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Question: Is the OP correct?
yes - 77 (38.5%)
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Author Topic: "Failure to Understand Bitcoin Could Cost Investors Billions" (Bitcoin's flaws)  (Read 42868 times)
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March 16, 2014, 07:00:45 AM
 #361

There is no feature, compelling or otherwise, that Bitcoin can't replicate.  The only question is whether or not the userbase considers your 'killer feature' as highly as you do.  If they do, then Bitcoin will steal your idea.  I'm still waiting for your grand announcement, BTW, and I'll be the first to point out if there is prior art within the bitcoin ecosystem.

The only ways that anonymity can be made provably 100% can never be done by Bitcoin unless they totally change the way the block chain works.


https://bitcointalk.org/index.php?topic=516524.msg5723997#msg5723997

3) bitcoin has anonymity until you want to exchange it for FIAT. same will happen with any altcoin that wants some actual purpose

Bullshit. Bitcoin has no reliable anonymity even when used with Tor+VPN. The only way to be surely anonymous is connect to the internet in a way that the connection can not be associated with you such as a different netcafe or a new unregistered mobile device and sim card every time you transact.

Since most people aren't doing that, Bitcoin can be easily taken over by the government. End of story.

And Bitcoin can't be fixed, here is why:

https://bitcointalk.org/index.php?topic=455141.msg5723957#msg5723957



https://bitcointalk.org/index.php?topic=515414.msg5724116#msg5724116

Truth is as strong as Titanium.  Tongue Kiss




Some parts of what he said make sense. If we really want to promote decentralized currencies and not just for profit, we'll be all ok for another altcoin to go mainstream instead of MUST BE BITCOIN hurr durr

The only reason we are promoting just bitcoins is it already had enough traction and we don't want to flood the average joe's mind with thousands of different copycats cryptos.

So if another cryptocurrency's rise is the death of bitcoin, it is still actually still a good news in the big picture.

+1. Good to see not everyone is dumb.

Actually we don't need that altcoin to kill Bitcoin. I believe the Fourth Branch of government created Bitcoin, and they will make it mainstream by regulating it then allowing it to be legal tender so no more taxes on using it. That is good even for an altcoin which the government hates, because expands our ecosystem.

So what I see is a better altcoin that is #2, but better for all of us idealists who understand where we are headed 10 - 20 years hence. The masses will follow us into this altcoin later, after they get totally fucked over by the government as socialism implodes. For now the masses still trust the government, otherwise the $223 trillion global fractional reserves (i.e. debt) and $1000 trillion of derivatives would have imploded already.



Decentralized exchange won't help you. Because your IP address is still visible to the government, and Tor+VPN can't help you.


Documents released by, and interviews with, Ed Snowden strongly imply that Tor and/or VPNs can, in fact, help quite a bit.

Anonymint please stop polluting other peoples threads.
And yes Tor CAN help you if you know how to use it Wink

I am not polluting. I responding on Buffet's point as to why Bitcoin can not become a unit-of-account (unless it becomes the new digital fiat legal tender).

Tor and VPNs can not be proven to anonymous when you use them. You might get lucky, you might not.

And besides, most are not using them, thus diluting the percentage of those who use them (5%?) by the percentage that you get lucky (80%?), means some very small percent (0.05 x 0.8 = 4%?) of Bitcoin users are anonymous w.r.t. to IP address.

And that is only IP address. You still have to mix your coins so they can't be traced on the public ledger block chain.

Problem is all mixers have the same problem as VPNs, in that you can't prove the people running them aren't revealing your identity (NSA gag order can be applied to them) or that their servers aren't backdoored.

And mixers are only a small percent of users, so thus the anonymity set is very limited.

So all of this means that the government can find 95+% of the users to attack them with taxation and criminal liability for all activity on the coin history. Because how can you prove you didn't mine the coin and sell it to yourself multiple times unless you have the identities of who you bought from and sold to?

Come on morons, you haven't thought this out.

You remind me of a Rottweiler. Very vicious in protecting his master, but not very smart.

My MO is very simple. I believe in decentralized crypto-currency. I am grateful Bitcoin exists and will promote it as such.

I am realistic about the flaws in Bitcoin. And I expect an altcoin to fix those issues. And then I expect the two things to coexist and we will profit from it.

You can go chew on your bone now.

DOGE bone?
Is THAT your favorite altcoin?  Cheesy

Hahaha, of course not. I already wrote upthread that all existing and known planned altcoins are crapcoins. Even Ethereum is nonsense because putting a Turing complete language in the block chain can cause a virus and destroy the entire block chain.

Quote
Sorry I believe you got this all wrong. I am going to totally change your perspective on Bitcoin.

Lower transaction fees will not cause merchants to accept only Bitcoin. They must continue to accept credit cards. And the masses are not merchants, so they will stick with what is familiar. The only people that will move into Bitcoin are investors or people who want to anonymous. Anonymity is the big non-investment market that electronic fiat can't provide. And Bitcoin isn't anonymous and technically can't ever be. Thus Bitcoin will be limited to those high tech savvy global investors and then the last greater fools who come in at the top of the bubble, so figure less than 100 million globally. We've got some where between 10 - 100X more growth before Bitcoin peaks as a commodity non-legal tender currency.

I believe the Fourth branch of the USA government created Bitcoin. I believe they will use their taxation powers to take control over (e.g. through the mining pools and regulation of all businesses) or limit Bitcoin. They can then offer the masses their centralized altcoin which works better as what the masses want and are accustomed to. Lack of anonymity means Bitcoin can't resist this outcome.


https://bitcointalk.org/index.php?topic=514659.msg5725115#msg5725115




https://bitcointalk.org/index.php?topic=374873.msg5725086#msg5725086

Just let the climate freaks eat their poison. It is futile to convince of them of the facts.

Get yourself some anonymous crypto-currency, then sit back with your popcorn and watch them destroy themselves with taxes.

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March 16, 2014, 10:13:44 AM
 #362

Good luck everyone.

"I'm bulletproof, nothing to lose, fire away, fire away, ricochet, you take your aim, fire away, fire away, you shoot me down but I won't fall,
I am titanium
"


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March 17, 2014, 07:08:57 AM
 #363

I quoted and commented on the Goldman Sachs analysis of Bitcoin here:

https://bitcointalk.org/index.php?topic=518456.msg5741592#msg5741592


One last time, to hammer the points into their thick skulls...


https://bitcointalk.org/index.php?topic=518453.msg5736229#msg5736229

bananas is correct, he just doesn't know how to defend his point well.

Bitcoin isn't decentralized, it is controlled by a few pools which have more than 50% of the hashrate.

Bitcoin is taxed as a commodity, and normal people aren't going to want to keep tax records for every small transaction they make. This is why Bitcoin can never advance as currency.

Because of this Bitcoin is already controlled by the governments. When they are ready to bless their bankster fiat patented solution, they will simply increase the taxes to unbearable levels.

The masses will readily jump to the fiat solution which has theft protection, chargeback protection, don't have to jump through hoops to use it and get it. Instant transaction times, etc, etc.

Bitcoin is a joke. It is for speculators only, not for serious uses.

If you were really serious, you'd have an anonymous coin that can't be taxed, with cpu-only mining that can't be centralized in pools. But you aren't serious. You are just n00bs.

Get off my lawn kiddies. Bye.

(and fuck you too, all you fucking idiots who berated me)


https://bitcointalk.org/index.php?topic=518453.msg5740803#msg5740803

Let me guess..... Rambling about flaw of bitcoins mining.... lol

Did the salient point just fly over your damn head?

The masses will never adopt Bitcoin because it will require them to keep records on every acquisition and disposal of Bitcoin, because Bitcoin is classified as a commodity by most all governments.

Legal tender fiat does not have this requirement. When you buy goods and services with legal tender, such as a hamburger, you have no obligation to keep a log for tax purposes.

And the other salient point which fly right over your head is that only merchants want the nonrefundable quality of Bitcoin. The consumers want protections such as the ability to dispute a charge, the insurance that their funds can't be stolen, etc..

Thus merchants can't exclusively accept Bitcoin, because the masses are NEVER going to use Bitcoin.

Duh!

Buffet's point is that Bitcoin can't become a unit-of-account where everyone transacts in it, thus no need to convert to and from fiat. And he is correct!

