8 ms·

Direct use value of Bitcoin

90 points by oleganza 14y ago

hayksaakian 14y ago
With widespread adoption, I could imagine software licensing getting a lot easier.
zby 14y ago
He writes about direct value of Bitcoin - but half of the examples he mentions are about crypto in general not about the particular system: - Smart Property is just a theoretical proposal for a system and the linked page says: Smart property was first proposed by Nick Szabo in his 1997 paper, "The idea of smart contracts". There are currently no implementations of this idea. - decentralized DNS is realized in a different system that uses the code from bitcoin software but is not connected in any way to the bitcoin system itself: http://dot-bit.org/Main_Page http://dot-bit.org/Main_Page I guess you can use bitcoin to do secure time-stamping of messages that can fit into the format of a bitcoin transaction (there is some place for comments or something) - so you can piggyback a message on a bitcoin transaction. Finally https://en.bitcoin.it/wiki/Contracts https://en.bitcoin.it/wiki/Contracts seem to be connected to the existing bitcoin system, but it is not clear how much of it is already implemented in the clients.
- jerguismi 14y ago
  More accurate title would be "direct value of cryptocurrency". Bitcoin has very conservative approach with this. The core developers won't merge any features which don't serve the basic idea of currency. However alternative chains could be used to develop many of these systems. I think there can be a tremendous value with public database, not controlled by anyone. Lately I have been thinking about alt-chain which could be used as a distributed stock/asset/IPO ledger. Similar to http://www.bitcoinx.org/ http://www.bitcoinx.org/ , but done in a separate chain to server the needs better.
  - oleganza 14y ago
    See my comment above. Many cool features (like timestamping) do not need any modification of the existing software. E.g. it is entirely possible to make DNS without alternative chain (like Namecoin), but fully on the existing block chain with timestamping through deterministic addresses.
- runn1ng 14y ago
  since I am almost out of battery I won't comment long, but the place for comment is highly theoretical. the transaction with comment is legal according to protocol, but non-standard and as such the official client refuses to propagate it through the p2p network. and because there is a client monoculture, you are out of luck with non-standard transactions if you are not owning a mining pool yourself. IF the non-standard transaction gets into blockchain, THEN the comment stays there forever. but it really never propagates.
  - quinndupont 14y ago
    And this happens with some regularity. The number of orphaned branches on the blockchain is surprisingly (to me, at least) significant (last I looked, around a dozen).
- oleganza 14y ago
  The cool thing about block chain as it is right now (even with incomplete support for multi-signature tricks), it already allows you to leave a trace of your document using addresses alone. Without any piggybacking - you just create a transaction address derived from a hash of your document, move your money in and out, then publish the document. Everybody can compute the keys and verify that the address is indeed derived from that paper and you indeed had this document created before the transaction was recorded.
  - javert 14y ago
    you just create a transaction address derived from a hash of your document How do you do that?
    - oleganza 14y ago
      You interpret your hash as a private key. Or as a seed for the private key. Then out of the private key you compute a public key, which when hashed with SHA256 and RIPEMD-160 gives you an address. Then, before disclosing the document, you transfer some amount to that address and back to your private address. After that, reveal the document: now everyone can repeat the procedure and verify that you have created that document (because you can always prove that you own that "coin" which travelled through the synthetic address). You can play with keys and addresses here: http://brainwallet.org http://brainwallet.org
      - javert 14y ago
        Wow! I didn't realize that you could generate a public key given a private key. To me, keypair generation was just a "black box." I should have known (probably studied it in class.) Thanks.
- quinndupont 14y ago
  You're absolutely right. I'm currently researching the cryptographic elements of bitcoin for this exact reason: ecash schemes actually rely on the power afforded by cryptography. In my mind, the economic disruption is actually less exciting. When I'm done the research and it goes to press I'll keep the HN community posted, since there seems to be quite a bit of excitement here on Bitcoin.
- MacsHeadroom 14y ago
  He writes about direct value of steel - but half of the examples he mentions are about metal in general and not about the particular alloy. While true, I don't see the relevance of this point. Bitcoin is a commodity with non-money uses. Yes, some of those over lap with other cryptography technology. But that doesn't really change anything.
