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This is a big step backwards from the security of Bitcoin. All someone has to do is break open the hardware and extract its key (or take its key with a side-cha

This is a big step backwards from the security of Bitcoin. All someone has to do is break open the hardware and extract its key (or take its key with a side-channel attack) and they can double-spend money. That's problem one. Bitcoin's entire byzantine protocol exists entirely to solve the double-spend problem, and it works, while this doesn't. Every MintChip has an ID, and every transaction is logged on both the sending and receiving device with the ID of the other device. This means that if someone takes your chip, they get a complete record of every transaction you've ever made. In other words, it's not anonymous at all. That's problem two. Bitcoin solves this by encouraging users to generate a new address/private key for every incoming transaction, so that matching up addresses to people is hard. It's tied to single physical devices which can be lost or damaged. This makes them unsuitable for storing savings. Bitcoin wallets, on the other hand, can be backed up securely. Both MintChip and Bitcoin can be stolen if the attached device is compromised. Bitcoin is designed in a way that makes it possible to fix that, and developers are working on a fix: multi-signature transactions (so you have several computers, or a computer and a phone, and all of them must agree to any outgoing transaction). MintChip, however, cannot solve this problem in any way except with chargebacks, and the documentation given so far indicates that they aren't supporting that.

meeeu 15y ago
You seem to have significant insight on the topic of digital currency. I would love to learn more from you if you can spare some time. Please leave me your contact or email me only if you want to.
Retric 15y ago
The largest problem with Bitcoin has always been how insecure peoples computers are. WoW accounts where only worth a few dollars and yet account hacking was incredibly common unless you used a physical authenticator tied to your account. Thus, to securely use Bitcoin you really need a third party either a 'bank' or a vary secure device. PS: Banking websites have their own issues. But because they tend to use multitiple forms of authentication the are significantly harder to break into on the client side.
- dvide 15y ago
  That's not really true. You can store Bitcoin keys on paper with QR codes (or even just in your brain), and sign transactions on devices that have never touched the internet and never will. It's just the infrastructure that hasn't been built yet, but there is a lot of development going on to enable the average user to utilize these possibilities. That's not even mentioning multi-signature transaction support.
  - Retric 15y ago
    I don't mean to suggest that Bitcoin can't adapt. Just that most of the advantages it has over physical / digital cash or credit disappears once you add such things. Once you have a bank or physical device governments will get into the game and start regulating with the express goal of eliminating anonymity for large transactions.
    - dvide 15y ago
      "... most of the advantages it has over physical / digital cash or credit disappears once you add such things. Once you have a ... physical device governments will get into the game and start regulating" Not sure what you mean. By 'device' I didn't mean some special hardware developed by some special company, where the government can then regulate that industry. I just meant any computer. I'm saying that signing a transaction can be done offline on devices that are never connected to the Internet, such as an old laptop, or yes even a special device. There's no fundamental requirement to have the keys on your virus-ridden home PC at any time. This doesn't remove any of Bitcoin's advantages from what I can see. And multi-signature transactions will allow for multi-factor authentication at a protocol level.
      - Retric 15y ago