However, there is a way we could make him incorrect, but you all don't want to hear it, so just go on your fucking merry-go-round way... I am done with you morons.


I guess hes working hard to pump his altcoin. Too bad hes ignored by most members on here.

WTF are you hallucinating about? Did I announce any altcoin? No!


You do realize that money is essentially paper (or coin) that represents the right to buy a product or service. But that all forms of fiat money are controlled by the fed or something similar, which is not part of the government (Altough it is above the law and it's protected by the government and influencing the government, even enslaving the government to a degree) and is only there to make profit for the shareholders by inflating the currency, stealing away value from your fiat, while also increasing national debt by the second?

If you realize that, holding bitcoin doesn't seem all that bad now does it?

The masses don't care about your complaints about central banking! They want debt, insurance, protection, convenience, and free handouts! Only you high tech merchants and gold bugs care.


Bitcoin is essentially a modern  moneygram....

Can moneygram quickly send money to people in over 180 countries who normally use only one of over 50 different currencies?

The masses have no need for that feature.

Duh.

You morons either don't have a brain stem or you don't use it.



https://bitcointalk.org/index.php?topic=518453.msg5740914#msg5740914

You all walked right into a trap.

The people who designed Bitcoin obviously knew that all those who are against central banking would create a ponzi speculation bubble and ignore the facts that the masses don't share their enthusiasm for killing fiat, central banking, theft protection, consumer protections, etc..

So those people who the governments wanted to trap have walked right into the trap!

And so now all of you have mixed your funds with drug dealers and all sorts of other illegal activity.

The masses are not coming in. Those stupid enough to buy into this bubble are going to not only lose all their money, but you are also going to be in criminal trouble.

Bitcoin is a trap. Period.

Enjoy.

Mark my words. I am 100% sure I am correct.


P.S. Buffet knows the plan. And he knows what is going to happen to you. Don't you know these people have been quoted as saying, "they will burn the fingers of the gold bugs up to their armpits".


https://bitcointalk.org/index.php?topic=518453.msg5741003#msg5741003

Quote
And so now all of you have mixed your funds with drug dealers and all sorts of other illegal activity.

There's a high probability that the $100 dollar bill in my wallet and maybe even some of the $20's have traces of cocaine on them (based on research that's been done).  So I'm fairly sure that my fiat funds are mixed in with all kinds of illegal activity, so how does that make BTC any different?  

Because the government can decide who it wants to target (first) and who it does not (or will target much later).

Remember how it works as socialism crashes. The masses are boiling frogs.

This quote from the decline of Germany into the abyss is on point:


Quote
   First they came for the Socialists, and I did not speak out-- Because I was not a Socialist.

    Then they came for the Trade Unionists, and I did not speak out-- Because I was not a Trade Unionist.

    Then they came for the Jews, and I did not speak out-- Because I was not a Jew.

    Then they came for me--and there was no one left to speak for me.

Also the government can offer digital currency to the masses, so they will be protected from cash. Fits right in with the plans to eliminate cash, so they can tax and track everything in the new world order.

See Bitcoin was the designed under the government model of, "problem, reaction, solution". Bitcoin will be seen as somewhat interesting idea but a huge problem in terms of fraud, lack of consumer protection, inconvenience, tax compliance, etc, and then the government and the big banks (of which Buffet owns a couple) will offer digital currency which solves the problems.

To those people who think Satoshi wasn't a task force from the Fourth branch of government, you are not rational.

Satoshi wrote that he expected Bitcoin to be taken over by ASICs, he expected mining would become centralized by large capital, he chose the 10 minute transaction window, etc.. This task force knew very well what they were designing and why.


https://bitcointalk.org/index.php?topic=518453.msg5741309#msg5741309

Can you please explain why he is wrong

Where he wrong is in his appraisal of the idea of "intrinsic value".

No he is not wrong.

Bitcoin can't become a unit-of-account for the reasons I just stated. And thus its intrinsic value is that of a money transmitting service, with heaps of irrational speculation on top (because Bitcoin can't do serious things that the masses want and it can't even do serious thing that we enthusiasts need, which is be anonymous so we don't end up in trouble).

We could make him wrong by making it impossible to tax a crypto-currency, but you all don't want to hear that and I don't think you have the balls for that. It wouldn't be for the masses, it would be for us, as the masses tax themselves into the abyss over next several years as socialism collapses.


https://bitcointalk.org/index.php?topic=518453.msg5741869#msg5741869

The people who designed Bitcoin obviously knew that all those who are against central banking would create a ponzi speculation bubble and ignore the facts that the masses don't share their enthusiasm for killing fiat, central banking, theft protection, consumer protections, etc..

So you are talking about a ponzi scheme conspiracy to attack people that "are against central banking"? Like, "make all these "anti-central-banking-bastards" poor by letting them invest into a ponzi and then let the bubble pop"?
Who are these "pro-central-banking-conspirators?

The Fourth branch of government.

What was the reason for them to start fighting against the "anti-central-banking-anarchos"? Were they aware of an underground community that was about to fight against central banking, so they must react to kind of a revolution?

You are a threat to their continuance of crony capitalism power.

When they created Bitcoin, they didnt think about, that the early miners and adaptors could most likely be the same people that they are fighting against?

They don't prosecute themselves. How many examples of bank court cases being dismissed do you need me to cite?


Does this really make any sense to you?

Perfect sense.

What do you think will happen on the very day of its release, when a central bank creates its own open source bitcoin copy (SHA256)? I give you some keywords to inspire: DDOS, PREMINING, INSTAMINING

The bankster digital fiat will not be decentralized. It will be just more of the same of what we have now in terms of electronic banking.

And remember they can offer everyone loans in their currency.



https://bitcointalk.org/index.php?topic=518453.msg5741903#msg5741903

Bitcoin can't become a unit-of-account for the reasons I just stated

I don't agree with your reasoning here.

By any measure, de-centralised currencies are a step away from "government control". Yes, government can issue a "cryptocurrency" but they can't control it other than by "hoping" then people will use theirs instead of another crypto.

Lets say they "declared" it legal tender and allowed people to pay their taxes in "govoCoin". So what ? It's not a substitute for true control such as the central banks now have over fiat.

My gosh you missed the main point. The masses like fiat! They don't require that the digital currency of the world needs to not be a fiat.

And you did not address the point that the masses don't like the properties of Bitcoin:

  • Mixes traceable illegal activity with their funds
  • No protection against theft
  • No refundable protection
  • No consumer protection
  • Very volatile price
  • Must convert to and from fiat which is a hassle
  • Very slow transactions, and confusing
  • No government guaranteed deposit insurance
  • Can't obtain a loan or credit card in bitcoins
  • There is no cash version to use offline.

Fiat doesn't have those weaknesses. Fiat has other weaknesses which we are concerned about, but the masses don't care about those weaknesses that bother us. Later the masses will fall into the abyss, then some of them will learn to appreciate our ideals but most of them won't learn.


https://bitcointalk.org/index.php?topic=518453.msg5742244#msg5742244

And you did not address the point that the masses don't like the properties of Bitcoin:

  • Mixes traceable illegal activity with their funds
  • No protection against theft
  • No refundable protection
  • No consumer protection
  • Very volatile price
  • Must convert to and from fiat which is a hassle
  • Very slow transactions, and confusing
  • No government guaranteed deposit insurance
  • Can't obtain a loan or credit card in bitcoins
  • There is no cash version to use offline.

Fiat doesn't have those weaknesses. Fiat has other weaknesses which we are concerned about, but the masses don't care about those weaknesses that bother us. Later the masses will fall into the abyss, then some of them will learn to appreciate our ideals but most of them won't learn.

Duh. I wonder if you guys even have a brain stem.

Whether or not we "have a brain stem" you certainly don't understand much about how the mechanics of present money system, nor the difference between what banks do and what payment processors do.

The Bitcoin blockchain is no substitute for a payment processor services (i.e. the handle supermarket transactions for example). But then it was never intended to be. The services you cite above such as refundability, payments insurance, consumer protections etc are not provided by the bank clearing system per-se. They are all 2nd third and fourth tier services, largely serviced by 3rd parties.

Those services would be provided in a bitcoin economy just the same. The only difference would be that you'd "reacharge" your Visa account via the blockchain just as you do at any of the Cryptocurrency exchanges today.