diggan 14y ago
> It costs nothing Doesn't it costs you anything to make a transaction with Bitcoin? That was more than I knew.
- jerguismi 14y ago
  The fee system is pretty complicated. You can get some transactions through without a fee, but I doubt that this will be the case in the future, when transaction spam will be increasing. The required fee basically depends on the generated transaction size (in bytes).
- yuvadam 14y ago
  The costs are negligible - several cents per transaction nowadays, and is always up to you to define related to how important the transaction is and how fast you'd like the network to confirm it. In any case, the costs are miniscule compared to standard transaction fees that banks charge.
  - gst 14y ago
    The costs are neglible now, but based on how Bitcoin works (shared transaction list) it seems likely that the costs will rise in the future: 1) Currently there's a transaction size limit of 1 MB in the protocol, with typical "large" transaction sizes being about one third of this. Once average transaction sizes will hit the limit, miners will probably include transactions paying higher fees, thus auctioning the available space. 2) Even if Bitcoin users agree on a protocol change to increase this limit costs will rise, as every transaction needs to be forwarded to all other nodes (or at least to the miners). So increasing transaction sizes will create higher hardware requirements for miners, without necessarily increasing their income. And there's the further complication that a fork will only work if a majority of the network actually supports it.
    - MacsHeadroom 14y ago
      1) No, Gavin (Bitcoin lead developer) says he wants to make the transaction and block size unlimited (or rather, let the miners limit it). This should keep fees down. https://bitcointalk.org/index.php?topic=140233.40 https://bitcointalk.org/index.php?topic=140233.40 2) No, costs for the majority of transactions will not go up- in fact, they may go down. Most miners already charge different fees based on any given transaction's size. The fees range from about a half-cent USD to about two cents USD. If someone wants to send a 2MB transaction, the miners will be able to charge whatever transaction fee they choose for expedient processing.
TheSisb2 14y ago
The first two paragraphs seemed to be directed towards the layman, and then the author takes a tangent with: "For example, the block chain (distributed transaction history) is designed to be extremely hard to forge and very easy to verify." You lost me completely.
- yuvadam 14y ago
  The block chain is a very simple concept: it's the permanent record of all bitcoin transactions ever made.
- inoop 14y ago
  The bitcoin blockchain is a replicated database (not distributed, as this guy claims) which contains a copy of each and every bitcoin transaction ever made since the beginning of time. It's basically how they 'solve' the so-called double spending problem where a digital coin can be duplicated (spent twice) unless there is some way to verify the uniqueness of said coin. Given a total history of every transaction ever made, a recipient can check whether a coin hasn't been already given to someone else by the sender. The idea is that anyone can participate in the peer-to-peer network that maintains this database, and that this database is signed on a block-by-block basis by the participants to maintain consensus. Hence the term 'block chain'. Now, since the data in the block chain is a set of time-stamped transactions that are difficult to forge (unless someone controls >50% of the network), one can use it to store other time stamped information such as contracts. (disclaimer: the above is just a semi-laymans attempt to explain the block chain to OP, feel free to correct me where I am wrong:)
  - quinndupont 14y ago
    (One of the better explanations I've seen). Indeed, the bitcoin.org website claims that the blockchain is the central innovation in Bitcoin (since the rest of the ecash crypto has been around for decades)
  - javert 14y ago
    Actually, the transactions can't be forged. If someone has > 50% of the network, they can double-spend, but they can't forge transactions.
contingencies 14y ago
It can be useful to frame such discussions in some conventional reference, thus here's my top of head summary of Bitcoin vs. the well established three main uses of money; ie. money as a... Unit of account: Works fine but has issues due to the relative volatility of its value. Also, the complexity of accounting that can result from blockchain rollbacks and other Bitcoin-specific issues (new "invoices/receipts" scheme, etc...) Store of value: Far too volatile at present to be much good; though it has been heading upwards, an individual party could easily destabilize the entire economy. Medium of exchange: Excellent speed and reach, theoretically an improvement on existing systems due to a lack of chargebacks (finality). Realistically, increasingly complex to implement, particularly securely, and especially for real time goods and services. Unfortunately the market is relatively small and spotty right now, so any benefits here are largely negated for general commerce. I can't help but feel the blockchain-tricks referenced by the author (in addition to the upcoming "invoices/receipts" mechanism) are nought but scope creep, best left out as violators of "do one thing and do it well", and in general a bad sign for Bitcoin's future. That said, I am all for Bitcoin, I think it's great. It's just important to be realistic about its objective properties vs. other systems.
