9 ms·

Bitcoin

186 points by sathishmanohar 15y ago

adrianwaj 15y ago
I think it is a lot easier for the people to remove a ruling party, than for that ruling party to remove a software application that the people want. What made email catch on? Did it put the post office out of business? Maybe the future is an online currency with <$5000 transactions used by smartphone users and somehow baked into the web like email, a server app. Apple, Google (or really the banks) should be onto this.
jpdoctor 15y ago
Fred: Redo that plot substituting gold, a currency going back to biblical times, for dollars. Do you think there is still a chance bitcoin will follow the Gartner hype cycle?
chimeracoder 15y ago
> I think it is, but there are significant ramifications that will result from the decoupling of currencies from governments. The decoupling of currencies from governments sounds like a radical shift, but it's actually only fairly recent in history that we use fiat money. That, of course, allows us to do a lot of things that we've gotten used to in the last century particularly, such as taking advantage of monetary policy to address short-term economic concerns. If alternative currencies catch on, that's something that governments will have less power to do - or at least, less power to do directly and predictably. Certainly, governments are going to push back on that, and probably try to discredit or disable alternative currencies. At the end of the day, though, while money can be determined by fiat, value is determined subjectively, so if alternative currencies catch on (which I think they well), it will necessitate a shift in the way that people think about money. (Not unlike the way that the Internet has shifted the way people think about tradable goods and IP law - just take a look at SOPA.)
- kiba 15y ago
  Bitcoin is also a technology. It can do more than just being money. For example, the technology is used in namecoin, which help facilitate the rise of a decentralized DNS system not subject to government control. After all, the DNS record is contained in every namecoin blockchain in the world. (OF course, the bigger issue is how the heck will namecoin get adopted as de facto DNS?) I even wrote an article on unexpected technological niche outbreak of bitcoin: http://bitcoinweekly.com/articles/technological-jailbreak-bitcoin-to-namecoin http://bitcoinweekly.com/articles/technological-jailbreak-bi... I think in time, we will start seeing Bitcoin technologies adopted in more areas and more areas that have nothing to do with money or our financial system.
  - SkyMarshal 15y ago
    Agreed. Bitcoin's fundamental value is a feasible solution to the Byzantine General's Problem, or distributed consensus among untrusted parties. That solution can and is being repurposed, Namecoin being among the first. The cat is very out of the bag, and it's one of the most interesting spaces in technology right now.
    - jc123 15y ago
      Good layman's explanation of bitcoin and Byzantine Generals' Problem: http://news.ycombinator.com/item?id=2667486 http://news.ycombinator.com/item?id=2667486
    - nazgulnarsil 15y ago
      I wouldn't call it a solution so much as a working approximation to a solution. AFAIK a complete solution would mean you could quantify how much each party trusts each other party at any given time.
    - Egregore 15y ago
      What are other problems (besides namecoin) which can be solved by bitcoin technology?
      - SkyMarshal 15y ago
- jpdoctor 15y ago
  > but it's actually only fairly recent in history that we use fiat money. What do you consider to be the starting year of fiat money?
  - chimeracoder 15y ago
    As with many things in history, I don't think there is a single year that we can point to as the turning point, since it's a somewhat gradual shift. Think about it this way - a few hundred years ago, it was commonplace to pay dues to the government using precious metals (like gold). In some parts of the world, this is still the case, but in the majority of the developed world, public and private debts are paid with money that gets its value by fiat. This change can't happen overnight, even if you force it to; if people continue to accept gold (for example) has having liquid value, then it will continue to be used as a currency. I wouldn't even use the beginning or end of Bretton Woods as the turning point (though it was certainly a turning point), because the point is less whether people can convert currency to gold than it is a question of whether they do.
    - jpdoctor 15y ago
      > * I don't think there is a single year that we can point to as the turning point, since it's a somewhat gradual shift.* Over what years do you think this shift occurred? Or put another way, you do realize that fiat has been in use at least since the Romans?
      - surrealize 15y ago
        There's a difference between "in use, somewhere" and "almost universally used".
  - mckoss 15y ago
