gold is deceptive because vital information is omitted purposefully.

In the various discussion about bitcoin vs. gold, it's always acknowledged by both sides that gold is superior in the true disaster scenario, obviously because of bitcoin's required infrastructure. Again, bitcoin's requirement for functional infrastructure is NOT ignored in these discussions. I think you must be misunderstanding what people probably typically mean when they say "economic collapse" or "economic disaster". They're pretty much referring to a scenario a bit worse than 2008/09, where finance stops, people lose wealth, but the structure of day-to-day life largely stays the same (whether that would actually be the case is a different discussion). I hardly think people are arguing that bitcoin makes sense in one of the near apocalyptic scenarios. You may get a few folks claiming mesh-networks or something, but most understand the necessity of big infrastructure for the foreseeable future.

That may be your interpretation but it is not what people tell the public. Bitcoin is a thing for an utopia/dystopia for which we have no historical pretext.
So then I read things like "Bitcoin: It's your best insurance against a diet of dog-food for the next decade." So yeah...


Sorry if my replies are a bit short, I have to get on with it today.

[johnyj]

I see there are some negative elements:

Avalon and BFL are going to delay their delivery of ASIC devices due to low capacity of production, so for now the difficulty increase of network is only generated by ASICMINER and since all these ASIC devices are still not very mature, customer have a high possibility runing into hardware problems, the network difficulty increase will not be that dramatic as imagined by some people. I think we could possibly see a double of difficulty each month, and if the difficulty do not increase that fast, there won't be lot of people rushing to buy bitcoin

[ElectricMucus]

Todays post is about the distinction Technology vs. Proof of Concept.
special thanks goes to deeplink.

Bitcoin is commonly refereed as a new in technology, and is compared to the Internet in it's potential influence.
There is a subtle error in this assessment but it makes a huge difference.

Bitcoin combines several different technologies which existed before, (think hashcash,  digicash, FOSS) and is certainly innovative. Although it is not a technology as such. Not even a standard. What is important here is that Bitcoin in contrast to the Internet has a lock in feature, the ledger is packaged with the software. This distinguishes it from a) The Internet which is based upon open standards and b) from most free open source software, in particular p2p software.
No p2p software comes with a predetermined dataset which is supposed to be transmitted.


People often argue that Bitcoin is mature enough to be considered the real thing. I have a fundamental problem with that.
Bitcoin was not designed to serve a particular purpose, if satoshis use of the proof of concept term are accurate. It just happened to become what it is today. That it has been fairly successful doesn't change the initial premise.
Bitcoin sometimes is called an experiment which I agree on.... but this experiment is far from over.

When would you agree we are on to the next phase? When the Satoshi client goes out of beta? Government acceptance? Another crypto-currency?

Yes and no, we are in the same phase since 2011. The next phase will be for Bitcoin to act like a real currency. That is why I think the block size limit is so important. Any other currency, historically and currently has non-trial transaction fees. I think they provide a major influence on the stability of the exchange rate against other currencies.
The next phase is an operating transaction market where both supply and demand matter.
I take this even one step further and say if transactions stay as low as they are Bitcoin as an experiment has failed. I think satoshi put the block size limit in there on purpose as a test for the community (although there is no quote on that subject except a vague hint)

Another point of maturity I would see if there emerges a standard out of the existing work, containing RFC style data structures and methods to implement cryptocurrencies with the possibility of backwards compatibility, that means a hard fork would not be necessary to implement additional features.

The third part is way too esoteric, but I mention it nevertheless. I want to be citizen of a functional decentralized republic in my lifetime. No matter what it takes as long as it is possible.
So the ultimate point of Bitcoin's maturity is it's obsolesce.  

[Melbustus]

Are you just trying to re-cast people's assertion that bitcoin is similar to gold into a different but specific statement that's obviously false?

No i am saying it is fundamentally different not similar.They have totally different mathematical structures.
They converge to a certain value, that's all. What I am saying is that stating that bitcoin is similar to gold is deceptive because vital information is omitted purposefully.

You're specifically asserting that people say bitcoin's distribution progression follows that of gold. I don't think people assert that. People assert that gold and bitcoin have a bunch of similar properties, but I don't recall anyone saying anything about similarity to HOW the limited supply gets distributed. Reread my response with that clarification. Or maybe I'm misinterpreting something?