- jerguismi 14y ago
  > I can't help but feel the blockchain-tricks referenced by the author (in addition to the upcoming "incoices/receipts" mechanism) are nought but scope creep, best left out as violators of "do one thing and do it well", and in general a bad sign for Bitcoin's future. The bitcoin core developers have strict policy - they don't accept these additional features such as distributed DNS to the main chain. However alternative chains can be developed for these features. I think that there can be a tremendous value for other kind of public, distributed, databases as well, not just currency.
  - contingencies 14y ago
    Sharing the same network-resource with those 'tricks', official or not, is not going to come free. However, I was mostly referring to the recent "invoices/receipts" thing, which is being included. IMHO as an implementer of a Bitcoin-integrated system, that's not helpful, rather it's a PITA. But I am not framing any of my development with Bitcoin purely in mind, rather I am trying to bridge arbitrary settlement systems objectively. (If interested, see http://ifex-project.org/ http://ifex-project.org/ for more info there.)
scotty79 14y ago
Gold: limited, durable, easy to use as physical transfer of value because of high value per unit of mass (due to rarity) Bitcoin: limited, durable, easy to transfer between any two connected users Whether you can make jewlery or timestamp things doesn't really matter for the main usage.
- nhaehnle 14y ago
  How durable is Bitcoin, really? In case of major economic turmoil, the value of Bitcoins can drop to zero and stay there permanently. This is very different from gold. In a truly apocalyptic scenario, gold also becomes nearly worthless. However, when society bounces back, the value of gold can be re-inflated based on the intrinsic value of gold. In the case of Bitcoin, such a bounce-back is not as likely to happen, because it would be so tempting for people to just start an entirely new blockchain.
  - rlpb 14y ago
    > In the case of Bitcoin, such a bounce-back is not as likely to happen, because it would be so tempting for people to just start an entirely new blockchain. In such a situation, people could be categorised into two: those who previously held Bitcoin, and those who previously didn't. The ones who did would favour continuing with the old block chain, since they'd have more value there. Surely this alone would be enough?
  - scotty79 14y ago
    As durable as P2P network. In truly apocalyptic scenario I'll most likely be dead so I don't really care. Resetting accounts to zero might be favorable scenario over getting killed over few pounds of gold in my basement and my suspected withholding of the information where is more.
  - MacsHeadroom 14y ago
    >In case of major economic turmoil, the value of Bitcoins can drop to zero and stay there permanently. It really can't. Bitcoin is used in over 100 countries. Economic turmoil in one, or even a few, country will not be sufficient to drop the price to 0. The system becomes more robust every day. It's essentially a basket currency made of currencies proportional to all the proportion of people which use it in various countries. After some more maturity there could not be a more robust currency scheme imaginable.
wildgift 14y ago
I thought old transactions in the block chain were rolled up into a new block and signed. So old transactions do vanish. Am I wrong or right on that one?
- jeremyjh 14y ago
  Just a digest of the previous block makes it into the next. Every client must have the entire block chain - every transaction ever made.
  - oleganza 14y ago
    That's not true. You may want to have entire block chain - if you wish to verify every block. Miners need to do so, to be sure they don't build their blocks on top of invalid blocks. Regular people don't require that and can trust some web wallets or light clients like Electrum, that store only block headers and keep track of personal keys, but do not verify all the transactions.
    - jeremyjh 14y ago
      It is true if we define client as "client which implements BTC protocol". If you define it as "random internet strangers I trust with my money" then of course it does not require the blockchain and also does not provide any of the strong guarantees from BTC. Even for Electrum which does not have your private keys, you are still trusting what it says the blockchain contains. If subverted this could for example lead you to believe that someone had sent BTC to your wallet that were not actually in the true blockchain.
