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The point of cryptocurrencies is not to "back" the currency with cryptography (or energy) as an intrinsic value, it is to prevent double-spending for a decentra

The point of cryptocurrencies is not to "back" the currency with cryptography (or energy) as an intrinsic value, it is to prevent double-spending for a decentralized currency. Cryptocomputations and the energy they consume have nothing to do with value, they're just an enabler of this decentralisation.

betterunix 14y ago
Unfortunately, the meaning of "double spending" is exceedingly vague for Bitcoin; there is no formal and precise definition. The systems developed by cryptography researchers invoke a central issuer of currency in their security definitions, which is useless for Bitcoin.
- javert 14y ago
  How is the meaning of "double spending" vague? It means spending the same units of a crypto-currency more than once. If you can do it, there is a flaw in your crypto-currency. > The systems developed by cryptography researchers invoke a central issuer of currency in their security definitions, which is useless for Bitcoin. The first part of that sentence is not completely true, because Bitcoin itself was (presumably) developed by cryptography researchers.
  - rubinelli 14y ago
    Here's a thought experiment: what if a random chance of "double spending" was built into the cryptocurrency? Then people would have an incentive to make the money circulate, and you could calibrate it to prevent deflation. (Obviously, it would be meaningless if people could just move money from wallet to the other.)
    - javert 14y ago
      That's a pretty novel idea, which would probably be appreciated by the (small) community of people who have a problem with the "deflationary" nature of bitcoins and are actually interested in doing bitcoin forks.
  - betterunix 14y ago
    "How is the meaning of "double spending" vague? It means spending the same units of a crypto-currency more than once." First of all, that is not a good definition, since it rules out the possibility of a unit of currency "coming back" to the party that spent it (imagine if I gave you a dollar, and then you were not allowed to give it back to me). It also fails to rule out the possibility of dividing one 1BTC unit into two 0.75BTC units, which is another form of double spending. There are deeper problems too. You say that if you "can" do it, it is a security problem, but there is no restriction on the attacker's computing power. What if the attacker forges ECDSA signatures? What if the attacker finds SHA256 collisions? What if the attacker computes a longer block chain, which is a polynomial time problem, reversing his transaction and getting the chance to spend the money again? The reason I said the security notion is vague is that there is no precise definition that Bitcoin actually achieves. If someone can develop one, and if it actually captures a meaningful notion of security, great! So far, no such definition exists. "The first part of that sentence is not completely true, because Bitcoin itself was (presumably) developed by cryptography researchers." I seriously doubt that, given that the original Bitcoin paper made absolutely no mention of the decades of previous work on digital cash that preceded it, nor any of the work on secure multiparty computation, nor did the paper give a security definition, nor did the author seem to be bothered by the fact that there is a polynomial-time attack on the system. It reads like a paper written by cryptography amateurs or enthusiasts, the sort of people who make most of the posts in sci.crypt and comp.compression. In a pedantic sense, Bitcoin is the product of research, but if the term "researcher" means anything beyond "human being," I think it is fair to draw the line at being familiar with and building on previous work. [Edit: Of course, that definition of "researcher" is not quite what we want, since it does not account for people who open entirely new fields. That is a rare edge case, however, and the issue was whether or not Satoshi was a researcher in an already established and well-developed field.]
    - wmf 14y ago
      For Bitcoin, double-spending would probably be defined as the same txout being spent in two different confirmed transactions. Perhaps this is so obvious that people consider it not worth explicitly stating.
