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Author Topic: Government vs Bitcoin ?  (Read 5040 times)
theymos
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November 01, 2010, 03:34:12 PM
 #21

EDIT : Well I guess a generator needs to check for double-spending when including incoming transactions, but that doesn't really change much since that could be solved with balance sheets, simply by network rejection of blocks that contain invalid transactions after they've been generated, or by a much smarter solution =) I didn't think of.

To be able to say, "No other transaction has spent these coins," you need to know the contents of every other transaction. There's simply no way around this. Balance sheets would reduce the space required for each transaction, but this would remove the useful script functionality, since every transaction would need to be sent to exactly one public key or hash.

Balance sheets are basically "simple transactions":
So to correct my balance sheet idea in one fashion, as well as the balance for each individual public key, the balance sheet would also have to keep enough information about the blocks which contain the transactions crediting the public key to enable references to those crediting transactions to be generated when spending the money. So instead of storing the public key and the balance, the balance sheet would have to store the public key, a list of crediting references and their corresponding credit amounts - the total credit being the balance. Anything more?

We'd probably have to change the name from "balance sheet" to "complete current credits list".

Even with balance sheets, you'd still have 100-200 bytes per transaction, which doesn't help the network end (the real problem).

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November 01, 2010, 03:55:38 PM
 #22

I don't really see how a trusted list of PK's and their balances isn't sufficient to decide whether a transaction is valid or not.
You wouldn't be able to go check each individual transaction relevant to a single balance, but as long as the balance sheet is signed by some trusted authority, or some hash of it is spread on the network I would be ok running such a generating client.

I'm assuming that when a transaction is made, both public keys are somehow broadcasted to the network so a complete credit list can be computed incrementally.

amirite or am i still missing something here ?

theymos
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November 01, 2010, 04:21:21 PM
 #23

amirite or am i still missing something here ?

You're currently allowed to make complex transactions that can, for example, be redeemed by either of two public keys (whoever gets it firsts wins). This would be impossible in a balance sheet system unless you also record the transaction script, and if you do that you're right back at full transactions.

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November 18, 2010, 03:52:16 AM
 #24

To be able to say, "No other transaction has spent these coins," you need to know the contents of every other transaction.
You don't need to know the contents of every other transaction. You need to have a current list of all the unspent coins and to keep abreast of the changes when they are spent. Spent transactions can be forgotten forever. The advantage of balance sheets over lightweight clients is that lots of the block chain can be forgotten and there are not merkle tree stubs hanging around which are a non-trivial size.

Balance sheets would reduce the space required for each transaction, but this would remove the useful script functionality, since every transaction would need to be sent to exactly one public key or hash.
No. Balance sheets are script friendly as they would store the scriptPubKeys of all the unspent coins. I'll admit that when I came up with the scheme I was hazy about how scripts work.

Even with balance sheets, you'd still have 100-200 bytes per transaction, which doesn't help the network end (the real problem).

Could you please explain what the real problem is? Balance sheets was intended to enable a fully featured mining-capable client while considerably reducing storage requirements. I believe that hard disk space will become a problem for average users long before network bandwidth or cpu usage.

I'm sorry I didn't notice both your continuations of this thread until today.

ByteCoin
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November 18, 2010, 04:48:48 AM
 #25

I don't really see how a trusted list of PK's and their balances isn't sufficient to decide whether a transaction is valid or not.
You wouldn't be able to go check each individual transaction relevant to a single balance, but as long as the balance sheet is signed by some trusted authority, or some hash of it is spread on the network I would be ok running such a generating client.

I'm assuming that when a transaction is made, both public keys are somehow broadcasted to the network so a complete credit list can be computed incrementally.

amirite or am i still missing something here ?

This topic needs it's own thread, but I don't understand what is being argued here, if your client is using a trusted server, then it's already a thin client, which only really needs the transactions that pertain to the chain of custody that leads to your balance, so that you can create the transactions to spend them.  If you are using a trusted server to verify the validity of transactions, your client doesn't even need a balance sheet at all.  Using balance sheets, your client cannot independently verify a transaction of a sender at all.

"The powers of financial capitalism had another far-reaching aim, nothing less than to create a world system of financial control in private hands able to dominate the political system of each country and the economy of the world as a whole. This system was to be controlled in a feudalist fashion by the central banks of the world acting in concert, by secret agreements arrived at in frequent meetings and conferences. The apex of the systems was to be the Bank for International Settlements in Basel, Switzerland, a private bank owned and controlled by the world's central banks which were themselves private corporations. Each central bank...sought to dominate its government by its ability to control Treasury loans, to manipulate foreign exchanges, to influence the level of economic activity in the country, and to influence cooperative politicians by subsequent economic rewards in the business world."

