Bitcoin

[fiby41]

You have to be more specific.

Just using Bitcoin on Tor won't make your transactions completely untraceable.

• *install Tor and use it for all subsequent browsing steps
  *visit Instawallet to anonymously create a Bitcoin wallet
  *List $100 cash for sale on Silk Road Market
  *Mail the cash through any US Postal Service drop box
  *When the Silk Road bitcoin payment arrives, withdraw it to your Instawallet

You can now spend Bitcoins from this Instawallet with complete anonymity. Instawallet doesn't know who you are (because of Tor). Silk Road doesn't know who you are (because of Tor). The USPS doesn't know who you are (anonymous drop boxes). The person who sold you Bitcoins doesn't know who you are (anonymous US mail).

Source/Sauce

[Scrubby]

Just using Bitcoin on Tor won't make your transactions completely untraceable.

We were talking about the bitcoin part of the transaction, of course it doesn't help if you tell your identity in some other way. BTW, both Instawallet and Silk Road are dead. Use the original client and set the proxy to localhost port 9150 and it will use the Tor Network if you start the browser bundle. Bitcoins can be bought using Localbitcoins.com.

[trfie]

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

Can this problem be avoided if there was a backup of the bitcoins? Seems terrible to be able to lose $5000 just like that.

Why has the value of bitcoin dropped by 50% over the last year? Shouldn't things be continually improving with bitcoin as ppl figure out more of the quirks, develop new technologies, and so on? There are no real competitors, and no problems with bitcoin that cannot be solved that would even indicate that competitors would pose a threat?

Do ppl foresee that we will have credit/debit cards for bitcoin in the future, without all the excessive fees of the credit card companies? Use it to exchange money between countries without exchange rate fees, etc? Seems like a big potential upside.

[jacob]

Why has the value of bitcoin dropped by 50% over the last year? Shouldn't things be continually improving with bitcoin as ppl figure out more of the quirks, develop new technologies, and so on? There are no real competitors, and no problems with bitcoin that cannot be solved that would even indicate that competitors would pose a threat?

Value is not the same as price. Value is what you get and is usually determined by fundamentals such as your considerations above... price is what you pay and is determined by matching supply and demand.

[bryan]

Can this problem be avoided if there was a backup of the bitcoins? Seems terrible to be able to lose $5000 just like that.

Of course. You actually don't have bitcoins, you only have the private key that authorizes you to move some unit of bitcoins from one address on the public ledger (blockchain) to any other address. The address is a derivative of the public key (the complement of the private key). So you can backup your private key however you like.

Why has the value of bitcoin dropped by 50% over the last year? Shouldn't things be continually improving with bitcoin as ppl figure out more of the quirks, develop new technologies, and so on? There are no real competitors, and no problems with bitcoin that cannot be solved that would even indicate that competitors would pose a threat?

It's a fairly small market cap ($4B) has been the typical explanation of volatility. The thought was people in previous generations of BTC price run-ups had a lot of BTC and able to control the market more. Though Bitcoin could continue to improve over time (and in fact the security does improve over time) it could also have a fatal flaw found or the way miners/nodes/users/developers work proves to be non-workable.

The biggest competitors to bitcoin I think are: 1) central authority willing to offer something very close to Bitcoin (Apple, Greece, Petro China) with perhaps the added benefit of setting a price floor of a unit and 2) alternative cryptos like Ethereum, Peercoin, Zerocoin that may be better than Bitcoin in some ways.

Do ppl foresee that we will have credit/debit cards for bitcoin in the future, without all the excessive fees of the credit card companies? Use it to exchange money between countries without exchange rate fees, etc? Seems like a big potential upside.

Of course. Here's an example: https://anxbtc.com/pages/card-compare

[trfie]

As I understand, the security of bitcoin is dependent on the astronomical amount of computing power that is continuously running, based on the uptake of bitcoin. So I do not think Apple or any other company or country could ever compete with that. The market cap of bitcoin is already $4 billion, any other currency has to compete against that head start. Does a corporation really want to get involved at the international level in currency disputes? And setting a price floor would be a mistake, look at the history of world currencies, no attempt to exert control over a currency has been successful (eg, attempts to maintain a floor, pegging, devaluation - all of these had negative consequences). I think that is why bitcoin has traction. Ppl like the fact that a government cannot start printing more money or blight it in any other way.

I haven't looked at bitcoin competitors in a couple of years, but do any of them have any advantage that bitcoin cannot develop?

Of course. You actually don't have bitcoins, you only have the private key that authorizes you to move some unit of bitcoins from one address on the public ledger (blockchain) to any other address. The address is a derivative of the public key (the complement of the private key). So you can backup your private key however you like.

This is just semantics. Since bitcoins cannot be spent without the private key, and the private key is required to spend bitcoins, the private key essentially IS the bitcoin. I didn't quite understand how the user above lost bitcoins. Was she purchasing bitcoins when the browser crashed? Because it the bitcoins were owned already then there should have been a backup of the private keys somewhere. But if the browser crashed during a purchase transaction, then the private keys associated with the seller's address should still exist and be known by the seller, right? What occurs to me is that the person must have created a new private key associated with an address, and the new private key was not saved before being lost?

[bryan]

As I understand, the security of bitcoin is dependent on the astronomical amount of computing power that is continuously running, based on the uptake of bitcoin. So I do not think Apple or any other company or country could ever compete with that.

