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Author Topic: Gold collapsing. Bitcoin UP.  (Read 2022643 times)
smoothie
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December 25, 2014, 07:27:36 AM
 #19001

I wonder if you could use the current CPU temperature to the first or second decimal place as a source of entropy.

The least significant bit of a 16 bit audio sample always seemed a good idea to me.

The nice thing about randomness: you can mix many sources (using xor or whatever) and you'll not lose anything even if one source is bad.

Unfortunately what you may get wrong if you are too careless about this is how much useful randomness you have.

If I recall correctly some sources in the Linux kernel rng are added to the pool but counted as zero entropy.


this is why understanding the inner workings of predifined rng's or procedure calls to generate entropy is essential.

Also making sure that entropy is explicitly used properly is key. Simply make sure entropy is being used for what it is being generated for.

███████████████████████████████████████

            ,╓p@@███████@╗╖,           
        ,p████████████████████N,       
      d█████████████████████████b     
    d██████████████████████████████æ   
  ,████²█████████████████████████████, 
 ,█████  ╙████████████████████╨  █████y
 ██████    `████████████████`    ██████
║██████       Ñ███████████`      ███████
███████         ╩██████Ñ         ███████
███████    ▐▄     ²██╩     a▌    ███████
╢██████    ▐▓█▄          ▄█▓▌    ███████
 ██████    ▐▓▓▓▓▌,     ▄█▓▓▓▌    ██████─
           ▐▓▓▓▓▓▓█,,▄▓▓▓▓▓▓▌          
           ▐▓▓▓▓▓▓▓▓▓▓▓▓▓▓▓▓▌          
    ▓▓▓▓▓▓▓▓▓▓▓▓▓▓▓▓▓▓▓▓▓▓▓▓▓▓▓▓▓▓▓▓─  
     ²▓▓▓▓▓▓▓▓▓▓▓▓▓▓▓▓▓▓▓▓▓▓▓▓▓▓▓▓╩    
        ▀▓▓▓▓▓▓▓▓▓▓▓▓▓▓▓▓▓▓▓▓▓▓▀       
           ²▀▀▓▓▓▓▓▓▓▓▓▓▓▓▀▀`          
                   ²²²                 
███████████████████████████████████████

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December 25, 2014, 08:34:34 AM
 #19002

out of curiosity to the security experts here.

which do you consider more secure, Armory or Trezor?

I'm not a security expert, but I would say trezor (with passphrase).

It's also easier to use securely.


Trezor seems safe. A simple paper wallet generated offline on a new computer running linux is safe too  Wink

the problem with a paper wallet is to spend the coins safely.
An average bitcoin user these days isn't able to create a linux live CD, import a private key, export the transaction by USB and broadcast it on another online computer running a full node.

Searching for a trusted escrow service? Check my trust. I use a Trezor device for my escrow services, so your coins are safe. Fee: 0.5% or 0.05 BTC, whichever is lower
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December 25, 2014, 10:22:20 AM
 #19003

out of curiosity to the security experts here.

which do you consider more secure, Armory or Trezor?

I'm not a security expert, but I would say trezor (with passphrase).

It's also easier to use securely.


Trezor seems safe. A simple paper wallet generated offline on a new computer running linux is safe too  Wink

the problem with a paper wallet is to spend the coins safely.
An average bitcoin user these days isn't able to create a linux live CD, import a private key, export the transaction by USB and broadcast it on another online computer running a full node.

Exactly. Like I said above: trezor (with additional passphrase against theft of seed backup) is quite secure, but most importantly: it's both easy to use securely (hard to fuck up) and very convenient. I use it as a day-to-day wallet (plus mycelium on the phone)

PGP key molecular F9B70769 fingerprint 9CDD C0D3 20F8 279F 6BE0  3F39 FC49 2362 F9B7 0769
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December 25, 2014, 11:18:53 AM
 #19004

I wonder if you could use the current CPU temperature to the first or second decimal place as a source of entropy.

The least significant bit of a 16 bit audio sample always seemed a good idea to me.