- Carroll Quigley, CFR member, mentor to Bill Clinton, from 'Tragedy And Hope'
theymos
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November 18, 2010, 02:50:18 PM
 #26

The advantage of balance sheets over lightweight clients is that lots of the block chain can be forgotten and there are not merkle tree stubs hanging around which are a non-trivial size.

Lightweight clients only need to store the parts of the Merkle trees that pertain to them. So if I am storing nothing but the block headers (no trees), someone sending me a Bitcoin transaction can send me the new transaction plus the required "branch transactions" in that block (usually not many extra transactions would be required). I can then reconstruct the Merkle root and verify the network's acceptance of the transaction without downloading a single entire Merkle tree.

This relies on the network's verification ability only. Such a lightweight client would not be trusting anyone.

Quote from: ByteCoin
Could you please explain what the real problem is? Balance sheets was intended to enable a fully featured mining-capable client while considerably reducing storage requirements. I believe that hard disk space will become a problem for average users long before network bandwidth or cpu usage.

I don't care about the requirements for mining. The average person should not be mining. The sooner dedicated organizations are doing all the mining, the better.

With the Bitcoin system, lightweight clients only need to download and store 80 bytes per block, plus temporarily a few extra transactions for every transaction they receive. Balance sheets requires storing and downloading a lot more data.

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November 18, 2010, 07:09:08 PM
 #27

]

Lightweight clients only need to store the parts of the Merkle trees that pertain to them. So if I am storing nothing but the block headers (no trees), someone sending me a Bitcoin transaction can send me the new transaction plus the required "branch transactions" in that block (usually not many extra transactions would be required). I can then reconstruct the Merkle root and verify the network's acceptance of the transaction without downloading a single entire Merkle tree.

This relies on the network's verification ability only. Such a lightweight client would not be trusting anyone.

Sounds like you would be trusting that the peer that sent you the relevant transactions to your new transaction to not be sending you a doctored set.  There would be no way to be certain that what you received were real transactions without the complete blockchain, but you could increase confidence if you could download one or more copies of the relevant blocks from random peers not currently engaged in trading with you.  Does the protocol permit a lightweight client to download a specific block from a random peer, or does it have to download them in order?

"The powers of financial capitalism had another far-reaching aim, nothing less than to create a world system of financial control in private hands able to dominate the political system of each country and the economy of the world as a whole. This system was to be controlled in a feudalist fashion by the central banks of the world acting in concert, by secret agreements arrived at in frequent meetings and conferences. The apex of the systems was to be the Bank for International Settlements in Basel, Switzerland, a private bank owned and controlled by the world's central banks which were themselves private corporations. Each central bank...sought to dominate its government by its ability to control Treasury loans, to manipulate foreign exchanges, to influence the level of economic activity in the country, and to influence cooperative politicians by subsequent economic rewards in the business world."

- Carroll Quigley, CFR member, mentor to Bill Clinton, from 'Tragedy And Hope'
theymos
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November 18, 2010, 07:32:06 PM
 #28

Sounds like you would be trusting that the peer that sent you the relevant transactions to your new transaction to not be sending you a doctored set.

Not at all. The transactions form a hash tree, and the root of this tree is in the block header. The headers, of course, are verified through the Bitcoin proof-of-work block chain system. The attacker would have to break SHA-256 in order to give you fake transactions.

Quote
Does the protocol permit a lightweight client to download a specific block from a random peer, or does it have to download them in order?

Yes. You can also request specific transactions by hash, which would be useful in this scheme. If two lightweight clients are dealing with each other, they might want to rely on the network to provide the transactions required for the Merkle tree.

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November 18, 2010, 07:45:38 PM
 #29

Sounds like you would be trusting that the peer that sent you the relevant transactions to your new transaction to not be sending you a doctored set.

Not at all. The transactions form a hash tree, and the root of this tree is in the block header. The headers, of course, are verified through the Bitcoin proof-of-work block chain system. The attacker would have to break SHA-256 in order to give you fake transactions.

I don't understand this, but I'm not a programmer.
Quote
Quote
Does the protocol permit a lightweight client to download a specific block from a random peer, or does it have to download them in order?

Yes. You can also request specific transactions by hash, which would be useful in this scheme. If two lightweight clients are dealing with each other, they might want to rely on the network to provide the transactions required for the Merkle tree.

