Bitcoin has failed. Could something similar possibly work?

[GeniuSxBoY]

The double-spending check system has to be as least as fast as normal credit card processing. Waiting minutes for the block chain to update is unacceptable.

Problem is already solved. The introduction to secure bitcoin banks will let you deposit bitcoins to a bank vault. Once you send bitcoins to the bank, the coins will be confirmed, and your account will be credited. When you buy something, you will send funds to the merchant who has a Bitcoin Bank Merchant Account. The account will be with your bitcoin bank, or another bitcoin bank.

When you transfer funds from bank account to bank account, the system substracts the number of bitcoins in your account and simply adds the number of bitcoins to the merchant account.

• The transfer is 100% safe.
• The bitcoins are already confirmed/verified at the time they are deposited.
• There are no actual transfer of bitcoins during a merchant transaction since the bitcoins are sitting in the vault the whole time.
• The transfer is instantaneous.

The problem is solved but we're at the stage that someone has to create a bank from scratch and secure it.  I think Mt. Gox is "bank-level" secure now so we know it's possible. Don't get me wrong, there will be breaches, you can't plan for everything. Over time, the security will get stronger and stronger with every breach.

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[Nagle]

The double-spending check system has to be as least as fast as normal credit card processing. Waiting minutes for the block chain to update is unacceptable.

Problem is already solved. The introduction to secure bitcoin banks will let you deposit bitcoins to a bank vault.

Yeah, right.  The "Bitcoin banks" to date are rather slimy operations.  Two "Bitcoin wallet" operations have failed. "Global Standard Bank" is clearly a scam.  Dwolla reversed transactions after saying they were irrevocable. Mt. Gox has now operated for almost two whole months without a disaster.

The whole point of Bitcoin was supposed to be that you didn't have to trust a central organization.  If the system needs "banks" merely to handle routine transactions, the design is broken.

On the other side, if you have reliable "banks", you don't need Bitcoin.

[1905]

LOL bitcoin has failed. Thats funny cuz every month there are $$$ in my bank account from bitcoins. Can anyone explain this?

[niemivh]

Bitcoin is failing.  It's doing more or less what I've been predicting for the past 2 months.  It'll hover at around $10 for a while longer as it is a psychological barrier to break before it goes under it.

Reasons for this failure are numerous but one of the primary reasons is that the process of mining bitcoins IS NOT productive work.  Neither is the role of securing the network.  Both these (in a society) would be referred to as 'socially necessary functions', but they are not productive.  There is a critical distinction to be made here.  I hope the members of this forum can recognize it, since I believe this is the primary flaw of the system and if resolved would really give BitcoinII the incredible potential that we all hoped it would have had the first go around.  Yet, the more time we spend not recognizing this failure and stamping our feet in disagreement and denial isn't helpful and will only prolong the day before progress can be made.

The currency must fundamentally represent useful work.  I'm curious if there would be a possible way to use certificates and this technology to have the 'coins' or units of value store useful work rather than simply meet all the other requirements of what a currency must do.  Because, Bitcoin does, quite successfully, do nearly everything else that is required of it as a currency.

This is the strength of the fractional reserve system or better yet simply debt-issued central bank credit.  Take Putin's Russia or Korea or many other nations whom have issued debt into the system to provide for useful work.  Our banking system is presently totally out of control due to lack of regulation and a central bank that works for Wall St., but in the past and in other parts of the world a bank operated as a means to grow the economy by directing credit to useful enterprises.  If we choose not to have a deflationary monetary standard (and there is a lack of reasons as to why we should, but this is a point of another discussion) the money must originate from somewhere.  In the present Bitcoin system it is issued simply for providing the necessary service of securing the network, yet that isn't of itself enough (or at all fair) to constitute it being worth anything.  Debt issued currency, used properly in the Hamiltonian, Friedrich List style of dirigistic high-value high-capital intensity work creates wealth.  Such is how many nations have rocketed themselves to 1st world status in the course of a few generations.  But in the Bitcoin system the primary recipient of the currency isn't providing useful work, they function similarly like a bank - charged with the task of securing the system.

If there would be someway of 'securitizing' useful and productive work that was performed and could be exchanged through the infrastructure in a Bitcoin like fashion that would be something that could shake the system to its core. 

Of course this would probably be harder than just becoming politically active, reading a few dozen history books, a few dozen economic books and then coming to the correct solutions regarding our problems.  But if there are people here that would like to direct their energy in this direction (Bitcoin, or Bitcoin-like solutions) then this is how to make the system actually functional.

