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Thread: "Hacker money" - Bitcoin

  1. #1
    Member
    Registered: Nov 2005

    "Hacker money" - Bitcoin

    So, money transfer apparently no longer needs financial institutions like banks or states? WTF? I read this publication about the scientific background and must admit I am not enough of a computer geek to fully get it.

    So the essential trust connected with every currency or any other kind of instrument of payment will no longer come from an institution (state or bank) but from cryptography? That sounds....awesome from a technical and sociological point of view.


    Quote Originally Posted by bitcoin.org
    Bitcoin is the first digital currency that is completely distributed. The network is made up of users like yourself so no bank or payment processor is required between you and whoever you're trading with. This decentralization is the basis for Bitcoin's security and freedom.
    You can buy bitcoins online with your creditcard. Also, the Bitcoin-Dollar exchange rate apparently went from 8 to 9 US$ in the last 48 hours. I wish my bank account had intrest rates like that.

    There is money to be made by "mining" (I didnīt quite get the principle), provided you have the hardware to do it.

    Apparently it sounds potentially dangerous to some, since the CIA invited the inofficial head of the bitcoin development team to a meeting.


    Together with the killing of Osama Bin Laden, the downfall of dictatorships in North Africa, the foreseeable end of Joseph Blatter as head of the FIFA, the leaving of honorable silverbacks from this very forum and the change of federal law for immission control in Germany, where noise immissions from children will no longer be considered equivalent to industrial noise immissions, this makes me think the TEH END OF THE WORLD IS NEAR.

    Hello 2012.
    Last edited by Hesche; 31st May 2011 at 06:51. Reason: More info added

  2. #2
    Member
    Registered: Jun 2004
    the problem with this is that their currency has no backing, unlike regular cash which used to be backed by the actual gold/precious metals inside the coins and later by banks and government. It will pick up if and only if businesses start recognizing this virtual currency, and for the love of god I cannot see a reason one would. Unless, of course, it becomes so big on the peer 2 peer side that supporting it directly (without requiring people to "withdraw cash" first) becomes convenient enough to draw customers and increase profit, kind of like how credit cards started being accepted in stores.

    We'll see...

    EDIT: also don't get the mining thing. But it gives me bad images of chinese-outsourced WoW miners :/

  3. #3
    Member
    Registered: Jan 2004
    Location: Back Home
    They would do well (as would everyone, actually) to watch Adam Curtis's current documentary series on BBC 2, "All Watched Over By Machines of Loving Grace".... all about the illusion of self-regulating systems, how these ideas came about and how, assisted by our faith and understanding of computers, they dominate our thinking about the world.

    Good related article here: http://www.guardian.co.uk/environmen...-tansley-smuts
    Last edited by Fingernail; 31st May 2011 at 07:38.

  4. #4
    Member
    Registered: Nov 2005
    Quote Originally Posted by Yakoob View Post
    the problem with this is that their currency has no backing, unlike regular cash which used to be backed by the actual gold/precious metals inside the coins and later by banks and government.
    I read a statement from a monetary expert who says that the actual backing of a currency isnīt relevant, but the trust in the currency is. If a receiver can trust a currency to be accepted by other buyers/receivers he will use it. If this system establishes streetcred it might as well function like any other currency.

    I guess Bitcoin relies on its free convertibility to every "real" currency. The real currencies supply the solid ground a currency needs, like an authority provided by a juridical system to make sure debts are recoverable.

    I guess this goes into philosophical discussions on what money and the value of things actually are. Like these Money as Debt videos that have been floating around for a while.

    When I got this right the only danger to this peer to peer system would be a organized attack by a coordinated cluster? Makes me think of China too for some reason.

    Advantages are anonymity (which might also be a disadvantage considering the possibilities for weapon dealers, mafia members and terrorists) independence from institutions and their agendas.

  5. #5
    Member
    Registered: Jun 1999
    Location: Procrastination, Australia
    At the risk of sounding terribly hack-Weberian, it's still going to die in the arse at some point and someone with guns will have to pick up the tab, perhaps only too happy to assume that kind of authority over people's debts.