If the transactions will not be on the block chain, then you have unregulated fractional reserves, just like we did during the wild 1800s in the USA where the private banks were creating "receipts for gold on deposit" out of thin air.

Just like the Mt.Gox and numerous other failures past and to come, you've essentially just recreated the mess that the public wanted to end and why we have central banking now to regulate that mess.

The key innovation of Bitcoin is to regulate the mess with decentralized proof-of-work, so nobody can cheat. When I see my transaction on the block chain, I know there were no fractional reserves created.

Once you enable the fractional reserves, you've enabled the government regulatory powers, and then you are essentially back to fiat again.

And for what gain for the masses? None. Just woe and trouble for them.

If you really want to crack this nut, you need to improve the technology more. You need strong anonymity. You need instant transactions. Etc.

All of this can be done. But you all don't want it done.

You'd rather fight for the status quo so you can keep your trap.


Suggestion or idea to help Bitcoin.

Quote
Currently, retailers pay a percentage of purchase volume called the
merchant discount rate (MDR) in order to accept electronic forms
of payments. In the United States, the average MDR is about 2.5%
for offline retail payments and 3.0% for online retail payments
(though these fees vary widely by merchant size and type). Today,
the use of virtual currencies could theoretically eliminate these
fees as they do not rely on traditional banking/payment networks.
That said, Bitcoin gateway service providers such as BitPay and
Coinbase, which enable merchants to accept Bitcoin payments,
typically charge a fee of about 1%.

I was a download software merchant in the past. I don't know if it has improved but in addition to the 3.5% MDR, I also paid 0.5% to the payment processor, and I had another couple of percent loses to chargebacks.

So the actual cost to most small internet merchants is 5+%.

That is significant. But again the consumers don't care.

Now if you can offer a significant discount for using Bitcoin, i.e. if the lack of chargebacks significantly lowers your cost of doing business, then consumers would care!

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March 21, 2014, 08:03:46 PM
 #364

US regulator hates anonymity:

http://www.bloomberg.com/video/cohen-regulation-will-support-virtual-currencies-WJJdkFdPTxemGaHivNvMhg.html
http://www.businessweek.com/articles/2014-03-18/if-bitcoin-remains-impractical-treasury-will-let-it-be

He also says:

  • They will regulate merchants if Bitcoin becomes widely accepted by them.
  • They are coordinating regulation with the G20.
  • At 47min, he says they will not likely be concerned with an anonymous coin which is only for virtual goods.

This is what I expected. They are focused on the tangible goods, industrial economy. They don't see a threat from commerce in the Knowledge Age. I think they will leave an anonymous coin alone until it becomes at least several $billion market cap.

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March 24, 2014, 03:16:18 PM
 #365

Miners are not bankers.  Miners are NOT the entire security model of Bitcoin (or any cryptocurrency).  Miners simply set the consensus ordering of transactions nothing more.   It would be the equivalent of showing which power companies supply power to the major banks and crying centralization because 90% of banks are now powered by less power companies than fifty years ago.

Control 50+% of miners, you can blacklist coins. True or false and why?

If the majority agree with that blacklisting (of illegal activity and theft of their coins), then the argument that it would cause the ecosystem to die is incorrect. Rather it would facilitate adoption by the masses.

OP's graphic is the result of a hierarchical system, cryptocoins are decentralized.

The masses use sites such as Coinbase and Mt.Gox. That is not decentralized.

In order to get instant transactions, chargebacks, consumer protection, etc. they will choose to pay from something like coinbase and Bitcoin the block chain will eventually be irrelevant.

Also the block chain is not decentralized. It is controlled by a few pools, and a very tiny % of the world's population who own most of the ASICs.

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March 27, 2014, 04:18:30 PM
 #366

Cross posting an excerpt from an ongoing discussion in another thread...

1. I generally disagree with this one. Never in the history of mankind has the average Joe won in mass, IMHO. Somehow I don't believe it will magically happen now that Bitcoin is around.

Bitcoin is a technology. Most every time the benefits of a new technology, properly applied, have benefited the average Joe sooner or later.

Risto it appears you excel on "counting" games, but when it comes to logic it appears you over generalize (or choose the simplest understanding for efficiency) and this causes you to make mistakes. I suck at board games but I appear to excel at seeing all the conceptual issues in full range of depth and extracting the generative essence. Our brains appear to be wired differently. That appears to make you better at finding arbitrage opportunities than me (but gives you no advantage in timing market moves), but my skill appears to make me a superior visionary than you. I don't excel mentally with anything that requires me to interact with my external sensors. I excel with short I/O tape and then let my mind run on it, although normally my reading comprehension is very high but don't expect me to interact in parallelized real-time with my I/O i.e. that game you mentioned upthread (I tried while getting sleepy and only managed 16000 after several tries perhaps I would do better if I put some thought into how I should be calculating the move probabilities on that grid, but it appears to come naturally to you?).

I had the following insight before, but no one prompted me to share it. It is difficult for me to keep track of all my ideas.

Contemplate that the technologies which benefit the masses are those which have individual scope; whereas, those which subject the masses to greater extortion via the collective have collective scope. For example, washing machines have only individual scope and were rapidly (logistically) adopted across the breadth of the developed world. Whereas, nuclear power and nuclear weapons can't be individualized and have further enslaved us in the collective.

The internet (networking in general) is a mix of individual empowerment and collective enslavement.

What does anonymity do in theory? In theory it makes it possible to have all the individual empower without any (most) of the collective enslavement.

This is why I am so obsessed with making sure we have anonymity, not just in our money but in every aspect of the internet. The technology I am working on is not only applicable to crypto-currency. I want to change the entire internet to make it asymmetrically more of an individual empowerment.

Throughout history we had anonymity in our money because it was physical. Now Bitcoin comes along with a fully traceable public ledger and we give up asymmetric power to the collective. This alarmed the shit out of me!!!!!!!!!!!!!!!!!!!!!!!!!!!! I said to myself a year ago, "hell no! not if I can do anything about it".

In geek speak, "you just don't get it".

The other asymmetric problem specific to Bitcoin is it uses ASICs thus mining is in the hands of the few, and also there is nothing in the design which economically discourages large pools thus one pool now controls more than 50% of the hash rate. Bitcoin has already fallen and can NEVER be a benefit to the individual. Sorry! Just wishing it to be not so is foolish. I don't have a vendetta against crypto-currency, rather I am logically analyzing the situation. And attempting to fix it. I was frankly initially shocked that you were so dismissive and uninterested (and others even attacked me for wanting to improve the situation), but then I realized it is because you guys don't think on a deep level as I do or you are blinded by your speculative fever and vested interests as owners of Bitcoins. And thus you walk right into the honey pot so designed to trap you. (And there are both technical and political reasons improvements to these issues can NEVER be back ported into Bitcoin. Sorry!)

P.S. the other fundamental driver of asymmetric power of the collective on the internet is the client-server model instead of P2P.

It is a fact that a physical multifurcating network is more efficient than a fully connected mesh topology, i.e. running a smaller pipe from the water district to each house increases the cost and back pressure than running a main line and then multifurcating branches off it (cross-sectional area reduces by the square of the proportional diameter decreases). However, the transfer of data on the internet does not obey that physical law because we don't charge for data according to the path it takes. However the challenge is the efficient, redundant DHT storage and serve of data for a purely P2P internet. That is a more difficult technical hurdle.

P.S.S. I predicted a couple of weeks ago the IRS ruling would be what it is and that it would cause the price to dive. The post is some where in my public archives on bitcointalk.

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March 27, 2014, 06:44:56 PM
 #367

Cross posting an excerpt from an ongoing discussion in another thread...

...

From my discussions with various community members, I think the general feeling is that hashers are paid for the services they provide to a mining pool whereas miners create bitcoins based on their own initiatives and the acceptance of their efforts by their peers.

...

Based on existing laws, I believe miners (but not hashers) are free to recognize gains on any coins they create when a gain is realized, and a court challenge would rule in their favour.


Yes, I agree with this observation. I have legacy coins that I CPU solo-mined back in 2010. I figure my tax basis is essentially zero dollars for these.


I emphatically disagreed as follows and if you don't rush to report, you are just increasing your eventual pain. And thus selling pressure coming now before April 15 filing deadline as miners scramble to sell coins to raise revenues to pay taxes that are due immediately! What ever China news you all are referring to may be incidental.