Ever wonder why Gavin's visit to the CIA came to naught?  Why it completely dropped off the radar of the political establishment?  I think they had a few analysts figure out what it was and where it was going and then realized that it would implode on its own and simply went about their business.

[indio007]

The currency must fundamentally represent useful work. 

Dead Wrong.

[lathomas64]

Bitcoin is failing.  It's doing more or less what I've been predicting for the past 2 months.  It'll hover at around $10 for a while longer as it is a psychological barrier to break before it goes under it.

Reasons for this failure are numerous but one of the primary reasons is that the process of mining bitcoins IS NOT productive work.  Neither is the role of securing the network.  Both these (in a society) would be referred to as 'socially necessary functions', but they are not productive.  There is a critical distinction to be made here.  I hope the members of this forum can recognize it, since I believe this is the primary flaw of the system and if resolved would really give BitcoinII the incredible potential that we all hoped it would have had the first go around.  Yet, the more time we spend not recognizing this failure and stamping our feet in disagreement and denial isn't helpful and will only prolong the day before progress can be made.

The currency must fundamentally represent useful work.  I'm curious if there would be a possible way to use certificates and this technology to have the 'coins' or units of value store useful work rather than simply meet all the other requirements of what a currency must do.  Because, Bitcoin does, quite successfully, do nearly everything else that is required of it as a currency.

This is the strength of the fractional reserve system or better yet simply debt-issued central bank credit.  Take Putin's Russia or Korea or many other nations whom have issued debt into the system to provide for useful work.  Our banking system is presently totally out of control due to lack of regulation and a central bank that works for Wall St., but in the past and in other parts of the world a bank operated as a means to grow the economy by directing credit to useful enterprises.  If we choose not to have a deflationary monetary standard (and there is a lack of reasons as to why we should, but this is a point of another discussion) the money must originate from somewhere.  In the present Bitcoin system it is issued simply for providing the necessary service of securing the network, yet that isn't of itself enough (or at all fair) to constitute it being worth anything.  Debt issued currency, used properly in the Hamiltonian, Friedrich List style of dirigistic high-value high-capital intensity work creates wealth.  Such is how many nations have rocketed themselves to 1st world status in the course of a few generations.  But in the Bitcoin system the primary recipient of the currency isn't providing useful work, they function similarly like a bank - charged with the task of securing the system.

If there would be someway of 'securitizing' useful and productive work that was performed and could be exchanged through the infrastructure in a Bitcoin like fashion that would be something that could shake the system to its core. 

Of course this would probably be harder than just becoming politically active, reading a few dozen history books, a few dozen economic books and then coming to the correct solutions regarding our problems.  But if there are people here that would like to direct their energy in this direction (Bitcoin, or Bitcoin-like solutions) then this is how to make the system actually functional.

Ever wonder why Gavin's visit to the CIA came to naught?  Why it completely dropped off the radar of the political establishment?  I think they had a few analysts figure out what it was and where it was going and then realized that it would implode on its own and simply went about their business.

What IS the difference between a necessary function and productive work? Do you mean productive as in producing something new as opposed to maintaining what exists?

There is no way to automate such a process if this is what you mean so we either need a comitee of the entire bitcoin community which would get bogged down as most rule by comittee does, or a central authority which is anethema to what alot of people believe bitcoin is about.

 Of course If I am wrong about what you mean by productive work you can ignore all that bit.

[Nagle]

The "productive work" problem is related to the launch. But that's not why Bitcoin is failing. The fundamental problem is that it's not a very useful medium of exchange. It's risky to use for online ordering, because Bitcoin sends are irrevocable. Technically, transactions are too clunky; waiting minutes for transaction confirmation, and sometimes having it fail, is inferior to existing credit card technology. That part has to "just work".

Any successor to Bitcoin has to work better than credit cards or PayPal for routine transactions, or it will never get any customer acceptance.

[niemivh]

The currency must fundamentally represent useful work. 

Dead Wrong.

Why shouldn't it?

If it doesn't, then what gives it its value?  Having it literally represent work rather than the existing USD --> Bitcoins --> Goods or services (still denominated in USD) is the crux of the problem here.  Everyone is concerned about the exchange rate to USD, as they should be in the existing system; since Bitcoin isn't implicitly 'backed' by productivity it seeks to find something that is, in this case USD. 

This is a (not the only) primary fallacy of Bitcoin.

