4 ms·

Only if Bitcoin fails at its promise and can't be fixed. E.g. some crypto breakthrough makes all security worth nothing. Only if P=NP, in other words.

pcrh 13y ago
Bitcoin is no longer the only cryptocurrency, so it has to hold value against gold, diamonds (both of which are completely anonymous), all fiat currencies, as well as alternate methods of payment. It is highly unlikely that it will be adopted as a currency for major business transactions (too unstable and unknown), and is completely traceable, so will not be adopted by major elements in the black market. In the end, if bitcoin specifically (as opposed to some alternate cryptocurrency) remains in use for a long period, it is likely to be for relatively small transactions in niche markets. Does that warrant it's current valuation? I have no idea.
- dwaltrip 13y ago
  Diamonds and gold make for quite shitty currencies Gold is extremely laborious to move, and not divisible enough for most usage. Diamonds are not fungible or very divisible. Both are very susceptible to physical theft. Network effects for money are very strong, and bitcoin has a huge first mover advantage. Any competing digital currency will require quite the innovation or distinguishing factor to gain any traction. It is becoming more 'known' and trusted with each month that passes. Pre-bitcoin-era financial groups are slowly yet increasingly giving it more legitimacy (Mainly VCs, a few funds, the occasional bank, and research groups -- also Second Market and the Winklevoss ETF are two big things to watch right now). The main counterpoint currently is that bitcoin use is quite error-prone and hard to digest, but this seems more like a temporary roadblock to me. Y'all remember geocities and AOL right? Bitcoin will become much easier and more secure to use in the coming years. Software is relatively easy to improve, compared to gold, fiat, and the like. There are some potential solutions to traceability, but it is uncertain how that will play out (I can't even pretend to fully understand the regulatory environments and international politics that will affect this). The one thing I can guarantee -- the way we use and conceptualize money is going to change drastically in the next several decades, and I think bitcoin will have a huge influence on this.
  - XorNot 13y ago
    Bitcoins are very susceptible theft, as evidenced by the fact that someone heists a whole bunch of them from a website every other week. You can't play off a good which is hard to move as "susceptible to theft" when you can log in and copy a data file and have succeeded in stealing a whole bunch of money.
    - dcc1 13y ago
      It is not bitcoin that is susceptible to heists, the protocol is rock solid! Its websites coded by script kiddies such as inputs.io by an under 18 Australian who ignore security and then get hacked (or more likely do a runner with the coins themselves) once they get enough suckers to send them bitcoin
      - oleganza 13y ago
        Like being above 18 gives any guarantee :-) Bitcoins can be owned, so it's better to own them instead of storing them in someone's wallet on some website. Send you money to a shitty exchange nearby, buy bitcoins, move them into your own wallet immediately. Then you won't care if someone hacks the exchange.
    - dwaltrip 13y ago
      I admitted using bitcoins currently is hard and expensive errors are easy to make. But this is a software issue. Old "good enough" security habits won't fly, as a lot money is on now on the line (old security issues usually didn't cause too much harm for most users). New practices/implementations will have to be developed, but I don't see why that won't happen. Even nowadays with a few simple steps you can make your bitcoin stash VERY VERY secure. Install a fresh copy of linux on a USB, disconnect all networking capabilities, boot to the USB, create a new wallet/address (brain or paper) using established methodology, turn off computer, remove USB, presto, you have a un-hackable bitcoin address. You could even create a multi-sig stash that requires a digital signature from multiple people (2-of-3, 3-of-5, etc). Obviously, this is cumbersome and non-trival for the average joe. But with a small amount of imagination it is easy to see how everyday solutions could be developed.
betterunix 13y ago
What does P=NP have to do with anything? Bitcoin can be attacked in polynomial time i.e. the "51% attack." I am also curious to know what security promises you would be referring to.
- oleganza 13y ago
  51% attack is a myth. Do you seriously think that all BTC holders would just blindly jump to a suddenly revealed chain to allow some dud to revert 1000 BTC transaction? There would be some turbulence, no doubt, but people will quickly ban the source of disturbance or hire an army to go and shut it down. Most probably, 51% will never happen because it's never economically justified. Even craziest anti-heroes must have earned a lot of money to risk pulling this off for very dubious reward. Some scientists don't like possibility of it, but it's their own bet on how reality works. When I mentioned P=NP, I meant that Bitcoin rests on inability to quickly break hashes and ECDSA signatures. If we find such a method, it would probably be a proof of P=NP.
  - betterunix 13y ago
    The 51% attack allows more than just reversing some transactions. It allows an attacker to selectively block transactions. It allows an attacker to deny the mining reward to miners. Really though, the point has more to do with formalizing Bitcoin's security. You claim that it relies on the security properties of cryptographic hashes and of digital signatures, but what property of Bitcoin actually reduces to the security of hashes or signatures? What are Bitcoin's security guarantees? When you can at least state some security property Bitcoin achieves, then maybe you can prove that Bitcoin's security depends on hashes and signatures. Without such proof you cannot go about making statements about P vs NP being relevant to Bitcoin's security; indeed, it is hard to speak about "security" for Bitcoin at all.
  - peterwiese 13y ago
    It has been shown in a recent study that from a game theoretic point of view, it is in the interest of a rational player to form a cartel with other rational players in order to enable the 51% attack. Now, major stakeholders in the real world such as banks are getting in on bitcoins. Additionally, they may be interested in destroying the currency once and for all. Personally I think it is just a matter of time until the attack will be realized. Maybe it already happened. We wouldn't event know....