The coinbase transaction sends you coins from the network, so this must be reported as income.

When you dispose the coins, you must report capital gains (or loss).

I saw my accountant long ago and discussed Bitcoin at length, and our assumptions based on existing law were pretty much exactly in line with this IRS guidance. 

Can you explain to me the logic behind the taxable event of block creation by miners? AFAIK, entities that mine physical gold don't have a taxable event when they pull it from the ground, do they? Isn't the taxable event when they sell the gold?

My rationale is the network of all users paid the coins to you in exchange for you providing a mining service.

Besides I wouldn't risk it on some flimsy interpretation you prefer, because fees and late penalties could be tacked on later. The IRS will always rule for the interpretation that nets them the most tax soonest. Good luck trying to defeat them in tax court.

Btw, I had this interpretation immediately upon learning of Bitcoin. It was obvious to me, well maybe that is because my sister and grandfather were both CPAs, my father is an attorney, and I self-taught myself double-entry cash and accrual accounting and tax accounting (when my sister and grandfather died).



it would mean that mining on P2P pool imposes no reporting requirements on you, whereas mining at a pool like GHash.io does.

Note my point above applies also to mining on a P2P pool. Also I hope you are aware that P2P pools are vulnerable to "share withhholding attack" (don't conflate that with my "transactions withholding attack") which was detailed in a whitepaper by Meni Rosenfeld in 2011 and Meni Rosenfeld's oblivious share fix couldn't be applied to P2P pools:

https://bitcointalk.org/index.php?topic=339902.msg3715641#msg3715641
https://bitcointalk.org/index.php?topic=339902.msg3719385#msg3719385

So for an anonymous coin you can forget P2P pools, because they would surely be attacked by the governments.

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March 27, 2014, 07:34:56 PM
 #368

On the recent IRS ruling that BTC is property subject to capital gains on disposal of coins, and that miners must additionally pay income tax on the value of the BTC when mined, someone thinks being outside the USA will help but they are sorely mistaken...

The IRS has gotten it all wrong. All their statement will do is push onshore people to offshore services and companies where they cannot be taxed. I live and work in an offshore country where there are no capital gains taxes and cryptos aren't taxed in any shape or form. I'm already seeing a rise in what can best be described as "offshore crypto farms"...

As a former Treasury official was purported to have said, "we will burn the fingers of the goldbugs up to their armpits". And he also said, "its our dollar and your problem".

http://armstrongeconomics.com/2014/03/24/the-real-conspiracy-the-imf-tax-agenda/

Quote
Obama is on board fully with the IMF agenda to raise taxes substantially French style. The IMF has been behind the scenes going to every former tax shelter and threatening them to turn over data. They have hit the Caribbean islands right down to Panama. Obama has laced the Ukrainian aid with the IMF Poison Pill. The IMF wants a shit load of money to tear apart the global economy in search of unpaid taxes. The Obama Administration has conspired with the IMF behind closed doors and entirely out of the Congress to pursue this secret agenda. They are on the path to destroy Western Civilization as we know it. This is no joke.


...thus we headed into a crazy period where the governments will try to fund the $150223 trillion global debt bubble [4] by hunting down all private capital (G20 announced a database for this today, NSA will contribute and note this is the bankster business model for them to own everything), then as Bitcoin is taken over top-down then the alternative coin with the above features will take over and become the surviving private sector. For this new virtual economy...


I hope you also understand that FATCHA will compel the nations of the banks in all nations to comply and remember the developing world is short the dollar due to massive bond issues in dollars to the ZIRP carry trade. The USA is still in control of the world as we go into this implosion 2016ish.


My understanding is FATCHA does not require us to declare assets we hold overseas which are not in an "account", i.e. Nestmann said we probably do not need to report bullion that we hold in our homes, yet we would need to report (even allocated) bullion in any overseas account.

Are Bitcoins a private asset or an account? And where do they reside in our possession or in the public ledger? And where does the public ledger reside?

The problem is that governments (IRS in particular) invariably interprets laws in the way that brings them the most income. So I think they can argue (in their Kangaroo rigged courts) that since the public ledger resides in at least one computer overseas, then it is reportable under FATCHA.

Okay so no big deal right? Just report it. Well what about all of you who did not report on time already and held an account that was ever worth more than $10,000? You are already liable for 5X the maximum value of the unreported account in penalties plus 5 years jail time.

And reporting marks us in the IRS computers as "potential tax avoiders". The chance of audit drastically increases.

This is one of those issues that caused me to think it just isn't worth investing in Bitcoin without 100% reliable anonymity.

I am eager for someone to refute my analysis on this.


Disclaimer: consult your own tax attorney, I am not providing tax advice, merely discussing this issue.





Regarding the illuminati fears... superstitious is the end of reason.

Those who confuse superstition with exquisitely researched facts have lost rationality.

For those who think there is no global conspiracy, you are apparently not aware of Anthony Sutton:

http://www.youtube.com/watch?v=xSVWXmZB1wc


See below on what the former IRS Commissioner told Aaron Russo when he was making the movie about there being no income tax law in the USA.


Martin Armstrong's position has been there is no proof of a global conspiracy, and he doesn't speculate. That is an acceptable position, except that he continues to assert there is no global conspiracy, which is thus speculation, since he doesn't have any proof to support that assertion. So I urge him to stop being disingenuous and appearing to be a tool of the elite towards a one world currency which he has proposed as a solution to this crisis.

As for proof of a global conspiracy, we got a big chunk of proof from Aaron Russo as follows.

https://bitcointalk.org/index.php?topic=279650.msg3497509#msg3497509

Quote from: AnonyMint
As a Treasury official said some decade ago about the time he also said, "we will burn the fingers of the goldbugs up to their armpits", it has always been the plan to go after the millionaires and steal back all their gains to the elite (skip to 36:35 min of the linked video) who run the fiat system. And Bitcoin is an amazingly great tracking tool to aid them in this coming global confiscation via taxation of the rich process. Note the elite super rich are always excluded from such gestapos.

Former (Jewish?) IRS Commissioner and the man who wrote much of the tax code law, said to (Jew) Aaron Russo (producer of Bette Midler, The Rose, Trading Places, etc) in Ashkenazi Jewish Yiddish language, "nothing will help you". Skip to the 37 min point in the linked video.

The elite know exactly what they are doing by launching Bitcoin via the fictitious anonymous identity "Satoshi".

Nick Rockefeller told Aaron Russo what the goal is.

P.S. The Ashkenazi Jews have a much higher average IQ of 117, and many elite are Ashkenazi Jews. The says nothing against all Jews however.

Also it is rather incredulous to discount the fact that all the transition to AML, KYC which is enabling this hunt for capital which Martin admits and writes about, was engineered starting with 9/11. And it pretty difficult to discount that 9/11 was not done by 16 guys on camels and was rather engineered by ... (much circumstantial evidence points to Dick Cheney as key cog in the wheel). They evidence that the buildings were not downed with airplanes is overwhelming, even 1000s of architects and engineers have signed a petition saying the government's story is implausible. And this terrorism false flag farce is being used to keep the world locked into a non-default increasing debt trajectory with a hunt for all capital. Precisely what is necessary to drive the world into a severe economic contagion which can usher in a one-world currency type result after destroying the nation-state concept.

I am not sure there is a global conspiracy. And it doesn't really affect my actions nor goals any way. So I don't really care. But I am skeptical of a guy (Armstrong) who says speaks against decentralized cryptocurrencies, speaks for a one-world currency solution (with national or regional currencies floating relative to it), and who speaks against the possibility of the global conspiracy without any proof.

Just because Armstrong is aware of manipulations at the lower-level echelon of the NY bankers club is not proof that the higher echelon doesn't exist. Logic 101 really.


Update: Armstrong writes today about the $2.3 trillion missing from Pentagon accounting and paperwork was conveniently destroyed at the Pentagon on 9/11.

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March 27, 2014, 08:21:41 PM
 #369

I had been pointing out this problem over the past weeks and months (remember upthread I pointed out that automating this computation was not realistic):

http://www.theatlantic.com/technology/archive/2014/03/why-bitcoin-can-no-longer-work-as-a-virtual-currency-in-1-paragraph/359648/

Quote
If I have to figure out which particular Bitcoin in my wallet I want to spend and what the tax treatment will be, Bitcoin just doesn't work as a commercial medium of exchange.