Good, that makes my concerns irrelevent.  Even if there were a way to fake a set of transactions without breaking sha256, the ability of the lightweight client to reach out and find another opinion makes any such future exploit pointless.

"The powers of financial capitalism had another far-reaching aim, nothing less than to create a world system of financial control in private hands able to dominate the political system of each country and the economy of the world as a whole. This system was to be controlled in a feudalist fashion by the central banks of the world acting in concert, by secret agreements arrived at in frequent meetings and conferences. The apex of the systems was to be the Bank for International Settlements in Basel, Switzerland, a private bank owned and controlled by the world's central banks which were themselves private corporations. Each central bank...sought to dominate its government by its ability to control Treasury loans, to manipulate foreign exchanges, to influence the level of economic activity in the country, and to influence cooperative politicians by subsequent economic rewards in the business world."

- Carroll Quigley, CFR member, mentor to Bill Clinton, from 'Tragedy And Hope'
Stephen Gornick
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November 28, 2010, 05:46:46 PM
 #30

If there was a malicious takeover, you could opt to hold your BTC until a solution is figured out.  Maybe something like coming up with new client software that accepts as valid only Bitcoin that was held pre-freeze (i.e, only as-of a certain block, ... anything traded after was ignored).

If that is a solution, then maybe this same tactic is like an insurance policy against a massive theft.  Lets say somehow mtgox loses their entire store of BTC holdings.  Lots of unhappy folks I presume.  Build a new client so that blocks occuring after the theft are ignored.  Put out a call to the general public to use the new client so that 50% + 1 of node hashing is on the good side, and Bitcoin is back in business.

But you are right.  Could become a new type of arms escalation.

kiba
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November 28, 2010, 05:49:16 PM
 #31


It seems hopeless and unwise though, for mainstream society to invest in a decentralized digital currency, which can at any point be hijacked and devalued by a powerful, centralized entity...

Attacking bitcoin with CPU power is one of the most stupid, expensive, difficult way to destroy a currency.

RHorning
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November 28, 2010, 05:51:31 PM
 #32

Seems that the biggest impediment to public confidence and widespread use of Bitcoin is exactly this - the inevitable end-game of the government/s and corporate banking entities taking over Bitcoin via CPU power...

The bankrupt US government and the Fed banks are not just going to allow a competing currency, which they can but don't control!

The mistaken notion here is the perception that governments necessarily are so powerful and have access to unlimited resources.  While on a personal level you may have that perception and it may generally be true when government officials gang up on an individual, there is strength in groups that stick together.  That is the reason you have a coup d'etat which happens from time to time in various parts of the world.

"The government" and banks can't take over Bitcoins through a brute force attack as they really don't have the computing power to do so, and what computing power they have is usually devoted to many other far more "important" tasks.  Of greater concern if you live in a democratically elected government is over the growth of the government, but then again my personal political philosophy is that government ought to be small for many reasons including the ability of the citizens to keep the government in check.

I really don't see how some entity like the Federal Reserve or even the Department of Defense, even if it devoted 100% of their computing power to mining bitcoins would be a threat as the citizens of America alone have access to far more computing power on a collective basis.  That kind of attack simply wouldn't happen, and a dedicated server farm with a blank congressional check spending billions of dollars to subvert Bitcoins would also get noticed eventually by the participants of Bitcoins too.

While the network is small it may be vulnerable to attack, but then again we are flying under the radar of the government here too and not being noticed.  It isn't something for the government to worry about.  As long as there are different governments around the world, even that minor threat is even more diminished as long as some governments perhaps might even support the aims and goals of Bitcoins turning such a brute force attack into an international incident bordering on an act of war.

The real threat is legislation that could potentially make using Bitcoins illegal, or a series of legal disputes in the judicial system, in any country for that matter.  There have already been attacks against peer to peer software in a number of situation, including what appears to be a current take-down attempt on the BitTorrent network in particular.  The same legal tools being used against that network may also be applied to Bitcoins, so it is a bit of a concern.

