What problem does bitcoin solve?

[kwukduck]

@v-tim

I2P is more of a darknet of it's own, it's not realy meant to go outside on the public web, but ofcourse you can set up proxies (and there are) to do that.

If you set up a new chain inside I2P it will be useless in the outside world unless there's some kind of exchange for it.

If you're going to proxy out you can be just fine, use multiple accounts, transfer from anonymous to non-anonymous and then spend it . Yes you can see where the money came from, but nobody knows that anonymous was you being anonymous, could have just as well been any other anonymous sending you the bitcoins.

[cdnbcguy]

The main problem it solves is that the government cannot reach up it's bum and pull out a trillion BC.

This will prove to be vital in the next few years.

[baloney]

I'm afraid bitcoin will never take off, just existing as a fun thing for the libertarians and anarchists. :-)

Don't forget about pedophiles and money launderers 

[Timo Y]

Government currencies are always more dangerous than voluntary currencies.

People have a tendency to overinsure themselves against high frequency, low impact events and underinsure themselves against black swan events.

Just because some government currency hasn't failed in the last 30 years doesn't mean it can't.

[FreeMoney]

Government currencies are always more dangerous than voluntary currencies.

People have a tendency to overinsure themselves against high frequency, low impact events and underinsure themselves against black swan events.

Just because some government currency hasn't failed in the last 30 years doesn't mean it isn't 100% guaranteed to.

because it is. After the bubble things go back to their actual value to people. And stained paper is not very valuable.

[Jason]

If a government currency is always more insecure than a non-government currency, then how do you explain the e-gold fiasco?  I personally know someone who lost US$50K he was keeping in 1MDC at the time 1MDC's account was seized, and I've heard of others who lost even more.  As far as I know, no one uses/trusts e-gold today, despite the best intentions of its founders who were nonetheless forced into complying with the demands of the government after they were falsely arrested on trumped-up charges of money laundering.

The attractive thing about bitcoin is that it seems to be a non-government currency that is relatively free from the coercive force of government at the present time.  I do fear, however, that as the internet becomes regulated more and more, the day may soon come when it will no longer be possible to initiate TCP/UDP connections to arbitrary ports on arbitrary IP addresses -- something that would leave the internet as used by most sheeple intact, while denying services such at those provided by bitcoin, freenetproject, i2p, and any other innovative services that would not be granted waivers by some government-supported regulatory body.  This sort of regulatory action would likely be justified with the standard approach of insisting that it is the only way to keep people safe from terrorism (or whatever the bogey-man of the year is at the time).

In order to stay one step ahead of those who feel threatened by a non-taxable, non-regulated, relatively anonymous currency, I hope some of us will put up with being called paranoid by many others by considering these threats, and come up with effective ways to neutralize them which can be implemented by the development team ahead of time when they become necessary.
 

I would not accept Bitcoin. Too insecure. Not possible to insure against value fluctuations.

I will never get this. A government currency is always more insecure than a non-government currency, yet people keep thinking otherwise Study history. Governments always try to steal their citizens by debasing the currency.

In reality is very simple, a government currency is backed by force. A non-government currency will only take off if it offers a quality currency, otherwise people have no reason to use it. A government currency is imposed by force, there is no incentive to offer a quality currency because people has to accept it anyways and therefore its always debased.

Government currencies are always more dangerous than voluntary currencies.

[Timo Y]

I do fear, however, that as the internet becomes regulated more and more, the day may soon come when it will no longer be possible to initiate TCP/UDP connections to arbitrary ports on arbitrary IP addresses.

worst comes to worst, the bitcoin client can be modified to communicate over email.  perhaps the bitcoin messages will be hidden steganographically inside jpg email attachments.   Webs of trust will prevent government agents from knowing whether a pet photo that I sent to my aunt contains a hidden message or not.
 
then there are always wireless mesh networks for the last mile distribution.

[Cryptoman]

I do fear, however, that as the internet becomes regulated more and more, the day may soon come when it will no longer be possible to initiate TCP/UDP connections to arbitrary ports on arbitrary IP addresses

I doubt that it will ever get to this point, unless we are already in a full-scale revolution.  That would be like telling people they couldn't leave their houses without getting their destination pre-approved by the government.  I mean, look at the stink over "net neutrality," even though this was a relative non-issue.  I do share your concerns, however.  Please help us by thinking up possible scenarios and the workarounds to avoid them.  Nice first post, by the way.  Welcome aboard.

