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Visualizing How A Bitcoin Transaction Works
Following our last primer on the digital currency, prices have somewhat stabilized (despite the ongoing efforts of TPTB to regulate it out of existence). The following infographic provides a step-by-step illustration of how a bitcoin transaction occurs.
(via bitcoincharts.com)
(click image for legible large version)
(h/t Dr. Constantin Gurdgiev via True Economics blog)
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Yeah. They are useful for a getway from a bank job, Good money that way.
Hopefully, that's not the only way you can come up with.
Indeed. Even with gas & insurance you can make far more money far more reliably with a car to deliver people or goods than to play with btc.
What the hell are you talking about?
Stay away from pre built mining rigs, they're very over priced. Build your own machine.
Stay away from pre built mining rigs, they're very over priced. Build your own machine.
Make sure you keep the Carbon Tax people out of your countries.
You forgot to add the price of the hardware...
AND the price of delivery because electricity is not ONLY charged by rate but also by connection. Even if you use zero you don't PAY zero.
There goes Tyler bitcon pumping again... tisk, tisk.
This too will pass. I was unawares of the new ZH policy until I figured out it did not apply to me, but it does to him.
Okay you say Tyler is pumping it, Tango In The Blight says he is bashing it..which one is it? Personally I don't think that either one of you two bothered to look at the piece.
Any time I see "random number generation" in a flow chart, I have visions of Jon Corzine driving 135 MPH on I-95.
From a mathematical perspective, bitcoin could be taken down in a heartbeat.
Sincerely, what is it I am missing good doctor?
All I need to think about is Syria, but on a much larger scale. Before anybody even knew it Syria went off line. Anybody who participated in bit coin suddenly had no access to funds. I understand that when they come back on line the bit coins may still be there, but if I were a person from Syria that wouldn't make me feel very good. Another thought is Cyprus, before people even had a chance to react the political class shut everything down and extracted funds from their accounts. The bottom line is this... if you can't touch it you don't own it.
I am all for expanding topixs. But Bitcoin is a joke. Syria is serious business.
I think the point of Syria and Cyprus was that you need be on top of your game when it comes to predicting the future based on the facts of reality.
The people of Cyprus and Syria should have known to get their money into physical PMs or physical cash before hand, but most didn't.
So without a crystal ball and NASCAR driver reflexes, trying to time all this electronic bitcoin/digital exposure is nigh impossible? Would it not then make more sense to have already taken the steps you write of?
DaddyO
amen
"From a mathematical perspective, bitcoin could be taken down in a heartbeat."
There's a lot of money to be made in breaking bitcoin, so if it's easy enough to be done "in a heartbeat", perhaps you could explain it to the rest of us?
I'm fairly certain I shouldn't hold my breath for your response . . .
How do I buy bread with shitcoin?
Simple - Bob has bitcoins, Alice has bread. Bob transfers x number of bitcoins to Alice by intitating the transaction process, while Alice hands y number of loafs to Bob. Bob goes home with bread. The transaction gets confirmed an hour later by miners. If the transaction goes bad, Alice then knows to never sell bread to Bob again.
If only grocery stores can pick up on this sooner! Not much different from credit/debit cards.
I thought Bob had bitchtits?
I think credit/debit cards are verified on the spot.
Wouldn't Bob & Alice also have to have their computers (can smartphones handle it?) & secure internet access to handle the transaction?
Search for IOS and Android bitcoin wallets. They have them already man.
Also, the only way the transaction could go bad with Bob being at fault is if he found a loophole in his wallet software that allowed him to send bitcoins he didn't have (because the bitcoins he would had before were already spent on another un-confirmed transaction). It's not likely though, most wouldn't know much on reverse engineering software.
Of course they can. Blockchain app allows you to create an indiovidual QR code to send/receive BTC (privately) to/from another smartphone or computer/terminal.
Just like your visa or paypal or mastercard or Amex can. cough cough.
This will be never allowed to work, because banks don't get their share.
The bank's "share" will be marketed as "value added services" after people are screwed by merchants of dishonesty and have no recourse through a chargeback mechansim (if it survives or grows large enough to materially impact anything of consequence to the banks).
I could imagine another drawback being that a robber/carjacker could completely clean out a victim's bitcoing account whereas ATM machines have a daily limit, as well as video cams at many locations.
I believe that's why the Boston Marathon bombers had to take their carjacking victim to multiple ATMs and then finally dumped him after he reached his limit.
Of course the video cameras often have limited to no value in these situations and the daily/transaction limits can be a boon or a nightmare depending upon the situation, as the Greeks found out to their dismay.
You forgot Gary, which is where I got confused.
I'm not the brightest guy in the world, but I'm not an idiot. After researching this bitcoin stuff for a while now, I can't understand it. Gold and silver for me!
You don't have to understand it, you just have to believe you understand it!
Oh, so like Keynesian economics (sic) then?
Cling to your metals. Maybe if you're lucky the DHS will let you leave the country with them, when things take a turn for the worse. Probably not, though. Bitcoin, on the other hand, isn't detectible with metal detectors.
