[Kensington]

Bitcoins....

who has them?

who doesn't?

who thinks they are a scam?

who thinks they are the dawn of the future of currency?

And who is clueless about what they even are?

[subego]

Not me.
Me.
Not me.
Me.
Not me.

[Kensington]

hahaha

Perhaps I should have left my entire question at...

Bitcoins????!???!!??

[Kensington]

I came across this deal earlier today at Dealnews

The Humble Weekly Sale: Telltale Games (pay what you want and help charity)

This week you can get a bundle of games from them, and pay as much or as little (as low as one cent) as you want. They accept Bitcoins as payment...and since I have Bitcoins I decided to snag up the bundle for one cent, or 0.000776 Bitcoins.

[Shaddim]

Yeah, ummm, heck of a deal there.

[Phileas]

The Winklevi are heavily invested in bitcoin. The also invented pistachios.

[subego]

Originally Posted by Kensington 

They accept Bitcoins as payment...and since I have Bitcoins I decided to snag up the bundle for one cent, or 0.000776 Bitcoins.

Probably the single most important thing for you to understand about Bitcoin is the reason your transaction was able to take place is that 0.000776 bitcoins can not be reproduced, copied, forged, etc.

It is a unique instance of a scarce (limited) resource, just like anything else which has value. In a lot of ways, Bitcoin is much easier to understand than money. It's closer to barter. You're trading something which has inherent value for something else which has inherent value.

Money is a lot more complicated. It has no inherent value. The government which prints a currency declares, by fiat, you can use it to pay your taxes. This gives it value, but it's not inherent. It exists only so long as a government is willing to accept it for taxes. A unit of fiat currency is unique like a bitcoin is unique, but it's scarcity isn't absolute like bitcoins are. The government can print an arbitrary amount, which alters its scarcity, which alters its value. This is inflation.

Bitcoins don't inflate. There is an absolute number of bitcoins available. You, a government, no one can ever make any more.

[BLAZE_MkIV]

But you can't pay your taxes with them and there's no way to reverse fraudulent transactions.

[subego]

Well, as has been demonstrated, there are things you can do with a currency other than pay your taxes.

As for the ability (or lack thereof) to reverse fraudulent transactions, that has nothing to do with currency in and of itself. You can't reverse a fraudulent, anonymous, cash transaction either.

In both cases the solution is not to transact your business anonymously.

[BLAZE_MkIV]

There's no such thing as an anonymous cash transaction. For bit coin it has everything to do with the currency. It's impossible to reverse a transaction. You can create a second equal and opposite transaction but it must be performed by the other party.

[subego]

Originally Posted by BLAZE_MkIV 

There's no such thing as an anonymous cash transaction.

Why not?

Originally Posted by BLAZE_MkIV 

TFor bit coin it has everything to do with the currency. It's impossible to reverse a transaction. You can create a second equal and opposite transaction but it must be performed by the other party.

An equal and opposite transaction is for all intents and purposes equivalent to a reversed one.

[turtle777]

Originally Posted by subego 

An equal and opposite transaction is for all intents and purposes equivalent to a reversed one.

Uhm, no.

If you give me cash, and I hand it back, there is no trail.

With bitcoin, there is.

-t

[subego]

So?

[Spheric Harlot]

There are People who value anonymity, or at least having the OPTION of anonymity.

[subego]

Are you talking to me?

[Spheric Harlot]

[subego]

I'm trying to put this together.

Are you saying Bitcoin is bad because it has a trail and therefore offers no option for anonymity?

[Spheric Harlot]

I'm saying that's what I believe turtle was saying.

I'm pretty much clueless about Bitcoins, so I'm reading this thread with interest.

[subego]

Well, unless I'm missing something, existence of a trail is not the same lack of anonymity. If the trail can't be connected to you, that is the same as being anonymous AFAIC.

More importantly however, I ask what is the practical effect of being able to hand someone cash and then have them hand it back vs. two Bitcoin wallets recording a transaction took place?

When it comes down to it though, handing someone money and then having them hand it back is only a transaction if you're being literal to a fault.

[Spheric Harlot]

I don't think that situation was constructed as a real-world example. It was intended to illustrate a point.

Being able to hand someone couple of dollars in exchange for goods is not the same thing as leaving an IP address every time you go out to buy condoms at the drugstore.

[subego]

You're being videotaped when you buy condoms.

That seems like a bigger footprint than an IP address, which can only be linked to an individual if you refuse to consider all the ways it may be linked to multiple people. Not to mention I'm pretty sure your IP isn't required to be part of the transaction.

People flip-out if you require always-on Internet for a game. You think that would fly with currency?

[Spheric Harlot]

Those videotapes are localized. The instant those videotapes leave the premises, they do so under a police warrant, or somebody is doing something very illegal. In addition, nobody has the slightest ****ing clue whether you were there — let alone when. So there is no reason for anybody to look through them for your face. Those recordings are also not kept indefinitely.

There is NOTHING you can do on the Internet that is not traceable to your particular wall socket.