The security of Bitcoin is the amount of work cumulatively done (with new work added with each new block). The period between blocks is dynamically adjusted to always be an average of 10m. Thus, I can't just all of a sudden bring a large amount of computing power online and go back in time to rewrite history. The best I could hope to do is some double spending on new blocks or not very old blocks in the hope that everyone else looking at the blockchain does not wait long enough for consensus/settlement. This is covered in the Bitcoin white paper.

Any new altcoin can come into existence with a new PoW such that existing Bitcoin PoW ASICs/FPGAs/GPU can't start going crazy on double spending or giving the altcoin a volatile (dynamic like I mentioned earlier) difficulty (in effect, DoS).

So, in terms of security of any new Bitcoin-like competitor, it just takes some consideration of what might happen with existing miner capabilities and miner incentives. This is not a barrier to competition (er, well a lot of cryptos failed out of the gate because they were stupid and didn't consider this..).

The market cap of bitcoin is already $4 billion, any other currency has to compete against that head start. Does a corporation really want to get involved at the international level in currency disputes? And setting a price floor would be a mistake, look at the history of world currencies, no attempt to exert control over a currency has been successful (eg, attempts to maintain a floor, pegging, devaluation - all of these had negative consequences). I think that is why bitcoin has traction.

You have a point about corporations getting involved with some touchy legal subjects. Governments wouldn't like a widely successful currency outside of their control. But I think in a lot of cases it would be worth corps to try to compete with governments, within the law.

In this day and age of technology, there could also be corps that exist outside of governments if they can stand on their own online. Thanks Internet/Tor. e.g. Silk Road or distributed prediction market platform.

Don't see issue with setting a price floor. Other than capability to re-adjust it ( think you could achieve something to the effect with sidechains/colored coins). One thing Bitcoin lacks for being a money is that it's not a good unit of account. Setting a price floor, or just having a more predictable exchange rate, would be extremely useful and simplify a lot. But sure, price of things in a market float. This complexity is an area of interest and would be great if a distributed solution existed for bitUSD. Most promising area, to me, is again prediction markets.

Ppl like the fact that a government cannot start printing more money or blight it in any other way.

This doesn't have any affect on what I was suggesting. Whatever new distributed Bitcoin-like competitor would have to be open source and transparent with it's monetary policy and all that jazz. What happens on the upper layers doesn't really matter. After all, you can do fractional reserve banking or any other traditional financial service on top of Bitcoin.

I haven't looked at bitcoin competitors in a couple of years, but do any of them have any advantage that bitcoin cannot develop?

Currently, another big question mark with Bitcoin is not just the consensus of users/miners on a single blockchain, but how to effectively enact changes to the Bitcoin software/protocol. You can look at the "blocksize debate" currently to get a feel of things. Enacting changes will only prove to be more difficult as the market cap rises. Bitcoin is an experiment which has reached a $4B market cap. Innovative competitors should be able to rise up just like in other markets. In my opinion barrier to entry is still pretty low in the crypto-currency space (Bitcoin has some network effect going for it, sure, but not so much as you would think. If Bitcoin was baked into the Internet or real word system it would be a huge barrier to entry).

For example, off the top of my head, I doubt Bitcoin would adopt a) cryptographically anonymous transactions (area of research: homomorphic encryption) or a b) turing complete scripting/contract language. Personally, I think we could push a new PoW/consensus method through, despite current miners being very upset and lobbying immensely to avoid it.

One outcome could be pure anarchy and competition among Bitcoin-branchA, Bitcoin-branchB, Bitcoin-branchC due to blockchain forks.

I like TruthCoin and can't wait for implementations to become available. Seems prediction markets could help in this area of consensus as well.

Though, fundamentally Bitcoin, prediction markets are proving to be very capitalist "one dollar, one vote" instead of originally thought "one cpu, one vote" (which then again, seems the same as "one dollar, one vote"). But Satoshi seemed to be going for a more, pure democratic system for consensus. This is another case for Better-Bitcoin, if you could get a more democratic (err, or whatever is more desirable among alternatives/competition) consensus mechanism.

Seems like an easy solution is, again what I mentioned earlier, for big corps or governments to do some access controlling e.g. one cryptographic citizen/user private/public key, one vote. This idea has been around for years and years and never caught on enough to work. (Similarly related is Trusted Computing)

This is all very game theoryish and interesting.

Of course. You actually don't have bitcoins, you only have the private key that authorizes you to move some unit of bitcoins from one address on the public ledger (blockchain) to any other address. The address is a derivative of the public key (the complement of the private key). So you can backup your private key however you like.

This is just semantics. Since bitcoins cannot be spent without the private key, and the private key is required to spend bitcoins, the private key essentially IS the bitcoin.

I think it's very important to understand this point though. It helps to eliminate confusion on things like "why can't I just copy some bitcoins." Also, who owns the bitcoins if you gifted your mother some BTC by giving her a copy of the private key? Now there are at least two copies of the key but the same number of bitcoins. In meatspace it's clear that your mother owns the bitcoins thanks to years of progress by human society, but in the Matrix/cyberspace/network/virtual world, no change of ownership has occurred.

[KevinW]

But if the browser crashed during a purchase transaction, then the private keys associated with the seller's address should still exist and be known by the seller, right?

No, a private key is known only to the owner and is never shared, hence the name.
https://en.wikipedia.org/wiki/Public-key_cryptography