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Top Bitcoin questions I’ve been asked

82 points by brown 13y ago

moonhorse 13y ago
Great pos! The more I learn about bitcoin, the more I feel like it still has a long way to go. There are a few hurdles that can not be easily solved now: 10min transaction time; deflationary (this pretty much means it would have a hard time to act a real "currency" based on nowadays economic thinking); the resources wasted in mining and the potential consolidation of mining; the programmable aspect is very limited today. What is your take of it?
- reshmakh 13y ago
  In the short term, I think it will have a hard time gaining use as a currency. A few currency scenarios might pop up, for example countries with unstable government or corrupt governments could see people store $ in BTC instead. However, I do think it could be very valuable as an application. Like if you layered it on top of the existing payment system to provide better security/anti-fraud.
  - moonhorse 13y ago
    Agreed!
    - reshmakh 13y ago
      I also think dogecoin is fun and may have a chance at being a useful tool for reputation and measuring attention.
      - jafaku 13y ago
        > dogecoin is fun What does that even mean? How can a currency be fun? Will my car become fun too if I attach a cute dog picture to it?
        UweSchmidt 13y ago
        If you look to the top of the page, next to your username, there's a number in brackets. Wouldn't it be nice to take that number and buy something real with it? You could, if it was a fun cryptocurrency that had at least a little traction. I'd imagine certain people could use their Stackoverflow Coins to buy a house!
        jafaku 13y ago
        So what property does Dogecoin have that Bitcoin doesn't, that enables us to do this? The answer is nothing, and Dogecoin is redundant. Might as well use Infinitecoin or any other copycoin before Dogecoin, they are all the same copy/pasted code, with no technical added value and the only effort they put goes to marketing.
  - jafaku 13y ago
    > A few currency scenarios might pop up, for example countries with unstable government or corrupt governments Sounds like most of the world would benefit from Bitcoin then.
- sneak 13y ago
  > There are a few hurdles that can not be easily solved now: 10min transaction time For almost all practical applications for which bitcoin is being used, this doesn't actually come in to play very often. > the resources wasted in mining It's not wasted if it's being used to process bitcoin transactions. > and the potential consolidation of mining Now you've got one - this is a huge threat to bitcoin today. It'll be interesting to see how it plays out over the next 6-12 months.
  - lmkg 13y ago
    > For almost all practical applications for which bitcoin is being used, this doesn't actually come in to play very often. But could this be a self-fulfilling prophecy? Perhaps this property of Bitcoin is hurting its adoption, by relegating it only to uses where this is not a hurdle.
    - reshmakh 13y ago
      Possible, but auth apps or other off blockchain workarounds must be coming. Existing payments systems had similar problems in the past.
  - ars 13y ago
    > For almost all practical applications for which bitcoin is being used, this doesn't actually come in to play very often. Not exactly. If you have all your coins in a single transaction, you will get change - which can take 10 minutes to confirm before you can spend it again. Yes, you can solve this by splitting up your money, but it's not something people expect. > It's not wasted if it's being used to process bitcoin transactions. Yes it is being wasted. Waste doesn't mean "unused", waste means "using more than necessary". Due to the hashrate arms race, tremendous amounts of power are being wasted doing nothing useful. Bitcoin is powered by electricity, a better currency would spend something else instead.
    - jafaku 13y ago
      > Yes it is being wasted. Waste doesn't mean "unused", waste means "using more than necessary". Due to the hashrate arms race, tremendous amounts of power are being wasted doing nothing useful. Due to the arms race, it's only getting more and more efficient. > nothing useful Again with that? You are starting to sound like a troll. > Bitcoin is powered by electricity, a better currency would spend something else instead. Can't you say the same about everything? Why does Bitcoin's energy consumption bother you so much, while you have cars, factories, and everything else still using fossil fuels, coal, etc.? Is your computer running on dark matter energy or what?
- olalonde 13y ago
  > deflationary (this pretty much means it would have a hard time to act a real "currency" based on nowadays economic thinking) This argument makes no sense to me. If Bitcoin's deflationary nature prevented it from acting as a currency, it would also prevent USD/CAD/dogecoin/etc. from acting as currencies because people would chose to buy Bitcoin instead of spending their inflationary currency on anything else. Every time you spend USD on something, you can instead buy an equivalent amount in Bitcoin. Not buying bitcoins can effectively be thought of as buying them and spending them. In fact, the truth is that no one knows if Bitcoin will be inflationary or deflationary within the next year due to its current small market cap and risky nature. But in an hypothetical world where Bitcoin does become a stable and deflationary currency, why would any selfish actor chose to hold an inflationary currency?
  - amscanne 13y ago