    A good book covering the subject is The History of Money (Jack Weatherford). Money was has had a tradition of being valuable in its own right (gold and silver coin), and eventually banks created paper money that represented an amount of gold held in reserve. The Bank of England, was at first a private entity (established in 1688) and was only nationalized in 1946[1]. The notes they issued were backed by deposits of coin, gold, or silver. They broke with the gold standard in 1931, and it's then we see money tied not to a specific asset, but rather as a debt instrument; it's valuable only because someone promises to pay you back. When the debtor is a nation-state, we have fiat money, and the money is backed only by the faith and credit of the nation who issues it. As Weatherford's book points out, fiat currency was not invented by the British, as the Chinese were using a similar system in the 1st or 2nd century, and continued to use a paper money system until 1399. Abuses destroyed the value of the paper currency, and it did not reappear in China until the 20th century. [1] http://en.wikipedia.org/wiki/Bank_of_England http://en.wikipedia.org/wiki/Bank_of_England
- sethg 15y ago
  Note that long before governments had fiat currency in the “we will print as many dollar bills as we want to” sense, devaluation of specie-based currency was not uncommon. According to Wikipedia, the Roman denarius had about 4.9g of silver when it was introduced under the Republic, 3.9g under Augustus (about 200 years later), and 3g in the later eras of the empire (a few centuries after that). The Byzantine histamenon coin was high-quality gold when it was introduced in the late 10th century, and had almost no gold by the late 11th. The English penny started out in the late 8th century as 1.5g of fine silver, then went to sterling (92.5%) silver in the 12th, reduced its weight to 0.97g in the early 15th, to 0.78g in the mid-15th, and so on.
pace 15y ago
Fred's post has an hidden agenda. There's no clear message in the article -- except expressing a strong believe for Bitcoin or related tech. So, I guess he's trying to get some heavy co-investors on board by creating some hype on Bitcoin again. Any other ideas? Besides: I love the Bitcoin idea and I'm sure it's not over yet (I still have Bitcoins). Edit: Don't get me wrong, I am not into bashing Fred -- I just want to get the real message behind his post and to raise HN readers's awareness for influence by media (media manipulation). Before happily discussing a new topic by a VC celeb we should ask why is HE now posting about Bitcoin. Look: Fred and his blog have a strong reach and influence, so it should be legitimate to question his actions. More on this topic: http://en.wikipedia.org/wiki/Media_manipulation http://en.wikipedia.org/wiki/Media_manipulation Edit2: just read another reply in this thread (which is downvoted as well) about that he just want to give the Bitcoin price another bump.
- mmahemoff 15y ago
  Is an agenda hidden when a VC says he's interested in a new technology? I'd say it's in plain sight as much as any post you'll see on any other blog.
  - pace 15y ago
    Fred and his blog are very popular -- so he is not just "a" VC, rather a strong opinion leader in the VC and startup world. I am just saying: Take Fred's words with a pinch of salt
    - kiba 15y ago
      It's a good idea to take someone's opinion with a pinch of salt, but it's bad idea to speculate and have no evidence to back up what you're saying.
- chris123 15y ago
  This is his message: "one of them is an interesting investment opportunity that we hope to participate in." It's a tease. He is talking his book, himself, etc. Standard operating procedure for a VC.
SkyMarshal 15y ago
This is a good article, linked in the comments: http://themonetaryfuture.blogspot.com/2011/11/air-guitars-and-bitcoin-regulation.html http://themonetaryfuture.blogspot.com/2011/11/air-guitars-an... Apparently there is a contingent among Bitcoiners and academics that wants it regulated for various reasons, and is working to achieve that.
deleted 15y ago
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mustpax 15y ago
Like any cryptosystem, Bitcoin has a fixed shelf life. As algorithms and attacks evolve, the cryptographic hash function that forms its core will eventually become obsolete will need to be replaced. We know this. The question is, can we build the ability to switch cryptographic building blocks into Bitcoin? I have no idea, but resiliency and adaptability are fundamental to the survival of any peer to peer system.
- ryandickherber 15y ago
  Assuming bitcoin does need its crypto upgraded at some point, probably what will happen is some people with a good deal of bitcoin authority, like the "official" bitcoin developers at bitcoin.org, will upgrade the crypto, and everyone will follow them, because they can be trusted.
- SkyMarshal 15y ago
  Yes, the hash algorithm can be upgraded as computing power increases. This was foreseen and built into it from the beginning. The implementation is relatively flexible, and can be modified or upgraded in a number of ways without having to restart the blockchain. Development of the technology is pretty active, you can observe what's being done on the development mailing list at Sourceforge: http://sourceforge.net/mailarchive/message.php?msg_id=28441040 http://sourceforge.net/mailarchive/message.php?msg_id=284410... That's just a random sample from Gavin, but if you're curious take 30m and read through to get a sense of what their issues and priorities are. The current issues list and recent change logs are also instructive; https://github.com/bitcoin/bitcoin/issues https://github.com/bitcoin/bitcoin/issues https://en.bitcoin.it/wiki/Changelog https://en.bitcoin.it/wiki/Changelog