[subego]

The way I understand it to work is your wallet has a unique address which makes it easier to tie back to you, but the fact you can have an infinite number of wallets makes it relatively easy to obscure a direct connection if desired. Dump stuff into a one-off wallet and you're golden.

[subego]

Originally Posted by Spheric Harlot 

There is NOTHING you can do on the Internet that is not traceable to your particular wall socket.

I am not a wall socket, I am a free man.

[Spheric Harlot]

Good luck proving that you, as a free man, just happened to not be around when your Internet connection was used.

So, if those Bitcoin wallets a tied to your identity, how are your actions untraceable?

[Dork.]

Read up a bit about Bitcoin recently. I think its both real, and a big scam at the same time. I think I understand what is going on. I may be wrong, though: this post is worth what you paid for it (in bitcoins!)

Bitcoin is just a shared ledger, that's all. Bitcoin wallets are a public/private key pair, and bitcoin transactions occur when the sender signs a transaction with their private key. This can be verified by anyone with access to the sender's public key. This also means that everyone using Bitcoin has a complete history of all transactions made, anywhere in the system. Wow.

Every so often (10 minutes, I believe) all the transactions are bundled up and distributed to all the nodes that are "mining" bitcoins. They are looking for a digital signature for that bundle that meets a certain computationally-hard criteria. The bundle also includes the signature from the last bundle. Once the signature is found for that block, all trades in that block are "confirmed", as they can't be altered without modifying the signature of the block. And since each block includes the previous blocks' signature, technically a transaction can't be altered unless all subsequent blocks are altered, too, so all transaction essentially get re-verified every time a new block is verified.

As a reward for participating in the system, the node that finds these hashes is rewarded with some new bitcoins that just appear in their wallet. (How do they get there? This is the part I am the most fuzzy on.) So the "currency" is continuously growing, with new coins added on a continual basis. But the system is set up so that computing new hashes gets harder and harder as time goes on, and the reward periodically gets smaller. This is supposed to be a way to make the currency less inflationary.

If you had gotten involved a few years ago, you might have been able to mine a few bitcoins with your PC running an app in the background. But now the computational requirements are too great. People who want to mine bitcoins now use high end graphics cards, or FPGA or ASIC-based equipment to calculate hashes. (As someone who knows from FPGAs, this is what started my recent interest.)

In addition, bitcoin "pools" have sprung up. The site running the pool divides up the work, and gives any bitcoins they get (minus a small fee) back to the participants in the pool in proportion to how much computational power they contributed. It's a good way to get a very, very small amount of bitcoins, particularly if you are only mining with your CPU. But I think most bitcoins are mined through pools now.

IMHO, the requirement to have all transactions published is the major thing that differentiates this from other forms of "currency". If I were to publish my bitcoin wallet address (really a public key , remember), then everyone can see all transactions I have made to and from my address. So, if you want to get paid at all by the general public, you basically give up all anonymity. And anyone at all that sends money to you can see all transaction sent to that address (i.e. if you get paid in bitcoins, your boss can see where you spend them.) And if you lose your private key? You're pretty much screwed.

But, folks seem to be making money off of it....

[subego]

The point I'm trying to make here is where the coins in your wallet came from is encrypted (AFAIK). You can't get a trail to anywhere just by looking in someone's wallet.

If you're sniffing every packet in and out of an IP, you might be able to figure out some of that traffic is Bitcoin related, but that won't lead you to who the bitcoins went to. The back-end system works via a distributed network of clients. Your packets go to them, not the final recipient.

Of course, if you're running the client, they won't even be able to see your individual uses of Bitcoin. You're getting Bitcoin traffic 24/7.

Lastly, while I think it's important to realize everything you do on the Internet is being monitored in multiple ways, when it comes to actually pinning something on you, the whole point of NAT was to make that impossible. Which it does.

There is no way to determine who is doing what from outside a NAT router. While some (usually of a prosecutorial bent) may have an interest in claiming the person who pays for an Internet connection is the source of outbound traffic, but this is demonstrably 100% false.

[subego]

Originally Posted by Spheric Harlot 

So, if those Bitcoin wallets a tied to your identity, how are your actions untraceable?

Simple. The wallets aren't tied to you by identity, they're tied to you by your possession of the wallet.

[Dork.]

Originally Posted by subego 

The point I'm trying to make here is where the coins in your wallet came from is encrypted (AFAIK). You can't get a trail to anywhere just by looking in someone's wallet.

I don't think that's true. The whole point is that all the nodes know all the transactions, and this is part of what makes it hard to forge, or spend bitcoins twice. Transactions are signed, not encrypted.

[subego]

Originally Posted by Dork. 

Bitcoin is just a shared ledger, that's all. Bitcoin wallets are a public/private key pair, and bitcoin transactions occur when the sender signs a transaction with their private key. This can be verified by anyone with access to the sender's public key. This also means that everyone using Bitcoin has a complete history of all transactions made, anywhere in the system. Wow.

My bad. I had thought this worked differently.

[subego]

Originally Posted by Dork. 

I don't think that's true. The whole point is that all the nodes know all the transactions, and this is part of what makes it hard to forge, or spend bitcoins twice. Transactions are signed, not encrypted.