- erikpukinskis 14y ago
  If transaction A, drawing from source G, is confirmed six times in blockchain M, the longest blockchain, with length 20, and transaction B shows up, also drawing from source G, but confirmed in blockchain fork N, and N becomes longer then M, then that is a double spend. Edit: changed one to six.
  - betterunix 14y ago
    OK, but Bitcoin allows that to happen; in the original Bitcoin paper, a polynomial time algorithm for doing exactly what you described is presented. Even if we accept that definition of double spending, it is not clear how that is useful for formalizing Bitcoin's security. How can you rule out someone computing a longer block chain, when doing so involves simply duplicating the work done by the rest of the parties in the system? What actually stops someone from doing this? In other words, under your definition, what does it mean to be secure against double spending?
    - javert 14y ago
      > How can you rule out someone computing a longer block chain, when doing so involves simply duplicating the work done by the rest of the parties in the system? What actually stops someone from doing this? I responded to another comment from you elsewhere, and I hate to confuse things by having one conversation in two places, but this is a really good question, and there is a straightforward answer. To make a longer blockchain, you have to have enough computing power to "catch up" to all the other people mining bitcoins, and then mine faster than they are. So, you have to have > 50% of the total hashing power. If you look into the mining "business," I think you will become convinced that only a nation-state or maybe Google could perform this kind of attack right now, and once ASIC mining technology is widely diffused, even that would be difficult. The "6 confirmations" thing the grandparent said is kind of arbitrary, but that is the number of blocks that bitcoin devs widely agree is enough to wait before you can be "effectively certain" that your transaction is in the longest block chain, and always will be. So that's how long you wait before handing over the keys when somebody purchases your mega-yacht with bitcoin. By "kind of arbitrary" I mean, in the context grandparent used it. If you do the math (as is given somewhere near the end of the bitcoin white paper), that is where you start approaching a 0% chance of the transaction not ending up in the longest chain.
bradleyland 14y ago
The goal to "prevent double-spending" is just a means to fix the money supply. You still have the problem that the value of your money will fluctuate, and the then you end up back at the problem of deflation. If you want the "value" of your currency to remain static, then the amount of currency in circulation must correlate to the size of your economy. New value is created all the time through increased productivity, increased population, and the creation of new markets. If your money supply remains fixed to any of the factors I've listed, you have a deflationary currency. The "prevention of double-spending" is a means, not an end. You have to ask yourself why you don't want "double-spending".
- erikpukinskis 14y ago
  > If your money supply remains fixed to any of the factors I've listed, you have a deflationary currency. This seems sensible on it's face, but you're ignoring the effect that speculators have on the market. If consensus is that a commodity will increase 10% year over year then investors will pile on, driving up the price until the expected return is 0%. When the expected return is 0% (like it is for buying a bushel of corn on a random Tuesday and selling it a month later) then your currency is no longer deflating. In other words, expected economic growth will be priced in to Bitcoin. Of course, when the speculators turn out to be wrong about economic growth, you will see the price move. But it won't be deflationary just because the economy is growing.
  - bradleyland 14y ago
    > In other words, expected economic growth will be priced in to Bitcoin. Yeah, that's kind of the point. When economic growth is "priced in to" a currency that is tied to a fixed commodity, it results in value fluctuations of the currency.