  - wcoenen 15y ago
    > Yes, the hash algorithm can be upgraded as computing power increases. This was foreseen and built into it from the beginning. It's not really "built-in". Everybody would have to upgrade their bitcoin software, and then the new hashing algorithm would become active after a transitional period. The only thing in the bitcoin protocol which facilitates this is an alert system that can be used to broadcast warnings: https://en.bitcoin.it/wiki/Alerts https://en.bitcoin.it/wiki/Alerts If a significant fraction of the bitcoin nodes is not upgraded, then the bitcoin network would be split in two.
SonicSoul 15y ago
I think a large factor in adoption of BitCoin is the uncertainty of it's security. You have to be close to a hacker to truly understand how BitCoin works. General public has little to no chances at being able to gage how safe bit coins are to hold, and with no government to back up the investment, they will understandably be very hesitant to participate. Especially since it already got hacked.
- SkyMarshal 15y ago
  Also, simply losing your wallet to bitrot, accidental overwrite, or whatever is a big problem for general public users.
  - biaxident 15y ago
    The image from the Wired article shows this pretty clearly: http://www.avc.com/.a/6a00d83451b2c969e2015393a8b4c3970b-pi http://www.avc.com/.a/6a00d83451b2c969e2015393a8b4c3970b-pi One of the biggest drops is after "Mt.Gox, the largest bitcoin exchange, admits its database was compromised and user information leaked." If you bank "lost" your money there would be outcry. Until people understand and trust these establishments it'll never take off.
- icebraining 15y ago
  "Bitcoin" didn't got hacked, but yeah, to a layman it probably looks that way.
- jl6 15y ago
  To be fair, understanding regular currency isn't exactly trivial. Most people seem to get by without understanding the finer points of banking, quantitative easing, M1, M2, etc.. And one might consider the ability of governments to manipulate their currencies for political reasons to be a security flaw.
noduerme 15y ago
I'm curious what they were thinking about investing in. A trading site like Tradehill? Or something a bit less risky?
thinkcomp 15y ago
This is naive in the extreme. We all live in nation-states and are required to abide by their laws as a result. Though it's theoretically possible to separate currency from governments, if that's not what the governments want, it will never be legally permissible. As it is, Bitcoin operates in a legal gray area. That's not going to improve. Most of the VCs I talked to about FaceCash refused to invest because they were afraid of the regulatory implications. But throw in some bad economics (verified as such by Paul Krugman, see http://krugman.blogs.nytimes.com/2011/09/07/golden-cyberfetters/ http://krugman.blogs.nytimes.com/2011/09/07/golden-cyberfett...), a catchy buzzword or two, and some political philosophy, and you've got yourself an investor? Venture capital is even more broken than I thought.
- dabeeeenster 15y ago
  What about gold?
- omarchowdhury 15y ago
  The popularity and usage of Bitcoin shows there is an emerging trend in the currency and payments market: digital peer to peer crypto-currencies. Wilson is only making a statement that this trend has materialized, and he is excited to see where it would go -- if any viable businesses spring up based on these currencies it would be a smart idea for him or other VCs to invest. Why? Well, Wilson at least is an investor in Internet products, and seeing as how these currencies are looking to establish themselves in a global market (Internet) whose GDP is in the trillions... you get the point. Though, I do think you are biased. Obviously.
- kiba 15y ago
  So you're jumping to conclusion based on what one venture capital investor says he will invest in?
  - thinkcomp 15y ago
    I've talked to about sixty, and Fred Wilson's post exemplifies many of the patterns I've observed throughout. So no, I wouldn't say I'm jumping to conclusions.
xefer 15y ago
If nothing else, this story ought to trigger a small bump in te price of a bit coin. The price seems to be directly collated to the amount of press it gets.
- wcoenen 15y ago
  Indeed, the google trends graph for "bitcoin" looks remarkably similar to the bitcoin price history: http://www.google.com/trends?q=bitcoin&ctab=0&geo=all&date=ytd&sort=0 http://www.google.com/trends?q=bitcoin&ctab=0&geo=al... http://bitcoincharts.com/charts/mtgoxUSD#rg360zvztgSzm1g10zm2g25 http://bitcoincharts.com/charts/mtgoxUSD#rg360zvztgSzm1g10zm...
  - DiabloD3 15y ago
    I'm sure that peak being the $30 mark and everyone Googling for Bitcoin to cash in on it had nothing to do with it. See also, cause and effect.
- flabbergasted 15y ago
  The bump, if any, from this story will probably be overshadowed by today's Fox Business News blurb: http://www.thebitcointrader.com/2011/11/bitcoin-discussed-live-on-fox-news.html http://www.thebitcointrader.com/2011/11/bitcoin-discussed-li...
gerggerg 15y ago
What happens if someone releases bitcoin2? right now bitcoin exists as a unique entity, but with competition what happens to it's value? bitcoin to me seems like how beenie babies were to moms in the 90s. Super fun and interesting for a while, but a couple years later and everyones trading pokemon cards. Plus I don't think I'm ever going to be able to get over how lopsided bitcoin favors early adopters.
