Discussion in 'General Discussion' started by smack, Feb 22, 2014.
I'd rather use the SotA Collector Coins as money instead of BitCoin....
Silk Road 1 - bitcoins gone and no recourse for people who lost money
Silk Road 2 - bitcoins gone and no recourse for people who lost money
Mt. Gox - bitcoins gone and no recourse for people who lost money
Flexcoin - bitcoins gone and no recourse for people who lost money
Anyone still truly believe this is a safe and stable investment?
Let's put Bitcoin aside and address an egregious error: you've taken a sample which is a subset of failures and inductively concluded something about the population. If you don't understand the problem there then I fear it would take too long to explain.
Mt Gox has been a known problem for years. The smart people avoided it. There has been talk about it on the "official" Bitcointalk forum for years (ironically the forum is supposed to be owned by mtgox). Consider that if you've just heard about the problems recently then you're probably not informed.
All of these platforms require people to assume an additional counter-party risk which is not built into the Bitcoin protocol. People "trade" inconvenience for risk. The inconvenience is that you could hold Bitcoin yourself, without assuming the additional counter-party risk. This is also a known problem. There are smart ways to manage Bitcoin, all of which are well documented. Again, this requires you to actually do some research.
Mt. Gox was the first major exchange and the face of bitcoin to many people. Even if people in the know new about the risks, individuals lost a cumulative $500 million dollars and there is zero recourse. People are screwed and they can't do anything about it.
There is no form of insurance or governing body to protect your currency. If you think that it is fine that your money can be stolen and you have no means to protect it nor recoup your losses, and that people are ignorant for seeing this as a problem, I don't know what to say.
You've insisted that it is actually a good thing that people had their money stolen and these repeated events are good for bitcoin in the long run. Applauding people's losses seems insensitive at best.
Bitcoin has two major massive problems that make it dead on arrival that we haven't even discussed.
1. With enough computing power and enough time, the bitcoin puzzle will be reverse engineered and someone can instantly harvest all remaining bitcoins. This currency has a very finite lifespan. Who wants to be the one holding the hot potato last when it is worthless? That power and time isn't far fetched when you can rent all of Amazon's spare cloud cycles on the cheap. Want to have the 30th faster super computer in the world instantly? It only costs $1,279 to rent for an hour and currently that would pay for itself in mining and then some.
2. Bitcoin has no central repository. It trusts the majority, and all it takes is one botnet to zerg the network and permanently and irrevocably destroy the whole thing.
Anyone pushing bitcoin is perpetuating a new flavor of pump and dump schemes. They're trying to inflate the worth of their own investment so they can sell high before the whole thing becomes worthless and all the suckers take massive losses. It is barely a step removed from fraud.
There has never been any requirement to ever use Mt Gox.
There is no governing body by design. If you don't like it, that's fine but you need to understand why it was designed like that. People need to understand how it works otherwise they will be in for a surprise.
It is a known risk and one that people should be aware of. If you understand how the protocol works then you'll see why this is a consequence. It isn't necessarily an insurmountable problem though. You need to understand why such an asymmetry exist to put it into context.
You also need to understand that with every plane crash comes an improvement in safety. The system is anti-fragile because it learns from the mistakes of the specific and improves the whole. Much like entrepreneurial failure is bad for an individual but good for society. You mistake the specific for the population, again.
Actually, this has been addressed. I point out in an earlier post that people have estimated the total energy consumption of the Bitcoin is $15m per day. This also require (an estimated) $200m of equipment just to get an edge. Few institutions can afford that. This also overlooks the possibility of an increase in the computing power of the network outside of this malicious entity. So yes, theoretical possible but also unlikely.
The technology securing Bitcoin is custom built ASICs. Trying to replicate that power with normal computers is even harder. The difference between an ASIC and an FPGA or GPU is big. Comparing an ASIC to a cpu is even worse.
Here's the necessary reading:
Core i7: 66 M/Hashes (apparently, although I'm skeptical).
Good gfx card: ~300 M/Hashes
Good FPGA: 800 M/Hashes
Good ASIC rig: 1,000,000+ M/Hashes. (yep, there's multiple chips per rig but that's how people roll).
How many CPUs were you going to roll? Yep. 30,000 CPUs isn't even worth the effort. The energy costs of CPUs greater too (M/hashes per Joule). The suggestion that CPUs are a threat is laughable.
Global Bitcoin computing power now 256 times faster than top 500 supercomputers, combined!
I would criticize the comparison of hashes to flops, but still... just consider how likely your claim is to reality.
That botnet would need serious computing power that you've failed to understand.