The nice thing about randomness: you can mix many sources (using xor or whatever) and you'll not lose anything even if one source is bad.

Unfortunately what you may get wrong if you are too careless about this is how much useful randomness you have.

If I recall correctly some sources in the Linux kernel rng are added to the pool but counted as zero entropy.


this is why understanding the inner workings of predifined rng's or procedure calls to generate entropy is essential.

Also making sure that entropy is explicitly used properly is key. Simply make sure entropy is being used for what it is being generated for.

Somebody should code  up an entropy "meter"  to go in the menu bar of Linux   distros.
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December 25, 2014, 11:20:16 AM
 #19005

out of curiosity to the security experts here.

which do you consider more secure, Armory or Trezor?

I'm not a security expert, but I would say trezor (with passphrase).

It's also easier to use securely.


Trezor seems safe. A simple paper wallet generated offline on a new computer running linux is safe too  Wink

the problem with a paper wallet is to spend the coins safely.
An average bitcoin user these days isn't able to create a linux live CD, import a private key, export the transaction by USB and broadcast it on another online computer running a full node.

Exactly. Like I said above: trezor (with additional passphrase against theft of seed backup) is quite secure, but most importantly: it's both easy to use securely (hard to fuck up) and very convenient. I use it as a day-to-day wallet (plus mycelium on the phone)


Has anybody noticed that Bitcoin actually has the potential to eliminate theft, like, for real?

https://tlsnotary.org/ Fraud proofing decentralized fiat-Bitcoin trading.
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December 25, 2014, 02:54:16 PM
 #19006

what is "constant time"?

Improved signing security

For 0.10 the security of signing against unusual attacks has been improved by making the signatures constant time and deterministic.

This change is a result of switching signing to use libsecp256k1 instead of OpenSSL. Libsecp256k1 is a cryptographic library optimized for the curve Bitcoin uses which was created by Bitcoin Core developer Pieter Wuille.

There exist attacks[1] against most ECC implementations where an attacker on shared virtual machine hardware could extract a private key if they could cause a target to sign using the same key hundreds of times. While using shared hosts and reusing keys are inadvisable for other reasons, it's a better practice to avoid the exposure.

OpenSSL has code in their source repository for derandomization and reduction in timing leaks, and we've eagerly wanted to use it for a long time but this functionality has still not made its way into a released version of OpenSSL. Libsecp256k1 achieves significantly stronger protection: As far as we're aware this is the only deployed implementation of constant time signing for the curve Bitcoin uses and we have reason to believe that libsecp256k1 is better tested and more thoroughly reviewed than the implementation in OpenSSL.

[1] https://eprint.iacr.org/2014/161.pdf


A countermeasure against

http://en.m.wikipedia.org/wiki/Timing_attack

?

Although I can't think of a practical scenario where a typical user would ever be exposed to this, yes, the concern is side-channel attacks (e.g., a timing attack):

Quote from: N Benger et al
ABSTRACT. We apply the Flush+Reload side-channel attack based on cache hits/misses to extract a small amount of data from OpenSSL ECDSA signature requests. We then apply a “standard” lattice technique to extract the private key, but unlike previous attacks we are able to make use of the side-channel information from almost all of the observed executions. This means we obtain private key recovery by observing a relatively small number of executions, and by expending a relatively small amount of post-processing via lattice reduction. We demonstrate our analysis via experiments using the curve secp256k1 used in the Bitcoin protocol. In particular we show that with as little as 200 signatures we are able to achieve a reasonable level of success in recovering the secret key for a 256-bit curve. This is significantly better than prior methods of applying lattice reduction techniques to similar side channel information.

From: N. Benger, J van de Pol, N.P. Smart, Y. Yar, “‘Ooh Aah... Just a Little Bit’: A small amount of side channel can go a long way,” from International Association for Cryptologic Research, 2014.

Basically, there's a bunch of number crunching done by your CPU each time your wallet signs a bitcoin transaction.  If a "constant time" algorithm is used, it takes the same amount of time to produce an ECDSA signature regardless of the message being signed (or the k value or private key used).  If the signing time is always the same, then an attacker cannot learn anything about your private keys by inspecting the timing variations (since there are none) when you sign various messages.  

