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The Well Deserved Fortune of the Federal Reserve Seriously, as the world's currency and failures of other countries to issue a reserve currency, one of the dol

by logn 14y ago

The Well Deserved Fortune of the Federal Reserve Seriously, as the world's currency and failures of other countries to issue a reserve currency, one of the dollar's biggest threats would be a crypto-currency. Either the project succeeds and you have an enormous source of potentially hidden money in the currency to maybe overtake the dollar, or it fails and you make sure it fails with such repercussions that no other crypto-currency can be easily introduced again, either due to new laws or loss of confidence. Additionally if they have the ability to crack SHA256 (designed by the NSA), the government could print the money. And they could probably have planned a way to sabotage bitcoins if they decided to back out before a certain point. The financial crisis may have helped sway the final decision to execute the plan: August 7, 2007: BNP Paribas terminated withdrawals from three hedge funds citing "a complete evaporation of liquidity". September 6, 2008: Fannie Mae and Freddie Mac placed in conservatorship by the U.S. government. September 15, 2008: Lehman Brothers filed for Chapter 11 bankruptcy protection. November 1, 2008: Satoshi Nakamoto publishes first bitcoin paper. Sources of dates: https://en.wikipedia.org/wiki/2007%E2%80%932012_global_finan.. https://en.wikipedia.org/wiki/2007%E2%80%932012_global_finan.... https://en.wikipedia.org/wiki/Subprime_mortgage_crisis https://en.wikipedia.org/wiki/Subprime_mortgage_crisis http://en.wikipedia.org/wiki/Federal_takeover_of_Fannie_Mae_.. http://en.wikipedia.org/wiki/Federal_takeover_of_Fannie_Mae_.... http://www.wired.com/magazine/2011/11/mf_bitcoin/all/ http://www.wired.com/magazine/2011/11/mf_bitcoin/all/

codeulike 14y ago
Its often supposed that Bitcoin arose as a reaction to the financial crisis, but that reaction is just as likely to have come from someone who was fed up with the government, as is it to come from the government. So your list of dates doesn't really count either way.
- logn 14y ago
  I see two main possibilities: (1) the paper was prepared anytime in advance and withheld until the dollar/US/world faced serious risk. (2) The BTC paper was started in the early stages of the crisis or later. Both possibilities could suggest the BTC creators had an interest in the success of the dollar. The alternative would be that it was opportunism of BTC creators who were always against the dollar or turned on it in the crisis. I happen to think that if you were always against the dollar you would just release bitcoin immediately and hope for the most disruption. I'd think that someone supportive of the dollar would be more apt to release it strategically as a contingency. In my mind that means that dollar supporters are the better chance of being behind bitcoin because they could have made it any time in the past or as the crisis progressed, whereas dollar opponents only had the time of the crisis to make it. Assuming that, I think then the US has an above-average chance of being the authors of bitcoin.
jahewson 14y ago
Yes, a ridiculous conspiracy theory is the most likely explainaition.
- deleted 14y ago
  [deleted]
NkVczPkybiXICG 14y ago
Breaking SHA256 does not allow any party to "print bitcoin". It lets them be more successful at mining it, but the same amount per block will be generated, and the difficulty still adjusts to 1 block every 10 minutes. All they'd be doing is screwing miners out of profits.
- logn 14y ago
  Depending on how much you can exploit SHA256 you could take all chance out of getting the longest block and earn the new coins or fees as often as you want. I don't know the specifics of the moving average of difficulty but you might be able to game it by backing off and letting the difficulty reset before finding the right hashes quickly again. If you're already starting at 5% of the coins, and you're steadily gaining more, and the currency is tending to deflate, that sounds pretty close to printing money. Sure you're constrained but so is the Fed today in its abilities to print money effectively. Additionally, having so many BTCs pretty much ensures you can find a way to continue bettering your financial situation, generating interest or something more creative.
- cjg 14y ago
  The difficulty reaches a maximum when the target hash is 0. If SHA256 is broken so badly that you can calculate a set of inputs to produce a particular output (0 in this case) then bitcoin can't make it any harder. You could mine a block as quickly as you could calculate valid inputs.
- runeks 14y ago
  Bitcoin would break with a compromised SHA256. If pre-image attacks on SHA256 become possible, one can replace transactions in the block chain with ones own transactions. A SHA256 hash identifies each transaction, and if you can produce a transaction with the same hash, but one that pays to you instead, you can replace transactions in the block chain with ones that pay to you.
neilxdsouza 14y ago
I made a comment on similar lines on my theory of the origin of bitcoin: https://news.ycombinator.com/item?id=5547910 https://news.ycombinator.com/item?id=5547910

by logn 14y ago

codeulike 14y ago

Its often supposed that Bitcoin arose as a reaction to the financial crisis, but that reaction is just as likely to have come from someone who was fed up with the government, as is it to come from the government. So your list of dates doesn't really count either way.

logn 14y ago
I see two main possibilities: (1) the paper was prepared anytime in advance and withheld until the dollar/US/world faced serious risk. (2) The BTC paper was started in the early stages of the crisis or later. Both possibilities could suggest the BTC creators had an interest in the success of the dollar. The alternative would be that it was opportunism of BTC creators who were always against the dollar or turned on it in the crisis. I happen to think that if you were always against the dollar you would just release bitcoin immediately and hope for the most disruption. I'd think that someone supportive of the dollar would be more apt to release it strategically as a contingency. In my mind that means that dollar supporters are the better chance of being behind bitcoin because they could have made it any time in the past or as the crisis progressed, whereas dollar opponents only had the time of the crisis to make it. Assuming that, I think then the US has an above-average chance of being the authors of bitcoin.

jahewson 14y ago

Yes, a ridiculous conspiracy theory is the most likely explainaition.

deleted 14y ago
[deleted]

NkVczPkybiXICG 14y ago

Breaking SHA256 does not allow any party to "print bitcoin". It lets them be more successful at mining it, but the same amount per block will be generated, and the difficulty still adjusts to 1 block every 10 minutes. All they'd be doing is screwing miners out of profits.

logn 14y ago
Depending on how much you can exploit SHA256 you could take all chance out of getting the longest block and earn the new coins or fees as often as you want. I don't know the specifics of the moving average of difficulty but you might be able to game it by backing off and letting the difficulty reset before finding the right hashes quickly again. If you're already starting at 5% of the coins, and you're steadily gaining more, and the currency is tending to deflate, that sounds pretty close to printing money. Sure you're constrained but so is the Fed today in its abilities to print money effectively. Additionally, having so many BTCs pretty much ensures you can find a way to continue bettering your financial situation, generating interest or something more creative.
cjg 14y ago
The difficulty reaches a maximum when the target hash is 0. If SHA256 is broken so badly that you can calculate a set of inputs to produce a particular output (0 in this case) then bitcoin can't make it any harder. You could mine a block as quickly as you could calculate valid inputs.
runeks 14y ago
Bitcoin would break with a compromised SHA256. If pre-image attacks on SHA256 become possible, one can replace transactions in the block chain with ones own transactions. A SHA256 hash identifies each transaction, and if you can produce a transaction with the same hash, but one that pays to you instead, you can replace transactions in the block chain with ones that pay to you.

neilxdsouza 14y ago

I made a comment on similar lines on my theory of the origin of bitcoin: https://news.ycombinator.com/item?id=5547910 https://news.ycombinator.com/item?id=5547910