Let’s Talk Bitcoin! Episode 19 - "Making It Up As You Go" June 29, 2013

[internationalaw]

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Hosts:
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Andreas M.Antonopoulos


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For June 29, 2013


Show Notes for Episode 19 Making It Up As You Go

• Stephanie’s Back from Porcfest!  She tells us all about it, ever heard of Woven Bacon Sandwich?  You will today
• Listener Mail: Open Garden availability, and the various options on the market for cold storage.
• Interview with Jeff Coleman from the Bitcoin Alliance of Canada for an interesting if tinny discussion of the Mbit, what it is, why it’s important, and why you might want to change your wallet right now to use it.
• Then we’ve got a tri-fecta of stories about various governmental organizations declaring things about technology they don’t seem to understand
• First Bitcoins Seized by DEA - Further Details

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[YaCoinYeah]

I love this project. It's slowly becoming the radio voice of bitcoin news.

[internationalaw]

I love this project. It's slowly becoming the radio voice of bitcoin news.

Thank you for listening! We strive to bring great bitcoin related content to our listeners. We have a lot in store for upcoming interviews!

[YaCoinYeah]

Maybe you can set up a fundraiser to get funds to advertise on bitcointalk about your show! Would be a very wise investment!

Will listen to the show tomorrow in the morning Best time to listen

[waxwing]

Another good show, lots of enthusiasm.
You are all very eloquent and interesting speakers, but I have to say again I am more and more impressed by how insightful and well thought out Andreas' comments are.

One thing really surprised me, even disturbed me - you gave a positive view of the idea of "tainting" coins. You barely mentioned the obvious problem - taintedness can only be defined by external authorities. Just arguing that it's a community decision is not enough - what kind of cash is it if the majority can vote that I don't "deserve" it for some reason? That's not so different to the problem we have with money now - if the majority doesn't like me using money for X then I'm just SOL. That's not OK.

I can't see it ever being accepted by the community, unless in some quasi- form with an overlay of extra technology (time locks? escrow?) which I don't understand yet. Even with any extra tech, suggestions of allowing tainted coins deserve considerable scepticism.

[cypherdoc]

Another good show, lots of enthusiasm.
You are all very eloquent and interesting speakers, but I have to say again I am more and more impressed by how insightful and well thought out Andreas' comments are.

One thing really surprised me, even disturbed me - you gave a positive view of the idea of "tainting" coins. You barely mentioned the obvious problem - taintedness can only be defined by external authorities. Just arguing that it's a community decision is not enough - what kind of cash is it if the majority can vote that I don't "deserve" it for some reason? That's not so different to the problem we have with money now - if the majority doesn't like me using money for X then I'm just SOL. That's not OK.

I can't see it ever being accepted by the community, unless in some quasi- form with an overlay of extra technology (time locks? escrow?) which I don't understand yet. Even with any extra tech, suggestions of allowing tainted coins deserve considerable scepticism.

This is so true and so important to get right. So many newbies get trapped into this tainting argument.

Monetary units have to be fungible. The units themselves are non political. They can't help themselves from being used "inappropriately" by criminals who might use them for drugs or a young girl who might use them for an abortion.

If we allowed usd to be destroyed because of drug tainting we'd not have any cash left. Same goes for digital dollars.

[franky1]

the main point of that talk which is what we all should really take on board. is to stop comparing bitcoin to FIAt price. but a direct Bitcoin to product price.

maybe setting up a bread, milk and veg valuation/commodity pricing index would help

EG work out the amount of miners online and divide that by 3600 to get a daily income value per person (much like minimum wage). then use that number to know that is the equivalent of 50 loaves of bread or milk.

much like how governments use the "cost of living" value to work out a minimum wage.. but in reverse

[mindtomatter]

This was from Reddit, and my response

The taint problem exposes a coming political era for Bitcoin, where each miner must decide what to do with a stolen coin. It is a very dangerous transition for us, because we move from a pure consensus of clients based on packets and fees, to arguing about crime reports. Needless to say, crime report collection, verification, and final judging are currently geographically monopolized.
Accept that taint claims will be available, for your use, if you choose; but beware any miner that would block a transaction.
One critical factor in coin theft is information asymmetry. The thief can mix the coins well enough before anyone knows they're gone. Unwitting parties in transaction might bear most of the cost of any coin-blocking movements.
tl;dr: coin freezing bad

That's a really good point about mixing the coins before they're tainted, and given the speed at which that could be possible (fast enough to the point of being considered automated) it seems difficult to deal with.
Perhaps the solution is for legitimate mixer-services to not accept coins that have been transferred within the last say 2-7 days. Shorter would work, but the less buffer you have the more likely the freeze hits an innocent.