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November 28, 2010, 06:46:27 PM
 #33

When you consider that, if successful, Bitcoin will have the world's most powerful special interests (governments and banks) arrayed against it, it is not unreasonable to make self-defense planning a top priority.  I think there should be an active group dedicated to thinking up "what if" scenarios, war gaming, development of alternative network topologies, etc.  In my view, P2P cryptocurrency is the most significant freedom-promoting development in our lifetimes, other than the internet itself.  Those who control their money control their destiny.  It will very likely accelerate the demise of the old-school hierarchical institutions (government and large corporations), but not without them waging an epic battle.  Things could get quite interesting in the next 10 years.  I agree with RHorning that the most significant threat is legislative, but the agorists among us are already itching to see large portions of the economy go underground.  The time is now to develop a sizable following for Bitcoin, especially among liberty-minded folks who will stick with us even if it becomes illegal to do so.

"A small body of determined spirits fired by an unquenchable faith in their mission can alter the course of history." --Gandhi
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November 28, 2010, 07:06:18 PM
 #34

When you consider that, if successful, Bitcoin will have the world's most powerful special interests (governments and banks) arrayed against it, it is not unreasonable to make self-defense planning a top priority.  I think there should be an active group dedicated to thinking up "what if" scenarios, war gaming, development of alternative network topologies, etc.  In my view, P2P cryptocurrency is the most significant freedom-promoting development in our lifetimes, other than the internet itself.  Those who control their money control their destiny.  It will very likely accelerate the demise of the old-school hierarchical institutions (government and large corporations), but not without them waging an epic battle.  Things could get quite interesting in the next 10 years.  I agree with RHorning that the most significant threat is legislative, but the agorists among us are already itching to see large portions of the economy go underground.  The time is now to develop a sizable following for Bitcoin, especially among liberty-minded folks who will stick with us even if it becomes illegal to do so.
How is one going to buy let's say a car underground? Cars have to be registered, etc. Transactions above certain amounts have to be registered, etc. How is Bitcoin or an alternative system going to get around that? For digital goods one could use Bitcoin, but most  interesting goods are not digital.

Test sending bitcoins to this address: 1P2NYce9Gj2eDN1GQNYaxkjm1npvmdqY4F
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November 28, 2010, 07:16:43 PM
 #35

When you consider that, if successful, Bitcoin will have the world's most powerful special interests (governments and banks) arrayed against it, it is not unreasonable to make self-defense planning a top priority.  I think there should be an active group dedicated to thinking up "what if" scenarios, war gaming, development of alternative network topologies, etc.  In my view, P2P cryptocurrency is the most significant freedom-promoting development in our lifetimes, other than the internet itself.  Those who control their money control their destiny.  It will very likely accelerate the demise of the old-school hierarchical institutions (government and large corporations), but not without them waging an epic battle.  Things could get quite interesting in the next 10 years.  I agree with RHorning that the most significant threat is legislative, but the agorists among us are already itching to see large portions of the economy go underground.  The time is now to develop a sizable following for Bitcoin, especially among liberty-minded folks who will stick with us even if it becomes illegal to do so.

What will government do when it collapse and there's hyperinflation?

It may be also a really dangerous time. So it's definitely crucial to stabilize the world economy at that point, since we are so interdependent now.

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November 28, 2010, 07:58:22 PM
 #36

What will government do when it collapse and there's hyperinflation?

It may be also a really dangerous time. So it's definitely crucial to stabilize the world economy at that point, since we are so interdependent now.

My own experience with hyperinflation was while living in Brazil during the mid 1980's, where local inflation was above 1000%.  I was lucky compared to the people I lived with at the time as my assets were mostly dollar denominated and did a monthly foreign exchange of dollars for (at the time) Brazilian Cruzados.

The Brazilians at the time were able to cope as the minimum wage was indexed to inflation (something I think would happen in most western countries if this became a problem).  Interestingly it turned out that most salary negotiations that I remember usually involved either a foreign currency (they demanded dollars, pounds, or deutschesmarks for a salary) or it was in multiples of that "minimum wage".  Using minimum wage as a currency in itself is sort of an interesting monetary unit in a hyperinflation environment that I don't think has been really well explored, particularly when that also becomes inflationary in its own right as it became in Brazil too.

It was rough when the money I had at the beginning of the month was only worth about half that value by the end of the month (sometimes less) and it did impact the kind of purchases that you did.  The most frustrating to me personally was that I couldn't really do price comparisons between one vendor against another for retail purchases, as literally the prices would be changing every day.  Pretty much if you saw something you wanted to buy, you made the purchase based strictly on if you could afford to buy the item or not.  I'm sure for merchants it was an even larger headache.

To give an example of how bad the inflation was, I noticed a huge pile of coins in a cash register that wasn't even being used.  When I asked if I could "buy" some of the coins, the cashier simply handed the whole heap to me thanking me for essentially taking out the trash.  I also knew a few people who literally used the money as a replacement for tissue paper in the bathroom because the tissue paper was more expensive.

