5 ms·

There's a lot to like about BitCoin. They "just" need to solve the following: 1. Technical issues (make it more secure) 2. Economic issues (deflation) 3. "Comp

There's a lot to like about BitCoin. They "just" need to solve the following: 1. Technical issues (make it more secure) 2. Economic issues (deflation) 3. "Competitor" issues (governments, banks, the powerful status quo)

ignifero 15y ago
... Which will lead to 4. Trust. People can only agree to use a currency if they trust it.
- kd1220 15y ago
  I think the lack of physical tokens for Bitcoin (or any cryptocurrency) will likely be the main hurdle for public acceptance. It'll probably take another generation or two for people to get used to the idea of not having a physical representation for currency.
  - ignifero 15y ago
    People accepted credit cards decades ago. If bitcoin could work as a currency (which it can't, for other reasons), it would presumably be used via equally convenient exchange devices.
patrickg 15y ago
4) Legislative issues. For example Germany (I'd bet) would not accept bitcoins in one's tax form ("I have to pay 345.67 bit coins of taxes to the state"). And if you have income in a non approved currency, you get into some trouble.
- iwwr 15y ago
  The restaurant owner was basically exchanging BTC for USD on the spot and also reporting tax income in USD.
- csomar 15y ago
  If you consider it as a commodity, it would be no different than Gold or Oil.
drivebyacct2 15y ago
I'm curious. Where exactly do you see a security flaw in Bitcoin? Exchanges run by former magic the gathering admins don't count. What flaw is there is there in the security of the currency, I'm curious.
- deleted 15y ago
  [deleted]
- discover 15y ago
  http://nerdr.com/shutting-down-bitcoin-really-taking-down-the-bitcoin-network/ http://nerdr.com/shutting-down-bitcoin-really-taking-down-th... I'll add that the crypto will one day be broken (even brute force will eventually work once CPU/GPU have progressed far enough). And when it is, there is no reason you couldn't just sit back cracking those wallets in secret before funneling the coins your way. A significant weakness of the anonymity of the network means no one really "owns" a wallet in the traditional sense. They are essentially communal.
  - jasonzemos 15y ago
    You're right that sha256 will one day be in jeopardy, but there's no reason why the system can't update itself well before then. If sha256 is broken, all it takes is for people to update their clients and only start accepting sha3, etc.
    - discover 15y ago
      Previously, breaking a crypto was nice, but not instantly and anonymously profitable as it is with Bitcoin. It will be interesting to see how it plays out when it happens.
- ubernostrum 15y ago
  Exchanges run by former magic the gathering admins don't count. Not sure what's meant by that dig, but worth pointing out that a lot of former (and some current) Magic pros do quite well in financial work. In fact, an eerie number of them seem to graduate from Magic, to poker, to finance.
ars 15y ago
> Economic issues (deflation) This is actually a pretty serious problem. The value of bitcoins always settles such that the cost of the electricity to make them is approximately their value. But because the difficulty is adjusted such that a fixed number of bitcoins are generated per time (meaning faster or more efficient computers don't help), and that the number generated per unit time is constantly shrinking, it will cost more and more electricity over time to make bitcoins. Deflation is built into it. And I bet the creator of bitcoins never realized that the scarce resource bitcoins track is electricity. If you want to make a ton of money, buy bitcoins just before they switch from 50 per block to 25. I'm betting the value will double.
- wedesoft 15y ago
  The cost of electricity per Bitcoin in turn depends on the computing power invested in the network. The strength of the next block is adjusted so that it takes approximately 10 minutes for the network to solve it. Also there are optional transaction fees.
  - ars 15y ago
    Right, that's what I'm saying: As more people join the network it becomes uneconomic to mine bitcoins, because since it's harder now, it costs too much electricity. So those with the least efficient setups stop mining. So the price settles at the cost of electricity. Then they reduce the number of coins per block. So suddenly it comes even less worth it to mine. Until the value of each bitcoin rises to match, causing people to want to mine again. If the value of each bitcoin did not rise, no one at all would mine and the network would grind to a halt (no confirmed transactions). Unless they have a mechanism to reduce the difficulty factor at that point. I'm not sure on that point.
    - jasonzemos 15y ago
      "If the value of each bitcoin did not rise, no one at all would mine and the network would grind to a halt (no confirmed transactions)." This isn't true. The system has several modes of adjustment and it will always be worth it for someone to generate blocks. If the value of a coin didn't rise to match generation costs, people /should/ stop mining -- but those that remain will collect more coins or transaction fees as the difficulty drops to compensate. Overall the economy as a whole shrinks, but never grinds to a halt.

