But after reading the six statements from LAUNCH in the header above, I feel like someone is trying to sell me beautiful beach front property in Nevada, get me to join a great new cult, or some combination of both. Yeah, going to change the world, unstoppable, most dangerous, blah, blah, blah… brain’s scam alert is ringing-ringing-ringing. LAUNCH’s presentation makes BC sound completely bogus.

2. Bitcoin is unstoppable without end-user prosecution.
3. Bitcoin is the most dangerous open-source project ever created.
4. Bitcoin may be the most dangerous technological project since the internet itself.
6. Bitcoins will change the world unless governments ban them with harsh penalties.

These are very dramatic points, but they’re not supported by Nakamoto’s paper. The paper simply describes a system of electronic transaction that doesn’t require a central authority. I take no position on whether or not it will work, or on the economic impact, but I can’t draw the conclusions stated above.

Nakamoto’s second paragraph ends with this statement:

“The system is secure as long as honest nodes collectively control more CPU power than any cooperating group of attacker nodes.”

That’s a pretty big “if.” It sounds like this: If hackers wanted to hack, or some government agency (the NSA?) wanted to destroy the system, they would need to assemble either an extensive bot-net, or a large in-house network (which a government could afford) to add enough CPU power to compromise the system.

In fact, if we ignore the bot-net threat for now, it sounds like this system only works if the government doesn’t consider it a threat.

If the government and bot-net threats doesn’t materialize, bitcoins may well become a useful and important means of electronic transaction one day. But from the four points above, it sounds like some libertarian ideologues are projecting onto bitcoins their fantasies of a new currency that will replace today’s supposedly government-corruptible currency. They’re welcome to this fantasy, and this technotarian political statement, but that’s not what bitcoins were invented for. I seriously doubt that bitcoin currency is the answer to their dreams.

-with apologies to Robert Anton Wilson, and wondering what he would have thought of bitcoins. i know he would have approved of the concept but he probably would have found a problem in execution (and maybe a solution).

Assuming you’re a human, you’re working just fine. You’re converting food and water into energy, just as nature intended. That’s not to say you’re doing anything _useful_, of course, but neither does Wall Street, and many people consider that work. *shrug*

BitCoins are based on hashing algorithms (for the “work” involved in minting bitcoins). The problem that needs to be solved scales with processing power (usually adding more leading 0′s to the hash that a computer needs to find), so throwing a server farm full of GPU’s won’t cause inflation of BitCoins overall. The BitCoins themselves are encrypted using public-key crypto and your claim to BitCoins depends on your possession of these collections of keys. The production of BitCoins is determined by the entire network at a fixed pace and halving every year, resulting in a finite number of BitCoins that can ever be produced. After which, deflation will most likely take place (assuming BitCoins are used enough) by the BitCoins being divided to a number of decimal places. BitCoins are also anonymous, as they are only collections of keys with no information about who owns them and your own public-private key pair can be regenerated at will.

I agree with the notion that this kind of currency is a potential threat for governments because no one controls the production of this kind of currency, so therefore power is taken away. Even if BitCoins specifically do not take off, the technology and system is sound, and will be a great model for any future electronic currency.

Note: There are drawbacks to this system like if your computer crashes with your BitCoins on it and no backup, you’re SOL. The network will also ignore the fact that BitCoins are lost and will not regenerate lost BitCoins. Also, much like encryption can be used for nefarious purposes, BitCoins scream to be used for money laundering.

So, with greatest computing power: NSA and maybe the Chinese government. and we’re back to where we started, no?

I think that the sum of the comments so far amounts to about 0 knowledge to bank on.

Bitcoin IS NOT some “viva la revolucion” magic thing that will overthrow governments… governments do more than govern a currency, and this replaces the network-aided currency transactions, which is a feature of a few private companies and not a feature of governments.

It’s almost like Visa or Paypal wrote this article to get US congresspeople to take note of this.

..sigh

There’s a lot more in the way of visible activity in exchanges than in transactions for goods and services, and the “retail” entities participating are few, non-professional, and could easily disappear overnight. I don’t mean to diminish the folks that participate in that, but they come from what will end up being the moral “stump” of true believers in Bitcoin. In _scale_, Bitcoin is going to be about secrecy, and used by those to whom that aspect has primacy. That will drive the need for conversion, until conversion is cut off.

> Depends on the jurisdiction, depends on the implementation of the currency, depends on the behavior of the people who use it.

It actually doesn’t in the US, the technology provider is responsible. Canada seems very easy on this stuff, though, and broadly speaking, Europe generally somewhere in between, for now. I can really only speak comprehensively to the US situation, though.

> The fact that Egold was involved in money laundering doesn’t mean every possible system of alternative digital currency is just as illegal. Bonnie and Clyde used a getaway car; doesn’t make cars illegal.

That’s a silly straw man; my point wasn’t at all that digital currency is illegal.-It’s not. My point was that initiatives that position as an alternative to government fiat currency, hide transactions and are based on a commodity, whether gold or digital hashmarks, are inherently of much more interesting to criminals than to regular folks. There’s not a real benefit beyond that it’s not “debt based” and it’s hidden. -The former is actually an economic suffocator, so it’s the latter that eventually drives a significant user base.

> Bitcoin is fiat currency. You apparently didn’t read their FAQ.