Where does "timing variation" come from?  As one example, your wallet needs to perform the following elliptic curve point multiplication as part of the ECDSA signing process:

  (x1, y1) = k x G

There's several different algorithms that can be used to carry out this multiplication.  The simplest is probably the "double and add" method.  However, the amount of time it takes this algorithm to execute depends on the specific value of k (G is always constant for bitcoin).  On the other hand, the "Montgomery Ladder" approach computes the point multiplication in a fixed amount of time (regardless of the specific value of k).  So a wallet would use a constant-time approach like the Montgomery Ladder technique rather than the double-and-add method as part of ensuring "constant time" ECDSA signatures.

Why does "constant time" matter?  In most cases I don't think it really does.  But let's imagine a contrived scenario where an attacker can get my wallet to produce several bitcoin-signed message with one of its funded private keys.  The attacker can pass it any piece of text, and my wallet will sign that text and relay the signature back to the attacker.  Normally this shouldn't be a problem because bitcoin-signed messages are safe.  But if the attacker can somehow accurately time how long my CPU takes to produce each signature, and then fiddle with the messages that it's requesting my wallet to sign, perhaps it can leach out enough information to determine my private key…

I think deterministic signatures are much more important than constant-time signatures (there's been a non-trivial amount of funds lost due to the repeat k-value problem but I doubt a single satoshi has ever been lost due to a genuine side-channel attack).  Someone like gmaxwell could comment better on the practical risks here…




I take it the time to do the multiplication varies directly with the size of the number k? Would it be linearly related?

And this applies whether or not we use deterministic signatures?
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December 25, 2014, 02:59:34 PM
 #19007

Has anybody noticed that Bitcoin actually has the potential to eliminate theft, like, for real?
Yes. Probably in more ways than you were anticipating:

Quote from: Wei Dai
I am fascinated by Tim May's crypto-anarchy. Unlike the communities traditionally associated with the word "anarchy", in a crypto-anarchy the government is not temporarily destroyed but permanently forbidden and permanently unnecessary. It's a community where the threat of violence is impotent because violence is impossible, and violence is impossible because its participants cannot be linked to their true names or physical locations.
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December 25, 2014, 03:09:31 PM
 #19008

...
Quote from: Wei Dai
...violence is impossible because its participants cannot be linked to their true names or physical locations.

Not quite...



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December 26, 2014, 02:34:05 AM
 #19009

https://m.youtube.com/watch?v=v6JUyK5dHoE
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December 26, 2014, 03:38:12 AM
 #19010

...
Quote from: Wei Dai
...violence is impossible because its participants cannot be linked to their true names or physical locations.

Not quite...



LOL, you know Wei Dai wrote that like a decade before Bitcoin right?
Justus is merely pointing out that the anti-theft elements of cryptographic solutions were contemplated long before it occurred to oakpacific this week.
The potential to do what governing that needs to be done with less of a central authority is one of the values crypto has the potential to add.

And Charlie pled out to a Money Transmission violation, not theft anyway.  The MTLs are arbitrary barriers to entry set up by banking to wall off their industry from competition.  I don't know who Charlie's victim is there... Citibank? for not being able to collect their customary fees?

The MTLs are part of banking's war on cash.  So that they can control the ledgers.  The Bank Secrecy Act laws preventing un-monitored transfers of US$10K were written when? in 1970? They haven't been adjusted for inflation since?

In today's dollars that would be over US$60K
http://www.dollartimes.com/inflation/inflation.php?amount=10000&year=1970

So what may have been thought of as a reasonable law then, is insane today.   The frog is well and truly boiled.

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December 27, 2014, 09:07:19 AM
 #19011

I wonder if you could use the current CPU temperature to the first or second decimal place as a source of entropy.

The least significant bit of a 16 bit audio sample always seemed a good idea to me.

The nice thing about randomness: you can mix many sources (using xor or whatever) and you'll not lose anything even if one source is bad.