    > If Bitcoin's deflationary nature prevented it from acting as a currency, it would also prevent USD/CAD/dogecoin/etc. from acting as currencies because people would chose to buy Bitcoin instead of spending their inflationary currency on anything else. This is exactly what happens. No one holds currency. People don't generally have their assets as cash, just what they need to be liquid. They hold their assets as a mix of stock (incl. funds, bonds, options), real estate, etc. In fact, the majority of people have practically no cash at all because they lend it to a bank (i.e. putting it in a checking or savings account) who invests it or lends it for a return! The bank only holds a small portion of what they say is in the account.
    - olalonde 13y ago
      Not sure if you are disagreeing with me but in case you are: suppose those assets (stocks, bonds, real estate) could be transferred as easily as a currency (instant transfer/fungible/divisible/liquid/etc.), would people use cash at all? What would be the use case for cash? My point was that Bitcoin would be such an asset. Perhaps a deflationary currency would have a negative overall impact on the economy, but that's not what I'm arguing about.
      - 13y ago
- jafaku 13y ago
  > 10min transaction time, resources wasted in mining, programmable aspect is very limited, deflationary, nowadays economic thinking Getting really tired of these arguments. Transactions take 0-2 seconds. The resources are not wasted, they are used to secure the network and are way lower than what VISA or any other big company use. And It's deflationary because people like me are suffering from this form of theft called inflation, and we desperately needed something like Bitcoin. Besides, without an economic incentive why would people risk money? Nowadays economic thinking is pretty much a pseudoscience, just like Psychology.
  - Nursie 13y ago
    A crypto currency network that requires constant hash thrashing is not one I'd call well designed. It appears to be a trade-off for the decentralisation of initial currency issuing, not something everyone considers important.
    - dllthomas 13y ago
      "It appears to be a trade-off for the decentralisation of initial currency issuing, not something everyone considers important." Mining isn't (primarily) for currency issuance - it's decentralization of secure transaction processing. Which still isn't something everyone considers important, of course.
      - Nursie 13y ago
        Well sure, it does both. There are (theoretical) systems that allow cryptographically secure transactions to take place without so much thrashing though. Even verifiable offline transactions. Of course bitcoin's major advantage is that it's already here and working.
        dllthomas 13y ago
        "Well sure, it does both." Certainly. Using it to distribute the currency, before there's the critical mass of people wanting to make transactions enough to pay your miners seems a perfectly good fit once you're already needing to mine, though. "There are (theoretical) systems that allow cryptographically secure transactions to take place without so much thrashing though. Even verifiable offline transactions." Verifiable offline transactions with no centralization? Can you link to some?
dperfect 13y ago
From the article: "...one fundamental building block that BTC needs right now: legitimacy" "Imagine if you were able to provide governments assurance that every BTC wallet that cashed out into USD had a thorough KYC procedure performed on the transaction" I'm afraid this kind of legitimacy will never be obtained for Bitcoin - not because it's impossible, but because many (most?) of Bitcoin's strongest proponents are pushing for the exact opposite goal. On one hand, we have people wanting to "fix" Bitcoin by providing more transparency - through decreased anonymity. On the other hand, we have people trying to "fix" Bitcoin by providing increased anonymity at all costs. Personally, I believe both goals are admirable, but the conflict may ultimately hurt Bitcoin's chances of long-term success and mass adoption. It comes down to this question: do we want Bitcoin to become "legitimate" and fit in to the current landscape of government regulation, law enforcement, consumer protection, etc., or do we want Bitcoin to fundamentally disrupt all of those ideas and stand as something all of its own? The first option ensures greater chances of (quick) widespread adoption without rocking the boat too much, while the second option flies in the face of systems of power and influence that have been in place for thousands of years.
- jafaku 13y ago
  I wouldn't bother using Bitcoin if it was more of the same bullshit, just digital. For instance, if it depended on my government, I would never be able to use Bitcoin, just like I'm not able to use gold or any other currency that the government can't use to steal from us through inflation, seizures, etc. People from first world countries have a hard time seeing the real benefits of Bitcoin.
- fragsworth 13y ago
  But it is not a mutually exclusive dichotomy of either legitimate or subversive. It can be (and already is) both. Some users, especially legitimate merchants, will have to follow the letter of the law. Other users, however, who are willing to break the tax law, can and will - just as people break those laws with cash transactions. I can pay someone in bitcoin for work or services, not report it, and it is just as under-the-table as paying in cash.
  - 13y ago
bluedevil2k 13y ago
My personal top question - as I understand it, to earn new bitcoins, you must mine them by verifying the ledgers from previous transactions. The first one who solves this puzzle gets the bitcoins. Question - why doesn't the fastest computer win every time? If the puzzle is a number crunching puzzle and computers are all doing the same thing, shouldn't the winner always be the same computer?
- dperfect 13y ago