      - oleganza 14y ago
        I didn't say I don't need to trust anybody. I have to trust even the full client: I need to validate the checksum, make sure I don't have viruses and keyloggers on my machine, I have to trust my backup system and have to trust people who understand crypto better than me. Everyone must trust someone, there is no clear line in the usability-vs-trust balance. I'm perfectly okay to trust a web wallet on blockchain.info small amount of bitcoins because they do a very good job with their iPhone app and SMS notifications. I'm also okay to put some of my money into Electrum and some - in Bitcoin-QT. And keep some on bitcoin-central.net in case I need to sell BTC for fiat quickly. Given all of that, it's not fair to say that "the true" client is this one, while all the others - are considerably different. For people who value their time, it's important to be able to sacrifice some trust for usability and vice versa. If we would always tell them that they must use the full client, we are just imposing our personal tradeoffs and do not respect theirs.
eduardordm 14y ago
Oleg, I learned quite a bit with your article but there is a statement that is not quite accurate: "dollar bills do not have any value in themselves" Legal tenders like dollar bills are the value themselves, it might even come to a situation where the material used to build it costs more than the actual value of the medium (1 cent coins). I wrote an article some time ago and I would be very happy if you could read it and give your thoughts: http://eduardo.intermeta.com.br/posts/2013/1/18/bitcoins-and-the-future-of-electronic-money http://eduardo.intermeta.com.br/posts/2013/1/18/bitcoins-and...
- weavejester 14y ago
  How do you figure that a dollar bill has any intrinsic value? The raw materials have some minor value, sure, but the cost of making a dollar note is significantly lower than a dollar. A dollar bill is a promise of value, conceptually no different to a cheque from the US government. If you believe that money has any value in itself, then I have some Zimbabwean dollars to sell you.
  - eduardordm 14y ago
    I did not 'figure'. What you described is representative money, not fiat/paper money.
    - weavejester 14y ago
      Representative money is a particularly vague term, which usually means money backed by a physical commodity, but can also encompass fiat money as well. There's nothing inherently magical about something being legal tender. The only difference between a $1 cheque and a $1 note is risk. The probability of a cheque bouncing is more likely than the USA economy collapsing into hyperinflation.
      - eduardordm 14y ago
        As you said, once I give you a dollar bill, the transaction is over. If I give you a check it will takes days for the actual transaction to happen and the money transferred (which can possibly end up in a physical transfer of cash) Money does not depend on any kind of backing at all, for instance: the US gov has been flooding the market with dollars backed by the promise it will buy them back someday. Some countries don't even bother buying dollars anymore, they rely 100% on swap agreements. Even if the economy collapses, the dollar will still be accepted for paying your gov duties, which means it will collapse too, equalizing the system. (inflation and deflation can be too complex for me to have any useful discussion)
tlrobinson 14y ago
Isn't this value derived from the system as a whole rather than Bitcoins themselves? If the monetary value of Bitcoin dropped to zero for some reason you wouldn't be able to use your existing Bitcoin for these purposes. It's kind of like saying you could use the comment/memo area of wires/checks to send or timestamp messages.
- MacsHeadroom 14y ago
  >Isn't this value derived from the system as a whole rather than Bitcoins themselves? Capital B Bitcoin (never plural) refers to the system as a whole. Lowercase b bitcoins refers to the units of currency. And yes, this value is derived from Bitcoin, not bitcoins- which is what the article says. >If the monetary value of Bitcoin dropped to zero for some reason you wouldn't be able to use your existing Bitcoin for these purposes. Yes, you would. All of these uses would still apply if bitcoins were worthless. Namecoins are essentially free, yet they can be used to do all of these as well. In fact, Namecoin is the third item on the list in the article.
  - tlrobinson 14y ago
    I don't understand. Namecoin uses an entirely separate block chain from the currency. How will my 50 BTC be useful if the currency fails?
  - javert 14y ago
    All of these uses would still apply if bitcoins were worthless. No, because if bitcoins were worthless, there would be no incentive to mine, and if there is no incentive to mine, there is no security for the blockchain.
nym 14y ago
Looking to buy bitcoins? Here are guides + ratings on how to buy bitcoins, in the united states, europe, and around the world: http://howdoyoubuybitcoins.com/ http://howdoyoubuybitcoins.com/ Let me know if you have any feedback! We're always trying to improve!