- SkyMarshal 15y ago
  There already is Bitcoin2, and 3, and 4, etc. Lots of forks, and even forks of forks (Bitcoin -> Ixcoin -> I0coin). Solidcoin is probably the main one, and has some interesting critiques of Bitcoin: http://solidcoin.info/faq.php http://solidcoin.info/faq.php Fundamentally, the value of anything is a function of its supply and demand, even currencies. In Bitcoin's case, the demand derives from the new utility provided by a unique and clever solution to the problem of distributed consensus among untrusted parties. Eg, people want to transact and neither trust each other to deal honestly nor trust a central monetary authority (either not to devalue the medium of exchange, or not track them, etc). Bitcoin created a system to make that possible, and hence has demand (and limited supply) and value. As long as the underlying reasons for that demand don't vanish, it should always have some value. The question is, can forks of Bitcoin provide that utility in a significantly better way, that gives them enough marginal demand over Bitcoin to incentivize most people in the Bitcoin network to switch? Same as the general competing currencies idea espoused by Ron Paul and others (for the record, I'm a skeptic, but find the idea interesting), just applied to virtual P2P currencies that are created by hackers rather than nation states (of course, there's nothing stopping a nation state from creating one either except their own laws, mindset, and momentum). As for early adopters being favored, you can only make that observation with the benefit of hindsight. Had bitcoin failed early or never taken off, early adopters would have lost. The expected value back when early adopters decided to commit and mine and accumulate bitcoin is decidedly different from the realized value of bitcoin now. Also, most currencies favor early adopters, even (especially) gold and silver. I don't think that's really anything new.
  - jpdoctor 15y ago
chris123 15y ago
Bitcoin isn't going anywhere anytime soon, IMHO. Works great for intended purpose. Just like a bike works great as a bike (not as a motorcycle or a rocket ship). Want to conduct an anonymous consumer-sized transaction and/or send money internationally and/or minimize transaction fees? Bitcoin: 1) Make your deal terms, priced in Bitcoins. Include whatever time limits are required, such as payment must be received by x deadline or else commitment expires and/or is subject to repricing. 2) Login to Bitcoin exchange. Purchase Bitcoins at whatever market price is. Send Bitcoins. 3) Done. Sure, you have other risks that you have hedged, minimized and/or accepted (or failed to recognize or address, and therefore accepted without knowing it). See here https://en.bitcoin.it/wiki/Contracts https://en.bitcoin.it/wiki/Contracts for some of the interesting contracts possible with Bitcoin. Plenty of opportunity for Bitcoin-related designers, developers, investors, etc. to create the services and interfaces required for end-Bitcoin users to feel confortable and be able to EASILY and SECURELY conduct transactions and bank their Bitcoins SECURELY (easy, disaster recover, not stolen or hacked, etc.). Landrush is on. Early dayz are now... still. Besides Bitcoin-related work, there is the whole, larger, universe of ancillary services. The analogy is Facebook to Facebook Apps or iPhone to iPhone Apps. Micropayments, automated bidding, pricing, incentivizing, etc. Lots of neat possibilities.
- adrianwaj 15y ago
  If you were Google, Apple or MS, would it be better to create one's own blockchain and promote that instead? Gcash, iMoney or Credits respectively.
  - wcoenen 15y ago
    If you want "your own" then there is no point in using a distributed blockchain. You'd just set up a centralized ledger under your control.
    - adrianwaj 15y ago
      No, they can guarantee their computers supply minimum level of computing power to make the network trustworthy, they can also cover transaction costs perhaps, and the block chain is still open for all. They can also offer an exchange and make money that way. Ideally, they can protect the network from corporate and government attack or interference -- keep it somewhat unregulated, promoted, trustworthy and developing.
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nextparadigms 15y ago
Some restaurants are already using bitcoin as a payment method, but it's still very hard to use it in real world situations. I still think that when we'll have a lot of NFC phones around, that's when Bitcoin payments will really start to become a common thing in the real world.
nazgulnarsil 15y ago
this entire debate would greatly benefit from tabooing the word "money" and talking more concretely about wealth.
mhartl 15y ago
the emergence of currencies that are not controlled by nation states in my lifetime What we expect is the emergence, not of currencies, but of a currency. Money is a natural monopoly, and a single currency is the free-market equilibrium. It's the current system of multiple separate floating currencies—each with its own name, exchange rate, and central bank/counterfeiter—that is the anomaly.
yaix 15y ago
"...decoupling of currencies from governments..." Yeah, because it worked so well when we let the banks just do whatever they wanted during the past 15 years.