"Bitcoin, on the other hand, isn't detectible with metal detectors."
So where is my guarantee that BTC is convertible into gold, silver or even fiat? Why are we leaving the country again? Pardon me, but am I missing something?
Guarantee? HAH! You believe in the power of contracts? The government guaranteed dollars would be convertible into a specific amount of gold, and you see how far that got you?
Who wants gold, silver, and fiat when you can have Bitcoin? Bitcoin is superior to all other currencies.
And I don't know why we're leaving the country: maybe because we don't like living there anymore? Maybe because the government is oppressive? Maybe because we enjoy adventure? Maybe because we refuse to be tax livestock? Take your pick.
This "superiority" is an article of faith, not fact. Superiority to me requires destruction of all electrical grids, all networks and yet able to use the money. btc offers no such benefits. gold does. Silver does.
Bitcoin, on the other hand, isn't detectible with metal detectors.
The USB stick up your butt will make the metal detector sing like a canary and the microwave the TSA insist you place it in if you want safe travel will wipe it clean.
Make sure you have them tattooed on your scalp so you can shave your head and retrieve them when you cross the border - it's the safest way - but make sure you have it tattooed in reverse so you can read it properly when looking at the motel bathroom mirror.
Or maybe a microfilm in a false tooth...
or a UV tattoo on your ball sack....
or train some carrier pidgeons! That's the one i'd use.
You have got to be kidding me. I'm at a loss for words at how incredibly stupid you are.
Apparently your loss of words does not translate into a loss of typing ability. Oh well.
19 words
Stupid is as stupid does.
I hope you get rich from your bitcoins, i hope they don't evaporate one day, i hope the tax man doesn't pound your ass, i hope every corner shop accepts them and i hope they make the Rothschilds wave the white flag and hand over their French mansions to all the poor people in an act of amnesty for all they've done to the world.
I doubt any of those things will happen but for your sake i hope they do because there's nothing worse than a fundamentalist that's just lost everything.
The only thing you need to prove your ownership of an account is your private key, which can be memorized (aka a "brainwallet").
No need to transport any physical item, or send any account data anywhere.
btc is detectable with routers and they can reject every btc packet by rejecting every encrypted packet and entire subnets can cut you off completely. Gold has no such weakness.
"Perhaps the sentiments contained in the following pages are not yet sufficiently fashionable to procure them in general favor; a long habit of not thinking a thing wrong, gives it a superficial appearence of being right, and raises at first a formidable outcry in defence of custom. But the tumult soon subsides. Time makes more converts than reason." -- Thomas Paine, Common Sense
I've been trying to believe I understand it, but I can't quite seem to fool myself. That's a red flag for me as I've learned the hard way when i've tried to fool myself in the past. Maybe one of the Winklevoss twins can explain it to me.
SR!!!
i still cant get that blinking "12:00" off my vcr and you want me to buy bitcoins??!?!?!?!??!?!?!?
Kito
First you hit the menu button on your controller ...if you don't have a menu button then you hit the program button....on some VCRs it's labeled as the function button. After you discern the appropriate button to hit then you go into..... Ah fuck it. What in the hell are you doing with a VCR these days anyway. They are so...well....barbaric.
Haha doc....a VCR tape is tangible...I can hold it....not the same as those digitally produced movies... ;)
Ah, well, then you wanna stick to that analog tape, and avoid that fancy digital tape (they used to have for a while). ;-)
Analog tape burns quite well.
When the electricity goes out you'll still have your movies. Way to think ahead!
Because unlike a strip of magnetized plastic, a disc of magnetized metal isn't tangible, right? Dimwit much?
I was referring to the movies stored in the cloud...the ones streamed to us you fuckface.....
Boy, are you smart... "in the cloud" - the one inside your brain, I'm sure, where information is stored in free floating particles...
LOL! Well, it's almost like the clock on your vehicle's console. There are two buttons and sometimes three that you have to choose from. All of us old people know that if you push them in the wrong sequence, detonation is likely to occur.:-) It's best just to leave those buttons alone.
I'll leave those buttons alone if Ben leaves his buttons alone........
Maybe you can help me pay for my dinner with a gold coin. First, you'll need to show me how to shave off a sliver of gold that weighs enough to pay for the meal. You must be very precise - I don't want to overpay and the restaurant doesn't want me to underpay. Next, you must prove to the restaurant the gold is actually really the element. That means measuring its specific density while you're standing at the cash register.
I'd love to see gold bugs pull this off without pissing off everyone standing in line. People already get angry at someone who simply writes a check.
Whereas with Bitcoin, I can pay for my meal quickly and with precision. And it's impossible to counterfeit.
Good luck beating that, gold bug.
Please enumerate the vast supply of restaurants that are taking bitcoins.
I think the next time I head out into the world at large I'll start asking if someone performing some form of service or selling a product is taking bitcoins.
So far, where ever I've gone I have not seen any 'Bitcoins Accepted' signs in the windows of merchants.
Now, maybe these ignorant retards aren't smart enough to see the benefits of bitcoins just yet, but there's still time, and then again, maybe not.