        That's significantly worse from a user perspective than giving Amazon a credit card number to enable one click checkout or downloading a book from my kindle. It's true you could do anonymous transactions online, but while it's better than mailing people cash it's something of an edge case and I could also buy a Visa gift card and get the same sort of anonymity. Again, I like Bitcoin, but the problem IMO is how to make it both as convenient as a credit card and secure. PS: Your also describing an adhock solution. As soon as you want to mass produce them to allow significant and convenient adoption you get into regulation issues. And by 'device' I am including just the software to manage your account from a cheap netbook.
smokeyj 15y ago
Could a national currency integrate into the block-chain if they wanted to? For example, Canada could issue 'authorized' bitcoins, meaning the coin had to originate from an official source. And if the coin originated from an 'authorized' source, the value could be pegged at a certain price -- backed by the gov't? This way the currency could adopt the flexibility and convenience of bitcoin -- while retaining the ability to issue new currency. Edit -- to clarify, a mint could purchase one coin, and peg the value of .00000001 of that coin to $1. Only transactions originating from this official coin would be treated as official currency.
- bnr 15y ago
  Bitcoins don't have IDs - it's only amounts being transferred between addresses. If I have 5BTC in my wallet, I have no way to differentiate between let's say the 0.01 "canadian" and the 4.99 ordinary BTC. i could not specify which ones to send in a transaction. That said, if MintCoin gains momentum I'm sure there will be plenty of MC-BTC exchanges popping up.
  - sokrates 15y ago
    That is wrong. Maybe the current client implementation cannot do this, but the open block chain allows one to exactly see where a coin originated (i.e. whether is is Canadian or not). Alternative implementations could then be told to specifically spend the Canadian or regular coins.
- wmf 15y ago
  I don't think it makes sense to use block chain technology for backed currencies; if you're going to have a central mint anyway you might as well use a Chaum-style system like Lucre or Open-Transactions.
- Estragon 15y ago
  Why would it? The capacity to manipulate the national currency is a major source of government power. Plugging into bitcoin would only dilute that power.
untog 15y ago
It's interesting- I wonder what the acceptable level of compromise is for the MintChip. As programmers our instinctive response is "none at all", but MintChip is a replacement for cash, and cash gets compromised all the time. So, in theory, the Mint might be OK with trading off security for convenience/affordability, as long as that level is below what they currently experience with cash. It's difficult to know.
- stcredzero 15y ago
  It's interesting- I wonder what the acceptable level of compromise is for the MintChip. As programmers our instinctive response is "none at all", but MintChip is a replacement for cash, and cash gets compromised all the time. That would be fine, except the compromises in MintChip give up what is essential to cash. It's more like a replacement for debit cards for small purchases.
  - gst 15y ago
    Some European countries tried out different systems in the past, for example the "Quick" system in Austria over a decade ago. As far as I know all of them failed. Quick was a small chip on a smart card that allowed you to store a monetary amount and to pay with this chip at certain terminals. This worked essentially like real money: You had to regularly top-up your chip and if you lost it your money was gone. This is all nice from theoretical aspects, but in practice it didn't provide any advantages to users. Why use your "Quick" card, when you can use your plain old debit card instead? With the debit card you earn interest, get a new card if you lose it, don't have to regularly top it up. The same is true for this Canadian Mint thing: (As a regular user) why should I be interested? I can use my credit card to pay online and offline. I can use my online banking account to transfer money to friends. Where's the advantage?
    - mcpherrinm 15y ago
      I think the reason the Mint is launching this contest is to see what the community can come up with. Hopefully having a development community first will lead to enough useful applications that answer the question of advantages.
napierzaza 15y ago
Yeah you're right, Bitcoin is ironclad and has never been gamed by anyone.