  The "puzzle" to be solved is a hash (of recent transactions and an arbitrary number) with certain required characteristics, and finding a valid solution is a matter of chance - basically through brute force. The fastest supercomputers do have greater chances of finding a solution (because they're testing more hashes per second), but they aren't guaranteed to win every time.
- letstryagain 13y ago
  Finding the next block is a random procedure. Miners try to guess a number that 'solves' the block puzzle. It could take 2 seconds or it could take 30 minutes. On average it takes 10 minutes. Faster computers can try more numbers but slow computers have a chance too. The faster your computer the better your chances. Does that make sense?
- ufmace 13y ago
  The answer is that the puzzle is huge and non-determininstic. The puzzle is to take a block of data - all of the transactions that haven't been confirmed yet - and append a value to it that makes the hash of it below a given number. That number is called the difficulty, and is dynamically set. Systems trying to solve it simply keep trying different values and running the hash to see what the value is. Any particular guess-and-hash operation has a certain probability of finding a solution, and that probability is the same for all systems, no matter how fast or slow they are running. Faster systems just guess-and-hash faster, and thus have more opportunities to succeed. That difficulty is set dynamically based on the estimated total rate of operations, or hashrate, of the entire network, so you can think of the system overall doing a certain number of hashes per second. A solution is essentially a random event that one particular hash will satisfy. So the higher the hashrate, the higher the probability that you will succeed, but it's still a probability. You never have a guarantee that you will succeed, no matter how fast you are, and even slower systems have a chance. That's why there are these malware-created networks of low-power systems doing bitcoin mining. They're all pretty slow, but with enough of them working, one of them will succeed every once in a while.
FigBug 13y ago
Something I've been wondering about Bitcoin: If Bitcoin is going to be used as a currency, you'll need to be able to get loans, short term like a credit card and long term like a mortgage. But isn't taking a loan in a deflationary currency very risky? Kinda like short selling, possible to lose/be in debt an infinite amount of money? Assuming Bitcoin becomes widespread, how do you convince people to take a salary that goes down every year? It's going to take a lot of re-education -- a completely different way of looking at money.
- stevenwagner 13y ago
  To be a bitcoin believer, its not necessary to think it will displace fiat. Bitcoin is deflationary like gold, so it shouldn't be much different then the gold commodity market or returning to a gold standard. For most of the united States growth and prosperity, it was on the gold standard.
  - dllthomas 13y ago
    "For most of the united States growth and prosperity, it was on the gold standard." Like the Great Depression, yes.
- letstryagain 13y ago
  Most people are not expecting Bitcoin to completely replace any government-issued currencies. If you take a job with remuneration in Bitcoin it will likely be a certain dollar amount worth of BTC rather than a certain amount of BTC.
- sirsar 13y ago
  This isn't specific to Bitcoin, although Bitcoin prompted the question. For a non-superficial answer, you'd want to read papers by Austrian economists. If you want amateur opinions, which I'm willing to bet is all you'll get on HN, it's been discussed to death on bitcointalk.org. Start with https://bitcointalk.org/index.php?topic=222845.0;all https://bitcointalk.org/index.php?topic=222845.0;all
- dragonwriter 13y ago
jafaku 13y ago
> The money supply for BTC increases slowly. This is discouraging transactions because (if you believe in the currency and its future) you should hoard your BTC. The amount of new BTC going into circulation is low, barring any disaster (e.g. Germany banning BTC, Kraken hacked), it just makes sense to hold because what you have today will be worth more tomorrow. Just another Dogecoin shill with unproven claims. What you said is absolutely false. In donations alone, bitcoiners have spent more (millions of dollars worth at the time) than dogecoiners have spent in everything. Dogecoin is not even in the top 5 anymore: http://coinmarketcap.com/ http://coinmarketcap.com/ It was just a short lived fad, like many other copycoins. Ever heard of Infinitecoin? Probably not. Yet it also entered the top 5 at one point.
- buttsex 13y ago
  Holding and speculating is a valid use case for BTC. Many people see it as an investment and don't use it as a currency so it's not absolutely false. If you are going to use coinmarketcap, at least filter out the non-mineable coins, Dogecoin is in the top 4.
  - jafaku 13y ago
    What some people do with it doesn't invalidate what I said at all. I'm just saying that being deflationary doesn't stop you at all from spending it. What's the difference between holding it and only spending dollars, and spending your coins and buying more coins with your dollars? There is no difference. In fact, since lots of places accepting Bitcoin give you discounts if you use Bitcoin, you are encouraged to spend it instead of dollars.
- logicallee 13y ago