The next time I go to Walmart I'll put all my groceries in my basket and head to the cashier and state, "if you aren't accepting bitcoin, then I'm outta here!".
More restaurants accept Bitcoin than accept gold. I can guarantee that. Even if a restaurant wanted to accept gold, it would be infeasible for it to do so. Accepting Bitcoin is a piece of cake.
It's a chicken and egg scenario. But the restaurants that do accept it are the few restaurants that those with bitcoins will patronize. So even if only a few in every major city accept it, they will profit as a result which will incent other restauarants losing share to begin accepting it.
But there's a problem with it being used for retail (risk of zero confirmation double spending), so e-commerce is mainly where Bitcoin has the advantage over other payment methods. Eventually a solution for retail will arrive.
But if you're paying for a meal, why not just use a credit card and get the rewards points?
Because bitcoins are the new 'COOL' dude.
Sadly, the last time I asked, the pizza delivery driver wasn't accepting bitcoins for his tip, nor as payment for the pizza.
I wonder if it had anything to do with the fact that he couldn't fill up his tank at the gas station with bitcoins.
You sound like an advocate for fiat, here. Your argument is basically, "Because Bitcoin isn't widely accepted today, it will never be widely accepted."
Who needs to counterfeit bitcoins at the restaurant, when my cell phone can hack your cell phone, and you're paying for my whole meal before you even sit down for your appetizer?
Apologies if YOU actually secure your mobile device, but MOST people don't secure theirs, and that materially impacts the bitcoin value proposition.
History is filled with people doing precisely this and it worked fine.
Also we now have much more sensitive scales. It's less work to weigh gold fractions or silver fractions than it is to verify 50's and 100's or even 20's to see if they're counterfeit and every major store / restaurant has that machine. Universal
In fact using an old article from Scientific American you can yourself make a scale that measures to picograms for just a few parts in 2004 dollars $60. Scrap parts. voltmeter & speedometer from a car, some cardboard, some weights of known value to test against it to plot voltages and write it on the cardboard. That simple. PICO grams
With bitcoin I have no such options: most places can not and will not use btc. ever. They can be shut down or jailed for doing so as it's going to be called MONEY LAUNDERING.
You expect me to get groceries & meals like a meth addict trying not to get caught in a back alley? Keep dreaming.
you know that cd, vcr, dvd, blu-ray, were killed by bittorrent, right?
the same peer to peer technology bitcoin uses to download the database of all bitcoin transactions.
get free bitcoins!
Donate btc here: 16uNQUidEKFN3nTrsF5a3PZfgWfJfQD4x9
wtf? fuck bitcon. my question is why in the hell are we sitting back, letting a NON governmental agency in the guise of the FED, print trillions of fucking dollars, loan them to the banking cartel @ ZERO PERCENT INTEREST, have said banks RE-DEPOSIT said trillions back into their respective FED accounts and accrue .25% interest? Banks are "capitalized" at taxpayer expense to gamble in deriatives, pump up the stock market, which they control through HFT, and are free from ANY loss due to the resrve accounts at the FED. They GAMBLE with free money, take no risk, earn interest on free money, and are protected from any loss through their Bank owned Federal Resrve. Our traitors in Congress and our so called president have forsaken the vanishing hard working and skilled Americans that were hoodwinked into this BULLSHIT. what a crock of shit this whole scam has become, and yet NO ONE stands up in the .Gov and questions any of it. WE will reap what THEY sow.
I disagree that bitcoin s/be summarily dismissed, but I never downvote a good rant... damn, I think I got a hard-on.
actually, i hope the bitcoin thingy works out, really! i just think there is far more important shit to worry about than some fucking futuristic crytographic time consuming digital "mining" infatuation bullshit that affects my FUCKING POCKETBOOK AND FUTURE, NOW..................sorry if that caused any shrinkage dude................
I can't wait until the day when I pull into some fast food drive in and start to pay with bitcoin but they tell me I don't have enough value in my account because bitcoin crashed that day. You see, I had bought a bitcoin for $100USD but that day it crashed to $2USD. I guess I'll have to settle for the dollar menu.
Reminds me of how I exceeded the credit on my CC and was denied my ability to purchase a meal. Oh, the humanity, time to get the American Express Bitcoin card.
Hmm, when I purchase things in USD, I don't usually worry about the current exchange rate between USD and Euros. Do you?
And the valuation of bitcoins in USD is volatile because it's still a small market. As it grows, that will solve itself.
I think you don't understand, in the future people will not want to convert to physical currency since btc will be very scarce, they will convert only what is necesary.
think 10, 20 years, and NO you will never buy fastfood because it needs some time to confirm the transaction, and the transaction fees will make it not economical for everyday transactions, 0.0005 btc transaction fees now are less than 10 cts but could be a lot more in the future, the fee is there to prevent people from spaming millions of small transactions, transactions of 0.1 or more btc are always free.
Learn more at www.getbitcoins.tk
I think you don't understand. What was described for giant fiat losses can happen so frequently your "further future" is dissolved from all possibility of ever happening.
Since most of us don't understand how to practically mine gold or silver, why not trust a binary string generator that spits out hard to find hashes?
