Bitcoin parity.

[bitcool]

Maybe parity will occur sooner, simply because the target I'm looking at (a stable price after widespread acceptance) is actually when 1 BTC is valued at $10 USD.

Let's say by that time there are 10M bitcoin in circulation, 10M x 10= $100M.

By comparison, Amazon's 2010 revenue is 31B, 310 times bigger.

To be a viable online transaction media, the size of bitcoin economy has to be comparable and the exchange rate needs to reach $1000/BTC

[1714940185]

1714940185

[wobber]

And if the exchange rate will be more than 10$/BTC how will we make payments? What if rate is 1000USD/BTC?
If I want to buy a hotdog I'l just send 0.001 BTC? To much zeros... What is the resolution to this problem?

[nelisky]

And if the exchange rate will be more than 10$/BTC how will we make payments? What if rate is 1000USD/BTC?
If I want to buy a hotdog I'l just send 0.001 BTC? To much zeros... What is the resolution to this problem?

Well, it crossed my mind to send you 10000 bitcoins, but there are just too many zeros there, so I gave up on it

Seriously, though, this has been discussed in some threads. I believe the idea is to simply handle division with better naming, like sending 35uBTC (that's micro btc or 0.000035).

[FatherMcGruder]

I believe the idea is to simply handle division with better naming, like sending 35uBTC (that's micro btc or 0.000035).

ZOMG METRIC SYSTEM COMMUNISM!!!!

[bitcool]

To be a viable online transaction media, the size of bitcoin economy has to be comparable and the exchange rate needs to reach $1000/BTC

Since we don't know dollar's value at that point, $1000 or $1,000,000 are both plausible.

The real celebration should be saved for 1 Oz Au / BTC

[E-conomictest]

When All currencies in the world be worth more than dollar. Then one bitcoin will be equal to that greenback.

[Vinnie]

Maybe parity will occur sooner, simply because the target I'm looking at (a stable price after widespread acceptance) is actually when 1 BTC is valued at $10 USD.

Let's say by that time there are 10M bitcoin in circulation, 10M x 10= $100M.

By comparison, Amazon's 2010 revenue is 31B, 310 times bigger.

To be a viable online transaction media, the size of bitcoin economy has to be comparable and the exchange rate needs to reach $1000/BTC

But before we reach this point we will have competing digital currencies, BTC backed currencies, BTC pegged currencies, currencies pegged to other digital currencies. Maybe the currency that wins will be one that is pegged to a basked of currencies, with BTC in the basket. Maybe BTC becomes useful for particular markets but not for others. Maybe BTCs velocity goes so high that Amazon could earn US $31 billion worth of BTC with BTC valued at only $10/BTC.

[ribuck]

...Maybe BTCs velocity goes so high that Amazon could earn US $31 billion worth of BTC with BTC valued at only $10/BTC.

A very good point. BTC takes so much of the friction out of making payments, that it's sure to circulate with a higher velocity than many other forms of payment. This means that even with only 21 million bitcoins, the value of each coin needn't be as high as we have sometimes assumed in previous discussions.

Also, as soon as bitcoin becomes known to the average Joe, bitcoin banks will be issuing accounts denominated in BTC but not backed by them. This will also reduce the value of each BTC needed to support a large economy.

[FreeMoney]

The velocity point is something I hadn't thought about. I think there is a tendency for a finite currency to gain value over time. This reflects the fact that someone who works first and waits to enjoy the fruits ought get more. This should keep the velocity from absolutely exploding.

[gene]

As others have mentioned above, parity is not what matters. We are rapidly approaching parity already. What matters is is how widespread it becomes as a method of payment. In other words, how reliable it is perceived to be. Expect a smear campaign to discredit it (and this community) as soon as it begins to gain traction with the "general public" and a follow-up attack to the network via legislation and technical means.

If bitcoin survives these assaults (no guarantee at all) then a BTC will likely be worth 10^n USD for some value of n greater than 2.