Absolutely correct. I was mistaken.

Systems are being designed to get around this though. Basically big "laundry pools" where you put in your coins and get someone else's coins back, which you put in a clean wallet.

If you go in and out of the pool a few times, and assuming the pools are large enough you don't accidentally get your own coins back, no one's going to be able to trace them.

[Spheric Harlot]

I think you might want to re-assess you concept of "untraceable".

You need an IP address to do anything on the Internet, and as long as you do, there is no such thing as being untraceable. Even Tor doesn't provide anonymity, as has been proven.

[subego]

Here is my concept of untraceable.

I spoof my computer's credentials, wardrive far away from my home, and find an unsecured node.

Untraceable enough?

[Spheric Harlot]

And what exactly do you do from that unsecured node? Surf for porn? Because if you're going to do something in ANY way productive and involves currency exchange, you're going to somehow have to leave a trail that leads to one of your accounts.


Here's my concept of untraceable:

I walk into a drugstore, choose whatever I need, and hand the cashier a couple of Euros.

So simple, even a normal human could do it.

[subego]

Originally Posted by Spheric Harlot 

And what exactly do you do from that unsecured node? Surf for porn? Because if you're going to do something in ANY way productive and involves currency exchange, you're going to somehow have to leave a trail that leads to one of your accounts.


Here's my concept of untraceable:

I walk into a drugstore, choose whatever I need, and hand the cashier a couple of Euros.

So simple, even a normal human could do it.

Your concept of untraceable appears to be based on conducting a transaction which is so insignificant nobody gives a shit. If anyone has even the slightest reason to care, being physically present for the transaction is about as traceable as you can get.

My concept of untraceable is based on actually being untraceable.

[Spheric Harlot]

Physical presence is completely untraceable unless somebody knows you were there.

It does not seem like it will be particularly difficult to create a complete financial profile of a person using Bitcoin transactions, including his shopping transactions.

I don't know how worthwhile or legal it would be, but if this is the future of financial systems, then things like payback point cards and such won't even be necessary to trick gullible fools into letting targeted advertisers profile them.

Privacy concerns are not an issue of some guy seeing you in the street. You may not see the distinction as worth making, but this sort of collection of data is relevant.

[Phileas]

But that's the point. In an importnat transaction, somebody will know you've been there.

That's how crime novels work.

[subego]

Exactly.

I want targeted ads.

What I don't want is to hand over a suitcase full of cash to the assassin I'm hiring.

That's a hypothetical example. I'd rather kill the mother****er myself.

[starman]

I started goofing around with Bitcoin mining the other day. It's amazingly slow and very wasteful, but my computer's on anyway so why not? After three days I've made 0.00012512 BTC, or 11 cents.

The problem today stems from the fact that the computations seem to be so hard that if you buy a dedicated ASIC Bitcoin farming machine, it pays off in two months, and then after that you make less and less money per month because the computations get harder and harder.

So, farming seems to be a waste. I even looked at cloud farming. A $75 investment gets you $64 back after a month on average.

As for the "currency" itself, I don't see it being more than a fad.

[turtle777]

Spot on. Way too volatile to be used as money.

In a sense, crypto currencies are a bit like a Ponzi scheme: the early investors adopters could make a ton of money, but if you're late to the game, there's not much to be had.

Plus, this whole "it's limited" concept doesn't work now that there are new crypto currencies cropping up every day.

-t

[subego]

Dogecoin

Wow. Much coin.

[subego]

Originally Posted by turtle777 

Spot on. Way too volatile to be used as money.

In a sense, crypto currencies are a bit like a Ponzi scheme: the early investors adopters could make a ton of money, but if you're late to the game, there's not much to be had.

Plus, this whole "it's limited" concept doesn't work now that there are new crypto currencies cropping up every day.

-t

"Competing" currencies only compete if people start accepting them. No one will take, say, TurtleCoin, so TurtleCoin supply is going to have a limited to negligible effect on the bitcoin value.

[Snow-i]

Originally Posted by subego 

Dogecoin

Wow. Much coin.

such currency. amaze

[Snow-i]

I've thought a few times about looking into bitcoin more.

Unfortunately, my "there's no such thing as a free lunch/easy money" sense is tingling which has prevented me from putting in any significant time or effort.

[turtle777]

Wow, I have not heard about this issue before. Short bitcoin (if only I could).

Bitcoin: What You're Not Being Told | StormCloudsGathering

-t

[turtle777]

Originally Posted by subego 

"Competing" currencies only compete if people start accepting them. No one will take, say, TurtleCoin, so TurtleCoin supply is going to have a limited to negligible effect on the bitcoin value.

But people DO accept other crypto currencies already. They all can be converted into USD, and therefore, into or out of BTC.

-t

[BLAZE_MkIV]

Because of the power requirements if you don't have an ASIC miner already payed for then you can't make a profit.

[starman]

Bitcoin value dropped almost 50% today. Damn.

[Shaddim]

It might recover, but we had our fun and got out a couple weeks ago. I still have a small amount in one of my wallets, but I'm just holding on to them as souvenirs.

[subego]

Dogecoin has quadrupled in value.