Those hashes are god damn hard to find. And if you could find them you would make tones of metal.
Like metal will matter one iota in the day where we couldn't verify a bitcoin or whatever at this point.
Bitcoin=basement dwellers wet dream.
Sorry, I'm still waiting for the Beanie Baby market to rise again first.
Tell me why akak. +1 at ya.
(Actually, I'm not, but don't tell anyone!)
akak The chair has four legs. The chair has four legs. The clock is on the wall. The clock is on the wall. The sun is bright. The sun is bright.
Everything in cycles. Are tulips on the Nth Turning Cycle or the Kondratiev Cycle? Hope it is soon, my warehouse is getting full of bulbs.
Back on topic ... How do you audit Bitcoins for GAAP? How do you prove you own the Bitcoins you say you do? Isn't it possible for two co-conspirators to say they own the same Bitcoin as an asset?
No, you have your own crypto key. Just try not to forget or write it down. If you forget the key or lose the key and someone finds it their is no one to turn to, you're shit out of luck.
Just like some data I burned on a DVD and used a crypto key to password protect the data. Can't remember the key, now I have an inexpensive plastic coaster to put my drinks on.
OK, but what prevents 2 co-conspirators from using the same crypto key when each is audited, with both claiming assets only one is entitled to claim? Sounds like classic business fraud.
I have a couple of great Pet Rocks, and a Cabbage Patch Coll or two.
Are "The Osmonds" 8-Track tapes worth anyting these days?
Amazingly yes. But not as much as you would hope and the target audience is gonna be rather small.
There is a market for 8-track tapes. Lotta people like the old classic cars and like to put an 8-track tape machine in those cars. Seems kinda of stupid, but they call it retro.
eBay 8-Track tapes
It IS money as long as someone will accept it and send you a product. More people accept bitcoins than gold AND you can buy gold and silver with bitcoins. Def money
Currency is not the same thing as money.
Both the CBs and PM speculators fear Bitcoin. CBs more so. Bullion holders have nothing to fear from BTC, but they do from TPTB.
Enumerate all these 'more' people accepting bitcoin!
I think we should have a contest where ZH'ers go out and take snapshots of all the merchants they see that are currently accepting bitcoins or have 'Bitcoins Accepted' in their windows.
I can see only one good use for bitcoins and that would be if you were planning on leaving the US and didn't want to pay the exit tax. Just before you leave you put all your USD into bitcoins, fly out of the country and extract your money when you arrive safely.
This way if you don't arrive safely, no one will ever get the money, especially the .gov. It's probably the only way to move money without .gov knowing about it and have Pauli (Uncle Sam) take his cut.
So, Bob and Alice make a deal and exchange special keys unlocking the back door, which allows in the miners whom begin smoking hash till they become dyslexic and can't spell, which creates more hash until the miners are too stoned to continue. Meanwhile, Alice is demanding her stuff and Bob is staring at a screen with a bunch of stoned miners.
acutally, taking the key and unlocking Alices backdoor and doing a little mining while hashed wouldn't be all that bad either. as long as Bob didn't mind......................
I see PMs as a store of value, but I see Bitcoins as a great way to move money when traveling. Buy a cache of Bitcoins before your trip and then pick up your cash at your destination, eg. Thailand, in local currency for walking around money, as needed. Swing on down to Australia while you're over there and repeat.
It would be very effective (especially if you were not planning on coming back) and save the hassle of trying to travel with a significant amount of cash and getting ripped off each time you exchange in/out of local currency. Problem is there are no Bitcoin ATMs or kiosks.
So, you'd have to find somebody like "Bob" and probably give him 1-2% in exchange for Bitcoins for his trouble (No problem, banks may charge more for currency exchanges). But I'm still unclear there are enough Bobs out there to easily conduct $1000-2000 cash transactions easily without running all over Bangkok just to find one who can do enough cash at a reasonable percentage.
I know you can find them on the web, but there are still too few, and small shop owners might not carry that much cash, and there is no gurantee they would not try to gouge you at 5%. Anybody ZHers out there have any experience with this yet?
This is the reason Bitcoin is so valuable: it's a global currency that can be taken through checkpoints and metal detectors without being confiscated by government agents. That's a MAJOR advantage over gold. And it's one of the many reasons Bitcoin will prevail over the "shiny metal that couldn't" (defeat governments).
But, you still haven't answered exactly how I extract my currency once I get to my destination. Yeah it's great if you want to skip the country to avoid Uncle Sam taking his fair share of your wealth as you leave. But, if I travel to Belize, where do you go to extract this currency while on vacation?
Unless there is a Bitcoin kiosk at the airport, where do I head to get my spending money?
Bitcoin is money. No need to "extract" it. Just trade it for goods and services directly.
that IS extraction. You CAN'T get it spent in Belize if no one is PERMITTED to use bitcoin. If they are jailed, if they are doubtful, if businesses & banks won't use it, your digits are dead. No food, no lodging, no tools, no euros, nothing for your btc in Belize. NOTHING.