[Jason]

A lot of things that have happened since 9/11 in the U.S. would have been laughed at as unlikely before the event.  Suspension of the right of habeus corpus for suspected terrorists, even if they are U.S. citizens, for one example, but there are others.  Incrementalism is insidious, and for those times when there are significant objections to some new usurpation of individual rights by the government, there is always a convenient "event" which facilitates the acceptance of new restrictions "for everyone's safety."  So long as people consider life (and by extension safety) their #1 priority (ahead of freedom, honor, etc.) then there is no reason to believe this trend will not continue until we have no meaningful rights left (compare, for example, the U.N. Universal Declaration of Human Rights to the U.S. Bill of Rights).

"The whole aim of practical politics is to keep the populace alarmed (and hence clamorous to be led to safety) by menacing it with an endless series of hobgoblins, all of them imaginary."  H.L. Mencken (written around 1918)

As those of you in the IT business already know, any approach at regulating the internet that operates on the basis of restricting individual ports or IP addresses is doomed to fail, because the "hackers" will respond by simply randomizing the ports used, or changing IP addresses.  Similarly, any attempt at using deep packet inspection will likewise fail because the hackers will respond by using encryption.  The only way for governments to stop pesky anonymous publishing services (freenetproject) anonymous network services (i2p), anonymous currencies (bitcoin), etc. will be to make a fundamental change in their approach.  Instead of the inherently promiscuous approach of allowing everything except certain services/sites, the opposite of denying everything except that which is permitted will doubtless be strongly pushed as the only way to control "child pornography, terrorism, and hacking" on the internet.  This won't affect the average person who uses the internet to order goods from Amazon or to check his credit card balance online, but it will affect those of us who bridge networks with ssh tunnels, utilize overseas VPNs to gain access to services not available in our own countries, use bitcoin/freenet/i2p, etc.  As with everything else, exceptions will always be made for larger corporations with "legitimate" communications needs, but that won't be very helpful to most of us.

I'm not claiming the above is inevitable worldwide, just reasonably foreseeable, and perhaps likely on a more localized basis.  It would be nice if it were possible to provide mechanisms by which bitcoin could survive in such an environment.  Any solutions would need to rely on the inevitable information leakage that will always be present in any worldwide communications network regardless of the best efforts made to limit it.

The ultimate fallback mechanism of manually transporting the necessary files to update one's bitcoin data directory would be a great start.  If some easily-followed procedure of accepting updated blocks in file form (either as email attachments, from a USB-key or from a file extracted from a steaganographically encoded MP3/JPG file as already suggested) were created, then many forms of human ingenuity could be utilized to keep the network alive in the face of totalitarian regulation.

Automated mechanisms would need to be carefully considered because they tend to be predictable and thus detectable/able to be censored.  However, friendly web sites would offer one possibility, although they are easily blocked.  Those of you old enough to remember analog modems/usenet ! addressing/bbs will also see that the phone lines represent another possibility.  Speaking of usenet, if it were allowed to continue in its current form (seems unlikely), then it also represents an ideal medium for block updates to propagate.

A plug-in mechanism added to the bitcoin client, through which plug-in modules could be developed on an as-needed basis to adapt to potentially rapidly changing legal conditions seems like an ideal place to start.  The plug-ins could support various mechanisms for updating blocks ranging from manual updating with files to dialing into a remote computer using an old-fashioned modem, to accessing a radio-operated BBS on an amateur satellite orbiting the earth.

I do fear, however, that as the internet becomes regulated more and more, the day may soon come when it will no longer be possible to initiate TCP/UDP connections to arbitrary ports on arbitrary IP addresses

I doubt that it will ever get to this point, unless we are already in a full-scale revolution.  That would be like telling people they couldn't leave their houses without getting their destination pre-approved by the government.  I mean, look at the stink over "net neutrality," even though this was a relative non-issue.  I do share your concerns, however.  Please help us by thinking up possible scenarios and the workarounds to avoid them.  Nice first post, by the way.  Welcome aboard.

[ShadowOfHarbringer]

If a government currency is always more insecure than a non-government currency, then how do you explain the e-gold fiasco?

E-gold **FIASCO** ?

Check this out:
http://en.wikipedia.org/wiki/E-Gold

In April 2007, the US government ordered e-gold administration to lock/block approximately 58 e-gold accounts, owned and used by The Bullion Exchange, AnyGoldNow, IceGold, GitGold, The Denver Gold Exchange, GoldPouch Express, 1MDC (a Digital Gold Currency, based on e-gold), and others, and forced G&SR (owner of OmniPay) to liquidate the seized assets.[15] In addition, a few weeks later, e-gold themselves were indicted with 4 indictments [16] . However, e-gold is still in business, though not accepting new accounts.
(...)