90 points by oleganza 14y ago

With widespread adoption, I could imagine software licensing getting a lot easier.

zby 14y ago

He writes about direct value of Bitcoin - but half of the examples he mentions are about crypto in general not about the particular system: - Smart Property is just a theoretical proposal for a system and the linked page says: Smart property was first proposed by Nick Szabo in his 1997 paper, "The idea of smart contracts". There are currently no implementations of this idea. - decentralized DNS is realized in a different system that uses the code from bitcoin software but is not connected in any way to the bitcoin system itself: http://dot-bit.org/Main_Page http://dot-bit.org/Main_Page I guess you can use bitcoin to do secure time-stamping of messages that can fit into the format of a bitcoin transaction (there is some place for comments or something) - so you can piggyback a message on a bitcoin transaction. Finally https://en.bitcoin.it/wiki/Contracts https://en.bitcoin.it/wiki/Contracts seem to be connected to the existing bitcoin system, but it is not clear how much of it is already implemented in the clients.

jerguismi 14y ago
More accurate title would be "direct value of cryptocurrency". Bitcoin has very conservative approach with this. The core developers won't merge any features which don't serve the basic idea of currency. However alternative chains could be used to develop many of these systems. I think there can be a tremendous value with public database, not controlled by anyone. Lately I have been thinking about alt-chain which could be used as a distributed stock/asset/IPO ledger. Similar to http://www.bitcoinx.org/ http://www.bitcoinx.org/ , but done in a separate chain to server the needs better.
- oleganza 14y ago
  See my comment above. Many cool features (like timestamping) do not need any modification of the existing software. E.g. it is entirely possible to make DNS without alternative chain (like Namecoin), but fully on the existing block chain with timestamping through deterministic addresses.
runn1ng 14y ago
since I am almost out of battery I won't comment long, but the place for comment is highly theoretical. the transaction with comment is legal according to protocol, but non-standard and as such the official client refuses to propagate it through the p2p network. and because there is a client monoculture, you are out of luck with non-standard transactions if you are not owning a mining pool yourself. IF the non-standard transaction gets into blockchain, THEN the comment stays there forever. but it really never propagates.
- quinndupont 14y ago
  And this happens with some regularity. The number of orphaned branches on the blockchain is surprisingly (to me, at least) significant (last I looked, around a dozen).
oleganza 14y ago
The cool thing about block chain as it is right now (even with incomplete support for multi-signature tricks), it already allows you to leave a trace of your document using addresses alone. Without any piggybacking - you just create a transaction address derived from a hash of your document, move your money in and out, then publish the document. Everybody can compute the keys and verify that the address is indeed derived from that paper and you indeed had this document created before the transaction was recorded.
- javert 14y ago
  you just create a transaction address derived from a hash of your document How do you do that?
  - oleganza 14y ago
    You interpret your hash as a private key. Or as a seed for the private key. Then out of the private key you compute a public key, which when hashed with SHA256 and RIPEMD-160 gives you an address. Then, before disclosing the document, you transfer some amount to that address and back to your private address. After that, reveal the document: now everyone can repeat the procedure and verify that you have created that document (because you can always prove that you own that "coin" which travelled through the synthetic address). You can play with keys and addresses here: http://brainwallet.org http://brainwallet.org
    - javert 14y ago
      Wow! I didn't realize that you could generate a public key given a private key. To me, keypair generation was just a "black box." I should have known (probably studied it in class.) Thanks.
quinndupont 14y ago
You're absolutely right. I'm currently researching the cryptographic elements of bitcoin for this exact reason: ecash schemes actually rely on the power afforded by cryptography. In my mind, the economic disruption is actually less exciting. When I'm done the research and it goes to press I'll keep the HN community posted, since there seems to be quite a bit of excitement here on Bitcoin.
MacsHeadroom 14y ago
He writes about direct value of steel - but half of the examples he mentions are about metal in general and not about the particular alloy. While true, I don't see the relevance of this point. Bitcoin is a commodity with non-money uses. Yes, some of those over lap with other cryptography technology. But that doesn't really change anything.