    I've been meaning to take a closer look at Paypal and the like recently, since they profess to be a mere exchange service but are functioning more and more as banks. Yet because of the domain they operate in do far more blocking and freezing of people's money for security reasons. There's been a few tales of grumpy people trying to get their money out of them. As their popularity increases I can only see increasing numbers of civil complaints and an increasing need for government bodies to bring them to heel.
    (fun flights of fancy involving this sort of thing involve governments banding together in a free and frank exchange of virtual banking regulation after theri citizens are screwed on a grand scale, creating all kinds of hilarious conspiracy theory opportunities. They talk about the creeping construction of secret socialist one world governments. I tell ya, nothing will bring it about quicker than so-called economic freedom.)

  6. #6
    Member
    Registered: Jul 2009
    I may be a Bear of Very Little Brain, but, for the life of me, I can't see a significant difference between this Bitcoin and a bank.

  7. #7
    Administrator
    Registered: Oct 2000
    Location: Athens of the North
    Quote Originally Posted by Fingernail View Post
    "All Watched Over By Machines of Loving Grace"
    It's definitely worth a watch, although I couldn't help feeling at times that it was the sort of programme that would have suited radio more than television. Some aspects (e.g. the feedback flowcharts) that benefited from the visual presentation but there were so many other scenes that were recycled that it distracted from what was being said.

    Quote Originally Posted by Sg3 View Post
    I may be a Bear of Very Little Brain, but, for the life of me, I can't see a significant difference between this Bitcoin and a bank.
    (snide on)A working website for one - the FAQ, Wiki, "Sites that accept bitcoins" and "Merchant howto" are all broken at this end(/snide off).

    In all seriousness, however, I don't see the advantage. If this is meant to be truly free of "real world" currency then I can't see how it will manage stability.

  8. #8
    Moderator
    Registered: Jan 2003
    Location: NeoTokyo
    First thing this reminds me of is the "Freedom Dollars" movement they have in the US, where an anti-govt leaning group (the kind of people you imagine stock food in their basements "just in case") came up with their own currency, convertible to and from dollars, and a little book of places that accept it as currency. Sort of a pop-anarchic recreational thing for that group. But this isn't really offering any kind of "statement" like that.

    Here it reminds me more like they were reading all these articles on monetization strategies for all these online ventures -- from online games & apps, etc -- and a recurring theme is virtual cash. Then they just generalized from the idea and thought they'd get a run on the market for a unified universal online currency. I don't know if the translation from Farmville Coins to this is going to fly unless it gets some big players exclusively using this currency. Like if there were a unified Zynga currency that some other apps started using as well, I could maybe see it taking off to a limited extent.

    But anyway, I have to imagine that that monetization strategy is what's really driving this, and the stuff about more convenience for the user and less hassle with banks and conversions (as if PayPal is soo terrible...) is just a justification they're using to sell it.

  9. #9
    Member
    Registered: Nov 2005
    Quote Originally Posted by Muzman
    I've been meaning to take a closer look at Paypal and the like recently, since they profess to be a mere exchange service but are functioning more and more as banks.

    Well Paypal certainly doesnīt like the new competitor since it just shut out a Bitcoin dealer.


    Quote Originally Posted by Sg3
    I may be a Bear of Very Little Brain, but, for the life of me, I can't see a significant difference between this Bitcoin and a bank.
    The thing is you donīt need an institution like a bank no more. Itīs a direct transfer without any distributor cutting off his interest margin. Also this
    Quote Originally Posted by Muzman
    Yet because of the domain they operate in do far more blocking and freezing of people's money for security reasons.
    would not fly any more with this system.

    I read up some more (Wiki Main Page FAQ):

    Quote Originally Posted by https://en.bitcoin.it/wiki/Main_Page
    Q. How does Bitcoin work?

    A. Bitcoin utilises public-key cryptography. A coin contains the owner's public key. When a coin is transferred from user A to user B, A adds B’s public key to the coin, and the coin is signed using A's private key. B now owns the coin and can transfer it further. A is prevented from transferring the already spent coin to other users because a public list of all previous transactions is collectively maintained by the network. Before each transaction the coin’s validity will be checked.

    Mining is providing your CPU (or rather GPU) power to proof read generated code thereby verifying transactions.

    There is a Bitcoin monitor that visualizes the activities on the Bitcoin network.