We should be busy trying to make the network as resilient as possible. This reliance on IRC and a few hard-coded nodes is an obvious weak point. The protocol should be hashed out rapidly and implementations should be as secure as possible. If the protocol is set, the software is solid and the network strong, then bitcoin has hope. The value will sort itself out naturally.

[em3rgentOrdr]

I think that if B gets even close to $ parity - not to mention gold parity - the network will be attacked - physically if not legally - by some governments and/or powerful banking groups.

One of the guys on the show Bruce Wagner did the other day, had some valid points: p2p networks are not indestructible. Plus, it wouldn't take complete BTC-network destruction to ruin public confidence in it and devalue it, perhaps, forever...

http://thinkingliberty.net/podpress_trac/web/590/0/Thinking_Liberty_-_2011-01-11.mp3

I think what we as a community need most of all for fast Bitcoin adoption and parity is an army of whitehats involved in it - testing, hacking, reviewing code, brainstorming attack response scenarios, etc.

If and when Bitcoin hits the mainstream, just one successful attack on it could delay complete adoption for years, or worse...

I listened to that podcast as well.  Very interesting guy that Perry Metzger fellow is, and we should heed his points questioning the ability of bitcoin to withstand a serious government attack.  First thing, and I think this has already been proposed/done, is a big bitcoin bounty for anyone who finds a security bug in the code as an incentive.  Second, and this has been discussed before, is to decouple the specifics of the bitcoin protocol from the current C implementation.  This will help each of us understand what exactly is going on in the code (admittedly, I don't know the entirety of what is happening in the code), and allow bitcoin to be implemented in other languages, hopefully more secure languages that have explicit type and error checking built in.

[fabianhjr]

MtGox just made a jump. We are at 0.4 USD per BTC now.

[bitcool]

The velocity point is something I hadn't thought about. I think there is a tendency for a finite currency to gain value over time. This reflects the fact that someone who works first and waits to enjoy the fruits ought get more. This should keep the velocity from absolutely exploding.

correct, this is the dilemma bitcoin is facing, money velocity tends to increase when the currency is devaluing, for an appreciating money, like bitcoin right now, people tends to hoard it, which in turn will have negative impact on its wider adoption -- maybe the threat of attacks and future uncertainty can make it moving faster?   

[ShadowOfHarbringer]

MtGox just made a jump. We are at 0.4 USD per BTC now.

That was speculation. We're back to ~0,33.

[bitcool]

We should be busy trying to make the network as resilient as possible. This reliance on IRC and a few hard-coded nodes is an obvious weak point. The protocol should be hashed out rapidly and implementations should be as secure as possible. If the protocol is set, the software is solid and the network strong, then bitcoin has hope. The value will sort itself out naturally.

It was taught in CS class that some critical NASA programs have to be mathematically proven it won't go awry using finite state machine models. Any digital currency that becomes foundation of the commerce of modern society, it has to undergo same process, I think.

[em3rgentOrdr]

We should be busy trying to make the network as resilient as possible. This reliance on IRC and a few hard-coded nodes is an obvious weak point. The protocol should be hashed out rapidly and implementations should be as secure as possible. If the protocol is set, the software is solid and the network strong, then bitcoin has hope. The value will sort itself out naturally.

It was taught in CS class that some critical NASA programs have to be mathematically proven it won't go awry using finite state machine models. Any digital currency that becomes foundation of the commerce of modern society, it has to undergo same process, I think.

When you say "be mathematically proven it won't go awry using finite state machine models" do you mean that incase the bits holding the registers for the finite state machine get flipped (and thus may enter into a random state), that the state machine transitions must be robust such that it will gracefully return the state machine back to a known legitimate state?