186 points by sathishmanohar 15y ago

I think it is a lot easier for the people to remove a ruling party, than for that ruling party to remove a software application that the people want. What made email catch on? Did it put the post office out of business? Maybe the future is an online currency with <$5000 transactions used by smartphone users and somehow baked into the web like email, a server app. Apple, Google (or really the banks) should be onto this.

jpdoctor 15y ago

Fred: Redo that plot substituting gold, a currency going back to biblical times, for dollars. Do you think there is still a chance bitcoin will follow the Gartner hype cycle?

chimeracoder 15y ago

> I think it is, but there are significant ramifications that will result from the decoupling of currencies from governments. The decoupling of currencies from governments sounds like a radical shift, but it's actually only fairly recent in history that we use fiat money. That, of course, allows us to do a lot of things that we've gotten used to in the last century particularly, such as taking advantage of monetary policy to address short-term economic concerns. If alternative currencies catch on, that's something that governments will have less power to do - or at least, less power to do directly and predictably. Certainly, governments are going to push back on that, and probably try to discredit or disable alternative currencies. At the end of the day, though, while money can be determined by fiat, value is determined subjectively, so if alternative currencies catch on (which I think they well), it will necessitate a shift in the way that people think about money. (Not unlike the way that the Internet has shifted the way people think about tradable goods and IP law - just take a look at SOPA.)

kiba 15y ago
Bitcoin is also a technology. It can do more than just being money. For example, the technology is used in namecoin, which help facilitate the rise of a decentralized DNS system not subject to government control. After all, the DNS record is contained in every namecoin blockchain in the world. (OF course, the bigger issue is how the heck will namecoin get adopted as de facto DNS?) I even wrote an article on unexpected technological niche outbreak of bitcoin: http://bitcoinweekly.com/articles/technological-jailbreak-bitcoin-to-namecoin http://bitcoinweekly.com/articles/technological-jailbreak-bi... I think in time, we will start seeing Bitcoin technologies adopted in more areas and more areas that have nothing to do with money or our financial system.
- SkyMarshal 15y ago
  Agreed. Bitcoin's fundamental value is a feasible solution to the Byzantine General's Problem, or distributed consensus among untrusted parties. That solution can and is being repurposed, Namecoin being among the first. The cat is very out of the bag, and it's one of the most interesting spaces in technology right now.
  - jc123 15y ago
    Good layman's explanation of bitcoin and Byzantine Generals' Problem: http://news.ycombinator.com/item?id=2667486 http://news.ycombinator.com/item?id=2667486
  - nazgulnarsil 15y ago
    I wouldn't call it a solution so much as a working approximation to a solution. AFAIK a complete solution would mean you could quantify how much each party trusts each other party at any given time.
  - Egregore 15y ago
    What are other problems (besides namecoin) which can be solved by bitcoin technology?
    - SkyMarshal 15y ago
jpdoctor 15y ago
> but it's actually only fairly recent in history that we use fiat money. What do you consider to be the starting year of fiat money?
- chimeracoder 15y ago
  As with many things in history, I don't think there is a single year that we can point to as the turning point, since it's a somewhat gradual shift. Think about it this way - a few hundred years ago, it was commonplace to pay dues to the government using precious metals (like gold). In some parts of the world, this is still the case, but in the majority of the developed world, public and private debts are paid with money that gets its value by fiat. This change can't happen overnight, even if you force it to; if people continue to accept gold (for example) has having liquid value, then it will continue to be used as a currency. I wouldn't even use the beginning or end of Bretton Woods as the turning point (though it was certainly a turning point), because the point is less whether people can convert currency to gold than it is a question of whether they do.
  - jpdoctor 15y ago
    > * I don't think there is a single year that we can point to as the turning point, since it's a somewhat gradual shift.* Over what years do you think this shift occurred? Or put another way, you do realize that fiat has been in use at least since the Romans?
    - surrealize 15y ago
      There's a difference between "in use, somewhere" and "almost universally used".
- mckoss 15y ago
  A good book covering the subject is The History of Money (Jack Weatherford). Money was has had a tradition of being valuable in its own right (gold and silver coin), and eventually banks created paper money that represented an amount of gold held in reserve. The Bank of England, was at first a private entity (established in 1688) and was only nationalized in 1946[1]. The notes they issued were backed by deposits of coin, gold, or silver. They broke with the gold standard in 1931, and it's then we see money tied not to a specific asset, but rather as a debt instrument; it's valuable only because someone promises to pay you back. When the debtor is a nation-state, we have fiat money, and the money is backed only by the faith and credit of the nation who issues it. As Weatherford's book points out, fiat currency was not invented by the British, as the Chinese were using a similar system in the 1st or 2nd century, and continued to use a paper money system until 1399. Abuses destroyed the value of the paper currency, and it did not reappear in China until the 20th century. [1] http://en.wikipedia.org/wiki/Bank_of_England http://en.wikipedia.org/wiki/Bank_of_England
sethg 15y ago
Note that long before governments had fiat currency in the “we will print as many dollar bills as we want to” sense, devaluation of specie-based currency was not uncommon. According to Wikipedia, the Roman denarius had about 4.9g of silver when it was introduced under the Republic, 3.9g under Augustus (about 200 years later), and 3g in the later eras of the empire (a few centuries after that). The Byzantine histamenon coin was high-quality gold when it was introduced in the late 10th century, and had almost no gold by the late 11th. The English penny started out in the late 8th century as 1.5g of fine silver, then went to sterling (92.5%) silver in the 12th, reduced its weight to 0.97g in the early 15th, to 0.78g in the mid-15th, and so on.