If the "coins" would instead represent hours of work, for example, I think it would be a much improved system.  Of course how to determine pay rates for labor of different value would be another challenge, although it would invalidate the need to be 'backed' via USD.

[niemivh]

The double-spending check system has to be as least as fast as normal credit card processing. Waiting minutes for the block chain to update is unacceptable.

Problem is already solved. The introduction to secure bitcoin banks will let you deposit bitcoins to a bank vault.

Yeah, right.  The "Bitcoin banks" to date are rather slimy operations.  Two "Bitcoin wallet" operations have failed. "Global Standard Bank" is clearly a scam.  Dwolla reversed transactions after saying they were irrevocable. Mt. Gox has now operated for almost two whole months without a disaster.

The whole point of Bitcoin was supposed to be that you didn't have to trust a central organization.  If the system needs "banks" merely to handle routine transactions, the design is broken.

On the other side, if you have reliable "banks", you don't need Bitcoin.

lol there has been banks from the earliest days of currency and there always will be no matter what form money takes... simple fact of the matter is that so long as there is profit to be made on money the banks will come like fly's on dog $h1t... yep even if we picked dog $h1t as the currency of choice.

What Bitcoin solves is central banking and governmental control over how money is issued and transferred between people... it was not a solution to the banks themselves.

Well and that whole other problem that banks DO provide a socially useful function if properly regulated and directed (by law) toward productive or otherwise useful lending.  The ability to borrow is critical to any modern economy.

[PatrickHarnett]

This thread and many others could have easily been labeled "the US dollar has failed" given the arguments put forward.  The US centric arguments also get a bit tiring when we are dealing with global views - reference the arguments about central government intervention in the direction of capital spending.

There is a lot of work done that is not productive.  Many financial activities (forex trading) could be argued as non-productive.  Maybe if you thought about currency as a means of exchange from apples to oranges, then you would be less concerned about the underlying.

I suppose it depends on what you want to do with Bitcoin.  If you want it to represent productive, primary industry production, then look for something else.  If you want a mechanism to swap value internationally, then is seems to do that just fine for something so new.

[niemivh]

If it doesn't, then what gives it its value?  Having it literally represent work rather than the existing USD --> Bitcoins --> Goods or services (still denominated in USD) is the crux of the problem here.  Everyone is concerned about the exchange rate to USD, as they should be in the existing system; since Bitcoin isn't implicitly 'backed' by productivity it seeks to find something that is, in this case USD.  

This is a (not the only) primary fallacy of Bitcoin.

If the "coins" would instead represent hours of work, for example, I think it would be a much improved system.  Of course how to determine pay rates for labor of different value would be another challenge, although it would invalidate the need to be 'backed' via USD.

The USD also does not represent any work achieved, it is not backed by gold and every day it is typed into a computer out of nothingness.  People are concerned about the price of BTC to USD not because BTC has no value of its own but because they pay their rent in USD (or whatever other fiat currency).  BTC is new and a critical stage will be the time when people start seeing a value in BTC vs. their groceries but it won't happen over night and is probably still many years from this shift.  With every passing day however BTC gets closer to this goal, with each new person brought into the fray and each new business seeing the value in accepting this as a currency the pivotal moment where people see the price of goods and services directly gets closer.

Once these coins are seen directly as their value in goods and services then you will see the coins representing hours of work, this is how all currencies came to be in history, even gold... it didn't just magically become a currency.

This is a time and patience/persistence issue, not some underlying flaw in the currency.  Can Bitcoin be improved? Yes, and people are working that in several ways but fundamentally it is a very sound system.

It's challenging when your ideas aren't some regurgitation of something you've read, it makes you have to explain things in such exhaustive detail that people don't want to read it; the alternative is of course to try to be brief to which people read into what you posted all manner of things neither said nor implied or simply point out what should be obvious to all.  Maybe this will be solved if I get a time to write a book.  =]

I'm not flaming you mind you, I'm just complaining in general that I'm unable to strike a balance between detail and brevity that is going to please everyone on this forum.

Unto your post,

The USD actually does represent work achieved, at least in a much larger proportion that Bitcoin where literally every new 'coin' issued is for doing non-productive 'work' of 'mining' 'coins'.  Sure, the existing system is abused, of course, but I'm just showing you the framework that is the issuance of currency.  Central banks have, as well as private banks, fund useful work.  If you wanted to go get a loan to do something pointless that wouldn't yield any useful function (and therefore no profit) I'm sure they wouldn't give it to you.  This means that these currencies are 'backed' by work/labor/productivity/useful-work, that money will be issued into the system for something worthwhile.  Of course with the deregulated banking system and 50-to-1 leverage and inter-bank lending this system is presently a madhouse, hence the social unrest and immiseration of the population.  