Do you also understand that having an edge in computing power for a brief period of time is not enough?
Edit: this links says it more concisely than I can:
Here we go:
An attacker that controls more than 50% of the network's computing power can, for the time that he is in control, exclude and modify the ordering of transactions. This allows him to:
Reverse transactions that he sends while he's in control. This has the potential to double-spend transactions that previously had already been seen in the block chain.
Prevent some or all transactions from gaining any confirmations
Prevent some or all other miners from mining any valid blocks
The attacker can't:
Reverse other people's transactions
Prevent transactions from being sent at all (they'll show as 0/unconfirmed)
Change the number of coins generated per block
Create coins out of thin air
Send coins that never belonged to him
I think you failed to read my link. Renting those spare Amazon cycles? That's 30,000+ cores, which literally would make it in pure power the 30th most powerful supercomputer on the planet, akin to a $200 million dollar supercomputer as you referred to.
You can also use botnets to do the same and have access to even vastly more computing power for free.
Oficla is a publicly known botnet with over 30,000,000 computers. That alone could gain 50% of the network and double-spend multiple coins from multiple clients at once, for exponential gain. And while it can't create a true legit coin out of thin air, if it has over 50% of the network, it can override verification of a coin and spend counterfeit coins, multiple times from multiple locations at once for exponential gain.
And you're still ignoring the fact that nothing is protecting the currency and there are multiple cases of people losing their entire investment immediately with zero recourse.
Not to mention the likelihood of the currency being seized. It has already been suggested by the Prime Minister of Ireland that they will outlaw Bitcoin.
Anyone who facilities Bitcoin transactions in the United States today could be seen in violation of the Patriot Act today under current legislation because it doesn't meet the guidelines for money laundering prevention, oversight and accountability.
The US government can't stop online gambling, but they can stop all US payment processors from letting you put money or take money out from such sites. Expect the same thing to happen with Bitcoin in the future.
Again, who wants to be holding the hot potato last when it is literally worthless.
I squeezed that one in late.
I've addressed this several times. There is no requirement to use these third-party platforms. There is a way to securely hold Bitcoins, none of your examples are an illustration of that. Ok, so that's tautologically true but perhaps you should figure out how to actually secure the Bitcoins. For example, paper wallets. There are problems here yes, and I'm mildly naughty for implying that security is "thing" but is in fact a process. People suffer hacking and fraud all the time. Improper security controls will always lead to problems.
Not exactly a well known expert in either information security, entrepreneurship or economics.
Better get on the phone to California. They just legalized it.
Decentralization is hard to kill. Cf: any peer-to-peer network.
It's a good thing state law trumps federal law.
Oh wait, it doesn't.
The point is the sentiment. The US Government could have tried already, but perhaps they won't? I won't make any promises here. You might be correct.
But let's caste our mind back to a time when cryptography was banned from being sold. Let's also recall Phil Zimmerman and PGP. And also what happened next... oh yes, commerce. Cryptography is integral to global payments. Pragmatism trumped government shortsightedness.
Points for cherry picking though.
Another article to add to this mix, hadn't actually read it before. Skeptical in all honesty too.
The trade of cryptography is still regulated and restricted.
Most people aren't aware that literally the bulk of the Patriot Act is focused on tracking all financial transactions, and preventing money laundering. The US government believes one of the most crucial (and fairly silent) tactics to fight terrorism and crime is to track money and prevent money laundering.
They didn't immediately seize gambling funds and gambling domain names. They did it quietly in the middle of the night and people lost money. And it didn't require a change in legislation because those laws were already on the books (though the domain name seizures are pretty illegal).
There is already past precedent they can do the same with Bitcoin at any point, but they may be waiting to figure out how to best execute that strategy and wait to see if they can establish a trail. The decentralized nature makes that difficult, but not impossible for them to be in the network looking for transactions.
I'm highly aware of that, but the laws have been seriously liberalized. I'd argue that this has been a boost for the US's position in the world (wealth / affluence etc). It is a world leader in digital commerce. Whether folks like that or not, admittedly Bitcoiners grumble about it.
I wonder how things might be if the US Government decided to adapt the protocol for its own use. A cryptographically secure coin that isn't decentralized.
I can't / won't argue about the Patriot Act as I'm honestly not knowledgeable enough about US laws.
I squeezed in another link with an add to my previous post. This quotation is more to the point:
Jat you need to read your links better....
