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Author Topic: Bitcoin: The Quants Dream.  (Read 4739 times)
Sultan
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September 19, 2011, 11:15:25 AM
 #21



I would humbly disagree with you here. The public key is made available to the world so amazon cannot deny that the key is is wrong since they will put it in global circulation. The maths and technicalities are complicated, granted, but thats why its equivilant is forensics. But true, anonymity cannot be guaranteed with Bitcoin, especially when you buy stuff in the real world, its just very difficut, not impossible. You can go through the delivery company check their records to see if it had been delivered.

Q: Who is going to make Amazon pay you?
Ans: A court which requires evidence of transactions.

[/quote]

As I said, it's a matter of technical forensics. If you had the signed address and you have the address you sent the BTC, you can check this on the blockchain with tge timestamp, compare to the timestamp on the receipt to have a convincing case. It's not impossible to find the truth on the blockchain.

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Lolcust
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September 19, 2011, 11:15:58 AM
 #22

@ Gabi

Well, that is  definitely a very plausible proposal Smiley

Geist Geld, the experimental cryptocurrency, is ready for yet another SolidCoin collapse Wink

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Cluster2k
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September 19, 2011, 11:22:19 AM
 #23

I have a keen interest in bitcoins but remain skeptical of the immense value people attribute to them and the real world usefulness of bitcoins, but even I don't agree with some of the points the OP has written.

I do agree that bitcoins are a trader's dream.  The trade and value can be manipulated at will.  The market is apparently free of the usual laws regarding trading as no government takes bitcoins seriously.  This is both a positive and a negative.  There's nothing stopping well executed fraud.  Just try explaining to your local police department that someone took your bitcoins and see how far that gets you.

We are seeing a race between bots on MtGox.  While the frequent volatility excites traders and allows easy profits to be picked off by the savvy, it makes bitcoins completely unsuitable for serious trade.  Imagine a merchant changing their price by 10% almost every day.

Single point of failure?  Sure.  It's MtGox.  By volume it's ten times larger than the next larger exchange.  Hack or close down MtGox and converting bitcoins to currencies becomes very difficult.  MtGox is in a position to be the market maker.  While it was dead in June some other exchanges closed down as there were no price signals available.  Could other exchanges open or take over?  Sure.  But again you're back to one or a few points of failure.  Does closing down exchanges close down bitcoin?  Of course not.  But it makes bitcoins simply not very useful.

Will bitcoin be dead in 3 months?  I have a hard time believing that.

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September 19, 2011, 11:48:43 AM
 #24

I have a keen interest in bitcoins but remain skeptical of the immense value people attribute to them and the real world usefulness of bitcoins, but even I don't agree with some of the points the OP has written.

I do agree that bitcoins are a trader's dream.  The trade and value can be manipulated at will.  The market is apparently free of the usual laws regarding trading as no government takes bitcoins seriously.  This is both a positive and a negative.  There's nothing stopping well executed fraud.  Just try explaining to your local police department that someone took your bitcoins and see how far that gets you.

We are seeing a race between bots on MtGox.  While the frequent volatility excites traders and allows easy profits to be picked off by the savvy, it makes bitcoins completely unsuitable for serious trade.  Imagine a merchant changing their price by 10% almost every day.

Single point of failure?  Sure.  It's MtGox.  By volume it's ten times larger than the next larger exchange.  Hack or close down MtGox and converting bitcoins to currencies becomes very difficult.  MtGox is in a position to be the market maker.  While it was dead in June some other exchanges closed down as there were no price signals available.  Could other exchanges open or take over?  Sure.  But again you're back to one or a few points of failure.  Does closing down exchanges close down bitcoin?  Of course not.  But it makes bitcoins simply not very useful.

Will bitcoin be dead in 3 months?  I have a hard time believing that.

Rewriting trader prices automatically is simple.

Now, if you keep the bitcoins you receive for goods and services instead of converting them to something else instantly, a price drop would screw you over. Yes, your prices will adjust in less than a second. The bitcoins in your wallet won't.

Auto-selling the coins you receive at best possible price is also doable, but then a price rise will make you very, very sore (despite the fact that from strictly pragmatic point of view, you get exactly as much USD for your goods and services as you wanted)

Best option would be a bot that manages the salesmen's accounts adjusting their prices and trading their coins in accordance with market behavior and "risk settings" the salesmen set when creating their accounts with bot service (so that bot can play "riskier" with the account holders that are willing to allow somebody's bot to carry out more risky, but potentially more lucrative, operations with their accounts)

I wonder how hard would such rent-a-bot service be to create.

Geist Geld, the experimental cryptocurrency, is ready for yet another SolidCoin collapse Wink

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memvola
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September 19, 2011, 12:08:43 PM
 #25

All Bitcoin will lead to is a deflationary economy in which asset prices continuously drop killing investment.

Doesn't make much sense unless money supply doesn't decrease. Which is not the case. If it's killing investment, why are the asset prices dropping? Bitcoin is not a closed system, people can just switch to any other currency, this increases asset prices.

I actually suggest you go and learn some economics instead of further math or programming.

