Bitcoin

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thebbqguy
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Bitcoin

Post by thebbqguy »

I have remained skeptical of bitcoin since I first heard of it about 18 months ago. But after watching Morgan Spurlock's Inside Man episode where he explored bitcoin, I might be changing my mind.

I might even buy a bitcoin soon. It's interesting how we change our attitudes once we understand things a little better.

reepicheep
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Re: Bitcoin

Post by reepicheep »

I buy $5/worth of bitcoin every day.

I figure this is what I would spend on a Starbucks frappachino or latte on the daily, so it's an amount I can afford to lose. I just forgo the Starbucks. Mostly I've seen the amount I've put in there decrease over the last 12 months, but I still have my auto-buy set up.

I'm not sold on Bitcoin as a long-term currency or investment, but I think there's going to be at least a couple more fantastical spasms of Tulip-buying mania before it really dies, so I'll have an opportunity to sell in the future if I choose to.

Keep in mind taxes are going to be a real pain in the ass if you buy and sell. Even worse than Lending Club. There are some organizations and individuals who have begun to provide advice and counsel in this arena, but bitcoin taxes are in their infancy in terms of how to deal with them.

El Duderino
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long term viability

Post by El Duderino »

Bitcoin's biggest problem is the user base. Most people haven't heard of it and half of those that have associate it with negative stuff like darknet, TOR, silk road, etc. Of the people that have heard of it, a lot of them are hoarding coins and not spending them (i.e. relying heavily on the unit of account and store of value functions of a currency), which really limits its use as medium of exchange, the most important part. More users and frequency of transactions will result in increased exchange stability.

I've held bitcoins for about 9 months now and so far I've made just two purchases: a computer and a pizza. Both transactions went off without a hitch and after figuring out how it works, was just as easy as a credit card. Bitcoin has worked for me a lot better as a medium of exchange than a store of value or unit of account.

I'm taking a fairly long position on bitcoin, despite my geeky friends who claim that I already missed the bandwagon (which I guess was back when it was trading near $1300 per bitcoin) or assert that quantum computing will negate any cryptographic benefits, which seems to me a disruptive technology that will eliminate most if not all computer security more than something specifically aimed at bitcoin.

If the big credit card companies haven't crushed this thing already, that probably means that they can't. I've separately heard government reps say that they're not nearly so worried about bitcoin, which is really hard to remain anonymous with, as they are the anonymous virtual currencies out there.

bryan
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Re: Bitcoin

Post by bryan »

huge fan for a while now. Though, I mostly laughed at the Inside Man episode because using Bitcoin in meatspace at the cashier is just a horrible experience and not what Bitcoin is good at. Until it becomes at least as easy as Venmo/Apple Pay, forget about it. It has way more uses in the digital world (it is the first digital/programmable money that has stuck, thanks to a fundamental breakthrough of distributed systems, and has proven to be hugely resilient)

Used to dollar cost average until it didn't make sense anymore, for my PF.

Though the future may not be all Bitcoin, it was worth voting with my dollar initially (since it has some philosophical origins that are interesting in addition to the tech and implications) and I always try to make it a point to use crypto as my funds of payment help them grow.

Go read the short whitepaper (https://scholar.google.com/scholar?&lr& ... 3988544578) or listen to some talk on it (https://news.ycombinator.com/item?id=8759302). Let your imagination run wild what the implications of having a global, programable, open value exchange system could mean (I for one am super excited about the future of insurance/hedging/prediction markets).

Do bring your skepticism along for the ride.

Fuzzy
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Re: Bitcoin

Post by Fuzzy »

I've liked the idea of crypto-money going way back... For example I had an eCash account from '96 until it dissolved in '98. It was basically a cryptographic bearer bond, designed so everyone could see the bank had issued it, but nobody knew to whom.

I nearly dived into the Bitcoin world when I heard about it in 2011, but I was a bit too skeptical to commit. The cooperative/distributed transaction clearing idea is brilliant, and the mining process is interesting. However, it's fully traceable and there's no value except speculation. Investments have an expected return, items and ideas have some usefulness, currency has government force behind it, gold has a long tradition and is shiny, but Bitcoins are just numbers. I assumed it would bubble up and pop by now without even a pretty flower to show for it.

It's been way more popular and resilient than I would have guessed, and I'm glad the crypto-currency idea finally has some legs, but it still seems like a shaky foundation to build on.

fips
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Re: Bitcoin

Post by fips »

I think we have discussed it before on this forum and it mostly boils down to how much people believe in a currency.

Everyone is still feeling a little hesitant whether to commit to Bitcoin or not.
However, has there ever been any Bitcoin theft or other difficulties regarding the algorithm yet?

All the cases I know revolve around people being incautious about handling their private key or hacks to the wallets, but afaik there is no case (and it's not possible) to "hack" the currency (unless you have more than half of the mining power). Plus, there's no broad consensus about its regulation. This has advantages (keeping it "free") and disadvantages (lowering the acceptance for regulated institutions).