This is NOT saying Bitcoins have become legal tender in CA. It is saying that bill AB 129 has passed in one of the lower committees within the CA state assembly. It would still need to be passed by the Senate Policy Committee, Senate Fiscal Committee, and lastly the Senate Floor. The bill also doesn't cover JUST Bitcoins but several other forms of digital currencies as a legal tender in the state. Can you not see that all of this messiness going on recently might have more than a few politicians a little skeptical?
I understand the bitcoin craze. There have been several communities in the northeast US ( and I'm sure others that I'm not aware of ) that have been using their own form of bartering forgoing the use of the USD for quite some time, this is just being done on a global scale so the amounts are that much larger. They've also been battling with the US Treasury about it for a long time as well, hehe.
The problem with the whole thing is that the overwhelming majority of people in the world do not believe that something such as a currency that is ONLY a digital entity has any physical worth. Hence why you constantly see that people cannot understand using hard currency for purchasing digital-only items like WoW gold. That's not even taking into account that the currency has no form of physical backing (neither does the USD anymore, thanks to the idiot Nixon, but that's another topic altogether ) so there's even less assurances for people if something goes wrong. PLUS, we're not touching the pointed fact that too many people are idiots on the computer, and thanks to hackers worldwide and the media consumers are even less trustful of a system that is nothing but 0s and 1s.
Until these and other hurdles can be surmounted Bitcoins will remain the niche item they are.
I have nothing against Portalarium accepting Bitcoins as payment for upgrades, add-on, etc., but I would hope that it's not something they would hold onto and use as an investment tool.
My mistake. They didn't legalize but passed a motion to make it legal.
Although I'll re-iterate my point on sentiment. I did also mention Germany in my previous post.
Yellen, if you want to believe her, said that FinCen is equipped just fine to handle it. She might be wrong, but her opinion carries a lot of weight (see previous post).
Sure. I've probably used the word risk more than any other person on this forum, and I naturally tend to thin in terms of risks and opportunities. With chaos (mess) comes opportunity.
Folks need to understand what they are getting into. If folks don't understand or properly manage their risk then their expectations will lead them to some horrifically awful places.
Skepticism is good. Ignorance is not.
Exactly. You raise several points here which I've already pointed out or hinted to. While you are skeptical you actually understand the point of it all. The system isn't perfect but it was designed to address what some people see as flaws. People are often idiotic, and often sane people trade real money for WoW Gold. There is no mystery here imho.
sir...we lost another engine, we're going down
i hope they wont go the bitcoin route, aside from all the high exposure problem press it got. the more serious thing imho is he fact that both the EU and the VS are starting to consider bitcoin a criminal currency. and i suspect that laws will be made against it in the future...
Bitcoin will get challenged until it is properly regulated. Governments obviously don't want a currency used that is out of their control. Right now Cash is still the top criminal currency, or what people use when they don't want something tracked to them.
Adding bitcoin as a payment option for SOTA holds no risk. You pay in bitcoins and the conversion service pays Portalarium as US currency. In the end is just another payment option like Paypal or Amazon which may or may not be available everywhere or to everyone.
No new form of payment is without its adoption problems. When people were using the barter system I am sure it was hard to convince people to take a piece of paper instead.
but even cash is getting/is already more and more regulated for example in my country payments above 2000 euro cant even be made in cash anymore.... so in theory a state could decide to ban conversions bitcoins into their currency anymore... which would limited the usefulness of BC seriously.
not a risk i would like to take as a company...
The is no risk to the company. Its just an option provided by a payment processor since no one processes their own payments. The company doesn't care whether you use cash, credit, bitcoin or Dogecoin. Customers use the service and they get their local currency. If your country bans bitcoins that that will simply not be option for you at checkout. Since the company doesn't hold bitcoin there is no risk, as the payment processor is 100% responsible and it is automatically converted. There is only risk if you are holding bitcoin whose value will fluctuate because of all these issues, which Portalarium would probably not do as they will get US Dollars for your payment in bitcoin.
With bitcoin governments can only control whether its popular, I really doubt bitcoin will go away if outlawed. I bet people still make certain transactions over 2000 euro in an anonymous way, and always will. Regulation isn't so much about controlling a currency as tracking it and getting a cut through taxes.
Baby steps in the right direction:
Bitcoin derivatives might be coming out in a week.. But the more people hear about trouble exchanges the more people will avoid it.
i think bitcoin is an interesting idea but i think it has too many problems associated with it. for example if someone steals them there is no recourse at all. if you had them at an exchange and they are stolen, you similarly have no recourse.
what i see happening is a reputable company coming up with an internet based currency backed by gold. bitcoin wouldn't be able to compete, it would do everything bitcoin can do except it would be backed by gold and allow recourse in the case of theft.
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