ignifero 15y ago

... Which will lead to 4. Trust. People can only agree to use a currency if they trust it.

kd1220 15y ago
I think the lack of physical tokens for Bitcoin (or any cryptocurrency) will likely be the main hurdle for public acceptance. It'll probably take another generation or two for people to get used to the idea of not having a physical representation for currency.
- ignifero 15y ago
  People accepted credit cards decades ago. If bitcoin could work as a currency (which it can't, for other reasons), it would presumably be used via equally convenient exchange devices.

patrickg 15y ago

4) Legislative issues. For example Germany (I'd bet) would not accept bitcoins in one's tax form ("I have to pay 345.67 bit coins of taxes to the state"). And if you have income in a non approved currency, you get into some trouble.

iwwr 15y ago
The restaurant owner was basically exchanging BTC for USD on the spot and also reporting tax income in USD.
csomar 15y ago
If you consider it as a commodity, it would be no different than Gold or Oil.

drivebyacct2 15y ago

I'm curious. Where exactly do you see a security flaw in Bitcoin? Exchanges run by former magic the gathering admins don't count. What flaw is there is there in the security of the currency, I'm curious.

deleted 15y ago
[deleted]
discover 15y ago
http://nerdr.com/shutting-down-bitcoin-really-taking-down-the-bitcoin-network/ http://nerdr.com/shutting-down-bitcoin-really-taking-down-th... I'll add that the crypto will one day be broken (even brute force will eventually work once CPU/GPU have progressed far enough). And when it is, there is no reason you couldn't just sit back cracking those wallets in secret before funneling the coins your way. A significant weakness of the anonymity of the network means no one really "owns" a wallet in the traditional sense. They are essentially communal.
- jasonzemos 15y ago
  You're right that sha256 will one day be in jeopardy, but there's no reason why the system can't update itself well before then. If sha256 is broken, all it takes is for people to update their clients and only start accepting sha3, etc.
  - discover 15y ago
    Previously, breaking a crypto was nice, but not instantly and anonymously profitable as it is with Bitcoin. It will be interesting to see how it plays out when it happens.
ubernostrum 15y ago
Exchanges run by former magic the gathering admins don't count. Not sure what's meant by that dig, but worth pointing out that a lot of former (and some current) Magic pros do quite well in financial work. In fact, an eerie number of them seem to graduate from Magic, to poker, to finance.

ars 15y ago

> Economic issues (deflation) This is actually a pretty serious problem. The value of bitcoins always settles such that the cost of the electricity to make them is approximately their value. But because the difficulty is adjusted such that a fixed number of bitcoins are generated per time (meaning faster or more efficient computers don't help), and that the number generated per unit time is constantly shrinking, it will cost more and more electricity over time to make bitcoins. Deflation is built into it. And I bet the creator of bitcoins never realized that the scarce resource bitcoins track is electricity. If you want to make a ton of money, buy bitcoins just before they switch from 50 per block to 25. I'm betting the value will double.

wedesoft 15y ago
The cost of electricity per Bitcoin in turn depends on the computing power invested in the network. The strength of the next block is adjusted so that it takes approximately 10 minutes for the network to solve it. Also there are optional transaction fees.
- ars 15y ago
  Right, that's what I'm saying: As more people join the network it becomes uneconomic to mine bitcoins, because since it's harder now, it costs too much electricity. So those with the least efficient setups stop mining. So the price settles at the cost of electricity. Then they reduce the number of coins per block. So suddenly it comes even less worth it to mine. Until the value of each bitcoin rises to match, causing people to want to mine again. If the value of each bitcoin did not rise, no one at all would mine and the network would grind to a halt (no confirmed transactions). Unless they have a mechanism to reduce the difficulty factor at that point. I'm not sure on that point.
  - jasonzemos 15y ago
    "If the value of each bitcoin did not rise, no one at all would mine and the network would grind to a halt (no confirmed transactions)." This isn't true. The system has several modes of adjustment and it will always be worth it for someone to generate blocks. If the value of a coin didn't rise to match generation costs, people /should/ stop mining -- but those that remain will collect more coins or transaction fees as the difficulty drops to compensate. Overall the economy as a whole shrinks, but never grinds to a halt.