  I didn't read the article but the part you quoted is basic economics. If some currency has usage but a limited supply - even if it's just cigarettes in a prison - its price will go up. When this happens, it gives a hurdle rate on spending. If relatively few cigarettes are making it into a prison, but there is no other convenient form of currency, you might well hold off trading some of yours because it will be worth more in a couple of weeks. Gold certainly can suffer from this effect and is a main reason that growth was unlocked when paper got off a 100% gold standard: if the economy needed money, you no longer had to mine it. This is NOT a normative statement, just a fact. Bitcoin spending is going to be curtailed (fact) by a limit on the speed of increase of the money supply, just as spending is spurred (fact) by easy credit and inflation. (Inflation for a fact spurs spending, because if inflation is 7%, then holding onto money costs you 7% per year, whereas spending it on anything can let you retain that value.) These are not normative statements but completely uncontroversial (and intuitive) economics.
ufmace 13y ago
The inflation one is the only one that's really fundamental to the currently. Part of the core of the Bitcoin system is that the validity of everything that happens is proven by being accepted by all of the nodes that make up the system, rather then by some special authority figure. There are authority figures that publish the node software, but they can't force anybody to go along with any change they make. They have to tell the world what their changes do, and hope that everybody is willing to upgrade. Part of the rules of the system that are enforced is how new coins come into existence, and the current rule for that is the fixed reward per block mined, with logarithmic decrease in reward amount. It is possible to change that, but the fundamental nature of the system is that the coin creation has to be controlled by an algorithm shared and repeatable among all nodes, and so cannot ever be based on any arbitrary or external factors. Even making a change that remains within those limits is risky. To keep the currency in existence, there must be broad agreement among all of the people running nodes as to what the rules of the currency are. If the core developers decide to make a change in that, and 20% of nodes refuse to upgrade, it would be a disaster. And so they aren't likely to risk doing anything that might piss off a significant fraction of the users. So love it or hate it, the fixed inflation system isn't going anywhere.
- mahyarm 13y ago
  Remember although, you can release an altcoin that doesn't release coins logarithmically like bitcoin does. You can release one that has a linear %1 permanent inflation rate for example.
  - Nursie 13y ago
    Or possibly one that rises in proportion to hash rate... ? That might be interestimg.
abalone 13y ago
It's interesting all the "how is this useful" examples she gives are for international commerce: money transfers, doing business with international customers, countries where cards are harder to accept. I'm still waiting to hear concrete examples of how Bitcoin would compete with credit cards in a First World market. There's a lot of talk about how "expensive" and "inefficient" the credit card system is (it's almost a mandatory part of any intro to Bitcoin). But so far I've heard nothing concrete. Anyone have a good link I should read?
- atmosx 13y ago
  No you can't read what doesn't exist. Firstly, there's a debate on whether BTC is closer to FIAT or to an asset (e.g. Gold). Let's say we skip that part. Until a world-wide bank like say UBS or a country decides to implement an infrastructure for bitcoin, it won't cut it. Why a country would want to do that, is beyond me - and probably beyond anyone with a basic understanding of macro-economics - and so we're left with other possible implementations of the protocol. Until we find a way for average Joe to switch from USD/EUR to BTC and back easily and without fear of money loss, I don't think we'll see any widespread adoption as a payment system. ps. The argument about using bitcoin in societies where finance is not well evolved, is as ridiculous as it is dangerous. Imagine bitcoin-driven banks in Addis Ababa handing out loans (in bitcoin or the local ETB currency?!) and financial products based on bitcoin. Then imagine that an unknown, early adopter, from the other side of the world decides to withdraw 100.000 bitcoins at once: There you go, you got Ethiopians playing wall-street pranks!
  - jamesrom 13y ago
    Why do you think it needs to be a bank that allows USD/EUR <> BTC?
    - atmosx 13y ago
      Because otherwise ordinary people will not have access to BTC and you can't achieve adoption without them. A Bank has an infrastructure that could make BTC virtually omni-present in the physical world. Any other non-gov institution, would have a hard time setting up an infrastructure in large scale. A bank has also the knowledge to protect herself from bitcoin itself, because (supposedly) understands the financial (and social) ramifications of every choice made AND should be held accountable if things get out of hand. If UBS (as in the example above) starts accepting BTC transactions, it means that thousands of hundreds of average Joes get instant access to the system. Otherwise, it's just you me and a couple of bleeding edge technophiles.
andreicek 13y ago
First comment, go easy on me. Have you seen https://www.youtube.com/watch?v=vnm4xFC2xNo https://www.youtube.com/watch?v=vnm4xFC2xNo ? I think the second guy at the end of the video raises an important question. Why use this over any other currency? If you are worried about the "control" of the said currency why not use a more "free" one like Swiss francs? I am worried that Bitcoin will never be used as a standard if a regular, Facebook user, can't manage to get his hands on it, and afterwards use it. It's a catch 22 in my opinion. Sure it's easy for IT people to use it, but my mom doesn't even know about PayPal for instance. And I am sure she is not the only one.