But that article points out another problem with the fact that Bitcoin is not untaxable as legal tender:

Quote
The price at which a particular Bitcoin was acquired (and this is traceable) determines the capital gains on that particular Bitcoin when spent.  If I spend Bitcoin A, which I bought at $10, but is now worth $400, I’ve got a very different tax treatment than if I spend Bitcoin B, which I bought at $390. […] This means Bitcoins are not fungible, and that makes it unworkable as a currency.

The reason this destroys fungibility is that people will need to think about tax timing and implications when spending money, i.e. they have to bind their money to their total tax planning.

That is the antithesis of money, because you reduce the degrees-of-freedom and remember the entire point of money was to eliminate the gridlock of barter and make it easy to transact without the requirement to find matching scenarios.

This is major! This just destroyed Bitcoin. If you don't understand this, you really better take some deep thought time.

Actually I think I may have pointed this out last year in the thread by deisik in the Economics forum.

You are coming to my bandwagon whether you like it or not. Because I saw these problems early and began formulating the solutions many months ago. So am quite far along already.

Those who were friendly to me are now being rewarded and handed the resources to be leaders, because they showed that they were astute and possess a group-think filter so as to think out-of-the-box. And they now know something you don't. Wink

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March 28, 2014, 04:57:27 PM
 #370

Apologies I am keeping this thread locked for now, because I don't have time to reply to others at this time. Maybe in the future I will open the thread again when I have more time.



I see in the Bitcoin news that others still don't get the point of what I wrote in my prior post.

http://www.forbes.com/sites/timworstall/2014/03/28/the-taxation-of-bitcoin-wont-mean-that-bitcoin-fails-as-a-currency/

Quote
Does that mean that the two $20 bills are not fungible, each one exactly the same as the other?

No, it doesn’t, not at all. For they are exactly the same at the time I want to spend them: each one will get me exactly the same $20′s worth of goods. It is in the earning of them that they are not fungible: a $20 bill earned from capital gains is more valuable to me, after tax, than one earned through wage labour.

So it is with Bitcoin. Each and every Bitcoin will, at the moment I spend it, purchase me exactly and only 1 Bitcoin’s worth of goods. So Bitcoin is entirely fungible when it’s being spent. It isn’t fungible as to where and how and at what price I earned it, this is true, but then the same also isn’t true about our $20 bill.

And I think we do all agree that a $20 bill works pretty well as a currency despite this problem?

He missed the point. If everyone has to factor the timing of tax planning into the timing of spends, then money sometimes loses the main reason it existed, which was to remove the gridlock caused by barter due to mismatches of the timing of what trading parties wanted to trade. For example, you want to buy that $1000 item, but this would move you into a higher tax bracket for the year, so you must wait until after Dec. 31.

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March 28, 2014, 11:03:35 PM
 #371

I wanted to share this discussion from another sub-forum. Here is a link to the first post of the discussion repeated below:

https://bitcointalk.org/index.php?topic=400235.msg5953406#msg5953406



P.S. I stand by my expectation of a revisit to $400 and probably a bottom under $300. The chart resembles silver's fall. Why? Because pigs get slaughtered in permabull markets (of tinfoil hat white males) where everyone wants to buy always.

All the things I've been warning about have come true.

http://www.theregister.co.uk/2014/03/28/bitcoin_china_pboc_ban/

Quote
China’s central bank has ruled that all banks and payment service providers in the country must cease dealing in Bitcoin.

The ruling, effective from April 15th, basically shutters all Bitcoin trading sites in the Middle Kingdom and means cash purchases will soon be the only way to buy into the virtual currency.

The People’s Bank of China (PBoC) has not officially announced the ruling, although Chinese business site Caixin claims to have seen an internal document stating that any banks failing to comply would be punished.

Said document apparently lists 15 trading sites which are set to be closed.

Take that news together with the analysis that the IRS has just placed an April 15 deadline margin call on all USA Bitcoin miners by ruling they must report and pay income taxes on newly mined coins, and doesn't it seem a little bit too coincidental that both try to force a massive selloff before April 15?

Then we have the main stream media bringing out other news about the threat of Nemo dat quod non habet confiscation or regulation of Bitcoin as follows.

http://www.telegraph.co.uk/technology/news/10728809/One-in-twenty-have-bought-illegal-drugs-with-Bitcoin.html

Quote
One in twenty have bought illegal drugs with Bitcoin

New research reveals that five per cent of those aware of Bitcoin have used it to buy drugs, while a third of Britons believe it to be the "currency of the future"

New research reveals that 18 per cent of those who know about the digital currency have used Bitcoin to buy goods or services online, and five per cent admit to having used it to buy illegal drugs.

So it appears that my demographic analysis has been correct (don't forget my upthread refutation of the erroneous BS "1 in 3 Kenyans use BTC"). In the seminal whitepaper Satoshi clearly targeted high tech goldbugs by saying Bitcoin is similar to gold but better than gold in some ways. And it is clear that Bitcoin is useless for the masses due to the list of problems I had provided (e.g. 10 min transactions, no refunds nor chargebacks nor consumer protection, too easy to be defrauded, etc), but the white male demographic is fanatic about Bitcoin because they want to break free from being the slaves to the collective system they are now.

So the feature they need most is the one Bitcoin doesn't have, which is strong anonymity, but they are so fanatic that they can't even put their delusion on pause to think rationally about this. They are just too excited about "finally being not a slave any more" combined with the intoxicating "I can become rich while helping the world to be free".

The problem is that it won't work. Because Bitcoin doesn't have anonymity thus all the white males using it can be targeted by the tax authorities, financial regulation authorities (FinCEN), and law enforcement in general. And it won't be adopted by the masses unless it becomes an offchain system wherein those needs I enumerated can be fulfilled for the masses. But once it is offchain, then the supply will no longer be limited to the 21 million coins and instead be controlled by reserve requirements dictated by regulators, i.e. we will be back to fiat again.

The only things that will be accomplished are:

  • White males against fiat will be identified and destroyed by the honey pot called Bitcoin.
  • The regulation of the offchain result must be global cooperation, thus we move to a NWO world government.

The elite could never beat us if we were united with the correct design and technology. The way the elite beats us is by getting us to chase non-solutions and fight those who offer real solutions. That is why the beta-males here on this forum resist me, because they are by definition slaves and will always be. Even as much as I try to help them, they will resist because their minds are under control of the honey pot traps that the elite lay out for them.

Adoption of Bitcoin will continue because the white males are fanatic about it.

But remember this reasonably affluent white male demographic (which funded by global $223 trillion debt socialism has spare time for masturbation hobbies and cargo cult movements) will eventually become saturated (just in time for the confiscations after all the intended prey have entered the trap) thus $1 million per BTC will not happen.

They will believe that they can profit off of this but they will be fully identified to the authorities and later come the confiscations.

This was the way to fool this otherwise astute group of men who resist the NWO.

These white men will become very boastful during this time (before the confiscations), as BTC goes to $10,000+.

Due to their greed and their erroneous thinking that they are strong united (when in fact they are weak in the designed trap), they will boastfully ridicule and resist all alternative lifeboats rendered unto them.

They will be lead by false prophets who will repeat the same trapdoor slogans, "the adoption is increasing" (ignoring that they are isolated from the masses).

They will ignore the facts that one pool controls more than 50% of the mining. They will ignore the facts of how regulation has destroyed any chance for Bitcoin to become a currency (except for those irrational white males who will force themselves to use it to try to justify their honey trap delusion).

The white men will bow to these false prophets to confirm they are good slaves.



Scenario analysis forward is there is a possibility that offchain services will increase mass adoption of Bitcoin. They might lobby the government for say an exclusion to capital gains for up to say $600 per year of gains due to transactions or say up to $100 per transaction. In return, they would offer the government regulators control over the offchain solvency. This could come in stages as Bitcoin transitions from an ideal of non-fiat, on chain currency to an offchain, fiat currency.