You MUST have a network. NOT A CHOICE, yet not needed for gold, silver or paper cash.
you MUST have someone WILLING to use the network to use btc even AGAINST government restrictions OR YOU GET NOTHING for btc. NOTHING.
easy, there's a thing that's called exchange, mtgox for example, then you sell there and send your usd to okpay, they have debit cards that you can order loaded with your money.
Perhaps you should look into Hawala, which accomplishes the same just fine, and the government hasn't been able to defeat despite years of concerted effort.
has no defense against routers that look for anything encrypted and block it entirely, or worse, network cutoffs so the place you need it most there is NO internet. None.
http://bahtcoin.com/
Binary digits in = Binary digits out
Value determined by level of D.O.J., F.B.I., and Treasury scrutiny, along with Ben Bernanke's bowel movements.
Gold and Silver punished in the same way but not connected to the infinitely manipulable and instantly altered ether of ether-space.
Physical PM's of universal value and transportability trump the binary bits; best of luck to those of you playing in that sandbox; I'm with you in spirit.
You clearly understand nothing about Bitcoin or Austrian economics. Don't opine on a subject unless you understand it.
Yes, and instead of illuminating us with your infinite wisdom on all things bitcoin and austrian economics. You resort to criticism and condemnation to make sure we understand our place in the universe at large, or at least your perception of us in it.
In fact your disparagement of our ignorance is enough to squeal on you to Tyler.
1. Nothing has "universal value". Everything is worth only what someone will trade you for it.
2. Bitcoins are more transportable than gold.
3. While it's possible that the fed/government could manipulate the paper price of bitcoins, they can also manipulate the paper price of gold/silver.
2. Bitcoins are more transportable than gold.
Only if the place you go has a grid for power and internet. If that's not the case and it IS NOT FOR ME then there's no way to "transport" the btc & use them, they would be dead digits with no purpose or value. Gold has no such problem, nor silver, for they are of the real world and btc is not.
i have yet to find a place without 3g phone coverage and power outlet.
and i have been lately in Egypt, singapore, malasya and vietnam.
Free wifi on a 15$ guesthouse?, i'm in.
Perhaps an analogy helps clarify the difference between Gold, Paper Money and Digital Money:
Think of gold as the granite milestone markers between cities. Think of smaller units between the milestone markers as either paper or digital money, whose unit size can be shrunk, as the number of units increases. You may start out with paper money whose unit size is meters, before the increasing supply makes them shrink.. to centimeters, to millimetres...
To travel a given distance, you now need more units, as their scale shrinks. The scale shrinks as more units of paper are created.
It does not matter if these "working" units are paper or electronic. The key is in their controlled supply, to keep the working scale the same.
Fiat paper has stopped referencing itself to the golden milestone (reference) markers. BTC can retain its working fidelity by limiting its lifetime growth and supply to that of gold. If its mining rate and supply can approach that of gold, BTC can supplant/replace fiat.
Before that happens, they will issue their own. And gold may indeed be cast out as a barbarous relic, heaven forbid.
Bitcoin must win, and must not be replaced by Fedcoin. Or heaven help us.
Kirk,
Out of that whole post you just made this was important...
"Bitcoin must win, and must not be replaced by Fedcoin. Or heaven help us."
Good evening.
Why would people choose to use "FedCoin" over Bitcoin? Bitcoin has superior qualities to anything a government could dream up. The whole point of Bitcoin is that people voluntarily choose to use it. Nobody is forced to use Bitcoin. But people choose to use it because they see it has good qualities to be a superior money. In fact, it's qualities are superior to gold in many ways.
Spyker, if you read again, you'll see I make no argument for the as yet non-existent 'Fedcoin' (a word I just 'coined', excuse the pun). In fact we should fear it like the plague.
Personally, Id rather avoid plastic cards (leave cookie trail), stick to cash or checks. Insofar I have to use fiat. Would rather use BTC in principle, but have not yet in practice. The learning curve up front is a bit of a pain, and is more for tech geeks than average person. It takes some time to get up and running, till it's easy.
how about a requirement to use fedcoin for taxes, and a requirement of prison for not using fedcoin for taxes, and a further sentence to prison for moneylaundering for using btc if they say so, and worse, some people thrown in prison for using btc to set an example EVEN IF they didn't use it?
Ask yourself how many grannies on wi-fi got nailed for kiddie porn or for torrents who don't even know what a torrent is because someone else used their router.
THAT is a deal-breaker.
As for gold... bitcoin lacks all the benefits of gold and gives me nothing positive to balance this out. Nothing.
why nothing was told about Alice trying to use the same coin with several different Bobs ?
In less than 10 minutes after a transaction is broadcast, it will be added to the the public ledger (the blockchain), and Alice's address will no longer possess that coin to spend. The more transactions that come in after Alice's transaction, the more secure her validated transaction is.
For larger transactions, you may want to wait for more transactions to come through to be sure. The gold standard (see what I did there?) is 6 discovered blocks, or about an hour of time.