[cypherdoc]

This was from Reddit, and my response

The taint problem exposes a coming political era for Bitcoin, where each miner must decide what to do with a stolen coin. It is a very dangerous transition for us, because we move from a pure consensus of clients based on packets and fees, to arguing about crime reports. Needless to say, crime report collection, verification, and final judging are currently geographically monopolized.
Accept that taint claims will be available, for your use, if you choose; but beware any miner that would block a transaction.
One critical factor in coin theft is information asymmetry. The thief can mix the coins well enough before anyone knows they're gone. Unwitting parties in transaction might bear most of the cost of any coin-blocking movements.
tl;dr: coin freezing bad

That's a really good point about mixing the coins before they're tainted, and given the speed at which that could be possible (fast enough to the point of being considered automated) it seems difficult to deal with.
Perhaps the solution is for legitimate mixer-services to not accept coins that have been transferred within the last say 2-7 days. Shorter would work, but the less buffer you have the more likely the freeze hits an innocent.

the thing you're missing Adam is proving that which is stolen from that which is allegedly stolen.

i could donate 100 BTC to your podcast today.  you might happily then spend that BTC immediately on needed expenses for production and expansion.  i could then come to you a month later and ask you for special favors related to advertising my business.  you would rightly decline from an ethical standpoint.  the disagreement escalates and then i go public accusing you of stealing my 100 BTC via a hack.  after all, i have the private key from the donation address proving it came from me to you.

how can anyone prove who's right?  should those coins be tainted forever?  and should your suppliers be able to ask you to repay with non tainted coins as a result?

[mindtomatter]

This was from Reddit, and my response

The taint problem exposes a coming political era for Bitcoin, where each miner must decide what to do with a stolen coin. It is a very dangerous transition for us, because we move from a pure consensus of clients based on packets and fees, to arguing about crime reports. Needless to say, crime report collection, verification, and final judging are currently geographically monopolized.
Accept that taint claims will be available, for your use, if you choose; but beware any miner that would block a transaction.
One critical factor in coin theft is information asymmetry. The thief can mix the coins well enough before anyone knows they're gone. Unwitting parties in transaction might bear most of the cost of any coin-blocking movements.
tl;dr: coin freezing bad

That's a really good point about mixing the coins before they're tainted, and given the speed at which that could be possible (fast enough to the point of being considered automated) it seems difficult to deal with.
Perhaps the solution is for legitimate mixer-services to not accept coins that have been transferred within the last say 2-7 days. Shorter would work, but the less buffer you have the more likely the freeze hits an innocent.

the thing you're missing Adam is proving that which is stolen from that which is allegedly stolen.

i could donate 100 BTC to your podcast today.  you might happily then spend that BTC immediately on needed expenses for production and expansion.  i could then come to you a month later and ask you for special favors related to advertising my business.  you would rightly decline from an ethical standpoint.  the disagreement escalates and then i go public accusing you of stealing my 100 BTC via a hack.  after all, i have the private key from the donation address proving it came from me to you.

how can anyone prove who's right?  should those coins be tainted forever?  and should your suppliers be able to ask you to repay with non tainted coins as a result?

So false accusations long after the fact as a means to essentially create chargeback risk?    I see the point, we'll talk about it on the show (once we burn through the backlog a little)

[cypherdoc]

This was from Reddit, and my response

The taint problem exposes a coming political era for Bitcoin, where each miner must decide what to do with a stolen coin. It is a very dangerous transition for us, because we move from a pure consensus of clients based on packets and fees, to arguing about crime reports. Needless to say, crime report collection, verification, and final judging are currently geographically monopolized.
Accept that taint claims will be available, for your use, if you choose; but beware any miner that would block a transaction.
One critical factor in coin theft is information asymmetry. The thief can mix the coins well enough before anyone knows they're gone. Unwitting parties in transaction might bear most of the cost of any coin-blocking movements.
tl;dr: coin freezing bad