The early adopters will not gain from this (see quote below). The institutional players will. These white beta-males will be slaughtered once again by the collective system. The institutional players know how the game is played to manipulate the masses to the desired outcome so that control remains in the elite hierarchy.

http://armstrongeconomics.com/2014/03/27/obama-lagarde-destroying-the-world-economy-a-lethal-combination/

Quote
Obama is of the same mindset and views anyone who even tries to hide money as a criminal. Sources have been warning all along that Obama would like to see the tax rate restored to where it was before Reagan – 70%. With the new technology to track money and with Lagarde, the two have been pushing to try to shut down every possible avenue to store wealth they cannot get their hands on.

Lagarde and Obama are actually pushing the rest of the G20 into destroying the world economy.

http://armstrongeconomics.com/2014/03/24/the-real-conspiracy-the-imf-tax-agenda/

Quote
Obama is on board fully with the IMF agenda to raise taxes substantially French style. The IMF has been behind the scenes going to every former tax shelter and threatening them to turn over data. They have hit the Caribbean islands right down to Panama.


The point I am making is that when you are isolated from the masses and identified doing some financial transactions, you are the first ones Hitler goes after because the masses will not complain, especially given that you are doing drug trading!

Just see that image of Risto upthread that makes him look bad. Whether you are bad is irrelevant. You can be associated with the drugs by implication and the mass politics will says "yes going after those cheats and evil do-ers".

You see the elite can turn you into the bad guys in the eyes of the masses, you white male unconformists. Then the elite can say, "those Bitcoiners who are not evil will prove it by registering and holding balances in the regulated offchain services".

You see there is no chance in hell of winning against the elite for as long as they can identify who you are.

The only way the rebels ever win is by guerrilla warfare wherein they can't be targeted.

There is probably more that I could say to make this more convincing, but let me close by saying...

I am not a slave. Join with me if you want to win.

I won't be holding your hand advising you when and what to do. You won't even hear from me. But I will silently be making sure the technology is correct.

I would love to see us take the internet back. I believe "we" will win, where the "we" are those who adopt the very high tech solutions.

I doubt any more talk will be effective. I am confident that soon others will be talking on my behalf. Those who want to win will hopefully hear. Good luck to everyone, including my detractors (peace).



Agreed we shouldn't drop itBitcoin. We must push on and continue to improve our technological options. And Bitcoin serves an important function even if there were other options, e.g. it drives market awareness and provides a liquid unit-of-exchange for investors in the ecosystem including altcoins. This is a dynamic system. I am arguing to be open to the dynamism in spite of the lack of serious altcoins to date. There isn't only one scenario (false prophets lead you to that wrong conclusion). And it doesn't mean no one will retain some gains from the mess. As they say, "don't put all your eggs in one basket".

To win, we need the antithesis of top-down thinking, e.g. stop this monotonic thinking that we need one unit-of-exchange to get global economies-of-scale. The goal should be more akin to the bimetallic standard, a bifurcation (or perhaps multifurcation) is much more dynamic and dynamism is our strong hand against top-down control (read at my signature why top-down control can't anneal). Whether it happened by chance or was planned, Litecoin is a weak silver to Bitcoin's gold, i.e. it doesn't offer the common man some compelling strengths.

Peace.





- If the depopulationists ("TPTB") have enough power to finish off the intelligentsia, they don't need bitcoin to do it. Every totalitarian regime has found a way to quickly sanitize the population, fully without bitcoins, facebooks or anything. Just set quotas for the local psycho-sociopathic sheriff and go.

This wakes up the masses. They operate by more subtle means of deception, e.g. Bitcoin. The trick is to have people enslave themselves without knowing it. This is how the elite avoid losing their heads and retain control. Chaotic uprisings are very risky for them. They prefer nationalistic pride wars, where the foolish masses believe they are fighting for something justified (e.g. see the posters from WW2 in the USA, "let's go finish off them japs" and of course it was a false-flag honey pot trap called Pearl Harbor that caused the Americans to think this way).



The foolish white males think they are fighting for something justified with Bitcoin, while they've been deceived and are doing the elite's desired outcome.

The new memes include fighting for feminism, fighting for the environment, etc.. You see how offended this makes you feel when I say this? Because you are a slave who stopped applying the scientific method (for if you did you would understand certain natural facts) and replaced it with top-down controlled emotional propaganda.

- If they do not have the power for draconian activities, then targeting bitcoin owners does not give them much, but is a very great thing for the freedom people who get to tighten their ranks and perhaps wake up more and more people down the road.

No matter how I think about it, it looks like that the depopulationists have lost. I will have to write more about it for you to understand it,

No need to write more. You don't understand.




The problem with people like you are that almost all your theories assume one blatant falsehood - that there are super intelligent, cunning, strategic, and complex humans that pull the strings on society in some elaborate and complex ways.

And lucky for them most people are easily deceived like you, despite historic records showing that Pearl Harbor was a false-flag planned to get USA isolationists into supporting the war.

Despite the overwhelming evidence that 9/11 was a false-flag to launch all this tracking of everyone's wealth for the big $223 trillion debt implosion coming.

Despite the copious evidence that Anthony Sutton provided (see video below to educate yourself):

Regarding the illuminati fears... superstitious is the end of reason.

Those who confuse superstition with exquisitely researched facts have lost rationality.

For those who think there is no global conspiracy, you are apparently not aware of Anthony Sutton:

http://www.youtube.com/watch?v=xSVWXmZB1wc

Carry on slave, there is nothing I can do to help someone like you.




There are, instead, simply systems that have been created over the years as humans have fought for more "security" (another basic need) that now enable certain classes to have advantages over others. This is kind of a economic darwinian evolution of sorts. But the players who take advantage of these systems today act much more out of tactics than strategy.

And you give them WAY TOO MUCH CREDIT.

This is 100% correct.

Are there false flag events,behind doors conspiracies and all kind of other evil doings like Anonymint suggests ?  Sure there are.
Are there people in the "elites"  that think they are smart enough and strong enough to do some of these things? Sure.

But a worldwide global conspiracy run buy a small group of people capable of long term thinking and execution of a plan ( 100 years ?). No.

It doesn't matter the result is the same regardless. The top-down system is how I described and the people are slaves and commit to things that enslave them more.

The propaganda is actually in control. The purveyors of it adjust as needed over 100s of years to keep the masses confused. The purveyors compete with each other and get replaced by those who can deceive better in each new epoch.

Think about it like this. The purveyors of the propaganda don't have to be omniscient about the future, they can change the propaganda at will.

Example is their global warming temperature predictions utterly failed, so now they are changing the propaganda to "man-made climate change" and trying to blame global cooling on it.

The conspiracy is not a grand one of being able to predict the future, rather it is the power vacuum of top-down control and the ability of propaganda to defeat propaganda.

Truth is never going to win for the collective.

Truth and knowledge are an individualized phenomenon. Refer to the "Information Is Alive!" blog entry you can find from the link on my signature.

There isn't one truth, rather everyone's truth is customized to their situation.

Thus collective anything will always be a destruction of individual fitness.

This is why anonymity is so crucial. We used to have it with cash and postal mail, now we are losing it.




But a worldwide global conspiracy run buy a small group of people capable of long term thinking and execution of a plan ( 100 years ?). No.

If one did not exist by design, it would arise by an evolutionary process.  It is an ecological niche in ideological space, and a rich one.  It will necessarily be filled.

Also, you overstate the case to create a strawman.  No actors need more than a short planning horizon in order for a community to persist.  

Clearly there are open conspiracies of vast scope which have been enormously successful for millennia.,  Why should there not be some which are clandestine, perforce, since their culture, their deeds, are so offensive to the mainstream that they would be destroyed but for stealth?

Clearly there are also many spurious, fantastical, or perhaps supernatural, conspiracies for which no material evidence will ever be provided, and thus which do not positivistically exist.  But the historical evidence of many conspiratorial communities is abundant, and among them some are persistent.  The degree of coordination among them is probably not great.

Supporters of a depopulationist agenda will act according to that agenda, whether by plan or by coincidence.  No conspiratorial hypthesis is required in order to oppose them in that agenda.






aminorex, compliments to your superior communication skills. Okay back to TA now. I am done. Thanks for the discussion all.

The reason he hates sin so much is sin really is anything that causes harm to others.

What do you do when you can't do anything without harming someone. It is impossible to never harm someone due to the Butterfly effect. You are basically asking for gridlock and communism.