pace 15y ago

Fred's post has an hidden agenda. There's no clear message in the article -- except expressing a strong believe for Bitcoin or related tech. So, I guess he's trying to get some heavy co-investors on board by creating some hype on Bitcoin again. Any other ideas? Besides: I love the Bitcoin idea and I'm sure it's not over yet (I still have Bitcoins). Edit: Don't get me wrong, I am not into bashing Fred -- I just want to get the real message behind his post and to raise HN readers's awareness for influence by media (media manipulation). Before happily discussing a new topic by a VC celeb we should ask why is HE now posting about Bitcoin. Look: Fred and his blog have a strong reach and influence, so it should be legitimate to question his actions. More on this topic: http://en.wikipedia.org/wiki/Media_manipulation http://en.wikipedia.org/wiki/Media_manipulation Edit2: just read another reply in this thread (which is downvoted as well) about that he just want to give the Bitcoin price another bump.

mmahemoff 15y ago
Is an agenda hidden when a VC says he's interested in a new technology? I'd say it's in plain sight as much as any post you'll see on any other blog.
- pace 15y ago
  Fred and his blog are very popular -- so he is not just "a" VC, rather a strong opinion leader in the VC and startup world. I am just saying: Take Fred's words with a pinch of salt
  - kiba 15y ago
    It's a good idea to take someone's opinion with a pinch of salt, but it's bad idea to speculate and have no evidence to back up what you're saying.
chris123 15y ago
This is his message: "one of them is an interesting investment opportunity that we hope to participate in." It's a tease. He is talking his book, himself, etc. Standard operating procedure for a VC.

SkyMarshal 15y ago

This is a good article, linked in the comments: http://themonetaryfuture.blogspot.com/2011/11/air-guitars-and-bitcoin-regulation.html http://themonetaryfuture.blogspot.com/2011/11/air-guitars-an... Apparently there is a contingent among Bitcoiners and academics that wants it regulated for various reasons, and is working to achieve that.

deleted 15y ago

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mustpax 15y ago

Like any cryptosystem, Bitcoin has a fixed shelf life. As algorithms and attacks evolve, the cryptographic hash function that forms its core will eventually become obsolete will need to be replaced. We know this. The question is, can we build the ability to switch cryptographic building blocks into Bitcoin? I have no idea, but resiliency and adaptability are fundamental to the survival of any peer to peer system.

ryandickherber 15y ago
Assuming bitcoin does need its crypto upgraded at some point, probably what will happen is some people with a good deal of bitcoin authority, like the "official" bitcoin developers at bitcoin.org, will upgrade the crypto, and everyone will follow them, because they can be trusted.
SkyMarshal 15y ago
Yes, the hash algorithm can be upgraded as computing power increases. This was foreseen and built into it from the beginning. The implementation is relatively flexible, and can be modified or upgraded in a number of ways without having to restart the blockchain. Development of the technology is pretty active, you can observe what's being done on the development mailing list at Sourceforge: http://sourceforge.net/mailarchive/message.php?msg_id=28441040 http://sourceforge.net/mailarchive/message.php?msg_id=284410... That's just a random sample from Gavin, but if you're curious take 30m and read through to get a sense of what their issues and priorities are. The current issues list and recent change logs are also instructive; https://github.com/bitcoin/bitcoin/issues https://github.com/bitcoin/bitcoin/issues https://en.bitcoin.it/wiki/Changelog https://en.bitcoin.it/wiki/Changelog
- wcoenen 15y ago
  > Yes, the hash algorithm can be upgraded as computing power increases. This was foreseen and built into it from the beginning. It's not really "built-in". Everybody would have to upgrade their bitcoin software, and then the new hashing algorithm would become active after a transitional period. The only thing in the bitcoin protocol which facilitates this is an alert system that can be used to broadcast warnings: https://en.bitcoin.it/wiki/Alerts https://en.bitcoin.it/wiki/Alerts If a significant fraction of the bitcoin nodes is not upgraded, then the bitcoin network would be split in two.