diggan 14y ago

> It costs nothing Doesn't it costs you anything to make a transaction with Bitcoin? That was more than I knew.

jerguismi 14y ago
The fee system is pretty complicated. You can get some transactions through without a fee, but I doubt that this will be the case in the future, when transaction spam will be increasing. The required fee basically depends on the generated transaction size (in bytes).
yuvadam 14y ago
The costs are negligible - several cents per transaction nowadays, and is always up to you to define related to how important the transaction is and how fast you'd like the network to confirm it. In any case, the costs are miniscule compared to standard transaction fees that banks charge.
- gst 14y ago
  The costs are neglible now, but based on how Bitcoin works (shared transaction list) it seems likely that the costs will rise in the future: 1) Currently there's a transaction size limit of 1 MB in the protocol, with typical "large" transaction sizes being about one third of this. Once average transaction sizes will hit the limit, miners will probably include transactions paying higher fees, thus auctioning the available space. 2) Even if Bitcoin users agree on a protocol change to increase this limit costs will rise, as every transaction needs to be forwarded to all other nodes (or at least to the miners). So increasing transaction sizes will create higher hardware requirements for miners, without necessarily increasing their income. And there's the further complication that a fork will only work if a majority of the network actually supports it.
  - MacsHeadroom 14y ago
    1) No, Gavin (Bitcoin lead developer) says he wants to make the transaction and block size unlimited (or rather, let the miners limit it). This should keep fees down. https://bitcointalk.org/index.php?topic=140233.40 https://bitcointalk.org/index.php?topic=140233.40 2) No, costs for the majority of transactions will not go up- in fact, they may go down. Most miners already charge different fees based on any given transaction's size. The fees range from about a half-cent USD to about two cents USD. If someone wants to send a 2MB transaction, the miners will be able to charge whatever transaction fee they choose for expedient processing.

TheSisb2 14y ago

The first two paragraphs seemed to be directed towards the layman, and then the author takes a tangent with: "For example, the block chain (distributed transaction history) is designed to be extremely hard to forge and very easy to verify." You lost me completely.

yuvadam 14y ago
The block chain is a very simple concept: it's the permanent record of all bitcoin transactions ever made.
inoop 14y ago
The bitcoin blockchain is a replicated database (not distributed, as this guy claims) which contains a copy of each and every bitcoin transaction ever made since the beginning of time. It's basically how they 'solve' the so-called double spending problem where a digital coin can be duplicated (spent twice) unless there is some way to verify the uniqueness of said coin. Given a total history of every transaction ever made, a recipient can check whether a coin hasn't been already given to someone else by the sender. The idea is that anyone can participate in the peer-to-peer network that maintains this database, and that this database is signed on a block-by-block basis by the participants to maintain consensus. Hence the term 'block chain'. Now, since the data in the block chain is a set of time-stamped transactions that are difficult to forge (unless someone controls >50% of the network), one can use it to store other time stamped information such as contracts. (disclaimer: the above is just a semi-laymans attempt to explain the block chain to OP, feel free to correct me where I am wrong:)
- quinndupont 14y ago
  (One of the better explanations I've seen). Indeed, the bitcoin.org website claims that the blockchain is the central innovation in Bitcoin (since the rest of the ecash crypto has been around for decades)
- javert 14y ago
  Actually, the transactions can't be forged. If someone has > 50% of the network, they can double-spend, but they can't forge transactions.

contingencies 14y ago

It can be useful to frame such discussions in some conventional reference, thus here's my top of head summary of Bitcoin vs. the well established three main uses of money; ie. money as a... Unit of account: Works fine but has issues due to the relative volatility of its value. Also, the complexity of accounting that can result from blockchain rollbacks and other Bitcoin-specific issues (new "invoices/receipts" scheme, etc...) Store of value: Far too volatile at present to be much good; though it has been heading upwards, an individual party could easily destabilize the entire economy. Medium of exchange: Excellent speed and reach, theoretically an improvement on existing systems due to a lack of chargebacks (finality). Realistically, increasingly complex to implement, particularly securely, and especially for real time goods and services. Unfortunately the market is relatively small and spotty right now, so any benefits here are largely negated for general commerce. I can't help but feel the blockchain-tricks referenced by the author (in addition to the upcoming "invoices/receipts" mechanism) are nought but scope creep, best left out as violators of "do one thing and do it well", and in general a bad sign for Bitcoin's future. That said, I am all for Bitcoin, I think it's great. It's just important to be realistic about its objective properties vs. other systems.