Learning economics is overrated. You learn life, and that gives you insight in economics. Most people around me are 35+ economists with nice degrees who work in banking and academia. Bankers like the idea of Bitcoin and academicians don't. Go figure... Wink
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September 19, 2011, 12:19:40 PM
 #26

Banks were invented to help a handful of people control most of world's resources. Banks acting as third parties in transactions aren't the only thing banks do. Wake up Neo

Nutter!

I'd probably disagree with wobber here, but wouldn't call him a nutter either. Banks were invented to provide a function that is obviously needed. On the other hand, modern finance industry is all about resource allocation. And a handful of people control it.

Duration until Bitcoin tanks: About 3 months.   

It's very hard to define tanking. If you can do that, I want to open a bet so that everyone can stand behind their words.

If it can't be defined, we can do it like this... X months later (3-12), I'll give you USD 50 (10 bitcoins at the current price) and you give me 10 BTC (50 USD at the current price), regardless of the parity. Smiley
general.crackdown
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September 19, 2011, 12:21:33 PM
 #27

I believe I have pointed out a very important fact:

The anonymous nature of Bitcoin removes any recourse to law when trades fall through unless you are going to remove its anonymous nature.



general.crackdown
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September 19, 2011, 12:24:07 PM
 #28

'And a handful of people control it.'

Yes the banks shareholders - you can go and buy a share if you want and have a vote.


general.crackdown
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September 19, 2011, 12:31:15 PM
 #29




Best option would be a bot that manages the salesmen's accounts adjusting their prices and trading their coins in accordance with market behavior and "risk settings" the salesmen set when creating their accounts with bot service (so that bot can play "riskier" with the account holders that are willing to allow somebody's bot to carry out more risky, but potentially more lucrative, operations with their accounts)

I wonder how hard would such rent-a-bot service be to create.

What a novel idea! Surely nobody in history has ever been smart enough to think up such a scheme?

LOL. What a complete financial ignoramus you are.

http://en.wikipedia.org/wiki/Long-Term_Capital_Management

By the way - it crashed (in 1998).
Cluster2k
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September 19, 2011, 12:34:08 PM
 #30

'And a handful of people control it.'

Yes the banks shareholders - you can go and buy a share if you want and have a vote.

Technically true, but practically not so simple.  Large corporations are controlled by just a few people or person equivalent entities regardless of the number of shareholders.  Have a look at the registry of any large business: it's dominated by managed funds and investment houses.  They essentially vote as a single person owning 5, 10, 15% or whatever of the business.

I own quite a few shares and sometimes vote down extremely generous pay rises for the CEO and board.  The votes are never successful as institutional investors own well over half the stock and always vote Yes.  On the one occasion where a pay rise vote was 51%+ No, the board exercised its right to ignore the vote!


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general.crackdown
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September 19, 2011, 12:35:16 PM
 #31

'And a handful of people control it.'

Yes the banks shareholders - you can go and buy a share if you want and have a vote.

Technically true, but practically not so simple.  Large corporations are controlled by just a few people or person equivalent entities regardless of the number of shareholders.  Have a look at the registry of any large business: it's dominated by managed funds and investment houses.  They essentially vote as a single person owning 5, 10, 15% or whatever of the business.

I own quite a few shares and sometimes vote down extremely generous pay rises for the CEO and board.  The votes are never successful as institutional investors own well over half the stock and always vote Yes.  On the one occasion where a pay rise vote was 51%+ No, the board exercised its right to ignore the vote!



And how exactly is Bitcoin going to prevent this happening?
Cluster2k
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September 19, 2011, 12:36:36 PM
 #32

'And a handful of people control it.'

Yes the banks shareholders - you can go and buy a share if you want and have a vote.

Technically true, but practically not so simple.  Large corporations are controlled by just a few people or person equivalent entities regardless of the number of shareholders.  Have a look at the registry of any large business: it's dominated by managed funds and investment houses.  They essentially vote as a single person owning 5, 10, 15% or whatever of the business.

I own quite a few shares and sometimes vote down extremely generous pay rises for the CEO and board.  The votes are never successful as institutional investors own well over half the stock and always vote Yes.  On the one occasion where a pay rise vote was 51%+ No, the board exercised its right to ignore the vote!

And how exactly is Bitcoin going to prevent this happening?

It's not.  I never said it was.  Somebody else claimed it might Wink

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memvola
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September 19, 2011, 12:39:48 PM
 #33

I believe I have pointed out a very important fact:

The anonymous nature of Bitcoin removes any recourse to law when trades fall through unless you are going to remove its anonymous nature.

Same with cash. You can remove its anonymous nature using external methods, Bitcoin doesn't prevent that. It even provides a transparent transaction history, which is easy to audit. It just provides anonymity if you need it.

Plus, I don't think we have data to support that not having anonymity provides more efficiency. You think humanity needs baby sitting. I don't. They are normative opinions, not facts. If all humanity thinks they don't need it, they won't. Otherwise they will. It's impossible to objectively measure. Maybe you can demonstrate that humans biologically need an outside threat of violence to behave morally. But I digress...

'And a handful of people control it.'

Yes the banks shareholders - you can go and buy a share if you want and have a vote.