Dragline
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Re: Bitcoin

Post by Dragline »

I'm most concerned about security. I once signed up for an account through Mt. Gox and could have bought bitcoins for a few dollars back then. But I never did. So later I kicked myself when they shot way up.

Of course, I would have lost it all later on when it collapsed or was hacked or whatever happened. So then I patted myself on the back for not getting involved.

It seems like timing is everything with these things right now.

Is there a secure place to trade/store them that anyone would recommend?

tzxn3
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Re: Bitcoin

Post by tzxn3 »

@Dragline: For storage, an offline tape backup in a safe deposit box is the safest I can imagine off the top of my head.

HVACtill40
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Re: Bitcoin

Post by HVACtill40 »

I purchased Bitcoin and Litecoin on the advice from a coworker last year before the runnup to over a $1000 a BTC and saw my $2000 investment peak around $40000 in about a week and half's time :o . I used BTC-E exchange for buying and selling of BTC/ALT Currencies. Coinbase is where I initally purchased my original Bitcoins. I can also speak to losing Bitcoins too when my Chrome browser crashed while performing a transaction and lost my encryption keys, 5 Bitcoins at the time which was approximately $5000 :roll: . There is also a divide amongst the crypto currency groups of bringing Bitcoin to the mainstream (all transactions are visible/verifiable) vs the anonymous groups which want Bitcoin to be more revolutionary (Dark Wallet). I have used Bitcoin which I used with a dark wallet then purchased a VPN service for the purpose of privacy while browsing the web. I sold everything I had at the time and transferred all my gains to a company called Gyft which exchanged Bitcoins for gift cards, purchasing $2000 Amazon gift cards till I had spent it all because I didn't know how they were going to regulate Bitcoin at the time. Later the following year the IRS ruled on how they were going to tax Bitcoin gains/mining profits. I'm still on the fence on how Bitcoin will function as a currency but what really interests me is the Bitcoin the technology. There is some really interesting development taking place with decentralized technology and blockchain based startups. Check out Ethereum (Smart Contracts) and Storj/Maidsafe(Decentralized Cloud Storage), very interesting. Listening to Vitalik Buterin speak about Ethereum really reminds me of Jacob, very smart dudes! I currently follow the Reddit subreddits Bitcoin and Bitcoinmarkets. Another good source for info is Coindesk.com and https://bitcointalk.org. For current BTC prices check out https://bitcoinwisdom.com/markets/btce/btcusd.

KevinW
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Re: Bitcoin

Post by KevinW »

I have been waiting and hoping for a cryptocurrency for a long time, but do not accept Bitcoin as the messiah.

The fundamental problem is, a complete cryptosystem design and implementation cannot be proven to be perfectly secure, so the best we can hope for is "no one can think of any vulnerabilities." There are unknown unknowns so the crypto community has settled on a process of skeptical peer review, where a proposed system is described in detail, the community picks it apart and finds vulnerabilities, and the design is changed, until it "runs clear" and no one can find vulnerabilities anymore. Sometimes the weaknesses are of the "I never would have thought of that" variety (e.g. http://en.wikipedia.org/wiki/Side-channel_attack) which is why this can't be trusted to one human mind. PGP, for example, went through years of revision in the open RFC process.

The whitepaper is a plausible explanation for why Bitcoin should be secure, but that's not enough. It was written by one person, whose intentions and credentials are secret, and the system was never reviewed. So it didn't surprise me when I heard about the numerous successful exploits that have cost Bitcoin users money or exposed them to liability.

That said, Bitcoin has attracted a lot of interest to the cryptocurrency project, so I am optimistic that a follow-up cryptocurrency system will go through a rigorous open development process, and will stick.

Scrubby
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Re: Bitcoin

Post by Scrubby »

KevinW wrote:The whitepaper is a plausible explanation for why Bitcoin should be secure, but that's not enough. It was written by one person, whose intentions and credentials are secret, and the system was never reviewed. So it didn't surprise me when I heard about the numerous successful exploits that have cost Bitcoin users money or exposed them to liability.
I'm not sure what you mean by saying that it has never been reviewed. Everything related to the protocol and implementation of the client is open source, and has been reviewed by a lot of individuals and some academical institutions. Lots of people have been scammed or lost money, but it has never been caused by a security problem in the Bitcoin protocol. Every time it has happen it has been caused by human mistakes, failed business models or most frequently, downright scams.

I still don't think it will last indefinitely, though. It's just too easy to topple it through the mining process. Anyone getting >50% of the total mining power for even a limited time can do all kinds of damage to the trust of the system.

KevinW
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Re: Bitcoin

Post by KevinW »

Here, "review" means a two-way discussion where informed peers can provide constructive criticism and authors can respond to it. It's true that the whitepaper and source code were opened up after the design was complete but that's not a peer review.