    I canīt quite put my finger on this. It sounds like an awesome concept, especially their claim to be more stable than the current monetary system with its spectacular crash 3 years ago.

  10. #10
    Member
    Registered: Jun 1999
    Location: Procrastination, Australia
    Oh, I agree actually. It's a fascinating idea. There's gonna be room for something to go wrong in there somewhere though. I don't know enough about network security to be at all specific but it's not just an exchange system between parties facilitated by bitcoin's system. There's a point there where your account says you don't have the money any more and the other guy doesn't have it yet either. They recognise this and have apparently built it to minimise the time this moment can exist with overlapping checks and such, but it still exists.
    Definitely better than Paypal and so on.
    Indeed probably the bigger risk to it, as opposed to what I was saying before, is if the big boys decide they don't like it and refuse to play ball, like you said. It'll be interesting to see how it goes.

  11. #11
    Member
    Registered: Jan 2004
    Location: Back Home
    Quote Originally Posted by Al_B View Post
    It's definitely worth a watch, although I couldn't help feeling at times that it was the sort of programme that would have suited radio more than television. Some aspects (e.g. the feedback flowcharts) that benefited from the visual presentation but there were so many other scenes that were recycled that it distracted from what was being said.
    That's very much his style, his other series (The Power of Nightmares is probably the most famous, about neoconservatism and islamism) follow the same blueprint. I find that the images and music combine to make whatever he's arguing quite powerful - perhaps unfairly so, it could almost be seen as propaganda. He has a tendency to link things together which don't necessarily follow as neatly as he presents them, but the ideas are usually compelling and thought-provoking at least.

  12. #12
    Member
    Registered: Oct 1999
    Location: Australia
    Quote Originally Posted by Muzman View Post
    There's a point there where your account says you don't have the money any more and the other guy doesn't have it yet either.
    To my knowledge this is pretty standard procedure with bank transactions, particularly international situations which I deal with constantly, and the delays are far worse. Bitcoin makes a claim that it's an average of ten minutes, and less problems with chargebacks (pretty big deal particularly in the gambling industry). Also, not getting slammed with transaction fees is pretty handy.

    I think it's got some potential, and I might look into doing a bit of mining just in case.

  13. #13
    Member
    Registered: Nov 2005
    From what I read you need to invest a lot into beefy hardware (especially graphic cards) in order to be a halfway efficient miner. With growing computing power of the network the probability for you as a single miner to calculate a new set of bitcoins is pretty low. Even after years chances are high your initial investment will never pay off.

    Oh yeah and this guy thinks that

    After month of research and discovery, we’ve learned the following:

    1. Bitcoin is a technologically sound project.
    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.
    5. Bitcoin is a political statement by technotarians (technological libertarians).*
    6. Bitcoins will change the world unless governments ban them with harsh penalties.
    Since it seems so easy to buy bitcoins and bitcoins themselves are not taxable this could be a nice object for speculation apart from usual stock exchange. 22% profit in 48 hours doesnīt sound too shabby. Definitely more profitable and risky than mining.
    Last edited by Hesche; 1st Jun 2011 at 07:14.

  14. #14
    Member
    Registered: Jun 1999
    Location: Procrastination, Australia
    Quote Originally Posted by Shug View Post
    To my knowledge this is pretty standard procedure with bank transactions, particularly international situations which I deal with constantly,
    Oh absolutely. The point was that, should problems arise there that's where a bank and ultimately the government guaranteeing the transaction and currency comes in.
    I'm not sure how it'll work out exactly, but for all the distributed exchange goals there are circumstances where bitcoin in effect possesses people's money. Which strikes me as something that could turn against it, or someone could use against it.
    I dunno though.

  15. #15
    Member
    Registered: Jun 2004
    I'm not very knowledgeable in networking and don't know jack shit about cryptography, so could someone explain how this whole thing works in lamen's terms?

    As far as I, probably wrongly, see, the whole system seems to be prone to complete hackery, without a regulatory body to protect it (like a bank or a government). I mean, who has how much money has to be stored somewhere doesn't it? They say "across the network" but the network only exists on the computers connected to it. Which means that if you are part of it, you hold some information about who owns what. So what's stopping someone cracking the encryption eventually and just infusing thousands of bitcoins into their account? Like I said, it's not a bank or a gov with shitton of security and regulations that make detecting such a fraud and irregularity possible and provide the means to fix that / punish those responsible.