Unfortunately what you may get wrong if you are too careless about this is how much useful randomness you have.

If I recall correctly some sources in the Linux kernel rng are added to the pool but counted as zero entropy.


this is why understanding the inner workings of predifined rng's or procedure calls to generate entropy is essential.

Also making sure that entropy is explicitly used properly is key. Simply make sure entropy is being used for what it is being generated for.

Somebody should code  up an entropy "meter"  to go in the menu bar of Linux   distros.

This would be interesting to see as well as a current list of entropy sources.

At some point you only need so much entropy from real world randomness but it is cool to come up with new ideas on ways to generate even more randomness.

███████████████████████████████████████

            ,╓p@@███████@╗╖,           
        ,p████████████████████N,       
      d█████████████████████████b     
    d██████████████████████████████æ   
  ,████²█████████████████████████████, 
 ,█████  ╙████████████████████╨  █████y
 ██████    `████████████████`    ██████
║██████       Ñ███████████`      ███████
███████         ╩██████Ñ         ███████
███████    ▐▄     ²██╩     a▌    ███████
╢██████    ▐▓█▄          ▄█▓▌    ███████
 ██████    ▐▓▓▓▓▌,     ▄█▓▓▓▌    ██████─
           ▐▓▓▓▓▓▓█,,▄▓▓▓▓▓▓▌          
           ▐▓▓▓▓▓▓▓▓▓▓▓▓▓▓▓▓▌          
    ▓▓▓▓▓▓▓▓▓▓▓▓▓▓▓▓▓▓▓▓▓▓▓▓▓▓▓▓▓▓▓▓─  
     ²▓▓▓▓▓▓▓▓▓▓▓▓▓▓▓▓▓▓▓▓▓▓▓▓▓▓▓▓╩    
        ▀▓▓▓▓▓▓▓▓▓▓▓▓▓▓▓▓▓▓▓▓▓▓▀       
           ²▀▀▓▓▓▓▓▓▓▓▓▓▓▓▀▀`          
                   ²²²                 
███████████████████████████████████████

. ★☆ WWW.LEALANA.COM        My PGP fingerprint is A764D833.        SMOOTHIE'S HEALTH AND FITNESS JOURNAL          History of Monero development Visualization ★☆ .
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December 27, 2014, 01:08:50 PM
 #19012

Daniel says that an asset's value comes from either a future expected payments, or, in the case of cash, from the future random opportunities it allows to enjoy.
But that's not a broad enough view: an asset's value comes from a demand which meets a limited supply.

He says that Bitcoin is an appcoin. That's true. It offers no expected future payments, and is far from being the equivalent of cash, still, it has value. Why? Daniel says it, because it's the required token to use the Bitcoin network.

It follows that an appcoin can have value if it is the only required token to use a network. If there is demand to use a peculiar network, and if the appcoin is the only way to use that network, then there is no reason to think the appcoin will not have value.

Concerning his argument that the appcoin will be dumped by the users as soon as they have finish to use the network: then how does he explain that bitcoins have value? Of course bitcoins have value because people use the token of the BTC network as both a store of value and a vehicle to speculate on the fact that the demand for the use of the network will skyrocket. Why do they do that? Because of the limited supply of the BTC tokens, not because bitcoins are the equivalent of cash and people want to have them to enjoy future random opportunities.

It follows that it is definitly possible that users  will choose to store their wealth in an appcoin and use it to speculate on the adoption of the relevant network (assuming the said appcoin has a limited supply) even is the appcoin has not a cash-equivalent dominance position over the liquidity market.
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December 27, 2014, 05:38:40 PM
 #19013

Daniel says that an asset's value comes from either a future expected payments, or, in the case of cash, from the future random opportunities it allows to enjoy.
But that's not a broad enough view: an asset's value comes from a demand which meets a limited supply.

He says that Bitcoin is an appcoin. That's true. It offers no expected future payments, and is far from being the equivalent of cash, still, it has value. Why? Daniel says it, because it's the required token to use the Bitcoin network.