E-gold was tried with violation of 18 USC 1960 in UNITED STATES OF AMERICA v. E-GOLD, LTD, District of Columbia court. The court found against E-gold, ruling that "a business can clearly engage in money transmitting without limiting its transactions to cash or currency and would commit a crime if it did so without being licensed."[19] In July 2008 the company and its three directors pled guilty to conspiracy to engage in money laundering and conspiracy to operate an unlicensed money-transmitting business.[1] The company faces fines of $3.7 million, however, the guilty plea is part of a plea bargaining process in which the DA dropped most charges. Regardless, the company has vowed to continue operations following the new Federal KYC guidelines. One upside of the court case for e-gold users is that the judge has rejected any charges of fraud regarding the e-gold user agreement and has confirmed the veracity of the company's gold reserve audit.

If by "fiasco" you mean being raided by government, then fiasco it is, indeed.
Government really hates competition.

[Jason]

I followed the e-gold saga for some time (some people I know are/were in the digital metal currency market).

I would call it a fiasco for a number of reasons:

1)  A number of accounts (as you pointed out) were seized.  Depositors lost millions of dollars with no chance for recovery due to the anonymous nature of the systems involved (one of the accounts seized was itself a DGC based on e-gold).
2)  Before the government raids, you could in/out exchange e-gold for other currencies with ease.  Today, is there *anyone* who will out exchange e-gold?
3)  E-gold claims it contacted the U.S. government on several occasions asking if it was subject to KYC rules, and each time they were told they were not subject to the laws (see Doug's blog on the e-gold site -- though you might have to find it on archive.org if it has been removed).  Then out of nowhere the government arrested the founders and halted all operations.  The founders were given the choice of either acceding to all of the government's demands on how they could run their business, or go to jail.

In hindsight, it is easy to see a number of mistakes were made by the e-gold founders, chief among them trusting the U.S. government to play by its own rules, something that has been made even clearer recently with all the hypocrisy surrounding the thinly veiled attacks on Wikileaks.

If a government currency is always more insecure than a non-government currency, then how do you explain the e-gold fiasco?

E-gold **FIASCO** ?

Check this out:
http://en.wikipedia.org/wiki/E-Gold

In April 2007, the US government ordered e-gold administration to lock/block approximately 58 e-gold accounts, owned and used by The Bullion Exchange, AnyGoldNow, IceGold, GitGold, The Denver Gold Exchange, GoldPouch Express, 1MDC (a Digital Gold Currency, based on e-gold), and others, and forced G&SR (owner of OmniPay) to liquidate the seized assets.[15] In addition, a few weeks later, e-gold themselves were indicted with 4 indictments [16] . However, e-gold is still in business, though not accepting new accounts.
(...)

E-gold was tried with violation of 18 USC 1960 in UNITED STATES OF AMERICA v. E-GOLD, LTD, District of Columbia court. The court found against E-gold, ruling that "a business can clearly engage in money transmitting without limiting its transactions to cash or currency and would commit a crime if it did so without being licensed."[19] In July 2008 the company and its three directors pled guilty to conspiracy to engage in money laundering and conspiracy to operate an unlicensed money-transmitting business.[1] The company faces fines of $3.7 million, however, the guilty plea is part of a plea bargaining process in which the DA dropped most charges. Regardless, the company has vowed to continue operations following the new Federal KYC guidelines. One upside of the court case for e-gold users is that the judge has rejected any charges of fraud regarding the e-gold user agreement and has confirmed the veracity of the company's gold reserve audit.

If by "fiasco" you mean being raided by government, then fiasco it is, indeed.
Government really hates competition.

[FreeMoney]

Jason, it isn't just government currencies that are sure to fall. It is all centralized currencies. If the currency is small and centralized it can get crushed by a bigger group, if it is the hugest then it will rape you itself.

[Jason]

I agree with you, FreeMoney.

I'm just pointing out that in an easily foreseeable repressive environment, Bitcoin is vulnerable too.  A few steps taken soon to harden it against the inevitable attacks will be propitious to it's future.

Jason, it isn't just government currencies that are sure to fall. It is all centralized currencies. If the currency is small and centralized it can get crushed by a bigger group, if it is the hugest then it will rape you itself.

[caveden]

A few steps taken soon to harden it against the inevitable attacks will be propitious to it's future.

Like ?

[hugolp]

If a government currency is always more insecure than a non-government currency, then how do you explain the e-gold fiasco?  I personally know someone who lost US$50K he was keeping in 1MDC at the time 1MDC's account was seized, and I've heard of others who lost even more.  As far as I know, no one uses/trusts e-gold today, despite the best intentions of its founders who were nonetheless forced into complying with the demands of the government after they were falsely arrested on trumped-up charges of money laundering.