SonicSoul 15y ago

I think a large factor in adoption of BitCoin is the uncertainty of it's security. You have to be close to a hacker to truly understand how BitCoin works. General public has little to no chances at being able to gage how safe bit coins are to hold, and with no government to back up the investment, they will understandably be very hesitant to participate. Especially since it already got hacked.

SkyMarshal 15y ago
Also, simply losing your wallet to bitrot, accidental overwrite, or whatever is a big problem for general public users.
- biaxident 15y ago
  The image from the Wired article shows this pretty clearly: http://www.avc.com/.a/6a00d83451b2c969e2015393a8b4c3970b-pi http://www.avc.com/.a/6a00d83451b2c969e2015393a8b4c3970b-pi One of the biggest drops is after "Mt.Gox, the largest bitcoin exchange, admits its database was compromised and user information leaked." If you bank "lost" your money there would be outcry. Until people understand and trust these establishments it'll never take off.
icebraining 15y ago
"Bitcoin" didn't got hacked, but yeah, to a layman it probably looks that way.
jl6 15y ago
To be fair, understanding regular currency isn't exactly trivial. Most people seem to get by without understanding the finer points of banking, quantitative easing, M1, M2, etc.. And one might consider the ability of governments to manipulate their currencies for political reasons to be a security flaw.

noduerme 15y ago

I'm curious what they were thinking about investing in. A trading site like Tradehill? Or something a bit less risky?

thinkcomp 15y ago

This is naive in the extreme. We all live in nation-states and are required to abide by their laws as a result. Though it's theoretically possible to separate currency from governments, if that's not what the governments want, it will never be legally permissible. As it is, Bitcoin operates in a legal gray area. That's not going to improve. Most of the VCs I talked to about FaceCash refused to invest because they were afraid of the regulatory implications. But throw in some bad economics (verified as such by Paul Krugman, see http://krugman.blogs.nytimes.com/2011/09/07/golden-cyberfetters/ http://krugman.blogs.nytimes.com/2011/09/07/golden-cyberfett...), a catchy buzzword or two, and some political philosophy, and you've got yourself an investor? Venture capital is even more broken than I thought.

dabeeeenster 15y ago
What about gold?
omarchowdhury 15y ago
The popularity and usage of Bitcoin shows there is an emerging trend in the currency and payments market: digital peer to peer crypto-currencies. Wilson is only making a statement that this trend has materialized, and he is excited to see where it would go -- if any viable businesses spring up based on these currencies it would be a smart idea for him or other VCs to invest. Why? Well, Wilson at least is an investor in Internet products, and seeing as how these currencies are looking to establish themselves in a global market (Internet) whose GDP is in the trillions... you get the point. Though, I do think you are biased. Obviously.
kiba 15y ago
So you're jumping to conclusion based on what one venture capital investor says he will invest in?
- thinkcomp 15y ago
  I've talked to about sixty, and Fred Wilson's post exemplifies many of the patterns I've observed throughout. So no, I wouldn't say I'm jumping to conclusions.

xefer 15y ago

If nothing else, this story ought to trigger a small bump in te price of a bit coin. The price seems to be directly collated to the amount of press it gets.

wcoenen 15y ago
Indeed, the google trends graph for "bitcoin" looks remarkably similar to the bitcoin price history: http://www.google.com/trends?q=bitcoin&ctab=0&geo=all&date=ytd&sort=0 http://www.google.com/trends?q=bitcoin&ctab=0&geo=al... http://bitcoincharts.com/charts/mtgoxUSD#rg360zvztgSzm1g10zm2g25 http://bitcoincharts.com/charts/mtgoxUSD#rg360zvztgSzm1g10zm...
- DiabloD3 15y ago
  I'm sure that peak being the $30 mark and everyone Googling for Bitcoin to cash in on it had nothing to do with it. See also, cause and effect.
flabbergasted 15y ago
The bump, if any, from this story will probably be overshadowed by today's Fox Business News blurb: http://www.thebitcointrader.com/2011/11/bitcoin-discussed-live-on-fox-news.html http://www.thebitcointrader.com/2011/11/bitcoin-discussed-li...

gerggerg 15y ago

What happens if someone releases bitcoin2? right now bitcoin exists as a unique entity, but with competition what happens to it's value? bitcoin to me seems like how beenie babies were to moms in the 90s. Super fun and interesting for a while, but a couple years later and everyones trading pokemon cards. Plus I don't think I'm ever going to be able to get over how lopsided bitcoin favors early adopters.