It follows that an appcoin can have value if it is the only required token to use a network. If there is demand to use a peculiar network, and if the appcoin is the only way to use that network, then there is no reason to think the appcoin will not have value.

Concerning his argument that the appcoin will be dumped by the users as soon as they have finish to use the network: then how does he explain that bitcoins have value? Of course bitcoins have value because people use the token of the BTC network as both a store of value and a vehicle to speculate on the fact that the demand for the use of the network will skyrocket. Why do they do that? Because of the limited supply of the BTC tokens, not because bitcoins are the equivalent of cash and people want to have them to enjoy future random opportunities.

It follows that it is definitly possible that users  will choose to store their wealth in an appcoin and use it to speculate on the adoption of the relevant network (assuming the said appcoin has a limited supply) even is the appcoin has not a cash-equivalent dominance position over the liquidity market.


i didn't like that he referred to Bitcoin as an appcoin.  when i think of an appcoin, i think of an associated asset or function that requires usage of appcoin, like SCJX for Storj, MSC for Maidsafe, ether, XCP, etc.  

to me, Bitcoin is digital cash; it functions independently and only gets traded for goods and services unrelated to Bitcoin itself and which exist totally off the blockchain.  Bitcoin is its own self contained financial system which transfers BTC from address to address and owner to owner.  i foresee a day when goods and services will be priced or denominated in BTC, ie, Bitcoin will become a unit of account and a new form of sound money unto itself.  to achieve this would be to achieve Bitcoins greatest potential as a form of digital gold.  this is why i am so against any proposal which might detract or distract from this outcome or turn Bitcoin into a multi-asset trading platform.  imo, ppl who advocate for this expansion of Bitcoins function either don't understand Bitcoin or are the "entrepreneurs" that Daniel refer to who were late to the party and wish to mold/change Bitcoin into their new "opportunity" at the expense of the rest of us who got in early.  the funny thing is, if they just bought BTC now, they would still be early adopters who should experience incredible wealth expansion over time.  aaand, it would be a lot easier.

b/c it is essentially "perfect" money due to its fixed supply and global payment network, all other altcoins or appcoins pale in comparison and lack the network effect which Bitcoin grabbed early on.  this is b/c they usually tweek a parameter that distorts Bitcoin's sound money function or try to add a feature which is useless.  eventually, these alternatives will be snuffed out according to Austrian Theory as society will function better and more efficiently with a single global monetary unit.  we're slowly seeing it happen.

the other reason ppl need or wish to hold digital cash, other than to capitalize on crashed assets, is that there are times when emergencies occur and one needs liquidity to buy or pay off essentials.  no one usually goes "all in", even in Bitcoin  Wink.  but hodling has an additional benefit.  as a result of the fact that it has a fixed supply means that in an ever expanding and chaotic fiat currency world, Bitcoins value has no other choice but to go up as fiat "leaks" into the Bitcoin system.
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December 27, 2014, 06:56:39 PM
 #19014

Daniel says that an asset's value comes from either a future expected payments, or, in the case of cash, from the future random opportunities it allows to enjoy.
But that's not a broad enough view: an asset's value comes from a demand which meets a limited supply.

He says that Bitcoin is an appcoin. That's true. It offers no expected future payments, and is far from being the equivalent of cash, still, it has value. Why? Daniel says it, because it's the required token to use the Bitcoin network.

It follows that an appcoin can have value if it is the only required token to use a network. If there is demand to use a peculiar network, and if the appcoin is the only way to use that network, then there is no reason to think the appcoin will not have value.

Concerning his argument that the appcoin will be dumped by the users as soon as they have finish to use the network: then how does he explain that bitcoins have value? Of course bitcoins have value because people use the token of the BTC network as both a store of value and a vehicle to speculate on the fact that the demand for the use of the network will skyrocket. Why do they do that? Because of the limited supply of the BTC tokens, not because bitcoins are the equivalent of cash and people want to have them to enjoy future random opportunities.