That's a really good point about mixing the coins before they're tainted, and given the speed at which that could be possible (fast enough to the point of being considered automated) it seems difficult to deal with.
Perhaps the solution is for legitimate mixer-services to not accept coins that have been transferred within the last say 2-7 days. Shorter would work, but the less buffer you have the more likely the freeze hits an innocent.

the thing you're missing Adam is proving that which is stolen from that which is allegedly stolen.

i could donate 100 BTC to your podcast today.  you might happily then spend that BTC immediately on needed expenses for production and expansion.  i could then come to you a month later and ask you for special favors related to advertising my business.  you would rightly decline from an ethical standpoint.  the disagreement escalates and then i go public accusing you of stealing my 100 BTC via a hack.  after all, i have the private key from the donation address proving it came from me to you.

how can anyone prove who's right?  should those coins be tainted forever?  and should your suppliers be able to ask you to repay with non tainted coins as a result?

So false accusations long after the fact as a means to essentially create chargeback risk?    I see the point, we'll talk about it on the show (once we burn through the backlog a little)

essentially yes.

the other problem could come from combining multiple inputs into a single output of a tx.  

once you combine tainted with non tainted coins into a single address, let's say Let's Talk Bitcoin's donation address  , how do you distinguish btwn them when it comes to you wanting to spend them?  you should check your address; you might be surprised just how many are tainted using blockchain.info.

perhaps we should blacklist your address?  

i could even take it one step further.  let's say i'm a competitor of yours.  i'm a bad guy too and i decide to donate to your address to sabotage it.  what do we do then?  afterall, you must be a money launderer having accepted and spent the coins on supplies.

[mindtomatter]

Your points are well taken, it's on the list.

In the meantime, our interview with Erik Voorhees is now live
http://letstalkbitcoin.com/post/51080936970/bitcoin-2013-conference-coverage-interview-with

Topic list:
Why Satoshi Dice is Gone from the land of the free
Why Panama?
Bitcoin based autonomous region, and the lesson of the Honduras free zone
Behind the man, history and hopes
Why Join, then Leave the Free State Project?
Why this time really is different
What's the scenario that keeps you up at night?
What do you think of Ripple in its current iteration?
Are Bitcoin Businesses Possible in the US?
What's Wrong with Mt Gox?
Is Bitcoin the future, or is it just Cryptocurrencies in general?
What do you think of Alt-Coins?

[Impaler]

Adam's plan to create a store that offers a discount for paying with BTC is a result of the deflationary nature of BTC.  But ware he's sees this as a good thing it is in fact a very bad development (not his fault of course, he is just doing the logical and inevitable thing under deflation).  As a merchant he is essentially trying to race ahead of the deflation rate, this will inevitably result in an acceleration of deflation, just as in a inflationary environment the merchant is trying to raise prices and race ahead of inflation and this creates even more inflation.

When the bulk of merchants adopt this kind of pricing strategy (as they inevitably must in a deflationary environment), the result is to drive more deflation as the 'discounts' now effectively become the true value of BTC, exchange for USD will try too catch up but because these discounts will most likely be by a percentage they will remain forever above the BTC/USD exchange rate and act to pull it upwards perpetually.

Now how do merchants ever actually make money if they are offering huge discounts?  The only way for the merchant to close that gap is to hold BTC for a long enough period for the coins appreciation to put them back in the black (or just accumulate private hoards).  Now ignoring all the risks they now have of a crash in exchange rates the merchant now has very low turn over of money, this is effectively removing large portions of BTC from circulation which leads to yet more deflation.  And no the higher rates of deflation won't decrease the time the merchant holds coins because the customers will demand an even deeper discounts, as the size of the discount needed to stimulate the consumer is proportional to the rate of deflation.

The logical end result is hyper deflation and the collapse of all commerce and investment.

[mindtomatter]

Adam's plan to create a store that offers a discount for paying with BTC is a result of the deflationary nature of BTC.  But ware he's sees this as a good thing it is in fact a very bad development (not his fault of course, he is just doing the logical and inevitable thing under deflation).  As a merchant he is essentially trying to race ahead of the deflation rate, this will inevitably result in an acceleration of deflation, just as in a inflationary environment the merchant is trying to raise prices and race ahead of inflation and this creates even more inflation.