In the various discussion about bitcoin vs. gold, it's always acknowledged by both sides that gold is superior in the true disaster scenario, obviously because of bitcoin's required infrastructure. Again, bitcoin's requirement for functional infrastructure is NOT ignored in these discussions. I think you must be misunderstanding what people probably typically mean when they say "economic collapse" or "economic disaster". They're pretty much referring to a scenario a bit worse than 2008/09, where finance stops, people lose wealth, but the structure of day-to-day life largely stays the same (whether that would actually be the case is a different discussion). I hardly think people are arguing that bitcoin makes sense in one of the near apocalyptic scenarios. You may get a few folks claiming mesh-networks or something, but most understand the necessity of big infrastructure for the foreseeable future.

That may be your interpretation but it is not what people tell the public. Bitcoin is a thing for an utopia/dystopia for which we have no historical pretext.

Yup, my interpretation is that even most of the perma-bulls aren't stupid enough to contend that bitcoin is useful without infrastructure. Not sure how you're seeing otherwise, but our interpretation of other people's meaning is clearly pretty subjective.

[bb113]

It's myth debunking time again.

This time it's gonna be one of the most represented facts about Bitcoin, so misrepresented that it may even be fraudulent.
It's the "Bitcoin is modelled after Gold in it's initial distribution from the block reward." -myth

Bitcoin follows a mathematical progression which looks like this

Gold on the other hand follows a sigmoid function which looks like this.

That has to do with the fact that at the beginning of gold mining people hadn't had automated mining machines which can haul several tons out of the ground at once, initially not even shovels.
In contrast to Bitcoin the total capacity matters in terms of total production.
Gold like any resource follows the Hubbert Peak in terms of production capacity. Which looks like this:



So to turn up an analogy if Gold would have behaved like Bitcoin stone age people would have picked up watermelon sized nuggets with their bare hands at a rate you pluck a goose.
Long story short: Stop spreading this myth, not only is it totally wrong it is misleading and from the perspective of an uninformed user fraudulent since it tries to talk away the substantial early adopter benefit.

This is a great post, thank you

Why shouldn't bitcoin should be compared to Gold supply since 1970, rather than since the beginning of time.

[DeathAndTaxes]

If it is that easy there would be plenty by now, there are none.

It really is that easy, here's a link: http://www.payoneer.com/PrepaidMC.aspx ... used em to get commissions from some of the sites I have been an affiliate for in the past
For Bitcoin I imagine you would just setup a frontend where people send you BTC. Once you get the coins then you credit their account $ @ gox rate minus fees. Can't be that hard.

As for the Captains of the Industry™ ... I said lazy, you said incompetent ... I would bet on "preoccupied with other projects"

It is harder than you think.  We have been in talks with a half dozen white label providers and they were all interested until ... Bitcoin.  HARD STOP.  EMERGENCY DIVE.  Financial companies are very conservative by nature.  Oh your good friends at Payoneer point blank told me (paraphrased) "they 100% know Bitcoin is a scam to con people out of money and will auto-freeze any account even suspected of participating in the Bitcoin scam".  Of all the contacts we had the absolute most paranoid and uninformed operators of the group.  Most other companies were interested in Bitcoin but their compliance/legal departments wouldn't allow the risk into an unknown/gray area.   There are a couple offshore banks willing but you wouldn't like the fees.  Trust me take whatever you think is utterly ripoff fees then double it and then add fees you never knew existed and then double it again.

So trust me it is harder than you think.  A LOT harder than you think.  It will eventually happen (by BitInstant or someone else), but thinking it is a couple hours of work, sign some papers, flip on the server and BLAMO BTC->VISA is kinda naive.  If you think it is that easy raise the hundred grand or so you need and make a couple million the first year without even trying.   Can I get my card from you next week or the week after?

[Melbustus]

Bitcoin combines several different technologies which existed before, (think hashcash,  digicash, FOSS) and is certainly innovative. Although it is not a technology as such. Not even a standard. What is important here is that Bitcoin in contrast to the Internet has a lock in feature, the ledger is packaged with the software. This distinguishes it from a) The Internet which is based upon open standards and b) from most free open source software, in particular p2p software.

Mmm... These "important" differences don't seem that important, if even correct. The "Internet" is obviously not a  technology or protocol either. Yet there are absolutely core protocols that it relies on. Sure, you can point out some differences between the evolution of bitcoin and early-internet, but I don't think the fact that it may not *exactly* fit the mold necessarily invalidates the thesis that bitcoin has similar disruptive potential.