Zero Hedgers who understand sound money and love gold/silver, need to open their mind to bitcoin and realise how significant it is. Come on, you're one of the fortunate ones who is educated on the problems with fiat money and the global central banking ponzi. This is an opportunity for you to back that knowledge and invest in a revolutionary new form of money that is set to change the world of finance. Don't let it slip by because you're bias against anything that competes with gold. When the hyperinflation hits, gold, silver, and BITCOIN is where you want to be! Get on it!
Don't have any issues with bitcoin.
Am I wrong about this or are there a finite number of keys that can be extracted to be used to hold bitcoins?
Right now, bitcoin is the perfect medium if you want to hide your money from .gov, ahem.......avoid paying any taxes on any cash you come across, or maybe you're hiding money from the bitch that's raking you over the coals in a divorce, or you're planning on absconding from the new new US police state.
As far as using it to pay for a happy meal down at Mickey D's, I just don't see it yet. And, probably never will, because .gov isn't gonna like not knowing how you're spending your money, much less where it's coming from.
Correct, there are a finite number of bitcoin addresses - approximately 115 quattuorvigintillion.
The anonymity aspect of bitcoin gets too much attention. In my opinion, it's better if you just forget about it being anonymous, because it's not. At best it's pseudo-anonymous, and in practice it can be easily traceable. If you want to avoid paying taxes or hiding money from others, you're still best to use cash since it's not traceable like bitcoin.
Re the happy meal - give it time. It's only just starting to attract decent VC for startups. Still not many people have heard of it. It needs a good 10 years or more to break into the mainstream. These are early days.
"As far as using it to pay for a happy meal down at Mickey D's, I just don't see it yet."
Can't do that with gold either, buddy. In fact, paying for a meal with gold would be much harder than paying for a meal with Bitcoin - you'd need to shave off a tiny bit of a gold coin and weigh it with an extremely sensitive scale. Then you'd need to prove to the cashier that the gold is actually real, using some kind of specific density test.
With Bitcoin, you'd just need to type in the amount of money you want to send (accurate down to 8 decimal places) and hit the "send" button. It's that simple.
When eating at Micky D's use the shit money to buy the shit food. Buy the good food with good money and nobody needs to know. We can live a double life, some in the .gov economy, and some in the free underground economy. Hiding in plain sight its all about now, until the police state deems it necessary to shoot undergrounders on sight.
There is no anonimity in bitcoin - just saying...
Absolutely right. You'd need to break a piece of the network so you can't use it again, change your MAC address (or whatever is used in the future) and make a new piece of network every single time you use ONE btc transaction or you're advertising to the entire planet what btc's all move in/out from one location. Then you're in prison when the government says so.
Yes more Bitcoin addresses possible than atoms in the planet. So fine there.
Technically finite in the sense of "not infinite", but practically infinite for our purposes. Every person on the planet could have a bitcoin address for every atom in their body and we still wouldn't be close.
Nice graphic. Wish they would implement a protocol to establish the value (spot price) based on all goods and services purchased instead of exchanges.
A good way to beat regulation is to have a second digital currency. Call it "Bitcoin 2.0" or something, and operates very similarly to regular Bitcoin, but with a different type of encryption. And so if the Feds start regulating Bitcoin, this Bitcoin 2.0 could kick in and be exchangeable for regular Bitcoins.
That way, you retain the original Bitcoin infrastructure, people can keep mining for them etc with the regular system, but then just exchange them into Bitcoin 2.0 and poof, it is anonymous again.
Then, if TPTB then start regulating Bitcoin 2.0, just fire up Bitcoin 3.0, which is exchangeable into Bitcoin 2.0 or regular Bitcoin. If TPTB go after Bitcoin 3.0, just fire up Bitcoin 4.0, etc etc.
Make it unstoppable the same way filesharing is unstoppable. Turn it into an unwinnable game of whack a mole for TPTB. Chop off one head and 100 more spring up in its place.
No need for this. Regulation of Bitcoin is impossible. Governments can't censor Bitcoin because it is its own protocol. Bitcoin is literally unstoppable (barring the total destruction of the Internet itself - which would cause greater impoverishment of governments than their loss of tax revenue from Bitcoin being adopted in a widespread way).
The bitcoin network is already unstoppable and does not need to play any whack-a-mole game with authorities. They are powerless to shut it down in the same way that the music/movie industries are powerless to shut down bittorrent. It is distributed and peer-to-peer.
The issue about needing a new encryption algorithm is a different threat - that wouldn't come from regulation, that would come from some mathematical researcher finding a weakness in the SHA-256 or ECDSA algorithms. In this case, we don't need a new coin, we just need to patch the Bitcoin client to use a new algorithm (no need for exchanging coins for new ones).
The threat of regulation is more in the form of governments freezing bank accounts of exchanges, or making it illegal to run bitcoin software, etc. They can pass laws to effect things outside of bitcoin but they can't stop the network itself (short of "turn off the internet", in which case you've got bigger problems).
Agreed. Bitcoin is out of the bag now. Some version of it will live until something better comes along.
However, what I do see is exchange of bitcoin for fiat and vice versa being severed for some time, as the few P2P exchanges are difficult to use right now. Mt. Gox will may die sometime in the next 2 years as they become overcentralized.