I also encountered the situation where dollars as money unto itself simply were being used instead, and the government turning a blind eye to the practice as long as it was kept in relatively small amounts.  If I went to the street markets to buy fresh fruit or other goods and paid for them in dollars, they were gladly accepted and in fact I would usually get more than the typical exchange rate would have purchased instead.  Small denominations were the most useful, as you would only get change in the local currency (typically), but the dollars were certainly accepted and in fact more desirable than even bulk gold bullion.

Comparing this to Bitcoins, I can envision a time in the future where major world currencies are encountering massive inflation where many people will be looking for alternatives.  As a practical matter, if you offered some bitcoins where the merchant realizes that they are stable or even deflationary, they will gladly accept that as currency instead and even make extraordinary efforts to accommodate such a transaction.  Life will go on, governments will continue to collect taxes and commerce will continue to happen.  It will be rough and there will certainly be "winners and losers" in such an environment, but society certainly won't collapse if that was to happen.  The threat to governments under hyperinflation is mainly general hardships for the population as a whole and general discontent that something is wrong needing to be fixed.  That may encourage a coup d'etat or certainly major turn-overs in the political parties running the government, but it doesn't imply that any particular country is going to completely collapse into anarchy in such a situation.  People and countries have gone through this before and survived just fine, even though it was certainly a huge ouch during the hyperinflationary period.

Of concern is of course what happened during the Weimar Republic and the political party which took over in Germany because of the hyperinflation, and the reaction of the German people which happened when that political party was able to bring inflation under control.  That tends to give the leaders of such a government close to a "blank check" to do a great many things that may not be politically acceptable in other environments.

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November 28, 2010, 10:40:38 PM
 #37

How is one going to buy let's say a car underground? Cars have to be registered, etc. Transactions above certain amounts have to be registered, etc. How is Bitcoin or an alternative system going to get around that? For digital goods one could use Bitcoin, but most  interesting goods are not digital.

Well, if you want a new Mercedes Benz or something like that, then you will need to buy it in the old economy.  However, I could envision a resourceful agorist buying an old clunker with some national currency and restoring it to like new condition and then selling it for Bitcoins.  When you register the car, which would already have a title, you would only have to pay taxes on its old, unrestored value. 

In the future, there will be a greater availability of desktop manufacturing devices and eventually molecular manufacturing machines, so the percentage of the world economy that can be delivered digitally is only going to increase.

"A small body of determined spirits fired by an unquenchable faith in their mission can alter the course of history." --Gandhi
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November 29, 2010, 03:15:39 AM
 #38

Its easy to spot the government. They are the ones pointing guns at you.


 Smiley
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November 29, 2010, 04:12:11 AM
 #39

How is one going to buy let's say a car underground? Cars have to be registered, etc. Transactions above certain amounts have to be registered, etc. How is Bitcoin or an alternative system going to get around that? For digital goods one could use Bitcoin, but most  interesting goods are not digital.

Well, if you want a new Mercedes Benz or something like that, then you will need to buy it in the old economy.  However, I could envision a resourceful agorist buying an old clunker with some national currency and restoring it to like new condition and then selling it for Bitcoins.  When you register the car, which would already have a title, you would only have to pay taxes on its old, unrestored value. 

In the future, there will be a greater availability of desktop manufacturing devices and eventually molecular manufacturing machines, so the percentage of the world economy that can be delivered digitally is only going to increase.


So commodity markets will be even bigger in the future. Imagine buying exotic matters so that you could print them with your machine.

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November 29, 2010, 04:42:39 AM
 #40

http://www.makerbot.com/

Seen one in person recently.  Slick little machines.

"The powers of financial capitalism had another far-reaching aim, nothing less than to create a world system of financial control in private hands able to dominate the political system of each country and the economy of the world as a whole. This system was to be controlled in a feudalist fashion by the central banks of the world acting in concert, by secret agreements arrived at in frequent meetings and conferences. The apex of the systems was to be the Bank for International Settlements in Basel, Switzerland, a private bank owned and controlled by the world's central banks which were themselves private corporations. Each central bank...sought to dominate its government by its ability to control Treasury loans, to manipulate foreign exchanges, to influence the level of economic activity in the country, and to influence cooperative politicians by subsequent economic rewards in the business world."

- Carroll Quigley, CFR member, mentor to Bill Clinton, from 'Tragedy And Hope'
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