People often argue that Bitcoin is mature enough to be considered the real thing. I have a fundamental problem with that.
Bitcoin was not designed to serve a particular purpose, if satoshis use of the proof of concept term are accurate. It just happened to become what it is today.

So did the internet! Initially created and nurtured by a small group, and then slowly evolved and morphed into what it is today with no explicit direction from anyone. I have no problem calling bitcoin an experiment. Nor would I have had a problem calling the internet an experiment in 1985, 1990, 1995, whenever.

The next phase will be for Bitcoin to act like a real currency. That is why I think the block size limit is so important. Any other currency, historically and currently has non-trial transaction fees. I think they provide a major influence on the stability of the exchange rate against other currencies.

Kind of a different argument, but I don't see why bitcoin needs to inherit the negative properties (high transaction fees) of prior solutions (currencies) in order to be considered "real".

I think satoshi put the block size limit in there on purpose as a test for the community (although there is no quote on that subject except a vague hint)

Huh? He thought the blocksize should be eventually raised. Here's the quote; read the thread (note: it's not vague):

It can be phased in, like:

if (blocknumber > 115000)
    maxblocksize = largerlimit

It can start being in versions way ahead, so by the time it reaches that block number and goes into effect, the older versions that don't have it are already obsolete.

When we're near the cutoff block number, I can put an alert to old versions to make sure they know they have to upgrade.

I want to be citizen of a functional decentralized republic in my lifetime.

Me too. :-)

So the ultimate point of Bitcoin's maturity is it's obsolesce.  

Not seeing how you get to this conclusion...

[ElectricMucus]

Why shouldn't bitcoin should be compared to Gold supply since 1970, rather than since the beginning of time.

Because the supply rate was still growing. And we have yet to encounter the peak, despite different estimations that we already passed it.
http://en.wikipedia.org/wiki/Peak_gold
Added to this gold mined since the beginning of time has already been distributed. This difference makes it impossible to compare gold with bitcoin except during the end of the race, for which we do no yet know what will happen. It is very possible that the initial distribution remains an influential part even then.

[ElectricMucus]

@Melbustus I respond to you this way since using chainquotes is painful in smf.


Bitcoin vs Internet, yes Bitcoin might have disruptive potential, but only if everybody on earth converts to Libertarianism. I doubt that will happen.
The Internet hasn't had and strings attached to it, and if Bitcoin would have been delivered just as the software needed to run a cryptocurrency I would put it in the same category.

Transaction fees, satoshi, it also was intended to have transaction fees high enough so they can compensate for the missing block reward during it's decline. Currently one block can contain about 2000 transactions which would if they should account for BTC 25 in fees at BTC 0.0125 per transaction, or $0.375. That may be too high for satoshidice to operate but it is certainly lower than an intentional bank transfer.
I can't see how we could reach that when raising the block size, now or before transaction space is scarce enough to squeeze out any free transactions and transactions which are because the abundant space.


Decentralized republics, Bitcoins obsolesce, people told me here every time I brought up that possibility that they don't want to form such a structure and they don't think it is necessary to do so. If you agree that we should implement software that includes a database of contact data, ownership of resources like land and assets plus a system to facilitate voting and call it the Bitcoin Republic you are the first one.

[ElectricMucus]

For today I am just going to mention the increased interest in XRP and the rise of paranoia about it. There is not much to say about it imo, well it's due for a bubble.
I doubt it would eat into Bitcoins market share since it wasn't intended to in any way, but you never know with some of the get rich quick idiots.

[zkay]

Todays myth regards the usefulness of Bitcoin in the case of an economic collapse.

It is claimed that Bitcoins would be very useful in economic uproar because they cannot be counterfeit.
The problem with that is that it is problematic to use Bitcoins in such a scenario in the first place. It pretty much depends that the infrastructure continues to be operational through the crisis.
Once the power grid and the Internet are affected the usefulness is pretty much done for. Proposals to rely on things like solar panels and off-line wallets is pretty much irrational because the mining infrastructure would grind to a halt. Transaction times would be beyond a day and the risk of an attack by the establishment which brought up the crisis severe.
I'd take a silver coin over a bitcoin transaction the next day, and I guess you would too...