jerguismi 14y ago
> I can't help but feel the blockchain-tricks referenced by the author (in addition to the upcoming "incoices/receipts" mechanism) are nought but scope creep, best left out as violators of "do one thing and do it well", and in general a bad sign for Bitcoin's future. The bitcoin core developers have strict policy - they don't accept these additional features such as distributed DNS to the main chain. However alternative chains can be developed for these features. I think that there can be a tremendous value for other kind of public, distributed, databases as well, not just currency.
- contingencies 14y ago
  Sharing the same network-resource with those 'tricks', official or not, is not going to come free. However, I was mostly referring to the recent "invoices/receipts" thing, which is being included. IMHO as an implementer of a Bitcoin-integrated system, that's not helpful, rather it's a PITA. But I am not framing any of my development with Bitcoin purely in mind, rather I am trying to bridge arbitrary settlement systems objectively. (If interested, see http://ifex-project.org/ http://ifex-project.org/ for more info there.)

scotty79 14y ago

Gold: limited, durable, easy to use as physical transfer of value because of high value per unit of mass (due to rarity) Bitcoin: limited, durable, easy to transfer between any two connected users Whether you can make jewlery or timestamp things doesn't really matter for the main usage.

nhaehnle 14y ago
How durable is Bitcoin, really? In case of major economic turmoil, the value of Bitcoins can drop to zero and stay there permanently. This is very different from gold. In a truly apocalyptic scenario, gold also becomes nearly worthless. However, when society bounces back, the value of gold can be re-inflated based on the intrinsic value of gold. In the case of Bitcoin, such a bounce-back is not as likely to happen, because it would be so tempting for people to just start an entirely new blockchain.
- rlpb 14y ago
  > In the case of Bitcoin, such a bounce-back is not as likely to happen, because it would be so tempting for people to just start an entirely new blockchain. In such a situation, people could be categorised into two: those who previously held Bitcoin, and those who previously didn't. The ones who did would favour continuing with the old block chain, since they'd have more value there. Surely this alone would be enough?
- scotty79 14y ago
  As durable as P2P network. In truly apocalyptic scenario I'll most likely be dead so I don't really care. Resetting accounts to zero might be favorable scenario over getting killed over few pounds of gold in my basement and my suspected withholding of the information where is more.
- MacsHeadroom 14y ago
  >In case of major economic turmoil, the value of Bitcoins can drop to zero and stay there permanently. It really can't. Bitcoin is used in over 100 countries. Economic turmoil in one, or even a few, country will not be sufficient to drop the price to 0. The system becomes more robust every day. It's essentially a basket currency made of currencies proportional to all the proportion of people which use it in various countries. After some more maturity there could not be a more robust currency scheme imaginable.

wildgift 14y ago

I thought old transactions in the block chain were rolled up into a new block and signed. So old transactions do vanish. Am I wrong or right on that one?

jeremyjh 14y ago
Just a digest of the previous block makes it into the next. Every client must have the entire block chain - every transaction ever made.
- oleganza 14y ago
  That's not true. You may want to have entire block chain - if you wish to verify every block. Miners need to do so, to be sure they don't build their blocks on top of invalid blocks. Regular people don't require that and can trust some web wallets or light clients like Electrum, that store only block headers and keep track of personal keys, but do not verify all the transactions.
  - jeremyjh 14y ago
    It is true if we define client as "client which implements BTC protocol". If you define it as "random internet strangers I trust with my money" then of course it does not require the blockchain and also does not provide any of the strong guarantees from BTC. Even for Electrum which does not have your private keys, you are still trusting what it says the blockchain contains. If subverted this could for example lead you to believe that someone had sent BTC to your wallet that were not actually in the true blockchain.
    - oleganza 14y ago
      I didn't say I don't need to trust anybody. I have to trust even the full client: I need to validate the checksum, make sure I don't have viruses and keyloggers on my machine, I have to trust my backup system and have to trust people who understand crypto better than me. Everyone must trust someone, there is no clear line in the usability-vs-trust balance. I'm perfectly okay to trust a web wallet on blockchain.info small amount of bitcoins because they do a very good job with their iPhone app and SMS notifications. I'm also okay to put some of my money into Electrum and some - in Bitcoin-QT. And keep some on bitcoin-central.net in case I need to sell BTC for fiat quickly. Given all of that, it's not fair to say that "the true" client is this one, while all the others - are considerably different. For people who value their time, it's important to be able to sacrifice some trust for usability and vice versa. If we would always tell them that they must use the full client, we are just imposing our personal tradeoffs and do not respect theirs.