82 points by brown 13y ago

Great pos! The more I learn about bitcoin, the more I feel like it still has a long way to go. There are a few hurdles that can not be easily solved now: 10min transaction time; deflationary (this pretty much means it would have a hard time to act a real "currency" based on nowadays economic thinking); the resources wasted in mining and the potential consolidation of mining; the programmable aspect is very limited today. What is your take of it?

reshmakh 13y ago
In the short term, I think it will have a hard time gaining use as a currency. A few currency scenarios might pop up, for example countries with unstable government or corrupt governments could see people store $ in BTC instead. However, I do think it could be very valuable as an application. Like if you layered it on top of the existing payment system to provide better security/anti-fraud.
- moonhorse 13y ago
  Agreed!
  - reshmakh 13y ago
    I also think dogecoin is fun and may have a chance at being a useful tool for reputation and measuring attention.
    - jafaku 13y ago
      > dogecoin is fun What does that even mean? How can a currency be fun? Will my car become fun too if I attach a cute dog picture to it?
      - UweSchmidt 13y ago
        If you look to the top of the page, next to your username, there's a number in brackets. Wouldn't it be nice to take that number and buy something real with it? You could, if it was a fun cryptocurrency that had at least a little traction. I'd imagine certain people could use their Stackoverflow Coins to buy a house!
        jafaku 13y ago
        So what property does Dogecoin have that Bitcoin doesn't, that enables us to do this? The answer is nothing, and Dogecoin is redundant. Might as well use Infinitecoin or any other copycoin before Dogecoin, they are all the same copy/pasted code, with no technical added value and the only effort they put goes to marketing.
- jafaku 13y ago
  > A few currency scenarios might pop up, for example countries with unstable government or corrupt governments Sounds like most of the world would benefit from Bitcoin then.
sneak 13y ago
> There are a few hurdles that can not be easily solved now: 10min transaction time For almost all practical applications for which bitcoin is being used, this doesn't actually come in to play very often. > the resources wasted in mining It's not wasted if it's being used to process bitcoin transactions. > and the potential consolidation of mining Now you've got one - this is a huge threat to bitcoin today. It'll be interesting to see how it plays out over the next 6-12 months.
- lmkg 13y ago
  > For almost all practical applications for which bitcoin is being used, this doesn't actually come in to play very often. But could this be a self-fulfilling prophecy? Perhaps this property of Bitcoin is hurting its adoption, by relegating it only to uses where this is not a hurdle.
  - reshmakh 13y ago
    Possible, but auth apps or other off blockchain workarounds must be coming. Existing payments systems had similar problems in the past.
- ars 13y ago
  > For almost all practical applications for which bitcoin is being used, this doesn't actually come in to play very often. Not exactly. If you have all your coins in a single transaction, you will get change - which can take 10 minutes to confirm before you can spend it again. Yes, you can solve this by splitting up your money, but it's not something people expect. > It's not wasted if it's being used to process bitcoin transactions. Yes it is being wasted. Waste doesn't mean "unused", waste means "using more than necessary". Due to the hashrate arms race, tremendous amounts of power are being wasted doing nothing useful. Bitcoin is powered by electricity, a better currency would spend something else instead.
  - jafaku 13y ago
    > Yes it is being wasted. Waste doesn't mean "unused", waste means "using more than necessary". Due to the hashrate arms race, tremendous amounts of power are being wasted doing nothing useful. Due to the arms race, it's only getting more and more efficient. > nothing useful Again with that? You are starting to sound like a troll. > Bitcoin is powered by electricity, a better currency would spend something else instead. Can't you say the same about everything? Why does Bitcoin's energy consumption bother you so much, while you have cars, factories, and everything else still using fossil fuels, coal, etc.? Is your computer running on dark matter energy or what?
olalonde 13y ago
> deflationary (this pretty much means it would have a hard time to act a real "currency" based on nowadays economic thinking) This argument makes no sense to me. If Bitcoin's deflationary nature prevented it from acting as a currency, it would also prevent USD/CAD/dogecoin/etc. from acting as currencies because people would chose to buy Bitcoin instead of spending their inflationary currency on anything else. Every time you spend USD on something, you can instead buy an equivalent amount in Bitcoin. Not buying bitcoins can effectively be thought of as buying them and spending them. In fact, the truth is that no one knows if Bitcoin will be inflationary or deflationary within the next year due to its current small market cap and risky nature. But in an hypothetical world where Bitcoin does become a stable and deflationary currency, why would any selfish actor chose to hold an inflationary currency?
- amscanne 13y ago
  > If Bitcoin's deflationary nature prevented it from acting as a currency, it would also prevent USD/CAD/dogecoin/etc. from acting as currencies because people would chose to buy Bitcoin instead of spending their inflationary currency on anything else. This is exactly what happens. No one holds currency. People don't generally have their assets as cash, just what they need to be liquid. They hold their assets as a mix of stock (incl. funds, bonds, options), real estate, etc. In fact, the majority of people have practically no cash at all because they lend it to a bank (i.e. putting it in a checking or savings account) who invests it or lends it for a return! The bank only holds a small portion of what they say is in the account.
  - olalonde 13y ago
    Not sure if you are disagreeing with me but in case you are: suppose those assets (stocks, bonds, real estate) could be transferred as easily as a currency (instant transfer/fungible/divisible/liquid/etc.), would people use cash at all? What would be the use case for cash? My point was that Bitcoin would be such an asset. Perhaps a deflationary currency would have a negative overall impact on the economy, but that's not what I'm arguing about.
    - 13y ago
jafaku 13y ago
> 10min transaction time, resources wasted in mining, programmable aspect is very limited, deflationary, nowadays economic thinking Getting really tired of these arguments. Transactions take 0-2 seconds. The resources are not wasted, they are used to secure the network and are way lower than what VISA or any other big company use. And It's deflationary because people like me are suffering from this form of theft called inflation, and we desperately needed something like Bitcoin. Besides, without an economic incentive why would people risk money? Nowadays economic thinking is pretty much a pseudoscience, just like Psychology.
- Nursie 13y ago
  A crypto currency network that requires constant hash thrashing is not one I'd call well designed. It appears to be a trade-off for the decentralisation of initial currency issuing, not something everyone considers important.
  - dllthomas 13y ago
    "It appears to be a trade-off for the decentralisation of initial currency issuing, not something everyone considers important." Mining isn't (primarily) for currency issuance - it's decentralization of secure transaction processing. Which still isn't something everyone considers important, of course.
    - Nursie 13y ago
      Well sure, it does both. There are (theoretical) systems that allow cryptographically secure transactions to take place without so much thrashing though. Even verifiable offline transactions. Of course bitcoin's major advantage is that it's already here and working.
      - dllthomas 13y ago
        "Well sure, it does both." Certainly. Using it to distribute the currency, before there's the critical mass of people wanting to make transactions enough to pay your miners seems a perfectly good fit once you're already needing to mine, though. "There are (theoretical) systems that allow cryptographically secure transactions to take place without so much thrashing though. Even verifiable offline transactions." Verifiable offline transactions with no centralization? Can you link to some?