meeeu 15y ago

You seem to have significant insight on the topic of digital currency. I would love to learn more from you if you can spare some time. Please leave me your contact or email me only if you want to.

Retric 15y ago

The largest problem with Bitcoin has always been how insecure peoples computers are. WoW accounts where only worth a few dollars and yet account hacking was incredibly common unless you used a physical authenticator tied to your account. Thus, to securely use Bitcoin you really need a third party either a 'bank' or a vary secure device. PS: Banking websites have their own issues. But because they tend to use multitiple forms of authentication the are significantly harder to break into on the client side.

dvide 15y ago
That's not really true. You can store Bitcoin keys on paper with QR codes (or even just in your brain), and sign transactions on devices that have never touched the internet and never will. It's just the infrastructure that hasn't been built yet, but there is a lot of development going on to enable the average user to utilize these possibilities. That's not even mentioning multi-signature transaction support.
- Retric 15y ago
  I don't mean to suggest that Bitcoin can't adapt. Just that most of the advantages it has over physical / digital cash or credit disappears once you add such things. Once you have a bank or physical device governments will get into the game and start regulating with the express goal of eliminating anonymity for large transactions.
  - dvide 15y ago
    "... most of the advantages it has over physical / digital cash or credit disappears once you add such things. Once you have a ... physical device governments will get into the game and start regulating" Not sure what you mean. By 'device' I didn't mean some special hardware developed by some special company, where the government can then regulate that industry. I just meant any computer. I'm saying that signing a transaction can be done offline on devices that are never connected to the Internet, such as an old laptop, or yes even a special device. There's no fundamental requirement to have the keys on your virus-ridden home PC at any time. This doesn't remove any of Bitcoin's advantages from what I can see. And multi-signature transactions will allow for multi-factor authentication at a protocol level.
    - Retric 15y ago
      That's significantly worse from a user perspective than giving Amazon a credit card number to enable one click checkout or downloading a book from my kindle. It's true you could do anonymous transactions online, but while it's better than mailing people cash it's something of an edge case and I could also buy a Visa gift card and get the same sort of anonymity. Again, I like Bitcoin, but the problem IMO is how to make it both as convenient as a credit card and secure. PS: Your also describing an adhock solution. As soon as you want to mass produce them to allow significant and convenient adoption you get into regulation issues. And by 'device' I am including just the software to manage your account from a cheap netbook.

smokeyj 15y ago

Could a national currency integrate into the block-chain if they wanted to? For example, Canada could issue 'authorized' bitcoins, meaning the coin had to originate from an official source. And if the coin originated from an 'authorized' source, the value could be pegged at a certain price -- backed by the gov't? This way the currency could adopt the flexibility and convenience of bitcoin -- while retaining the ability to issue new currency. Edit -- to clarify, a mint could purchase one coin, and peg the value of .00000001 of that coin to $1. Only transactions originating from this official coin would be treated as official currency.

bnr 15y ago
Bitcoins don't have IDs - it's only amounts being transferred between addresses. If I have 5BTC in my wallet, I have no way to differentiate between let's say the 0.01 "canadian" and the 4.99 ordinary BTC. i could not specify which ones to send in a transaction. That said, if MintCoin gains momentum I'm sure there will be plenty of MC-BTC exchanges popping up.
- sokrates 15y ago
  That is wrong. Maybe the current client implementation cannot do this, but the open block chain allows one to exactly see where a coin originated (i.e. whether is is Canadian or not). Alternative implementations could then be told to specifically spend the Canadian or regular coins.
wmf 15y ago
I don't think it makes sense to use block chain technology for backed currencies; if you're going to have a central mint anyway you might as well use a Chaum-style system like Lucre or Open-Transactions.
Estragon 15y ago
Why would it? The capacity to manipulate the national currency is a major source of government power. Plugging into bitcoin would only dilute that power.

untog 15y ago

It's interesting- I wonder what the acceptable level of compromise is for the MintChip. As programmers our instinctive response is "none at all", but MintChip is a replacement for cash, and cash gets compromised all the time. So, in theory, the Mint might be OK with trading off security for convenience/affordability, as long as that level is below what they currently experience with cash. It's difficult to know.

stcredzero 15y ago
It's interesting- I wonder what the acceptable level of compromise is for the MintChip. As programmers our instinctive response is "none at all", but MintChip is a replacement for cash, and cash gets compromised all the time. That would be fine, except the compromises in MintChip give up what is essential to cash. It's more like a replacement for debit cards for small purchases.
- gst 15y ago
  Some European countries tried out different systems in the past, for example the "Quick" system in Austria over a decade ago. As far as I know all of them failed. Quick was a small chip on a smart card that allowed you to store a monetary amount and to pay with this chip at certain terminals. This worked essentially like real money: You had to regularly top-up your chip and if you lost it your money was gone. This is all nice from theoretical aspects, but in practice it didn't provide any advantages to users. Why use your "Quick" card, when you can use your plain old debit card instead? With the debit card you earn interest, get a new card if you lose it, don't have to regularly top it up. The same is true for this Canadian Mint thing: (As a regular user) why should I be interested? I can use my credit card to pay online and offline. I can use my online banking account to transfer money to friends. Where's the advantage?
  - mcpherrinm 15y ago
    I think the reason the Mint is launching this contest is to see what the community can come up with. Hopefully having a development community first will lead to enough useful applications that answer the question of advantages.

napierzaza 15y ago

Yeah you're right, Bitcoin is ironclad and has never been gamed by anyone.