eduardordm 14y ago

Oleg, I learned quite a bit with your article but there is a statement that is not quite accurate: "dollar bills do not have any value in themselves" Legal tenders like dollar bills are the value themselves, it might even come to a situation where the material used to build it costs more than the actual value of the medium (1 cent coins). I wrote an article some time ago and I would be very happy if you could read it and give your thoughts: http://eduardo.intermeta.com.br/posts/2013/1/18/bitcoins-and-the-future-of-electronic-money http://eduardo.intermeta.com.br/posts/2013/1/18/bitcoins-and...

weavejester 14y ago
How do you figure that a dollar bill has any intrinsic value? The raw materials have some minor value, sure, but the cost of making a dollar note is significantly lower than a dollar. A dollar bill is a promise of value, conceptually no different to a cheque from the US government. If you believe that money has any value in itself, then I have some Zimbabwean dollars to sell you.
- eduardordm 14y ago
  I did not 'figure'. What you described is representative money, not fiat/paper money.
  - weavejester 14y ago
    Representative money is a particularly vague term, which usually means money backed by a physical commodity, but can also encompass fiat money as well. There's nothing inherently magical about something being legal tender. The only difference between a $1 cheque and a $1 note is risk. The probability of a cheque bouncing is more likely than the USA economy collapsing into hyperinflation.
    - eduardordm 14y ago
      As you said, once I give you a dollar bill, the transaction is over. If I give you a check it will takes days for the actual transaction to happen and the money transferred (which can possibly end up in a physical transfer of cash) Money does not depend on any kind of backing at all, for instance: the US gov has been flooding the market with dollars backed by the promise it will buy them back someday. Some countries don't even bother buying dollars anymore, they rely 100% on swap agreements. Even if the economy collapses, the dollar will still be accepted for paying your gov duties, which means it will collapse too, equalizing the system. (inflation and deflation can be too complex for me to have any useful discussion)

tlrobinson 14y ago

Isn't this value derived from the system as a whole rather than Bitcoins themselves? If the monetary value of Bitcoin dropped to zero for some reason you wouldn't be able to use your existing Bitcoin for these purposes. It's kind of like saying you could use the comment/memo area of wires/checks to send or timestamp messages.

MacsHeadroom 14y ago
>Isn't this value derived from the system as a whole rather than Bitcoins themselves? Capital B Bitcoin (never plural) refers to the system as a whole. Lowercase b bitcoins refers to the units of currency. And yes, this value is derived from Bitcoin, not bitcoins- which is what the article says. >If the monetary value of Bitcoin dropped to zero for some reason you wouldn't be able to use your existing Bitcoin for these purposes. Yes, you would. All of these uses would still apply if bitcoins were worthless. Namecoins are essentially free, yet they can be used to do all of these as well. In fact, Namecoin is the third item on the list in the article.
- tlrobinson 14y ago
  I don't understand. Namecoin uses an entirely separate block chain from the currency. How will my 50 BTC be useful if the currency fails?
- javert 14y ago
  All of these uses would still apply if bitcoins were worthless. No, because if bitcoins were worthless, there would be no incentive to mine, and if there is no incentive to mine, there is no security for the blockchain.

nym 14y ago

Looking to buy bitcoins? Here are guides + ratings on how to buy bitcoins, in the united states, europe, and around the world: http://howdoyoubuybitcoins.com/ http://howdoyoubuybitcoins.com/ Let me know if you have any feedback! We're always trying to improve!