I'm not convinced. I believe in shareholder pressure. I also believe in consumer pressure. I don't believe that they work in the current state of affairs. What Cluster2k said.

'And a handful of people control it.'
Technically true, but practically not so simple.
And how exactly is Bitcoin going to prevent this happening?

There is no central bank controlling the money supply. That's the extent Bitcoin is helpful.

No one is claiming that Bitcoin can prevent such patterns in general. Bitcoin banks will be controlled by a handful of people as well. :-)
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September 19, 2011, 12:41:51 PM
 #34

Quote from: general.crackdown
All Bitcoin will lead to is a deflationary economy in which asset prices continuously drop killing investment.

That's asset prices in bitcoin
'killing investment'?   Is bitcoin to die in 3 months or are you predicting the complete replacement of all other currencies by bitcoin?

Are you really using the hypothetical situation of bitcoin being the only currency in order to argue against it?

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general.crackdown
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September 19, 2011, 12:49:34 PM
 #35

So far we have determined:

1) Bitcoins 'anonymous' nature is useless as to contest payment evidence of transaction is required.
2) Bitcoin does not prevent monopoly by institutional investors.

'Plus, I don't think we have data to support that not having anonymity provides more efficiency.'

Well it does provide efficiency as it tends to be quite a good incentive not to commit crime. Who is going to pay somebody when their is no guarantee that what they have bought will arrive?
 
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September 19, 2011, 01:01:14 PM
 #36

Quote from: general.crackdown
All Bitcoin will lead to is a deflationary economy in which asset prices continuously drop killing investment.

That's asset prices in bitcoin
'killing investment'?   Is bitcoin to die in 3 months or are you predicting the complete replacement of all other currencies by bitcoin?

Are you really using the hypothetical situation of bitcoin being the only currency in order to argue against it?


Bitcoin will still be deflationary when other currencies exist.
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September 19, 2011, 01:08:56 PM
 #37

I believe I have pointed out a very important fact:

The anonymous nature of Bitcoin removes any recourse to law when trades fall through unless you are going to remove its anonymous nature.

0/10 trolling

bitcoin is not anonymous
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September 19, 2011, 01:18:24 PM
 #38

So far we have determined:

1) Bitcoins anonymous nature is useless as to contest payment evidence of transaction is required.
2) Bitcoin does not prevent monopoly by institutional investors.

1) True. Anonymity increases efficiency only if we assume that there are transactions that would not happen without it (which is the case). Being anonymous means you have to trust the vendor, since you can't prove what you are entitled to if they don't deliver. It's always a trade off.

2) True, but in proper context. Bitcoin supply will never be controlled by a central authority. I believe that this makes it more resistant to monopolization, whatever that might mean (maybe you need to clarify). It will have to be widespread for this to happen though.

Quote from: general.crackdown
All Bitcoin will lead to is a deflationary economy in which asset prices continuously drop killing investment.

That's asset prices in bitcoin
'killing investment'?   Is bitcoin to die in 3 months or are you predicting the complete replacement of all other currencies by bitcoin?

Are you really using the hypothetical situation of bitcoin being the only currency in order to argue against it?


Bitcoin will still be deflationary when other currencies exist.

I don't think you get the contradiction here. Bitcoin is inflationary when it's dying. It is deflationary when it's flourishing. So it needs to flourish to die?
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September 19, 2011, 01:20:45 PM
 #39

1) Bitcoins anonymous nature is useless as to contest payment evidence of transaction is required.


The *weak anonymity* of bitcoin is an optional attribute - it may or may not be present in a particular bitcoin exchange mechanism.  
For many bitcoiners it's *not a useful feature for day to day trade*...   So what!?

It is however very good to have the ability to donate to/support causes which one might not want to publicly associate with.

Another situation where the pseudonymity is appreciated is in transfer of value between individuals who know each other.
The 'anonymity' here is not between the participating parties - but simply in that there is no intermediate party to have any record linking their identities to the addresses in the transaction.

The obvious case where anonymity is preferred by the participants is of course the black market for illicit goods/services.
Whether something is 'black market' or not will vary depending on the jurisdictions involved - so one party may be breaking laws whilst the other is not.
That the parties in such a transaction don't enjoy legal recourse against each other is hardly of concern.

That bitcoin is something of an enabler for such transactions in the first place is a legitimate concern, but it's ameliorated somewhat by the fact that Bitcoin's actual level of traceability lies somewhere between that of cash and credit cards.
If the crime is so heinous that a State would throw enough resources to follow the blockchain and subpoena for the right server records - then it's effectively trackable.





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September 19, 2011, 01:26:41 PM
 #40

Quote from: general.crackdown
All Bitcoin will lead to is a deflationary economy in which asset prices continuously drop killing investment.

That's asset prices in bitcoin
'killing investment'?   Is bitcoin to die in 3 months or are you predicting the complete replacement of all other currencies by bitcoin?

Are you really using the hypothetical situation of bitcoin being the only currency in order to argue against it?


Bitcoin will still be deflationary when other currencies exist.

And your point is..  ?? 
What *precisely* is your argument about why this is a bad thing?   


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