Only in a situation where the infrastructure continues to be operational along with a steady high inflation (no deflation) can Bitcoin shine. These are mostly periods of good economic growth, in real cases of economic crisis ppl wouldn't have enough cash to keep the bitcoin price up.

I would expand on this further and say that in a true SHTF period in history, a person who has goods worth trading (food, etc) might be hesitant to trade those things for anything but either a) other useful objects or b)useful services. I always read that people want to have silver/gold/bitcoins/whatever for during a grid-down SHTF situation, when those things won't be valuable to have until after the chaos is over with and things settle down again. It is an argument I have never understood.

[Melbustus]

Bitcoin vs Internet, yes Bitcoin might have disruptive potential, but only if everybody on earth converts to Libertarianism.

Libertarians love bitcoin for obvious reasons, but seeing the utility and potential of bitcoin spans quite a wide swath of political ideology. The long-term implications of blockchain-type distributed consensus systems are not understood. Nor were the implications of routing 1500 byte packets of data over a distributed system in the early 80s. The monetary side of bitcoin is just one aspect.

Transaction fees, satoshi, it also was intended to have transaction fees high enough so they can compensate for the missing block reward during it's decline. Currently one block can contain about 2000 transactions which would if they should account for BTC 25 in fees at BTC 0.0125 per transaction, or $0.375. That may be too high for satoshidice to operate but it is certainly lower than an intentional bank transfer.
I can't see how we could reach that when raising the block size, now or before transaction space is scarce enough to squeeze out any free transactions and transactions which are because the abundant space.

Agreed that free transactions should be squeezed out eventually. But I do not think that 1MB (with associated estimates of 7 transactions per second) is going to allow bitcoin to reach its potential. I believe we agreed in another thread that probably exists some gradual increase scheme that makes sense.

Decentralized republics, Bitcoins obsolesce, people told me here every time I brought up that possibility that they don't want to form such a structure and they don't think it is necessary to do so. If you agree that we should implement software that includes a database of contact data, ownership of resources like land and assets plus a system to facilitate voting and call it the Bitcoin Republic you are the first one.

Yeah, as I touched on above, the potential of bitcoin-style technology to decentralize many aspects of society which currently require centralization is potentially the biggest societal implication (Mike Hearn's work on distributed markets and smart property come to mind). Maybe I'm being thick, but I still don't see how that makes the monetary aspect obsolete.

[ElectricMucus]

I would expand on this further and say that in a true SHTF period in history, a person who has goods worth trading (food, etc) might be hesitant to trade those things for anything but either a) other useful objects or b)useful services. I always read that people want to have silver/gold/bitcoins/whatever for during a grid-down SHTF situation, when those things won't be valuable to have until after the chaos is over with and things settle down again. It is an argument I have never understood.

Yes in a true SHTF situation, historically things that are appreciated the most are the things of immediate concern. That is why most goldbugs say their gold isn't for the crisis but for after the crisis.
Bitcoin in this regard is very much a gamble, and I wouldn't gamble with such a situation, though everybody is different.

[ElectricMucus]

@Melbustus

Yes, the underlying technology Bitcoin uses has may different uses which reach far beyond what BTC currently does. What is of my concern is that a good part of the potential application would require a hard-fork just like increasing the block limit does. So that brings the potential innovator in the situation where rewriting the software from scratch to make it more extendible, versatile, or whatever becomes more and more attractive.
Some of those solutions could include a currency aspect, not directly competing with bitcoin but still making it obsolete in the context of which it is used.

We are seeing the first step in this direction with ripple, which is just a tiny one and there is a long way ahead. It is possible that Bitcoin remains relevant throughout this process, although I wouldn't bet on it.

[Odalv]

@Melbustus

Yes, the underlying technology Bitcoin uses has may different uses which reach far beyond what BTC currently does. What is of my concern is that a good part of the potential application would require a hard-fork just like increasing the block limit does. So that brings the potential innovator in the situation where rewriting the software from scratch to make it more extendible, versatile, or whatever becomes more and more attractive.
Some of those solutions could include a currency aspect, not directly competing with bitcoin but still making it obsolete in the context of which it is used.

We are seeing the first step in this direction with ripple, which is just a tiny one and there is a long way ahead. It is possible that Bitcoin remains relevant throughout this process, although I wouldn't bet on it.

Looks like "I'm saying nothing, but my words will be proven"