I call BS on that. Although your intentions are good, the recurrent outcome of your stated ideology is horrific genocide which is the antithesis of your intention. As far as I can see, the Bible doesn't talk about not harming (although harming shouldn't be and helping should be an individualized goal but not a global requirement, e.g. I can help someone individually whose situation I know), rather it pushes the value of individualism and focusing on what you can do rather than judging others (c.f. Matthew 7). The point of the 10 Commandments is that individualism is destroyed by disrespecting property rights. Then you need a government (idol) to enforce (collective) theft.

When the Bible says there is only one King and only one law, what it means is a one-on-one relationship between you and your creator (c.f. Matthew 6:5). For scientists and atheists, let's look at this from the perspective of knowledge spawns accretively from individual fitness to individual situations. I got more in depth on this when I was working out the type theory of computer languages (yeah I know you wonder what in the heck would type theory have to do it). Here is the link:

https://groups.google.com/forum/#%21msg/scala-debate/vysv97J0xok/ikiNtik33QsJ

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March 29, 2014, 03:49:58 AM
 #372

AnonyMint, what are your thoughts on the development of ZeroCash?

https://www.youtube.com/watch?v=l7LSSE0bRRo&feature=youtu.be

I was aware of the ZeroCash innovation over ZeroCoin with more details to be forthcoming May 18, but your video added some new details for me now specifically from the following linked time forward to the end:

https://www.youtube.com/watch?v=l7LSSE0bRRo#t=492

Both ZeroCash and ZeroCoin have the following weaknesses:

  • The don't make your IP address anonymous, i.e. others can still see that your computer sent a transaction (and Tor and VPNs are honey pots). The government has the law to compel you to reveal your passwords or throw you in jail if you don't.
  • They require we trust someone to generate the master key and never use it maliciously. If the master key is compromised, unlimited new coins can be created and we won't know which coins these are (anonymity is not compromised), thus the entire crypto-currency comes crashing down. I think this is too much of a risk to put in a currency. Would you trust you money if you can never prove if someone is creating more coins? In other words, we will never know what the coin supply is. That for me is a step backwards to fiat central banking. They may claim they will generate the master key at a ceremony where it is destroyed in front of all viewers, but there is no way to know that the computer used isn't somehow backdoored. The NSA even has means of using electromagnetic sensors to eavesdrop on air-gapped computers.
  • Their ZK (zero knowledge) system uses bilinear pairings so this means it is vulnerable to potential secret NSA cryptanalysis and any future quantum computer. I would much prefer we use Lamport signatures on the block chain and helped generalize an improvement for them recently. I haven't yet seen a ZeroCash type zero knowledge employing McEliece binary Goppa codes which are thought to be resistant to quantum computing, even then I would still prefer Lamport because very unlikely cryptanalysis can ever break it.
  • Even with ZeroCash's improvement to 9ms per transaction verification speed (ZeroCoin was 400 - 500 ms), this can't scale to Visa scale without requiring that mining be highly centralized. Bitcoin already has the horrific weakness that one pool controls more than 50% of the hash power and thus could blacklist coins...
  • It is brand new cryptography and often weaknesses are found in new cryptography. It is premature to put this on the block chain wherein if it is later broken, then it is too late to undo it and the currency potentially collapses. New crypto (especially this complex Pinocchio SNARKs stuff which is a higher order polynomial abstraction of Span Programs) requires 5 - 10 years to be fully vetted.
  • If ever the crypto is broken, all the historical anonymity is lost because it is sitting on the block chain.
  • It appears to be incompatible with a Mini block chain design.
  • There is no way to make mixed anonymous transactions indistinguishable from regular unmixed transactions.
  • ZeroCash adds 3 minutes to the transaction time (from time you click checkout) whereas ZeroCoin only added less than 1 second, and this is for all transactions unless you give up the anonymity of the transaction amount for ZeroCash so that you can do some of the transactions outside of ZeroCash (and do anonymity mixing only when you need to) in which case might as well do it offchain as I explain below.

Any way, the immediate solution to all this is to use ZeroCoin offchain (not ZeroCash because ZeroCoin is simpler, much faster to generate transactions, and open source code already exists) and decentralized (no risk of coin loss nor need to trust as with centralized mixers). More details will be forthcoming. The only feature that would be lost is ZeroCash's ability to hide the transaction amounts with Pour transactions, i.e. we'd be stuck with fixed denominations for mixing.

I'd rather see a conservative strategy and give time for something like ZeroCash to mature and solve the weaknesses I enumerated. In the meantime, ZeroCoin could be used offchain decentralized very effectively. So we don't lose much and we don't take the big risks. And we gain some other capabilities.

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March 29, 2014, 07:16:03 AM
 #373

http://www.youtube.com/watch?v=MGsalg2f9js#t=499

Quote from: Mark Suckerberg
Before most people were anonymous...

http://www.youtube.com/watch?v=MGsalg2f9js#t=813

Quote from: Mark Suckerberg
We succeeded because we cared more about doing it...

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March 29, 2014, 08:07:44 PM
 #374

Discussion going on in another thread:

https://bitcointalk.org/index.php?topic=400235.msg5971226#msg5971226


Anonymint - Don't bother with your standard (arrogant) "you don't understand" response just because I don't lap up your every word.

Breaking News! Smoking gun! Eyewitness account released by well known Jim Rickards (former intelligence agent turned analyst and author of best seller, Currency Wars) who was in the room when the CIA was doing the insider trading on option puts against the two airlines involved in 9/11. Corroborated by Max Keiser who was talking to Cantor Fitzgerald brokers who told him they were betting short against bombings and airplane attacks imminent on New York.

So STFU mofo! You dumb ass white boy slave.

You've had all these prior examples of false-flags, e.g. Pearl Harbor, Reichstag fire, etc. and you see the clear motivation for 9/11 was the Patriot Act and subsequent executive orders and laws that have created all seeing police and tax slavery state exposed by Edward Snowden. Yet you still want to believe your white world isn't so corrupt as it is. You want to live in your fantasy bubble.

The only thing you might understand is "Mooo. Mooo".

Arrogance? No. Just don't want to join dumb ass fools. I prefer humble, but am I supposed to just fall into the queue with you chattel.

It has nothing to do with lapping up my word. It has to do with you being too lazy to actually research. If you did the research, you would understand why it is physically impossible for the steel buildings to entirely collapse from fire and debris. Add to that free fall velocity of collapse, meaning no resistance. The only way for WTC7 to collapse the way it did was demolition. And if you are not an engineer then maybe you don't understand that, but we engineers understand why. And yes in fact the building was evacuated several times for long periods leading up to this. And in fact there were dozens of workers in the elevator shafts of the twin towers (where the structural steel beams were) for many weeks leading up to the demolitions. If you did some research and capable of understanding engineering and science, then you would know this.

This is another example of what I was explaining upthread (about Bitcoin's white male nerd demographic) wherein we can be separated from the masses who will never be able to comprehend the engineering about 9/11 and so will believe the government's impossible concocted whitewash (or in Bitcoin's case masses are not adopting, only white males against central banking are). We see the same ignorance of science or facts mechanism in play with all the current things white people are fooled into fighting for (to do what the elite want), e.g. Bitcoin, man-made climate change, discrimination, feminism, environment, etc.. The elite lull you into your comfort zone where you can be manipulated with emotional propaganda, e.g. "save those cute polar bears or cute little African kids".

Cantor Fitzgerald traders were insider-trading the options on the attacks that killed them.  Unbelievable.  Insider information provided by Jim Rickards in his new book The Death of Money reveals the CIA was aware of trading on targeted airlines leading up to 9/11.  Max Keiser corroborates this with his own experience.  Amazing.

https://www.youtube.com/watch?v=sI0GUdYwS68&list=UUvsye7V9psc-APX6wV1twLg

People always ask why 9/11 whistleblowers don't come forward.  This is why.  They are afraid to speak out too soon.  Many have been killed.  But enough people are out there, keeping themselves in the public view so that they can safely reveal their piece of the puzzle when the time is right.


If i can´t proove that Kennedy wasn´t killed by a talking green horse it might as well be as true as every other explanation!

I am just really curious if you understand the engineering of a steel beam structure?

I mean you speak with such venom and ridicule, then certainly you must be knowledgeable?

So can I give you some test engineering questions and expect you to answer?

Don't get shy now fonzie. I remember you as an outgoing cool guy from Happy Days.

Can you tell me how fires and debris could bring the Eiffel tower down vertically in free fall entirely with not any portion standing nor falling off center?