When the bulk of merchants adopt this kind of pricing strategy (as they inevitably must in a deflationary environment), the result is to drive more deflation as the 'discounts' now effectively become the true value of BTC, exchange for USD will try too catch up but because these discounts will most likely be by a percentage they will remain forever above the BTC/USD exchange rate and act to pull it upwards perpetually.

Now how do merchants ever actually make money if they are offering huge discounts?  The only way for the merchant to close that gap is to hold BTC for a long enough period for the coins appreciation to put them back in the black (or just accumulate private hoards).  Now ignoring all the risks they now have of a crash in exchange rates the merchant now has very low turn over of money, this is effectively removing large portions of BTC from circulation which leads to yet more deflation.  And no the higher rates of deflation won't decrease the time the merchant holds coins because the customers will demand an even deeper discounts, as the size of the discount needed to stimulate the consumer is proportional to the rate of deflation.

The logical end result is hyper deflation and the collapse of all commerce and investment.

You're assuming that things stay the same - The deflationary business model works during an actively deflationary environment, the discounts will vary based on the expectations of future value.  Right now we're in a period of revaluation when things will happen fast,  in a few years we'll have a much more stable pricing structure which will reduce the discount since there is less expectation of appreciation.   

For example, right now if the price of BTC goes from 100 to 200, that is a 100% appreciation.  If 1BTC is 10,000 and goes to 10,100 that is less than 1% appreciation.  In the first situation, it makes sense to sell for a 40% discount, because the % growth makes that a good deal.  In the second situation, you'd be an idiot to do that.

Get it?   People change their behavior based on incentives

So that means that right now when the expectation is for incredible upside (tens of thousands) with very little downside (can only go to zero).  That isn't true forever.

[internationalaw]

Let's Talk Bitcoin! is a show for users new and old of Cryptocurrencies and
the current king of them all, Bitcoin! Episodes range from 55 minutes to
a little over an hour, and include news, analysis and original interviews
in a clean, audio-magazine format..

For previous episodes & our Listener Support widget, visit us at www.letstalkbitcoin.com

Send Listener Questions, Feedback, plus offers to help the cause and join
our team to adam@letstalkbitcoin.com

Also, we're looking for members to join our Bitcoin Community Roundtable -
If you're doing something in the Bitcoin community and want to be made
available of interview opportunities as they arise, Check out the specific
thread for more details https://bitcointalk.org/index.php?topic=186752

Each episode takes about 10 hours to produce, please support the show if
you like what we're doing.

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Hosts:
Adam B. Levine
Stephanie Murphy,PhD
Andreas M.Antonopoulos


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For May 25, 2013 “A Brave, New World”

Show Notes for Episode 10

• Cloud Identity, HD Wallets, and Quick Interview Hits from the Conference
• Regulating Bitcoin, where do you stand?
• Keeping Bitcoin in Perspective and Knowing the Risks
• Rethinking Tip Widgets

[internationalaw]

Let's Talk Bitcoin! is a show for users new and old of Cryptocurrencies and
the current king of them all, Bitcoin! Episodes range from 55 minutes to
a little over an hour, and include news, analysis and original interviews
in a clean, audio-magazine format..

For previous episodes & our Listener Support widget, visit us at www.letstalkbitcoin.com

Send Listener Questions, Feedback, plus offers to help the cause and join
our team to adam@letstalkbitcoin.com

Also, we're looking for members to join our Bitcoin Community Roundtable -
If you're doing something in the Bitcoin community and want to be made
available of interview opportunities as they arise, Check out the specific
thread for more details https://bitcointalk.org/index.php?topic=186752

Each episode takes about 10 hours to produce, please support the show if
you like what we're doing.

1BefjsirD4Sqi46xYvo2djyiXgTHkXyppo


LITECOIN Donations

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Hosts:
Adam B. Levine
Stephanie Murphy,PhD
Andreas M.Antonopoulos


RSS Feed Here

For May 28, 2013 “A Brave, New World”

Show Notes for Episode 11

• Granular Identity Control & Cloaked Email Addresses
• Bitcoin Integration, Playing the VC Game, Lockdown Security, and Online Wallets
• Password Recovery vs. True Security
• Multi-Part Backups & Multi-Signor Wallets
• The Teeter-Totter of Security vs. Ease of Use
• Moving Enormous Armory to Android & Open-Source to Full-Time
• Pioneering in a New Space & Armory for Altcoins

BUMP: EPISODE 11 IS OUT NOW!