SkyMarshal 15y ago
There already is Bitcoin2, and 3, and 4, etc. Lots of forks, and even forks of forks (Bitcoin -> Ixcoin -> I0coin). Solidcoin is probably the main one, and has some interesting critiques of Bitcoin: http://solidcoin.info/faq.php http://solidcoin.info/faq.php Fundamentally, the value of anything is a function of its supply and demand, even currencies. In Bitcoin's case, the demand derives from the new utility provided by a unique and clever solution to the problem of distributed consensus among untrusted parties. Eg, people want to transact and neither trust each other to deal honestly nor trust a central monetary authority (either not to devalue the medium of exchange, or not track them, etc). Bitcoin created a system to make that possible, and hence has demand (and limited supply) and value. As long as the underlying reasons for that demand don't vanish, it should always have some value. The question is, can forks of Bitcoin provide that utility in a significantly better way, that gives them enough marginal demand over Bitcoin to incentivize most people in the Bitcoin network to switch? Same as the general competing currencies idea espoused by Ron Paul and others (for the record, I'm a skeptic, but find the idea interesting), just applied to virtual P2P currencies that are created by hackers rather than nation states (of course, there's nothing stopping a nation state from creating one either except their own laws, mindset, and momentum). As for early adopters being favored, you can only make that observation with the benefit of hindsight. Had bitcoin failed early or never taken off, early adopters would have lost. The expected value back when early adopters decided to commit and mine and accumulate bitcoin is decidedly different from the realized value of bitcoin now. Also, most currencies favor early adopters, even (especially) gold and silver. I don't think that's really anything new.
- jpdoctor 15y ago

chris123 15y ago

Bitcoin isn't going anywhere anytime soon, IMHO. Works great for intended purpose. Just like a bike works great as a bike (not as a motorcycle or a rocket ship). Want to conduct an anonymous consumer-sized transaction and/or send money internationally and/or minimize transaction fees? Bitcoin: 1) Make your deal terms, priced in Bitcoins. Include whatever time limits are required, such as payment must be received by x deadline or else commitment expires and/or is subject to repricing. 2) Login to Bitcoin exchange. Purchase Bitcoins at whatever market price is. Send Bitcoins. 3) Done. Sure, you have other risks that you have hedged, minimized and/or accepted (or failed to recognize or address, and therefore accepted without knowing it). See here https://en.bitcoin.it/wiki/Contracts https://en.bitcoin.it/wiki/Contracts for some of the interesting contracts possible with Bitcoin. Plenty of opportunity for Bitcoin-related designers, developers, investors, etc. to create the services and interfaces required for end-Bitcoin users to feel confortable and be able to EASILY and SECURELY conduct transactions and bank their Bitcoins SECURELY (easy, disaster recover, not stolen or hacked, etc.). Landrush is on. Early dayz are now... still. Besides Bitcoin-related work, there is the whole, larger, universe of ancillary services. The analogy is Facebook to Facebook Apps or iPhone to iPhone Apps. Micropayments, automated bidding, pricing, incentivizing, etc. Lots of neat possibilities.

adrianwaj 15y ago
If you were Google, Apple or MS, would it be better to create one's own blockchain and promote that instead? Gcash, iMoney or Credits respectively.
- wcoenen 15y ago
  If you want "your own" then there is no point in using a distributed blockchain. You'd just set up a centralized ledger under your control.
  - adrianwaj 15y ago
    No, they can guarantee their computers supply minimum level of computing power to make the network trustworthy, they can also cover transaction costs perhaps, and the block chain is still open for all. They can also offer an exchange and make money that way. Ideally, they can protect the network from corporate and government attack or interference -- keep it somewhat unregulated, promoted, trustworthy and developing.

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nextparadigms 15y ago

Some restaurants are already using bitcoin as a payment method, but it's still very hard to use it in real world situations. I still think that when we'll have a lot of NFC phones around, that's when Bitcoin payments will really start to become a common thing in the real world.

nazgulnarsil 15y ago

this entire debate would greatly benefit from tabooing the word "money" and talking more concretely about wealth.

mhartl 15y ago

the emergence of currencies that are not controlled by nation states in my lifetime What we expect is the emergence, not of currencies, but of a currency. Money is a natural monopoly, and a single currency is the free-market equilibrium. It's the current system of multiple separate floating currencies—each with its own name, exchange rate, and central bank/counterfeiter—that is the anomaly.

yaix 15y ago

"...decoupling of currencies from governments..." Yeah, because it worked so well when we let the banks just do whatever they wanted during the past 15 years.