What you're missing here is that even if the 'currency' that represents BTC took off and became widespread it would still function as what it is: a virtual commodity.  It would still be denominated in dollars.  People would still check the value of BTC to USD before trading anything for it.  That isn't independence, it would be much like Gold, where we say it is increasing in value because we are valuing it in USD.

I'm saying that unless this system can somehow directly represent work performed (which is a radical change from how existing BTC are brought into the system) then I don't expect it to really ever be adopted as a 'currency'.

[niemivh]

If it doesn't, then what gives it its value?  Having it literally represent work rather than the existing USD --> Bitcoins --> Goods or services (still denominated in USD) is the crux of the problem here.  Everyone is concerned about the exchange rate to USD, as they should be in the existing system; since Bitcoin isn't implicitly 'backed' by productivity it seeks to find something that is, in this case USD.  

This is a (not the only) primary fallacy of Bitcoin.

If the "coins" would instead represent hours of work, for example, I think it would be a much improved system.  Of course how to determine pay rates for labor of different value would be another challenge, although it would invalidate the need to be 'backed' via USD.

The USD also does not represent any work achieved, it is not backed by gold and every day it is typed into a computer out of nothingness.  People are concerned about the price of BTC to USD not because BTC has no value of its own but because they pay their rent in USD (or whatever other fiat currency).  BTC is new and a critical stage will be the time when people start seeing a value in BTC vs. their groceries but it won't happen over night and is probably still many years from this shift.  With every passing day however BTC gets closer to this goal, with each new person brought into the fray and each new business seeing the value in accepting this as a currency the pivotal moment where people see the price of goods and services directly gets closer.

Once these coins are seen directly as their value in goods and services then you will see the coins representing hours of work, this is how all currencies came to be in history, even gold... it didn't just magically become a currency.

This is a time and patience/persistence issue, not some underlying flaw in the currency.  Can Bitcoin be improved? Yes, and people are working that in several ways but fundamentally it is a very sound system.

It's challenging when your ideas aren't some regurgitation of something you've read, it makes you have to explain things in such exhaustive detail that people don't want to read it; the alternative is of course to try to be brief to which people read into what you posted all manner of things neither said nor implied or simply point out what should be obvious to all.  Maybe this will be solved if I get a time to write a book.  =]

I'm not flaming you mind you, I'm just complaining in general that I'm unable to strike a balance between detail and brevity that is going to please everyone on this forum.

Unto your post,

The USD actually does represent work achieved, at least in a much larger proportion that Bitcoin where literally every new 'coin' issued is for doing non-productive 'work' of 'mining' 'coins'.  Sure, the existing system is abused, of course, but I'm just showing you the framework that is the issuance of currency.  Central banks have, as well as private banks, fund useful work.  If you wanted to go get a loan to do something pointless that wouldn't yield any useful function (and therefore no profit) I'm sure they wouldn't give it to you.  This means that these currencies are 'backed' by work/labor/productivity/useful-work, that money will be issued into the system for something worthwhile.  Of course with the deregulated banking system and 50-to-1 leverage and inter-bank lending this system is presently a madhouse, hence the social unrest and immiseration of the population.  

What you're missing here is that even if the 'currency' that represents BTC took off and became widespread it would still function as what it is: a virtual commodity.  It would still be denominated in dollars.  People would still check the value of BTC to USD before trading anything for it.  That isn't independence, it would be much like Gold, where we say it is increasing in value because we are valuing it in USD.

I'm saying that unless this system can somehow directly represent work performed (which is a radical change from how existing BTC are brought into the system) then I don't expect it to really ever be adopted as a 'currency'.

I'm realizing a problem here that nobody addressed toward my idea. 

This (labor based) currency wouldn't work either because of the wide spreads of the value of work that exist in the world for the same labor performed.  A programmer in India and a programmer in the US that do the same work get paid a vastly different amount of money. 

If it was hours of labor between these two places why would either party engage in it?  The US programmer would simply buy in USD the services of the Indian.  As this downward trend would exist not only between these two countries but the entire world then effectively only the country with the lowest currency would benefit from using the system.  Clearly this is broken from the outset.  Funny that nobody picked up on that.

LOL

I really guess there is no alternative to just becoming politically active.  Truly our only solution.