It follows that it is definitly possible that users  will choose to store their wealth in an appcoin and use it to speculate on the adoption of the relevant network (assuming the said appcoin has a limited supply) even is the appcoin has not a cash-equivalent dominance position over the liquidity market.


i didn't like that he referred to Bitcoin as an appcoin.  when i think of an appcoin, i think of an associated asset or function that requires usage of appcoin, like SCJX for Storj, MSC for Maidsafe, ether, XCP, etc.  

to me, Bitcoin is digital cash; it functions independently and only gets traded for goods and services unrelated to Bitcoin itself and which exist totally off the blockchain.  Bitcoin is its own self contained financial system which transfers BTC from address to address and owner to owner.  i foresee a day when goods and services will be priced or denominated in BTC, ie, Bitcoin will become a unit of account and a new form of sound money unto itself.  to achieve this would be to achieve Bitcoins greatest potential as a form of digital gold.  this is why i am so against any proposal which might detract or distract from this outcome or turn Bitcoin into a multi-asset trading platform.  imo, ppl who advocate for this expansion of Bitcoins function either don't understand Bitcoin or are the "entrepreneurs" that Daniel refer to who were late to the party and wish to mold/change Bitcoin into their new "opportunity" at the expense of the rest of us who got in early.  the funny thing is, if they just bought BTC now, they would still be early adopters who should experience incredible wealth expansion over time.  aaand, it would be a lot easier.

b/c it is essentially "perfect" money due to its fixed supply and global payment network, all other altcoins or appcoins pale in comparison and lack the network effect which Bitcoin grabbed early on.  this is b/c they usually tweek a parameter that distorts Bitcoin's sound money function or try to add a feature which is useless.  eventually, these alternatives will be snuffed out according to Austrian Theory as society will function better and more efficiently with a single global monetary unit.  we're slowly seeing it happen.

the other reason ppl need or wish to hold digital cash, other than to capitalize on crashed assets, is that there are times when emergencies occur and one needs liquidity to buy or pay off essentials.  no one usually goes "all in", even in Bitcoin  Wink.  but hodling has an additional benefit.  as a result of the fact that it has a fixed supply means that in an ever expanding and chaotic fiat currency world, Bitcoins value has no other choice but to go up as fiat "leaks" into the Bitcoin system.
It's digital cash because people aren't afraid of hoarding it.
And why are they hoarding it when instead they can just use the payment system and dump the BTC as fast as they can once they have buy the goods and services they needed? Because they don't see the BTC tokens only as a means to use the network/payment system but also as a store of value and a speculation vehicle.

The store of value function exists when there is a limited supply. The speculation vehicle function exists when the user-base of the network has a growth potentiel. These two conditions aren't specific to Bitcoin. If Storj tokens exist in limited supply and the Storj network has a big growth potentiel, then people will hoard them like they are hoarding BTC.

That doesn't threaten the digital cash position of BTC at all (the superior network effect in payments cannot be overturned), it's just something that will happen outside the scope of BTC. Today they are plenty of assets which allow people to store their value besides gold, and people use a great variety of vehicles to speculate. The Austrian theory is probably right to conclude that the cash function is a natural monopoly, but the SOV and speculation functions aren't natural monopoly. That's why appcoins will have value, not because they will be use as a means of payments or as a unit of account (Bitcoin will stay the king), but because they will allow to store value and speculate.

BTC will not capture all the value created by the economy. Some value will exist outside of its scope, and if other networks than the BTC network create value for the consumers, then there is no question that the tokens that allow people to use those networks will have value too.
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December 27, 2014, 07:17:23 PM
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Daniel says that an asset's value comes from either a future expected payments, or, in the case of cash, from the future random opportunities it allows to enjoy.
But that's not a broad enough view: an asset's value comes from a demand which meets a limited supply.

He says that Bitcoin is an appcoin. That's true. It offers no expected future payments, and is far from being the equivalent of cash, still, it has value. Why? Daniel says it, because it's the required token to use the Bitcoin network.

It follows that an appcoin can have value if it is the only required token to use a network. If there is demand to use a peculiar network, and if the appcoin is the only way to use that network, then there is no reason to think the appcoin will not have value.