I find the big exchanges are tyrannical by forcing you to provide a photo copy of your drivers license and proof of address in order to do a wire transfer. And I thought bitcoin was anonymous!
They can shut down exchanges but black market traders will arise to fill the gap for those who want fiat for btc. Besides when btc is king exchanging it for fiat won't make sense.
It can be debased. Therefore, I do not want it.
Are you trolling or you don't understand bitcoin? It cannot be debased.
Maybe I don't understand bitcoin. From what I read, it is virtually mined using an algorithm. Algorithms can be changed (i.e. to mine more).
If that's wrong, educate me.
You're right, but no one can decide to do this unilaterally. Say you were to patch your bitcoin client to generate blocks with extra reward or lower difficulty - your blocks would be rejected by other nodes in the network as invalid. Hence, all the other users and miners of bitcoin, would continue following the main blockchain, whilst you would be forked off into your own alternate chain that no one accepts. None of the payments would be accepted by others since your coins aren't in *their* blockchain (ie. "The" blockchain).
The community as a whole needs to decide if any protocol-level changes are to take place, and users will have to upgrade to new bitcoin client versions to support those changes. Even very minor changes can cause huge debate amongst the community and be rejected. There is no way anyone would agree to a patch which debases bitcoins and breaks the rules of Satoshi's white paper. It is hard enough as it is for even trivial changes to get through.
In the worst case, the community becomes divided and the blockchain gets forked in 2 directions based on differing rule sets. In this case, there is a very strong financial incentive for the community to reconcile and form a consensus, otherwise it threatens to destroy bitcoins and the wealth of all involved.
Hence, bitcoin is very unlikely to deviate at all from Satoshi's white paper. Definitely it is hard to imagine there ever being a change to allow further debasement.
Then what good is it? No one can vote / agree / re-code gold or silver to do this, only digital currencies (open-source) or fiat.
No good for me.
You're right, but no one can decide to do this unilaterally. Say you were to patch your bitcoin client to generate blocks with extra reward or lower difficulty - your blocks would be rejected by other nodes in the network as invalid. Hence, all the other users and miners of bitcoin, would continue following the main blockchain, whilst you would be forked off into your own alternate chain that no one accepts. None of the payments would be accepted by others since your coins aren't in *their* blockchain (ie. "The" blockchain).
Yeah but if the FED or banks take this over (clandestinely or not) they'll all agree to make changes. The idea that the people will control the money is naive. The people can control bitcoins, for now. But they will never control the money without a large revolution that dismantles CBs. I've been seeing more and more suspicious sites creeping up trying to sell bitcoin. Suspicious in that they look more high end and legit, like banking front ends.
Also, without easy expansion of the money supply, you'd run into the same problems as gold. In panics people would expect massive expansion--this would destroy the purpose of bitcoin as they've have to print/mine trillions to "save the banks"...
It's neat as an underground currency to buy drugs and such, but I really don't want to put my savings (or gold) into them. Not because of the volatility but because I see it going down the same path as paper (which is basically digital currency at this point).
CLEARLY btc can be debased: gold and btc each can be divided into lower purities. A CLEAR understanding of btc reveals this.
We can trade 50% purity gold coins but we don't; we could run it down to 10% gold if we want. We can also divide btc many many times. That's debasement. Period.
It does't mather, let's say you buy now 1 bitcoin, in the future it's too expensive, they will change the default unit to milibitcoin 0.001 btc, so you will have 1000 milibits or 1million credits or whatever.
Look btc can be exchanged with people that value bitcoin, same with gold. period. Even if mtgox goes down, it will continue to exist and will recover after sometime.
So if a person buys something with a bitcoin and something happens like the seller does not send the product. Would a person have a way of getting his bitcoin back like you have a way of recovering your credit card payment by contacting your credit card company or Paypal?
The answer is no, the transfer is as final as a direct debit.
In direct debit in many circumstances you can still get money back if you can prove fraud, like an invalid amount more than what was agreed / required or that the debit card itself was hacked / cloned.
Bitcoin doesn't do this. Something else would need to do this layered over top of bitcoins or we really can't use them. I won't.
Currently the payment card industry is subsidizing losses by assessing fees to everyone. So even though I've never been cheated by the gas station, that gas station operator is still paying 3% on every dollar of revenue to the credit card company. Additionally if the cardholder claims the charges were not authorized (e.g., card stolen) the gas station is out that money as well.
So for the refund protection of the occasional purchase from an untrusted online merchant, I get 3% added to the cost of everything I buy from everywhere.
So there will be discounts for using bitcoins (just as there are discounts for using cash). If you wan to use a credit card with refund protection, you can -- just that it will cost you more. And once the risk-free transactions (e.g., gas station) activity goes to Bitcoin, then the amount of fraud remaining on those networks will raise the cost for the merchant, perhaps to 5% or 10%. So then the discount for using bitcoin becomes even more pronounced. Credit card issuers are already refusing to serve customers they deem as likely to abuse the refund system. That's why you get calls from the credit card company every time you travel.
You nailed it. Currently paypal can only do this using approval of banks & government but bitcoin has no such backing.