dperfect 13y ago

From the article: "...one fundamental building block that BTC needs right now: legitimacy" "Imagine if you were able to provide governments assurance that every BTC wallet that cashed out into USD had a thorough KYC procedure performed on the transaction" I'm afraid this kind of legitimacy will never be obtained for Bitcoin - not because it's impossible, but because many (most?) of Bitcoin's strongest proponents are pushing for the exact opposite goal. On one hand, we have people wanting to "fix" Bitcoin by providing more transparency - through decreased anonymity. On the other hand, we have people trying to "fix" Bitcoin by providing increased anonymity at all costs. Personally, I believe both goals are admirable, but the conflict may ultimately hurt Bitcoin's chances of long-term success and mass adoption. It comes down to this question: do we want Bitcoin to become "legitimate" and fit in to the current landscape of government regulation, law enforcement, consumer protection, etc., or do we want Bitcoin to fundamentally disrupt all of those ideas and stand as something all of its own? The first option ensures greater chances of (quick) widespread adoption without rocking the boat too much, while the second option flies in the face of systems of power and influence that have been in place for thousands of years.

jafaku 13y ago
I wouldn't bother using Bitcoin if it was more of the same bullshit, just digital. For instance, if it depended on my government, I would never be able to use Bitcoin, just like I'm not able to use gold or any other currency that the government can't use to steal from us through inflation, seizures, etc. People from first world countries have a hard time seeing the real benefits of Bitcoin.
fragsworth 13y ago
But it is not a mutually exclusive dichotomy of either legitimate or subversive. It can be (and already is) both. Some users, especially legitimate merchants, will have to follow the letter of the law. Other users, however, who are willing to break the tax law, can and will - just as people break those laws with cash transactions. I can pay someone in bitcoin for work or services, not report it, and it is just as under-the-table as paying in cash.
- 13y ago

bluedevil2k 13y ago

My personal top question - as I understand it, to earn new bitcoins, you must mine them by verifying the ledgers from previous transactions. The first one who solves this puzzle gets the bitcoins. Question - why doesn't the fastest computer win every time? If the puzzle is a number crunching puzzle and computers are all doing the same thing, shouldn't the winner always be the same computer?