[Meatpile]

"just keep enough money in your wallets that you are willing to lose" is the worst excuse anyone can come up with. If it cant be secured then its bullshit and shouldnt be considered useful in the least

[mindtomatter]

Yeah but it's the best solution anyone can come up with for web wallets - They are unavoidably insecure so manage your exposure to minimize your risk.

I agree personally, it's BS.  I have I think .1 in a coinbase wallet and that's it in online wallets

[internationalaw]

Let's Talk Bitcoin! is a show for users new and old of Cryptocurrencies and
the current king of them all, Bitcoin! Episodes range from 55 minutes to
a little over an hour, and include news, analysis and original interviews
in a clean, audio-magazine format..

For previous episodes & our Listener Support widget, visit us at www.letstalkbitcoin.com

Send Listener Questions, Feedback, plus offers to help the cause and join
our team to adam@letstalkbitcoin.com

Also, we're looking for members to join our Bitcoin Community Roundtable -
If you're doing something in the Bitcoin community and want to be made
available of interview opportunities as they arise, Check out the specific
thread for more details https://bitcointalk.org/index.php?topic=186752

Each episode takes about 10 hours to produce, please support the show if
you like what we're doing.

Bitcoin: 1NM8ENV1sGAbMiuuUhhpjnCPdyAqxmXaoQ



Litecoin: LQ8vRaAsq1Y65MCid8YG6iMdXFa5gN6729

Bitmessage: BM-BcWgZS3dqdrCz9x7cDi9QnMUc51xZbNv

Hosts:
Adam B. Levine
Stephanie Murphy,PhD
Andreas M.Antonopoulos


RSS Feed Here

For May 28, 2013 “You get my Bitmessage”

Featuring an interview with Charlie Lee, creator of Litecoin!

Show Notes for Episode 12

• Listener Email - “Outrageous Legal Looting System”
• Bitmessage
• Bitcoin Notary
• Stephanie Murphy interviews Charlie Lee, creator of Litecoin
• OKPay, Mt. Gox & The Liberty Laundry Network?

New Episode is OUT!

This is a great episode, we hope you all enjoy!

[internationalaw]

EPISODE 013 (June 3, 2013) is out now!

Let's Talk Bitcoin! is a show for users new and old of Cryptocurrencies and
the current king of them all, Bitcoin! Episodes range from 55 minutes to
a little over an hour, and include news, analysis and original interviews
in a clean, audio-magazine format..

For previous episodes & our Listener Support widget, visit us at www.letstalkbitcoin.com

Send Listener Questions, Feedback, plus offers to help the cause and join
our team to adam@letstalkbitcoin.com

Also, we're looking for members to join our Bitcoin Community Roundtable -
If you're doing something in the Bitcoin community and want to be made
available of interview opportunities as they arise, Check out the specific
thread for more details https://bitcointalk.org/index.php?topic=186752

Each episode takes about 10 hours to produce, please support the show if
you like what we're doing.

Bitcoin: 1GyqzKX86nVNQRkcmHUKP966AMUmzDsSBW

Litecoin: Lba2Pfx8vb8wtMYDG7Gq3ftuB2hGL37j7H

Bitmessage: BM-BcWgZS3dqdrCz9x7cDi9QnMUc51xZbNv


Hosts:
Adam B. Levine
Stephanie Murphy,PhD
Andreas M.Antonopoulos


RSS Feed Here

For May 28, 2013 “Shakers & Movers”

Featuring an interview with Charles Hoskinson

Show Notes for Episode 13

• Bitcoin100 WordPress Tip Widget BitcoinPressCenter.org
• Interview with Charles Hoskinson, Founder of the Bitcoin Education project
• Platform vs. Service - Bitcoin Neutrality in focus
• Interview with Chris “Fellow Traveler” on OpenTransactions & the Bitmessage breakthrough
• Dust vs. Microtransactions - Throwing out the Baby with the Bathwater
• Interview with Marc Hochstein of American Banker & Bailey Reutzel of PaymentSource on Bitcoin, Journalism and playing by the rules.