betterunix 14y ago

Unfortunately, the meaning of "double spending" is exceedingly vague for Bitcoin; there is no formal and precise definition. The systems developed by cryptography researchers invoke a central issuer of currency in their security definitions, which is useless for Bitcoin.

javert 14y ago
How is the meaning of "double spending" vague? It means spending the same units of a crypto-currency more than once. If you can do it, there is a flaw in your crypto-currency. > The systems developed by cryptography researchers invoke a central issuer of currency in their security definitions, which is useless for Bitcoin. The first part of that sentence is not completely true, because Bitcoin itself was (presumably) developed by cryptography researchers.
- rubinelli 14y ago
  Here's a thought experiment: what if a random chance of "double spending" was built into the cryptocurrency? Then people would have an incentive to make the money circulate, and you could calibrate it to prevent deflation. (Obviously, it would be meaningless if people could just move money from wallet to the other.)
  - javert 14y ago
    That's a pretty novel idea, which would probably be appreciated by the (small) community of people who have a problem with the "deflationary" nature of bitcoins and are actually interested in doing bitcoin forks.
- betterunix 14y ago
  "How is the meaning of "double spending" vague? It means spending the same units of a crypto-currency more than once." First of all, that is not a good definition, since it rules out the possibility of a unit of currency "coming back" to the party that spent it (imagine if I gave you a dollar, and then you were not allowed to give it back to me). It also fails to rule out the possibility of dividing one 1BTC unit into two 0.75BTC units, which is another form of double spending. There are deeper problems too. You say that if you "can" do it, it is a security problem, but there is no restriction on the attacker's computing power. What if the attacker forges ECDSA signatures? What if the attacker finds SHA256 collisions? What if the attacker computes a longer block chain, which is a polynomial time problem, reversing his transaction and getting the chance to spend the money again? The reason I said the security notion is vague is that there is no precise definition that Bitcoin actually achieves. If someone can develop one, and if it actually captures a meaningful notion of security, great! So far, no such definition exists. "The first part of that sentence is not completely true, because Bitcoin itself was (presumably) developed by cryptography researchers." I seriously doubt that, given that the original Bitcoin paper made absolutely no mention of the decades of previous work on digital cash that preceded it, nor any of the work on secure multiparty computation, nor did the paper give a security definition, nor did the author seem to be bothered by the fact that there is a polynomial-time attack on the system. It reads like a paper written by cryptography amateurs or enthusiasts, the sort of people who make most of the posts in sci.crypt and comp.compression. In a pedantic sense, Bitcoin is the product of research, but if the term "researcher" means anything beyond "human being," I think it is fair to draw the line at being familiar with and building on previous work. [Edit: Of course, that definition of "researcher" is not quite what we want, since it does not account for people who open entirely new fields. That is a rare edge case, however, and the issue was whether or not Satoshi was a researcher in an already established and well-developed field.]
  - wmf 14y ago
    For Bitcoin, double-spending would probably be defined as the same txout being spent in two different confirmed transactions. Perhaps this is so obvious that people consider it not worth explicitly stating.
erikpukinskis 14y ago
If transaction A, drawing from source G, is confirmed six times in blockchain M, the longest blockchain, with length 20, and transaction B shows up, also drawing from source G, but confirmed in blockchain fork N, and N becomes longer then M, then that is a double spend. Edit: changed one to six.
- betterunix 14y ago
  OK, but Bitcoin allows that to happen; in the original Bitcoin paper, a polynomial time algorithm for doing exactly what you described is presented. Even if we accept that definition of double spending, it is not clear how that is useful for formalizing Bitcoin's security. How can you rule out someone computing a longer block chain, when doing so involves simply duplicating the work done by the rest of the parties in the system? What actually stops someone from doing this? In other words, under your definition, what does it mean to be secure against double spending?
  - javert 14y ago
    > How can you rule out someone computing a longer block chain, when doing so involves simply duplicating the work done by the rest of the parties in the system? What actually stops someone from doing this? I responded to another comment from you elsewhere, and I hate to confuse things by having one conversation in two places, but this is a really good question, and there is a straightforward answer. To make a longer blockchain, you have to have enough computing power to "catch up" to all the other people mining bitcoins, and then mine faster than they are. So, you have to have > 50% of the total hashing power. If you look into the mining "business," I think you will become convinced that only a nation-state or maybe Google could perform this kind of attack right now, and once ASIC mining technology is widely diffused, even that would be difficult. The "6 confirmations" thing the grandparent said is kind of arbitrary, but that is the number of blocks that bitcoin devs widely agree is enough to wait before you can be "effectively certain" that your transaction is in the longest block chain, and always will be. So that's how long you wait before handing over the keys when somebody purchases your mega-yacht with bitcoin. By "kind of arbitrary" I mean, in the context grandparent used it. If you do the math (as is given somewhere near the end of the bitcoin white paper), that is where you start approaching a 0% chance of the transaction not ending up in the longest chain.

bradleyland 14y ago

The goal to "prevent double-spending" is just a means to fix the money supply. You still have the problem that the value of your money will fluctuate, and the then you end up back at the problem of deflation. If you want the "value" of your currency to remain static, then the amount of currency in circulation must correlate to the size of your economy. New value is created all the time through increased productivity, increased population, and the creation of new markets. If your money supply remains fixed to any of the factors I've listed, you have a deflationary currency. The "prevention of double-spending" is a means, not an end. You have to ask yourself why you don't want "double-spending".

erikpukinskis 14y ago
> If your money supply remains fixed to any of the factors I've listed, you have a deflationary currency. This seems sensible on it's face, but you're ignoring the effect that speculators have on the market. If consensus is that a commodity will increase 10% year over year then investors will pile on, driving up the price until the expected return is 0%. When the expected return is 0% (like it is for buying a bushel of corn on a random Tuesday and selling it a month later) then your currency is no longer deflating. In other words, expected economic growth will be priced in to Bitcoin. Of course, when the speculators turn out to be wrong about economic growth, you will see the price move. But it won't be deflationary just because the economy is growing.
- bradleyland 14y ago
  > In other words, expected economic growth will be priced in to Bitcoin. Yeah, that's kind of the point. When economic growth is "priced in to" a currency that is tied to a fixed commodity, it results in value fluctuations of the currency.