dperfect 13y ago
The "puzzle" to be solved is a hash (of recent transactions and an arbitrary number) with certain required characteristics, and finding a valid solution is a matter of chance - basically through brute force. The fastest supercomputers do have greater chances of finding a solution (because they're testing more hashes per second), but they aren't guaranteed to win every time.
letstryagain 13y ago
Finding the next block is a random procedure. Miners try to guess a number that 'solves' the block puzzle. It could take 2 seconds or it could take 30 minutes. On average it takes 10 minutes. Faster computers can try more numbers but slow computers have a chance too. The faster your computer the better your chances. Does that make sense?
ufmace 13y ago
The answer is that the puzzle is huge and non-determininstic. The puzzle is to take a block of data - all of the transactions that haven't been confirmed yet - and append a value to it that makes the hash of it below a given number. That number is called the difficulty, and is dynamically set. Systems trying to solve it simply keep trying different values and running the hash to see what the value is. Any particular guess-and-hash operation has a certain probability of finding a solution, and that probability is the same for all systems, no matter how fast or slow they are running. Faster systems just guess-and-hash faster, and thus have more opportunities to succeed. That difficulty is set dynamically based on the estimated total rate of operations, or hashrate, of the entire network, so you can think of the system overall doing a certain number of hashes per second. A solution is essentially a random event that one particular hash will satisfy. So the higher the hashrate, the higher the probability that you will succeed, but it's still a probability. You never have a guarantee that you will succeed, no matter how fast you are, and even slower systems have a chance. That's why there are these malware-created networks of low-power systems doing bitcoin mining. They're all pretty slow, but with enough of them working, one of them will succeed every once in a while.

FigBug 13y ago

Something I've been wondering about Bitcoin: If Bitcoin is going to be used as a currency, you'll need to be able to get loans, short term like a credit card and long term like a mortgage. But isn't taking a loan in a deflationary currency very risky? Kinda like short selling, possible to lose/be in debt an infinite amount of money? Assuming Bitcoin becomes widespread, how do you convince people to take a salary that goes down every year? It's going to take a lot of re-education -- a completely different way of looking at money.

stevenwagner 13y ago
To be a bitcoin believer, its not necessary to think it will displace fiat. Bitcoin is deflationary like gold, so it shouldn't be much different then the gold commodity market or returning to a gold standard. For most of the united States growth and prosperity, it was on the gold standard.
- dllthomas 13y ago
  "For most of the united States growth and prosperity, it was on the gold standard." Like the Great Depression, yes.
letstryagain 13y ago
Most people are not expecting Bitcoin to completely replace any government-issued currencies. If you take a job with remuneration in Bitcoin it will likely be a certain dollar amount worth of BTC rather than a certain amount of BTC.
sirsar 13y ago
This isn't specific to Bitcoin, although Bitcoin prompted the question. For a non-superficial answer, you'd want to read papers by Austrian economists. If you want amateur opinions, which I'm willing to bet is all you'll get on HN, it's been discussed to death on bitcointalk.org. Start with https://bitcointalk.org/index.php?topic=222845.0;all https://bitcointalk.org/index.php?topic=222845.0;all
dragonwriter 13y ago

jafaku 13y ago

> The money supply for BTC increases slowly. This is discouraging transactions because (if you believe in the currency and its future) you should hoard your BTC. The amount of new BTC going into circulation is low, barring any disaster (e.g. Germany banning BTC, Kraken hacked), it just makes sense to hold because what you have today will be worth more tomorrow. Just another Dogecoin shill with unproven claims. What you said is absolutely false. In donations alone, bitcoiners have spent more (millions of dollars worth at the time) than dogecoiners have spent in everything. Dogecoin is not even in the top 5 anymore: http://coinmarketcap.com/ http://coinmarketcap.com/ It was just a short lived fad, like many other copycoins. Ever heard of Infinitecoin? Probably not. Yet it also entered the top 5 at one point.

buttsex 13y ago
Holding and speculating is a valid use case for BTC. Many people see it as an investment and don't use it as a currency so it's not absolutely false. If you are going to use coinmarketcap, at least filter out the non-mineable coins, Dogecoin is in the top 4.
- jafaku 13y ago
  What some people do with it doesn't invalidate what I said at all. I'm just saying that being deflationary doesn't stop you at all from spending it. What's the difference between holding it and only spending dollars, and spending your coins and buying more coins with your dollars? There is no difference. In fact, since lots of places accepting Bitcoin give you discounts if you use Bitcoin, you are encouraged to spend it instead of dollars.
logicallee 13y ago
I didn't read the article but the part you quoted is basic economics. If some currency has usage but a limited supply - even if it's just cigarettes in a prison - its price will go up. When this happens, it gives a hurdle rate on spending. If relatively few cigarettes are making it into a prison, but there is no other convenient form of currency, you might well hold off trading some of yours because it will be worth more in a couple of weeks. Gold certainly can suffer from this effect and is a main reason that growth was unlocked when paper got off a 100% gold standard: if the economy needed money, you no longer had to mine it. This is NOT a normative statement, just a fact. Bitcoin spending is going to be curtailed (fact) by a limit on the speed of increase of the money supply, just as spending is spurred (fact) by easy credit and inflation. (Inflation for a fact spurs spending, because if inflation is 7%, then holding onto money costs you 7% per year, whereas spending it on anything can let you retain that value.) These are not normative statements but completely uncontroversial (and intuitive) economics.