It’s not. They just don’t know what a fiat currency is. They say that the value of bitcoin is derived from scarcity, and it’s _entirely_ from that; hence, it’s a commodity-backed currency. -The commodity doesn’t need to be the electricity or CPU/GPU cycles used to create it; the fixed-quantity commodity is the bitcoin itself. The sorts of alternative currency that are actually fiat are those along the lines of LETS, which, like the dollar, reflect instead the faith and participation of a community and which allow currency availability to scale in reflecting activity.

Secrecy will indeed be the main feature many people are looking for, myself included. (I don’t happen to think I can get it, so I won’t be using Bitcoin, but that’s a separate issue.) The need for secrecy doesn’t mean conversion to other currencies is essential. One thing has nothing to do with the other. Maybe all I want is to do a particular transaction without Mom finding out.

If you can cite a specific law or regulation that Bitcoin is illegal in the U.S., do it. Simply repeating that you think it’s illegal, does not make it so.

My point was that initiatives that position as an alternative to government fiat currency, hide transactions and are based on a commodity, whether gold or digital hashmarks, are inherently of much more interesting to criminals than to regular folks.

Bitcoin doesn’t match that description. It’s a fiat currency, it’s not based on a commodity, and all transactions are public (though the identities of the participants is someone obscured). It may be interesting to criminals, but it’s not obviously useful to them, for reasons I’ve already mentioned above.

They say that the value of bitcoin is derived from scarcity, and it’s _entirely_ from that; hence, it’s a commodity-backed currency.

Nonsense. What they actually say, clearly, is “Bitcoins have value because they are accepted as payment by many.” They are backed by nothing at all. There is no commodity, just like LETS and the dollar. The fact that there are limited bitcoins does not change the fact that there’s no backing commodity.

Each owner transfers the coin to the next by digitally signing a hash of the previous transaction and the public key of the next owner and adding these to the end of the coin. A payee can verify the signatures to verify the chain of ownership.

The benefits of a currency like this:

b) Your coins can’t be tracked

Errr…. don’t the first and last statements contradict each other?

And, in general, isn’t being able to track the previous ownership of coins a Bad Thing (esp. I would think for libertarians)? Why is it any business of yours that the BC’s in my possession were last owned by notorious druglord X?

Wait some years till the chinese and others stop accepting dollars for international transactions and you’ll see who’s defaulting faster than the speed of light. Then, you’ll wish you had bitcoins instead of dollars :D

So what happens to your bitcoin currency when your computer is infected with a trojan/virus designed to steal it?

Bitcoin, in scale, is entirely dependent upon the existence of entities that will allow conversion of Bitcoins to dollars.

You wouldn’t be willing to trade bitcoins for goods and services, but lots of other people would. There’s no reason a bitcoin-to-dollars conversion is necessary to that trade.

There will never be retailers participating in Bitcoin transactions.

Looks like there are a shedload of them at https://en.bitcoin.it/wiki/Trade.

it will inherently be out of compliance with regulations

Depends on the jurisdiction, depends on the implementation of the currency, depends on the behavior of the people who use it. The fact that Egold was involved in money laundering doesn’t mean every possible system of alternative digital currency is just as illegal. Bonnie and Clyde used a getaway car; doesn’t make cars illegal.

these sorts of anti-fiat-currency initiatives aren’t really interesting to citizens outside of a committed core group

Bitcoin is fiat currency. You apparently didn’t read their FAQ.

I’m only suggesting defining retailers as ongoing business entities, for whom risks and returns are significant. A guy selling a few hats he makes doesn’t have the same concerns. In a way, every eBay vendor is a retailer, but that’s such a broad definition as to be meaningless.

> If you can cite a specific law or regulation that Bitcoin is illegal in the U.S., do it. Simply repeating that you think it’s illegal, does not make it so.

I didn’t say that it was illegal. And I specifically said that alternative currencies aren’t by nature illegal in the US. In my first post I described at length where it would run into difficulties with the IRS, and how it’s the responsibility of the software/community creator to report transactions. You can look up the regulations pretty easily. They need to generate 1099Bs. Simple.

> Nonsense. What they actually say, clearly, is “Bitcoins have value because they are accepted as payment by many.” They are backed by nothing at all. There is no commodity, just like LETS and the dollar. The fact that there are limited bitcoins does not change the fact that there’s no backing commodity.

Are you saying that it’s a fiat currency because it says so on their FAQ? :-) In truth, if I am a user of Bitcoins, I value these coins because there is a fixed quantity of them. You can argue the semantics of it, but in effect Bitcoin _acts_ exactly like a commodity-backed currency. The number of Bitcoins in circulation doesn’t grow with an economy. What is driving my valuation in Bitcoins? What will inevitably cause deflation of Bitcoins? Primarily the quantity in circulation, and speculation within the conversion sites. Compare descriptions of the three models under discussion; which two are more alike?

a. “I value currency based upon the gold standard because there are limited quantities of gold available, and I trust that a currency based upon a valued material in limited quantities cannot be manipulated/corrupted by those running the system. Deflation is likely an ongoing issue.”

b. “I value currency based upon Bitcoin because there are limited quantities of Bitcoins available, and I trust that a currency based upon a valued hashmark in limited quantities cannot be manipulated/corrupted by those running the system. Deflation is likely an ongoing issue.”

c. “I value the US$ because it has the US government behind it, supported by a dynamic economy which ensures that it is accepted by everyone around the world. Few who use it understand how it works beyond this simple fact, or the relationship of quantity to value, and inflation is built in and effectively managed.”