Concerning his argument that the appcoin will be dumped by the users as soon as they have finish to use the network: then how does he explain that bitcoins have value? Of course bitcoins have value because people use the token of the BTC network as both a store of value and a vehicle to speculate on the fact that the demand for the use of the network will skyrocket. Why do they do that? Because of the limited supply of the BTC tokens, not because bitcoins are the equivalent of cash and people want to have them to enjoy future random opportunities.

It follows that it is definitly possible that users  will choose to store their wealth in an appcoin and use it to speculate on the adoption of the relevant network (assuming the said appcoin has a limited supply) even is the appcoin has not a cash-equivalent dominance position over the liquidity market.


i didn't like that he referred to Bitcoin as an appcoin.  when i think of an appcoin, i think of an associated asset or function that requires usage of appcoin, like SCJX for Storj, MSC for Maidsafe, ether, XCP, etc.  

to me, Bitcoin is digital cash; it functions independently and only gets traded for goods and services unrelated to Bitcoin itself and which exist totally off the blockchain.  Bitcoin is its own self contained financial system which transfers BTC from address to address and owner to owner.  i foresee a day when goods and services will be priced or denominated in BTC, ie, Bitcoin will become a unit of account and a new form of sound money unto itself.  to achieve this would be to achieve Bitcoins greatest potential as a form of digital gold.  this is why i am so against any proposal which might detract or distract from this outcome or turn Bitcoin into a multi-asset trading platform.  imo, ppl who advocate for this expansion of Bitcoins function either don't understand Bitcoin or are the "entrepreneurs" that Daniel refer to who were late to the party and wish to mold/change Bitcoin into their new "opportunity" at the expense of the rest of us who got in early.  the funny thing is, if they just bought BTC now, they would still be early adopters who should experience incredible wealth expansion over time.  aaand, it would be a lot easier.

b/c it is essentially "perfect" money due to its fixed supply and global payment network, all other altcoins or appcoins pale in comparison and lack the network effect which Bitcoin grabbed early on.  this is b/c they usually tweek a parameter that distorts Bitcoin's sound money function or try to add a feature which is useless.  eventually, these alternatives will be snuffed out according to Austrian Theory as society will function better and more efficiently with a single global monetary unit.  we're slowly seeing it happen.

the other reason ppl need or wish to hold digital cash, other than to capitalize on crashed assets, is that there are times when emergencies occur and one needs liquidity to buy or pay off essentials.  no one usually goes "all in", even in Bitcoin  Wink.  but hodling has an additional benefit.  as a result of the fact that it has a fixed supply means that in an ever expanding and chaotic fiat currency world, Bitcoins value has no other choice but to go up as fiat "leaks" into the Bitcoin system.
It's digital cash because people aren't afraid of hoarding it.
And why are they hoarding it when instead they can just use the payment system and dump the BTC as fast as they can once they have buy the goods and services they needed? Because they don't see the BTC tokens only as a means to use the network/payment system but also as a store of value and a speculation vehicle.

The store of value function exists when there is a limited supply. The speculation vehicle function exists when the user-base of the network has a growth potentiel. These two conditions aren't specific to Bitcoin. If Storj tokens exist in limited supply and the Storj network has a big growth potentiel, then people will hoard them like they are hoarding BTC.

That doesn't threaten the digital cash position of BTC at all (the superior network effect in payments cannot be overturned), it's just something that will happen outside the scope of BTC. Today they are plenty of assets which allow people to store their value besides gold, and people use a great variety of vehicles to speculate. The Austrian theory is probably right to conclude that the cash function is a natural monopoly, but the SOV and speculation functions aren't natural monopoly. That's why appcoins will have value, not because they will be use as a means of payments or as a unit of account, but because they will allow to store value and speculate.

BTC will not capture all the value created by the economy. Some value will exist outside of its scope, and if other networks than the BTC network create value for the consumers, then there is no question that the tokens that allow people to use those networks will have value too.