This means btc is in the wind and so are you for using it. Any attempt to do this with btc like paypal requires a refusal to comply with governments or banking regulations until btc is accepted in them and it certainly will not be.
Keep in mind when paypal initially didn't want to go along with blocking funds heading to wikileaks, for any purpose, especially because of Julian Assange. Voila: paypal's choice was to keep refusing and be shut down forever, or to bend to Uncle Sam. Bend they did.
Bitcoin is the inevitable by product of monetary policy going bananas and internets role as the last beacon of freedom.
Having said that, I'd rather own gold. But Bitcoin is nice, for now.
What is Bitcoin? It is the globalists wet dream.
Come on. We do this every other week on BTC, and I've yet to read a comment spelling out the most important part of money: TRUST. It's working on ubiquity and utility, but the biggest hurdle is always going to be trust. (Please I beg you, spare me the cut and paste explanation on encryption - I grew up using PGP with MSDOS o/s).
BTC is not the only e-currency and looking around the world today, I dare say some derivations of digital fiat may one day be dominant - Historically, humans have a tendency to assign value to all sorts of crap without any thought. But whether BTC is a trustworthy, fair measure of value/effort, and free from speculative corruption is open to question. There's no point in championing an alternative to government fiat if all you are doing is replacing it private fiat that only enriches the founders and speculators beyond the dreams of avarice.
I'm thinking those "dreams of avarice" have largely become reality.
Bitcoin? I'm having a problem visualising a gold bar in hand. Want the clunk of a shiney one in my locker, Davy Jones aka.
I'd be interested in seeing one of the sub-Tylers (maybe an intern)? do an analysis of the Ven digital currency...
I like the Bitcoin tech, it's so technically sweet, but it has one huge flaw. Any malware on your PC that allows your private key to be known allows the perp to steal ALL of your money in one transaction and that act is completely untraceable.
List of Major Bitcoin Heists, Thefts, Hacks, Scams, and Losses
https://bitcointalk.org/index.php?topic=83794.0
Almost Half a Million Bucks Stolen in First Major Bitcoin Theft
http://www.geekosystem.com/first-major-bitcoin-theft/
Excerpt:
Though it is difficult to forge a Bitcoin, and many people spend quite a long time and a significant amount of computing power generating them (misleading - people "spend quite a long time and a significant amount of computing power" to generate the "blocks" that are essential to the secure operation of the Bitcoin system, thereby earning Bitcoins for doing so - WS09) they aren’t exactly difficult to steal, as opposed to real-life, tangible money; whereas one would have to knock over a bank with Bruce Willis and Billy Bob Thornton to steal a significant amount of money, all one needs in order to pilfer a bunch of Bitcoins is access to the owner’s computer. Because Bitcoins are traded through a decentralized network without any sort of authorities, and the addresses used to send and receive Bitcoins are not attached to any kind of identity, once Bitcoins are stolen, it is pretty much impossible to get them back — a major flaw in the currency.
It is true, btc are not recomended if you use windows XP and don't know if you have the service pack2 or the service pack3. If you don't know what i'm saying, better not use it because most likely your computer is compromised.
I must admit I have highly concerns. I feel this concept is too primitive & I question one step of what is shown and 2 steps of what is not shown.
The part I see that I question is the step where x (50 ?) BTC are granted to whoever mines / solves the hash. How does "everyone" know when one person finally solved this, from whom does the new 50 btc get granted? If it's just the code then it won't take long to mess with that code to grant btc. Even if it doesn't last it can cause a disruption to the network like a denial of service to keep re-verifying false claims. That doesn't look good.
Additionally what is not shown concerns me very much:
problem #1 fiat exchanges. These bank accounts are either legitimate but carry huge risk or illegitimate which carries the highest risk of all, shut down & confiscation by governments / banks for money laundering. So if you never use btc to trade dollars, euros, yen, etc., and strictly use it as on-grid barter (be not mistaken: btc can not work off grid due to the verification process of all transactions on the peer network) then you can avoid the bank account risk problem. If instead you want to preserve ownership of dollars, euros, yen, perhaps between 2 locations so you're not carrying cash and it's not "in" the bank system as btc, you now need THREE reliable end-points. One to start, one to finish. These bank accounts need to exist long enough to transfer fiat.
ONE: your fiat not on the exchange.
TWO: your fiat on the exchange.
THREE: your fiat at the destination.
Between 2 & 3 is when you would have btc in your btc wallet and this ties to serious problem #2 I will address shortly.
If bank accounts are frozen or siezed at your origin, your destination or the fiat-to-btc exchange you lose it all. GONE. Vanished. Now problem #2 : irreversibility of transactions.
Believe it or not we have more than just electronic currency, we also have electronic TRANSACTION systems that work regardless of the currency because of security features that people expect.
One of those features is REVERSIBILITY of transactions. Having this or not having it poses risk either way but this is what people expect. People expect a fraudulent transaction can be reversed. If I transit out btc & get nothing in return I'd like them back. If I can't have them back then the currency may be quasi-stable but the transaction system is worthless.
That's right, it's so dangerous I'm better off bartering cans of food than using btc.
Any questions?