The attractive thing about bitcoin is that it seems to be a non-government currency that is relatively free from the coercive force of government at the present time.  I do fear, however, that as the internet becomes regulated more and more, the day may soon come when it will no longer be possible to initiate TCP/UDP connections to arbitrary ports on arbitrary IP addresses -- something that would leave the internet as used by most sheeple intact, while denying services such at those provided by bitcoin, freenetproject, i2p, and any other innovative services that would not be granted waivers by some government-supported regulatory body.  This sort of regulatory action would likely be justified with the standard approach of insisting that it is the only way to keep people safe from terrorism (or whatever the bogey-man of the year is at the time).

In order to stay one step ahead of those who feel threatened by a non-taxable, non-regulated, relatively anonymous currency, I hope some of us will put up with being called paranoid by many others by considering these threats, and come up with effective ways to neutralize them which can be implemented by the development team ahead of time when they become necessary.

What you say is correct. I should have said that government currencies are always more insecure from inflation than voluntary currencies. If governments use force is another game (not saying you should not take the possibility into account).

About the problem of governments controlling the internet the answer is this: http://guifi.net You have a english button there to get a translated site, and you should check the map button on the top right, to see how big is the network. Its basically a private and voluntary tcp/ip network.

[Jason]

I mentioned a couple of posts back an idea for updating the bitcoin client to use a plug-in architecture for the purposes of updating blocks.  The existing mechanism could be kept as either a built-in or converted to a plug-in.  Additional mechanisms could then easily be added and tested/deployed.  The plug-ins would not be responsible for authenticating the blocks, just downloading them.

Specific plug-ins could be developed in response to changes in the threat model.  For instance, if bitcoins are outlawed, a mechanism that obscures the communications between clients could be added (for example, via i2p) in order to protect users of the software in the affected jurisdiction(s) from prosecution.

A few steps taken soon to harden it against the inevitable attacks will be propitious to it's future.

Like ?

[ShadowOfHarbringer]

I followed the e-gold saga for some time (some people I know are/were in the digital metal currency market).

I would call it a fiasco for a number of reasons:

1)  A number of accounts (as you pointed out) were seized.  Depositors lost millions of dollars with no chance for recovery due to the anonymous nature of the systems involved (one of the accounts seized was itself a DGC based on e-gold).
2)  Before the government raids, you could in/out exchange e-gold for other currencies with ease.  Today, is there *anyone* who will out exchange e-gold?
3)  E-gold claims it contacted the U.S. government on several occasions asking if it was subject to KYC rules, and each time they were told they were not subject to the laws (see Doug's blog on the e-gold site -- though you might have to find it on archive.org if it has been removed).  Then out of nowhere the government arrested the founders and halted all operations.  The founders were given the choice of either acceding to all of the government's demands on how they could run their business, or go to jail.

From what you are saying, it clearly looks like it was not fiasco. Government was simply more powerful and destroyed it.
It is not a fiasco of currency itself. If you have army big enough, You can destroy just any non-bulion centralized currency by simply invading the country which issues the currency.

** Also, please stop quoting below messages. It is annoying as hell. ** This is not usenet or email.

[Jason]

Quoting provides context to those who do not read the entire thread, so I will continue to do it.  I will, however, trim the material quoted to the minimum necessary in order to assuage your delicate sensibilities.

As for your continuing and pointless argument about whether or not the government's attack upon e-gold constituted a "fiasco" or not, we'll just have to agree to disagree and let it go.  Further debate on the subject will serve no purpose other than to let people know that you are a troll.

I followed the e-gold saga for some time (some people I know are/were in the digital metal currency market).

I would call it a fiasco for a number of reasons:

[...]

From what you are saying, it clearly looks like it was not fiasco. Government was simply more powerful and destroyed it.
It is not a fiasco of currency itself. If you have army big enough, You can destroy just any non-bulion centralized currency by simply invading the country which issues the currency.

** Also, please stop quoting below messages. It is annoying as hell. ** This is not usenet or email.

[kiba]

As for your continuing and pointless argument about whether or not the government's attack upon e-gold constituted a "fiasco" or not, we'll just have to agree to disagree and let it go.  Further debate on the subject will serve no purpose other than to let people know that you are a troll.

Jesus, using the word troll had become..less powerful these day. Just because you feel insulted, doesn't mean that said poster is a troll.

[FreeMoney]

Jason, quoting is helpful. I find it more helpful if the quote is on top, maybe just because I'm used to it. I think other are the same way.