pcrh 13y ago

Bitcoin is no longer the only cryptocurrency, so it has to hold value against gold, diamonds (both of which are completely anonymous), all fiat currencies, as well as alternate methods of payment. It is highly unlikely that it will be adopted as a currency for major business transactions (too unstable and unknown), and is completely traceable, so will not be adopted by major elements in the black market. In the end, if bitcoin specifically (as opposed to some alternate cryptocurrency) remains in use for a long period, it is likely to be for relatively small transactions in niche markets. Does that warrant it's current valuation? I have no idea.

dwaltrip 13y ago
Diamonds and gold make for quite shitty currencies Gold is extremely laborious to move, and not divisible enough for most usage. Diamonds are not fungible or very divisible. Both are very susceptible to physical theft. Network effects for money are very strong, and bitcoin has a huge first mover advantage. Any competing digital currency will require quite the innovation or distinguishing factor to gain any traction. It is becoming more 'known' and trusted with each month that passes. Pre-bitcoin-era financial groups are slowly yet increasingly giving it more legitimacy (Mainly VCs, a few funds, the occasional bank, and research groups -- also Second Market and the Winklevoss ETF are two big things to watch right now). The main counterpoint currently is that bitcoin use is quite error-prone and hard to digest, but this seems more like a temporary roadblock to me. Y'all remember geocities and AOL right? Bitcoin will become much easier and more secure to use in the coming years. Software is relatively easy to improve, compared to gold, fiat, and the like. There are some potential solutions to traceability, but it is uncertain how that will play out (I can't even pretend to fully understand the regulatory environments and international politics that will affect this). The one thing I can guarantee -- the way we use and conceptualize money is going to change drastically in the next several decades, and I think bitcoin will have a huge influence on this.
- XorNot 13y ago
  Bitcoins are very susceptible theft, as evidenced by the fact that someone heists a whole bunch of them from a website every other week. You can't play off a good which is hard to move as "susceptible to theft" when you can log in and copy a data file and have succeeded in stealing a whole bunch of money.
  - dcc1 13y ago
    It is not bitcoin that is susceptible to heists, the protocol is rock solid! Its websites coded by script kiddies such as inputs.io by an under 18 Australian who ignore security and then get hacked (or more likely do a runner with the coins themselves) once they get enough suckers to send them bitcoin
    - oleganza 13y ago
      Like being above 18 gives any guarantee :-) Bitcoins can be owned, so it's better to own them instead of storing them in someone's wallet on some website. Send you money to a shitty exchange nearby, buy bitcoins, move them into your own wallet immediately. Then you won't care if someone hacks the exchange.
  - dwaltrip 13y ago
    I admitted using bitcoins currently is hard and expensive errors are easy to make. But this is a software issue. Old "good enough" security habits won't fly, as a lot money is on now on the line (old security issues usually didn't cause too much harm for most users). New practices/implementations will have to be developed, but I don't see why that won't happen. Even nowadays with a few simple steps you can make your bitcoin stash VERY VERY secure. Install a fresh copy of linux on a USB, disconnect all networking capabilities, boot to the USB, create a new wallet/address (brain or paper) using established methodology, turn off computer, remove USB, presto, you have a un-hackable bitcoin address. You could even create a multi-sig stash that requires a digital signature from multiple people (2-of-3, 3-of-5, etc). Obviously, this is cumbersome and non-trival for the average joe. But with a small amount of imagination it is easy to see how everyday solutions could be developed.

betterunix 13y ago

What does P=NP have to do with anything? Bitcoin can be attacked in polynomial time i.e. the "51% attack." I am also curious to know what security promises you would be referring to.

oleganza 13y ago
51% attack is a myth. Do you seriously think that all BTC holders would just blindly jump to a suddenly revealed chain to allow some dud to revert 1000 BTC transaction? There would be some turbulence, no doubt, but people will quickly ban the source of disturbance or hire an army to go and shut it down. Most probably, 51% will never happen because it's never economically justified. Even craziest anti-heroes must have earned a lot of money to risk pulling this off for very dubious reward. Some scientists don't like possibility of it, but it's their own bet on how reality works. When I mentioned P=NP, I meant that Bitcoin rests on inability to quickly break hashes and ECDSA signatures. If we find such a method, it would probably be a proof of P=NP.
- betterunix 13y ago
  The 51% attack allows more than just reversing some transactions. It allows an attacker to selectively block transactions. It allows an attacker to deny the mining reward to miners. Really though, the point has more to do with formalizing Bitcoin's security. You claim that it relies on the security properties of cryptographic hashes and of digital signatures, but what property of Bitcoin actually reduces to the security of hashes or signatures? What are Bitcoin's security guarantees? When you can at least state some security property Bitcoin achieves, then maybe you can prove that Bitcoin's security depends on hashes and signatures. Without such proof you cannot go about making statements about P vs NP being relevant to Bitcoin's security; indeed, it is hard to speak about "security" for Bitcoin at all.
- peterwiese 13y ago
  It has been shown in a recent study that from a game theoretic point of view, it is in the interest of a rational player to form a cartel with other rational players in order to enable the 51% attack. Now, major stakeholders in the real world such as banks are getting in on bitcoins. Additionally, they may be interested in destroying the currency once and for all. Personally I think it is just a matter of time until the attack will be realized. Maybe it already happened. We wouldn't event know....