6 ms·

What a colossal waste of electricity. Great, they've created a general ledger and currency formed by individual untrusted participants, but who in the aggregat

What a colossal waste of electricity. Great, they've created a general ledger and currency formed by individual untrusted participants, but who in the aggregate are trusted. What about this: Why not just diversify your risk by doing transactions or investing in currencies/assets across a diversified set of untrusted counterparties? Same net effect, and a lot less electricity wasted.

ikeboy 11y ago
Huh? How does this "diversifying risk" idea let you do any of the major bitcoin applications? (For example, how would your idea that has the "same net effect" as bitcoin allow anonymous markets?)
- jgalt212 11y ago
  Bitcoin is not anonymous. The entire ledger history is exposed. Through network analysis you can figure out who the original anonymous holder is. And as soon as that holder tries to convert to a fiat currency their identity will be exposed. It's precisely because Bitcoin is way more traceable than cash, the US government has not tried to shut it down despite a lot illegal activity being paid for via bitcoin. As soon as Satoshi tries to convert any of his coins into dollars or any other legacy currency everyone will know who he is.
  - ikeboy 11y ago
    This is wrong. Plenty of people have converted to fiat and not been caught, there are ways of mixing coins.
    - jgalt212 11y ago
      Actually, we're both wrong. Just because you have not been caught does not mean there hasn't been loss of anonymity. And if you mix enough coins you can decrease the chances of being pinpointed exactly as the source, but you cannot definitively remove yourself from the bucket of suspects.
      - ikeboy 11y ago
        >And if you mix enough coins you can decrease the chances of being pinpointed exactly as the source, but you cannot definitively remove yourself from the bucket of suspects. Not in my understanding. I have some coins X that are tainted. I send them to you, Y. You, Y, happen to have other coins completely unrelated to the address I sent my X coins to, and you send them to me at address Z. There's no blockchain link between X and Z. I suppose physically tracking you down, assuming you keep logs, could hurt me, but if I trust you not to keep logs then I'm safe after you delete the logs.
        jgalt212 11y ago
        This is what I mean about reading the whole ledger. If wallet X is a target, then anyone who transacts with X is a target (which includes Y (anyone with a direct link to X) and Z (anyone with an indirect link to X)). We are dealing in probabilities here, but we definitely don't have untraceable transcations. The authorities have a finite number network paths/leads they can track down. Of course, the more washing transactions you do with dirty coins the harder it is to track down the original wallet. That being said, the blockchain is somewhat self limiting in how many transactions it can processes per unit of time and thus the its obfuscating capabilities are diminished.
        ikeboy 11y ago
        But Y might be over Tor, or might not keep logs. There's no mechanism I can see for getting past wiped logs after the fact. If everything is done in RAM, and the machine is rebooted every few days, there's pretty much nothing you could do afterwards. If all you need is a finite number of leads, then trivially the number of humans/bitcoin users is finite. I don't think that makes a difference.
        jgalt212 11y ago
        Regardless of whether or not Y is over TOR, it cannot serve as a cut out. All the transactions are stored on the blockchain. So if Y tries to convert to dollars, then they have him. Or if Y's proxy Z tries to convert to dollars, they have Z (and by extension Y). For these reasons, I cannot figure out why they don't know who stole the MtGox bitcoins. The only way to hide is to forever keep your booty in bitcoins. Whenever the thief tries to convert his/her bitcoins to money or goods, the veil of anonymity will be pierced. And given the amount money involved in MtGox, it would be blow wide open. As an aside, this has to be one of the deeper HN threads that has not devolved into a flame war. kudos to us.

ikeboy 11y ago

Huh? How does this "diversifying risk" idea let you do any of the major bitcoin applications? (For example, how would your idea that has the "same net effect" as bitcoin allow anonymous markets?)

jgalt212 11y ago
Bitcoin is not anonymous. The entire ledger history is exposed. Through network analysis you can figure out who the original anonymous holder is. And as soon as that holder tries to convert to a fiat currency their identity will be exposed. It's precisely because Bitcoin is way more traceable than cash, the US government has not tried to shut it down despite a lot illegal activity being paid for via bitcoin. As soon as Satoshi tries to convert any of his coins into dollars or any other legacy currency everyone will know who he is.
- ikeboy 11y ago
  This is wrong. Plenty of people have converted to fiat and not been caught, there are ways of mixing coins.
  - jgalt212 11y ago
    Actually, we're both wrong. Just because you have not been caught does not mean there hasn't been loss of anonymity. And if you mix enough coins you can decrease the chances of being pinpointed exactly as the source, but you cannot definitively remove yourself from the bucket of suspects.
    - ikeboy 11y ago
      >And if you mix enough coins you can decrease the chances of being pinpointed exactly as the source, but you cannot definitively remove yourself from the bucket of suspects. Not in my understanding. I have some coins X that are tainted. I send them to you, Y. You, Y, happen to have other coins completely unrelated to the address I sent my X coins to, and you send them to me at address Z. There's no blockchain link between X and Z. I suppose physically tracking you down, assuming you keep logs, could hurt me, but if I trust you not to keep logs then I'm safe after you delete the logs.
      - jgalt212 11y ago
        This is what I mean about reading the whole ledger. If wallet X is a target, then anyone who transacts with X is a target (which includes Y (anyone with a direct link to X) and Z (anyone with an indirect link to X)). We are dealing in probabilities here, but we definitely don't have untraceable transcations. The authorities have a finite number network paths/leads they can track down. Of course, the more washing transactions you do with dirty coins the harder it is to track down the original wallet. That being said, the blockchain is somewhat self limiting in how many transactions it can processes per unit of time and thus the its obfuscating capabilities are diminished.
        ikeboy 11y ago
        But Y might be over Tor, or might not keep logs. There's no mechanism I can see for getting past wiped logs after the fact. If everything is done in RAM, and the machine is rebooted every few days, there's pretty much nothing you could do afterwards. If all you need is a finite number of leads, then trivially the number of humans/bitcoin users is finite. I don't think that makes a difference.
        jgalt212 11y ago
        Regardless of whether or not Y is over TOR, it cannot serve as a cut out. All the transactions are stored on the blockchain. So if Y tries to convert to dollars, then they have him. Or if Y's proxy Z tries to convert to dollars, they have Z (and by extension Y). For these reasons, I cannot figure out why they don't know who stole the MtGox bitcoins. The only way to hide is to forever keep your booty in bitcoins. Whenever the thief tries to convert his/her bitcoins to money or goods, the veil of anonymity will be pierced. And given the amount money involved in MtGox, it would be blow wide open. As an aside, this has to be one of the deeper HN threads that has not devolved into a flame war. kudos to us.