Add: I will have to go restudy my reasons from before if you decide to get into this with me. As I remember offhand when I had studied it before the finite element analysis of the NIST model made assumptions which were impossible.

Basically it boils down to common sense. You can't get domino failure across a lattice structure and free fall.

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March 30, 2014, 12:20:36 AM
 #375

The discussion on China is intriguing. You all appear to be looking at it only from the perspective of Bitcoin. You all appear to continue to have this tunnel vision which is forced on you by your vested interest. I think we need to fight our vested interest in order that we don't miss the bigger picture.

Am I correct that Chinese masses are more open to black market investments than Westerners? They have this shadow banking underground sub-economy wherein relatives refer each other to non-standard investments.

Thus is China Inc. forced to regulate more strongly because unlike in the west where Bitcoin appears to mostly limited to white males who hate central banking or high tech merchants who hate credit card payments, in China perhaps they see the seeds of a mass movement towards Bitcoin, i.e. not as a currency for normal purchases but as an investment vehicle and an investment currency?

Bear in mind that Chinese haven't been able to easily invest outside of their country and their culture really values investing excess income and the participation rate in the stock market and condo bubbles was apparently very high. Also the real interest rate paid on savings accounts is even more negative than in the west, so this forces the middle class to invest instead of save. Also the mainstream investment bubbles are popping already (not yet in the west). Michael Pettis's (mpettis.com) main point is that China's consumption share of GDP is 38% (with investment share at 58%) whereas normal is 50% and in the USA it is 70+% (thus investment share is much lower).

The differing regulation might tell us the different adoption demographics in each country. This might be a very insightful proxy.

If that assumption is correct, then apparently the Communist party are pushing Bitcoin further towards the underground economy (which I am hoping becomes the dominant economy).

This seems to play perfectly towards decentralized exchanges and anonymous coins.

I had already pondered that China (Asia) would be potentially the largest market for an anonymous altcoin due to the extremely high levels of corruption and bribery, e.g. Philippines still has a bank secrecy law for domestic citizens (for now although the IMF et al are working to get it removed ... no conspiracy eh?). Note as a foreigner the bank secrecy doesn't apply to you, the Philippines already has agreements with for example the IRS to share data on any foreign owned local bank account.

Interested to read your thoughts. Hopefully someone can dig up some data.

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March 30, 2014, 01:40:06 AM
 #376

And this is why ASICs suck and why we need cpu-only mining.

Meet the manic miner who wants to mint 10% of all new bitcoins

Recently one pool surpassed 50% of the total mining power of Bitcoin. As well, the individual miners are a just a few people. The rest of the world is left out.

This makes it very easy to regulate and control the transaction processing in Bitcoin. Blacklisting of coins could be easily implemented by the government. I warned about this a year ago.

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March 30, 2014, 09:28:41 PM
 #377

If you feel the need to comment on this post, you can click the link to the following thread to reply there. For the moment, I am discouraging replies by keeping this thread locked because I am trying to not get involved in long debates. Have work to do.

Can you have perfect trust with perfect anonymity? Or are they dynamic dualities
I'm having trouble conceiving how trust might work with perfect anonymity and vice versa

Let's differentiate between anonymity and privacy.

Anonymity means that no one can know some aspect of your identity, e.g. you might decide to reveal the name of your company but never who runs that company.

Privacy means only some people know some aspect of your identity, e.g. the merchants you buy from may know your account number but otherwise not public unless revealed by one of those merchants.

Anonymity is a more secure form of privacy because there is no trust involved, because no one knows what you have not revealed to anyone.

So I can choose to trust a merchant who reveals its name and stakes its reputation on that name, without needing to know who owns that merchant. The key here is that prior bad outcomes don't follow the owner to new ventures. So history of performance of a merchant becomes paramount.

If I don't want to trust a merchant to deliver the goods, the merchant and I can agree on a 3rd party escrow agent with multisig on payment (both I and escrow agent must sign for payment to be transferred to merchant). Again no need for the escrow agent to reveal his/her true name rather the historical reputation of a pseudonym will suffice.

Ditto on contracts, arbitration agents can be chosen on contract signing.

In short, our personal identity can be orthogonal to our business performance identity.

This allows us to fail and start over again. It is very forgiving. And it keeps the government, conniving attorneys, and the Kangeroo court system out of our business.

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March 31, 2014, 12:20:29 AM
 #378

sgbett, perhaps we may find we agree more than we both realized on our initial exchange.

I don't view this as one aristocratic lineage in control. There is much competition and failure amongst those who vie to capture the power vacuum of democracy. And they may fail entirely during epochs, e.g. the Dark Age returned it to feudalism so warlords had more power than Kings.

Rather I think the NWO is the natural evolutionary outcome of human desire for collective governance. This power vacuum of democracy forces centralization of power.

I covered this process in more detail (made an analogy to organisms in a Petri dish) in my essay which CoinCube referred to in his Economic Devastation thread:


In any case, this is why I am trying to eliminate (or reduce is more realistic) the ability of society to tax. I think that is the only way to break free from that power vacuum and arrive at a society based on free market competition.

There is much fear and misunderstanding from readers who think this would be worse. For example they conflate crony capitalism with the free market, etc..

This is all covered in great detail in my past writings on this forum. And I don't have time to repeat the discussion again.

Hope that helps our misunderstanding and apologies for losing my cuth upthread.

I am hoping CoinCube will write a book on all this, because I am obviously not patient and articulate enough to prevent misunderstandings.

P.S. perhaps you can detect from my writings today, I am not feeling ill today. Happy productive day and I can concentrate.


Add: I forgot to insert this motivation in one of my posts today. If we become wealthy, we can avoid the terrorism tsuris when we travel. A free market is developing to serve us.

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March 31, 2014, 09:38:13 AM
 #379

This appears to repeat nearly all the points I've made recently:

http://techcrunch.com/2014/03/30/bitcoin-slips-in-the-wake-of-the-irss-tax-decision/

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March 31, 2014, 02:52:34 PM
 #380

A wallet that tracks your fiat cost base is important to develop so that U.S. people can pay taxes, but "discussion" about it among people who don't have the capability to make it (not to say it is difficult because it is a standard requirement for enterprise accounting since 1800s) is moot.
The issue is not just record keeping and calculation, but also planning and timing. The timing on planning interferes with the timing-fungibility of money. This is one of the reasons why investments are not money.

He missed the point. If everyone has to factor the timing of tax planning into the timing of spends, then money sometimes loses the main reason it existed, which was to remove the gridlock caused by barter due to mismatches of the timing of what trading parties wanted to trade. For example, you want to buy that $1000 item, but this would move you into a higher tax bracket for the year, so you must wait until after Dec. 31.

You set up your wallet software such that it automatically spends the last earned coins, which makes it a wash generally (or yields a small gain for which you need to pay taxes and be happy that you get to keep about 60-90% of the purchasing power that would have been 100% lost to inflation in the case you had been using USD instead of Bitcoin). This is similar to using currency.

If you are spending more than you earn, then your wallet spends the coins that were accumulated earlier, in which case you suffer a larger tax hit. This is similar to selling your investments for profit, and paying taxes.

Can someone else explain why this is the end of Bitcoin because I fail to see it?

You still don't get it. It may have nothing to do with minimizing BTC gains.

The issue is that tax law is complex. For example there is a $1000 Tax Credit where if you earn less than a certain amount or more than another higher amount, you don't get the credit. So it happens that you are ready to spend BTC on Dec. 23rd for Xmas gift, but it would push over the bracket and you lose $1000. So you need to decide to not spend until Jan 1 (much too late for Xmas). Thus Bitcoin wasn't money for you.


I never had to do that with dollars."  THAT'S BECAUSE YOU HAD NO GAINS BEFORE.

Read my post above this one, so you can have an epiphany.

The issue is that gains impact tax brackets and credits and all sorts of tax planning.

So you can't just take all the gains you can get.

You have to restrict yourself to scenarios.

This ruins the timing of being able to spend money when ever you want to.

At least this is how impacts some people. Maybe your tax situation is different and you take all the gains you can get, because you are in an investor class. But the common man is not. He has all sorts of things to balance, such as reporting his unemployment assistance, tax credits, solar installation energy credit, alternative minimum tax, etc....

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