ufmace 13y ago

The inflation one is the only one that's really fundamental to the currently. Part of the core of the Bitcoin system is that the validity of everything that happens is proven by being accepted by all of the nodes that make up the system, rather then by some special authority figure. There are authority figures that publish the node software, but they can't force anybody to go along with any change they make. They have to tell the world what their changes do, and hope that everybody is willing to upgrade. Part of the rules of the system that are enforced is how new coins come into existence, and the current rule for that is the fixed reward per block mined, with logarithmic decrease in reward amount. It is possible to change that, but the fundamental nature of the system is that the coin creation has to be controlled by an algorithm shared and repeatable among all nodes, and so cannot ever be based on any arbitrary or external factors. Even making a change that remains within those limits is risky. To keep the currency in existence, there must be broad agreement among all of the people running nodes as to what the rules of the currency are. If the core developers decide to make a change in that, and 20% of nodes refuse to upgrade, it would be a disaster. And so they aren't likely to risk doing anything that might piss off a significant fraction of the users. So love it or hate it, the fixed inflation system isn't going anywhere.

mahyarm 13y ago
Remember although, you can release an altcoin that doesn't release coins logarithmically like bitcoin does. You can release one that has a linear %1 permanent inflation rate for example.
- Nursie 13y ago
  Or possibly one that rises in proportion to hash rate... ? That might be interestimg.

abalone 13y ago

It's interesting all the "how is this useful" examples she gives are for international commerce: money transfers, doing business with international customers, countries where cards are harder to accept. I'm still waiting to hear concrete examples of how Bitcoin would compete with credit cards in a First World market. There's a lot of talk about how "expensive" and "inefficient" the credit card system is (it's almost a mandatory part of any intro to Bitcoin). But so far I've heard nothing concrete. Anyone have a good link I should read?

atmosx 13y ago
No you can't read what doesn't exist. Firstly, there's a debate on whether BTC is closer to FIAT or to an asset (e.g. Gold). Let's say we skip that part. Until a world-wide bank like say UBS or a country decides to implement an infrastructure for bitcoin, it won't cut it. Why a country would want to do that, is beyond me - and probably beyond anyone with a basic understanding of macro-economics - and so we're left with other possible implementations of the protocol. Until we find a way for average Joe to switch from USD/EUR to BTC and back easily and without fear of money loss, I don't think we'll see any widespread adoption as a payment system. ps. The argument about using bitcoin in societies where finance is not well evolved, is as ridiculous as it is dangerous. Imagine bitcoin-driven banks in Addis Ababa handing out loans (in bitcoin or the local ETB currency?!) and financial products based on bitcoin. Then imagine that an unknown, early adopter, from the other side of the world decides to withdraw 100.000 bitcoins at once: There you go, you got Ethiopians playing wall-street pranks!
- jamesrom 13y ago
  Why do you think it needs to be a bank that allows USD/EUR <> BTC?
  - atmosx 13y ago
    Because otherwise ordinary people will not have access to BTC and you can't achieve adoption without them. A Bank has an infrastructure that could make BTC virtually omni-present in the physical world. Any other non-gov institution, would have a hard time setting up an infrastructure in large scale. A bank has also the knowledge to protect herself from bitcoin itself, because (supposedly) understands the financial (and social) ramifications of every choice made AND should be held accountable if things get out of hand. If UBS (as in the example above) starts accepting BTC transactions, it means that thousands of hundreds of average Joes get instant access to the system. Otherwise, it's just you me and a couple of bleeding edge technophiles.

andreicek 13y ago

First comment, go easy on me. Have you seen https://www.youtube.com/watch?v=vnm4xFC2xNo https://www.youtube.com/watch?v=vnm4xFC2xNo ? I think the second guy at the end of the video raises an important question. Why use this over any other currency? If you are worried about the "control" of the said currency why not use a more "free" one like Swiss francs? I am worried that Bitcoin will never be used as a standard if a regular, Facebook user, can't manage to get his hands on it, and afterwards use it. It's a catch 22 in my opinion. Sure it's easy for IT people to use it, but my mom doesn't even know about PayPal for instance. And I am sure she is not the only one.