    Also, I don't get the mining process. Doesn't it effectively translate to "keep pc idle = make money?" Doesn't that just sound like it would lead to endless inflation and money being creating effectively for nothing (rather than as "payment" for a "labor" of some sort)? And what's stopping someone from just making their own mining program that tells the network it has "mined" more bitcoins than it's actually supposed to?

    Clearly I am not understanding this whole thing

  16. #16
    Moderator
    Registered: Jan 2003
    Location: NeoTokyo
    I remember while studying different brands of international regulations that int'l banking regulation is one of the more successful examples of self-regulation (on the international level), where the banks themselves set international standards & regulations, not states or treaties.

    Ostensibly, you'd think if this group were smart it'd match a lot of those regulations itself just to build confidence in its integrity. The internal pressure for needing confidence & predictability is why self-regulation works so well for banking to begin with.

    But then again you see the catch; at least from that quote it seems the whole ethos of this thing is distrust with the big banks in smoke filled rooms setting the rules for everybody & controlling the flow of money, and this is the pop-anarchic hacker's alternative. Maybe I wasn't so far off seeing the connection to Freedom Dollars in my previous post after all.

  17. #17
    ZylonBane
    Registered: Sep 2000
    Location: ZylonBane
    Bitcoin is financial LARPing.

  18. #18
    Member
    Registered: Nov 2005
    Quote Originally Posted by Yakoob
    I'm not very knowledgeable in networking and don't know jack shit about cryptography, so could someone explain how this whole thing works in lamen's terms?

    http://www.youtube.com/watch?v=Um63O...layer_embedded

  19. #19
    Member
    Registered: Jun 2004
    yeah i watched that, and it doesnt explain the actual implementation details of the whole thing or address my questions.

  20. #20
    Member
    Registered: Nov 2005
    You could try this scientific publication. Itīs all in there with calculations on how probable a success of an attack on the system would be and so on. I only got some of it since Iīm no computer expert and these equations just make me feel dumb. Maybe the FAQ can simplify it enough to get more than from the video without this world formula stuff from the publication.

    I think I know now whatīs so fascinating about this whole thing. It just reveals how important basic human emotions are in daily life. This one is about trust. Trust this system and it will work. Of course, this is true for every other (monitary) system out there but here itīs so simple because itīs only open source code, written by one, maybe a couple of individuals. No big institutions involved, just a code. Matrix style. It just reveals how trust holds together our societies.

    Man, that sounds like the closing lines of some lofty blockbuster movie.

  21. #21
    Member
    Registered: Apr 2002
    Location: Third grave from left.
    This thing has "scam" and/or "baseless-dream" written all over it. Are there any faint signs anywhere this can be taken even remotely seriously? Like peer-review or other reputable opinions. Some detailed information how it all works (not that laugh inducing pdf at their page nor the useless wiki) - especially something that concentrates on the juicy math bits and not implementation side of it (which no-one gives a flying fuck about at this point).

  22. #22
    Member
    Registered: Apr 2002
    Location: Third grave from left.
    Quote Originally Posted by Hesche View Post
    You could try this scientific publication.
    It is just some random and quite shitty pdf (basically, a glorified blog post from some bloke at the internet) that has no chance of ever getting to be "scientific publication". (immho of course)

  23. #23
    Member
    Registered: Jun 2004
    good. most publications are shit.

    EDIT: just found this lovely tidbit in the wiki:

    Your Bitcoin wallet contains all of the private keys necessary for spending your received transactions. If you delete your wallet without a backup, then you no longer have the authorization information necessary to claim your coins, and the coins associated with those keys are lost forever.
    Lovely, losing all your life savings in a computer crash...
    Last edited by Yakoob; 1st Jun 2011 at 18:56.

  24. #24
    is Best Pony
    Registered: Nov 2002
    Location: The magical land of Equestria
    I suspect that the sort of person who will be using this to any great extent will be the sort of person with at least two mirrors of their hard drives.

  25. #25
    Member
    Registered: Jun 2004
    which, if the case, will never catch on then since 99.9% of people don't even know what a hard drive is.

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