Regarding finding peers, what about something like what TOR uses, or maybe even better I2P Network Database, which is a bit more decentralized:

Overview

I2P's netDb is a specialized distributed database, containing just two types of data - router contact information (RouterInfos) and destination contact information (LeaseSets). Each piece of data is signed by the appropriate party and verified by anyone who uses or stores it. In addition, the data has liveliness information within it, allowing irrelevant entries to be dropped, newer entries to replace older ones, and protection against certain classes of attack.

The netDb is distributed with a simple technique called "floodfill", where a subset of all routers, called "floodfill routers", maintains the distributed database.

RouterInfo

When an I2P router wants to contact another router, they need to know some key pieces of data - all of which are bundled up and signed by the router into a structure called the "RouterInfo", which is distributed with the SHA256 of the router's identity as the key. The structure itself contains:

The router's identity (a 2048bit ElGamal encryption key, a 1024bit DSA signing key, and a certificate)
The contact addresses at which it can be reached (e.g. TCP: example.org port 4108)
When this was published
A set of arbitrary text options
The signature of the above, generated by the identity's DSA signing key

...

Bootstrapping

The netDb is decentralized, however you do need at least one reference to a peer so that the integration process ties you in. This is accomplished by "reseeding" your router with the RouterInfo of an active peer - specifically, by retrieving their routerInfo-$hash.dat file and storing it in your netDb/ directory. Anyone can provide you with those files - you can even provide them to others by exposing your own netDb directory. To simplify the process, volunteers publish their netDb directories (or a subset) on the regular (non-i2p) network, and the URLs of these directories are hardcoded in I2P. When the router starts up for the first time, it automatically fetches from one of these URLs, selected at random.

Floodfill

The floodfill netDb is a simple distributed storage mechanism. The storage algorithm is simple: send the data to the closest peer that has advertised itself as a floodfill router. Then wait 10 seconds, pick another floodfill router and ask them for the entry to be sent, verifying its proper insertion / distribution. If the verification peer doesn't reply, or they don't have the entry, the sender repeats the process. When the peer in the floodfill netDb receives a netDb store from a peer not in the floodfill netDb, they send it to a subset of the floodfill netDb-peers. The peers selected are the ones closest (according to the XOR-metric) to a specific key.

Determining who is part of the floodfill netDb is trivial - it is exposed in each router's published routerInfo as a capability.

Floodfills have no central authority and do not form a "consensus" - they only implement a simple DHT overlay.

I'm still trying to understand it all.  There seems to always be some sort of bootstrapping for any p2p network (anyone know if this is always the case?).  Is maybe selecting a "URL at random" from the list of hardcoded directories a better idea than just picking them from the list in order?  It seems having different locations for directory lookup has less likelihood of centralized point of failure...

[sturle]

MtGox just made a jump. We are at 0.4 USD per BTC now.

That was speculation. We're back to ~0,33.

That was speculation.  We're back to ~0.4.

Seriously.  The market can move far in any direction at the moment without beeing an indicator for anything but a small buy or sale.  There is no resistance between 0.27 and 0.51.

[da2ce7]

We are really at a guess based market at the moment.     It will be very interesting to see where what we decide bitcoin is worth. (in the short term)

[bitcool]

When you say "be mathematically proven it won't go awry using finite state machine models" do you mean that incase the bits holding the registers for the finite state machine get flipped (and thus may enter into a random state), that the state machine transitions must be robust such that it will gracefully return the state machine back to a known legitimate state?

that's exactly my understanding too. I am going back and re-learn what I am supposed to know already 
http://en.wikipedia.org/wiki/Finite-state_machine

[ElectricGoat]

When you say "be mathematically proven it won't go awry using finite state machine models" do you mean that incase the bits holding the registers for the finite state machine get flipped (and thus may enter into a random state), that the state machine transitions must be robust such that it will gracefully return the state machine back to a known legitimate state?

Most likely it's just proving that if the bits don't "magically" change due to some hardware failure, then the program will end up computing the correct solution.

You can also have proofs that if less than N bits magically change, then it doesn't matter, but I don't see how you could have proofs that whatever might happen, you will always compute the correct solution.