If the design had been reviewed, someone probably would have pointed out, for example, that the whitepaper never defines a security model. It is standard practice in this arena to begin with a precise falsifiable definition of what "secure" means so it is possible to analyze whether or not a system is actually secure. That was never done, and apparently Satoshi never anticipated that someone might generate malicious transactions in order to inject harmful information into the blockchain. Consequently:

"If you own Bitcoin, you also own links to child porn"
http://www.dailydot.com/business/bitcoi ... tion-code/

which is a liability for Bitcoin users (and gross).

This is just one example. There are probably other holes that no one has noticed yet.

Scrubby
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Re: Bitcoin

Post by Scrubby »

KevinW wrote:Here, "review" means a two-way discussion where informed peers can provide constructive criticism and authors can respond to it.
Like this? https://bitcointalk.org/index.php?topic=2901.0

Gavin Andresen is one of the top tier Bitcoin developers.

KevinW
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Re: Bitcoin

Post by KevinW »

No, not like that. The review/discussion is supposed to happen while the system is being designed in order to prevent these kinds of things from ever happening. An apologetic forum thread after the cat is out of bag doesn't count. If this happened once it can happen again.

Scrubby
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Re: Bitcoin

Post by Scrubby »

The problem is that you want a system that is created to avoid censorship, to support censorship based on the laws of a particular country. That's not possible. There were no cats in any bags back in 2011. If they wanted to add some sort of mechanism to filter data they could have done it, but as long as you lock user supplied data into the block chain there would always be a way around it.

trfie
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Re: Bitcoin

Post by trfie »

There has been a lot of corruption with bitcoin, hundreds of millions if not billions have been stolen, even before one of the exchanges went under and basically stole the users' money. I feel like I would be legitimizing the criminal warloads who have stolen a large % of the outstanding currency if I invested in bitcoin.

Besides, while bitcoin provides some benefits over paper currency, it seems to me that there are many more potential problems a digitial currency could solve, but bitcoin doesn't. Eg, couldn't security somehow be built into the currency in a way that cannot be done for paper currency? Eg, it is possible to lose paper currency. Could there be some backup of digital currency that prevents it from being lost? I could think of other examples.

I am sold on the the idea of a digital currency, but I don't know if bitcoin is it? Do others think that there is potential for other digitial currencies or can everything that could be done with a digital currency be done with bitcoin?


Edit: just saw the post by Scrubby. Total anonymity doesn't seem like something that can be solved with the current bitcoin architecture. I'm not sure that it is ideal from a security standpoint, however. Is it possible for a digital currency to be created that would hamper criminals and underworld activities, but yet be used by ordinary ppl anonymously? Also, if a paper currency is lost digitally (eg, someone electronically steals money), that money is gone. But could a digital currency provide a built-in safeguard for this?

Scrubby
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Re: Bitcoin

Post by Scrubby »

trfie wrote:Besides, while bitcoin provides some benefits over paper currency, it seems to me that there are many more potential problems a digitial currency could solve, but bitcoin doesn't. Eg, couldn't security somehow be built into the currency in a way that cannot be done for paper currency? Eg, it is possible to lose paper currency. Could there be some backup of digital currency that prevents it from being lost? I could think of other examples.
The actual bitcoins are stored in the block chain, and the wallet is just a key to sign a transfer of those coins. You can make as many backups of the wallet as you like. The client named Armory has support for multiple password protected wallets. The level of encryption is configurable, I've configured it to take about 1 second to decode on my computer. That's somewhere in the range of 10 000 - 1 000 000 times harder than the encryption which is used by online stores for their customers passwords. It's also possible to require the signatures from two or more different wallets to complete a transaction.

If anyone gets the password the money can still be stolen, but I don't see any other way around that than reversible transactions. That would make a distributed currency worthless, because anyone could just take their money back after receiving what they purchased.

Regarding anonymity it's practically 100% anonymous if you want it to be. If you do the transactions using Tor on an open Wifi network there is no way to trace it back to you.

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fiby41
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Re: Bitcoin

Post by fiby41 »

Last edited by fiby41 on Fri May 08, 2015 7:01 am, edited 1 time in total.

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fiby41
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Re: Bitcoin

Post by fiby41 »

Scrubby wrote:
trfie wrote:If you do the transactions using Tor on an open Wifi network there is no way to trace it back to you.
It is not as simple and clear-cut as that but you can go down the Tor Project rabbit hole yourself:

Download the Tor Browser Bundle

Frequently Asked Questions about Tor

Overview - Learn where Tor came from and how it works

Scrubby
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Re: Bitcoin

Post by Scrubby »

fiby41 wrote:It is not as simple and clear-cut as that but you can go down the Tor Project rabbit hole yourself:
You have to be more specific. I'm aware of what the origin of the Tor software is, just like I'm aware of the origin of the internet.

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