What incentive do I have to hold appcoinx to store value when BTC promises better return & better liquidity.

The Austrian theory relates to natural MONEY monopoly, not "cash". SOV is a function of money. There absolutely is a network effect for store of values of the same nature (cryptocoins). Moreover, I don't believe that coins the likes of Storj would have limited supply.

"I believe this will be the ultimate fate of Bitcoin, to be the "high-powered money" that serves as a reserve currency for banks that issue their own digital cash." Hal Finney, Dec. 2010
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December 27, 2014, 07:20:32 PM
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What incentive do I have to hold appcoinx to store value when BTC promises better return & better liquidity
Diversification.

Why professionnal investors have a portfolio of stocks instead of just having the stock that has the better risk/reward?
Quote
The Austrian theory relates to natural MONEY monopoly, not "cash". SOV is a function of money. There absolutely is a network effect for store of values of the same nature (cryptocoins).
Obligation, stocks, real estate, commodities, etc., are all store of value. There is not reason to think the store of value function begets a network effect nor a natural monopoly (you only need a minimum treshold of liquidity to realize the value, that's it).

Nick Szabo has written an outstanding essay about the origins of money: http://szabo.best.vwh.net/shell.html
You will see that the network effect isn't a key feature in order to store value.
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December 27, 2014, 07:24:59 PM
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What incentive do I have to hold appcoinx to store value when BTC promises better return & better liquidity
Diversification.

Why investors have a portfolio of stocks instead of just having the stock that has the better risk/reward?

This is not diversification.

These are all eggs of the same basket (cryptoSOV).

Network effect dictates only one egg can survive. There is no comparison with stocks.

"I believe this will be the ultimate fate of Bitcoin, to be the "high-powered money" that serves as a reserve currency for banks that issue their own digital cash." Hal Finney, Dec. 2010
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December 27, 2014, 07:36:45 PM
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What incentive do I have to hold appcoinx to store value when BTC promises better return & better liquidity
Diversification.

Why investors have a portfolio of stocks instead of just having the stock that has the better risk/reward?

This is not diversification.

These are all eggs of the same basket (cryptoSOV).

Network effect dictates only one egg can survive.
I am not taking about buying altcoins but about buying networks (via appcoin). Two networks which are not on the same market aren't competitors. Bitcoin is in competition with Litecoin since they are both payment system networks. But Bitcoin isn't a competitor which MaidSafe or Storj since the two latter are aiming to solve an entirely different problem than Bitcoin.

Your argument is like saying that Bitcoin will kill Facebook since there can only be one network in the economy because of the network effect. No, the network effect entails only one network per market. There are a lot of markets in the economy, and Bitcoin will not address all the market of the economy.
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December 27, 2014, 08:00:25 PM
 #19019

What incentive do I have to hold appcoinx to store value when BTC promises better return & better liquidity
Diversification.

Why investors have a portfolio of stocks instead of just having the stock that has the better risk/reward?

This is not diversification.

These are all eggs of the same basket (cryptoSOV).

Network effect dictates only one egg can survive. There is no comparison with stocks.

He is diversify in crypto currencies but a good diversification would have more than one asset.

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December 27, 2014, 08:02:31 PM
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...
Quote from: Wei Dai
...violence is impossible because its participants cannot be linked to their true names or physical locations.

Not quite...



LOL, you know Wei Dai wrote that like a decade before Bitcoin right?
Justus is merely pointing out that the anti-theft elements of cryptographic solutions were contemplated long before it occurred to oakpacific this week.
The potential to do what governing that needs to be done with less of a central authority is one of the values crypto has the potential to add.

Not sure what you're talking about.  Non-sequitur?

Quote
And Charlie pled out to a Money Transmission violation, not theft anyway.

I'm merely pointing out that "Charlie" got owned--according to justusranvier that's impossible.  Go go jackbooted thugs Smiley

Quote
[a bunch of butthurt re moneylaundering laws]

Protip:  If you want to break laws, get good.  "Charlie" wasn't.  He didn't even know how to STFU, and paid Smiley

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