[niemivh]

Wow, for those still holding out hope:

http://www.alexa.com/siteinfo/bitcoin.org#

Going down in flames.

[bitcoinBull]

Wow, for those still holding out hope:

http://www.alexa.com/siteinfo/bitcoin.org#

Going down in flames.

Once you've been to bitcoin.org you don't need to again (except to update the client).

This one looks hopeful: http://www.alexa.com/siteinfo/mtgox.com

[FlipPro]

[leeloulee]

great now I have a headache

[RandyFolds]

Bitcoin is failing.  It's doing more or less what I've been predicting for the past 2 months.  It'll hover at around $10 for a while longer as it is a psychological barrier to break before it goes under it.

Reasons for this failure are numerous but one of the primary reasons is that the process of mining bitcoins IS NOT productive work.  Neither is the role of securing the network.  Both these (in a society) would be referred to as 'socially necessary functions', but they are not productive.  There is a critical distinction to be made here.  I hope the members of this forum can recognize it, since I believe this is the primary flaw of the system and if resolved would really give BitcoinII the incredible potential that we all hoped it would have had the first go around.  Yet, the more time we spend not recognizing this failure and stamping our feet in disagreement and denial isn't helpful and will only prolong the day before progress can be made.

The currency must fundamentally represent useful work.  I'm curious if there would be a possible way to use certificates and this technology to have the 'coins' or units of value store useful work rather than simply meet all the other requirements of what a currency must do.  Because, Bitcoin does, quite successfully, do nearly everything else that is required of it as a currency.

This is the strength of the fractional reserve system or better yet simply debt-issued central bank credit.  Take Putin's Russia or Korea or many other nations whom have issued debt into the system to provide for useful work.  Our banking system is presently totally out of control due to lack of regulation and a central bank that works for Wall St., but in the past and in other parts of the world a bank operated as a means to grow the economy by directing credit to useful enterprises.  If we choose not to have a deflationary monetary standard (and there is a lack of reasons as to why we should, but this is a point of another discussion) the money must originate from somewhere.  In the present Bitcoin system it is issued simply for providing the necessary service of securing the network, yet that isn't of itself enough (or at all fair) to constitute it being worth anything.  Debt issued currency, used properly in the Hamiltonian, Friedrich List style of dirigistic high-value high-capital intensity work creates wealth.  Such is how many nations have rocketed themselves to 1st world status in the course of a few generations.  But in the Bitcoin system the primary recipient of the currency isn't providing useful work, they function similarly like a bank - charged with the task of securing the system.

If there would be someway of 'securitizing' useful and productive work that was performed and could be exchanged through the infrastructure in a Bitcoin like fashion that would be something that could shake the system to its core. 

Of course this would probably be harder than just becoming politically active, reading a few dozen history books, a few dozen economic books and then coming to the correct solutions regarding our problems.  But if there are people here that would like to direct their energy in this direction (Bitcoin, or Bitcoin-like solutions) then this is how to make the system actually functional.

Ever wonder why Gavin's visit to the CIA came to naught?  Why it completely dropped off the radar of the political establishment?  I think they had a few analysts figure out what it was and where it was going and then realized that it would implode on its own and simply went about their business.

Let's apply your theories to some real-world situations. If you aren't a primary producer (farmer), your work and thus your life are a joke? Precious gems, aside from diamond and quartz, have little to no industrial value and their collection and cutting and polishing is a HUGE industry. The same could be said for gold, silver, and other precious metals. They have industrial uses, but not in the quantities we are mining. So, is it productive work to collect gold from the ground and stick in in some bunker under the rockies at a cost of billions and billions of dollars?

I am just going to ballpark a figure and say 90% of all work done in first world nations is equivalent to jacking off with a belt around your neck; someone needs it done, but a passerby on the street watching you do it will probably think you're retarded. Bureaucracy. That about sums it up. Unfortunately, it got us where we are.

[TiagoTiago]

I've been told the KG of wasted computer hardware has more gold than the KG of ground at pretty much any gold mine out there...

(kinda  unrelated i guess, but i felt like saying that)

[PatrickHarnett]

I've been told the KG of wasted computer hardware has more gold than the KG of ground at pretty much any gold mine out there...

(kinda  unrelated i guess, but i felt like saying that)

I didn't think that was right because I've seen gold recovery articles before.  But I found this pretty picture/link.  http://rossdawsonblog.com/weblog/archives/2010/06/infographic_use.html

Maybe we could send all our old phones to OP