On Mon, Dec 23, 2013 at 10:22 PM, meekerdb <meeke...@verizon.net> wrote:

>  On 12/23/2013 6:54 PM, Jason Resch wrote:
>
>
>
>
> On Mon, Dec 23, 2013 at 5:02 PM, meekerdb <meeke...@verizon.net> wrote:
>
>>  On 12/23/2013 12:46 PM, Jason Resch wrote:
>>
>>
>>
>>
>> On Mon, Dec 23, 2013 at 2:12 PM, meekerdb <meeke...@verizon.net> wrote:
>>
>>>  On 12/23/2013 9:07 AM, Bruno Marchal wrote:
>>>
>>> Crypto-currencies, like cryptography, can surely help to save the
>>> freedom of privacy and privateness.
>>>
>>> Crypto-currencies does not need to be a pyramidal con, like Quentin
>>> suspects. They just allowed to create new independent banks which can do
>>> their work "honestly" or not.
>>> "honestly" is not moral here, but it means that it is attempted, at the
>>> least, to not base economy on lies (which often happens to keep jobs
>>> despite they became obsolete).
>>>
>>>
>>> Money is both the most wonderful economical tool and the most horrible
>>> life goal.
>>>
>>> When money is used honestly, every one (good willing enough) win and is
>>> enriched. But the longer the play, the bigger the liars can win, so "those
>>> who make money the main goal" crack, and corrupt the system, which at that
>>> moment become pyramidal.
>>> It is basically a confusion between meaning and use, or goal and tool.
>>>
>>> Today, a part of the economy relies on lies, so it is more the actual
>>> bank system which seems to lead us (partially) to a pyramid.
>>> The existence of crypto-money can help by providing different competing
>>> economies, and can help in making transition (and awakening from the lies)
>>> more smooth.
>>>
>>>
>>>  I don't see it as any different than gold or silver.  Banks used to
>>> have reserves of gold or silver and they issued their own script money that
>>> was redeemable in gold or silver.  BUT they always loaned much more script
>>> than they had gold or silver.  They relied, quite reasonably, on the fact
>>> that in any given time interval, only few people would want to redeem their
>>> script in gold or silver.
>>>
>>> Now you may say this is "lying", but so long as not done to excess, it
>>> makes for good economics.  Consider and extreme example: Suppose the
>>> 'banker' has no gold or silver at all but he's prepared to loan script
>>> anyway.  Someone comes to him and wants to borrow $1000 to build a bridge
>>> over small river near the town.  The banker loans him the script.  He pays
>>> for material and labor, which he can do because people believe the script
>>> is backed by gold.  The bridge gets built and so farmers can come to town
>>> much more quickly, productivity is improved and the town thrives, so more
>>> people deposit money in the bank and the banker can actually buy some gold
>>> to back up his script.  "Artificially" increasing the money supply can be
>>> very useful; but just as with all kinds of interactions it depends a lot on
>>> trust.  If nobody trusts anybody else, as now so many people automatically
>>> distrust their government, then the economy is dragged down.
>>>
>>> http://opinionator.blogs.nytimes.com/2013/12/21/in-no-one-we-trust/?_r=0
>>>
>>> Brent
>>>
>>>
>>>
>>  One difference I see is that with crypto-currencies intermediaries are
>> not required for either, 1. safe keeping, or 2. transfers.  If they are
>> never held by intermediaries then they have nothing to loan out.
>>
>>
>>  The point of my example is that you don't HAVE to have anything to loan
>> out.
>>
>
>  Commercial banks from which people get loans don't create the Federal
> Reserve notes they loan out, they need to already have some on hand before
> they can make a loan.  With bitcoins it is clear you can't loan any out
> unless they are in your possession.
>
>
> That's like saying those banks in the old west couldn't loan out gold
> unless they had it in their possession.  Sure; but it didn't keep them from
> loaning script that, according to them, was backed by gold.
>
>
>
This would be considered fraud in any other line of business.


>
>  Of course, our money today is fundamentally nothing but IOUs, which can
> be created out of thin air and backed by nothing but a promise. The
> instability of such a system arises when debt (which is money in our
> system) is created faster than the rate at which the economy grows.
> Defaulted debt destroys outstanding IOUs and collapses the money supply.
>
>
> Which is the down side when money creation is excessive - but you miss the
> point of my example which shows that this same fiat creation of money can
> also be good. Fundamentally all money rests on trust.  Even gold is only
> good because people believe others will accept it for food, sex, etc.
>


Trust is not a bad thing to have, but to design a system that inherently
requires trust to function and will crash should that trust ever evaporate
is a less-than-perfect design.


>
>
>
>>   Banks loaned out the value of gold without having the gold (having only
>> a small part of it).
>>
>> As for security I'm not sure; can't you lose your bitcoins?
>>
>>
>  You can, but their security need not depend on traditional physical
> security approaches: vaults, guards, cameras, etc. You can encrypt your
> wallet and then its security is assured.  Your wallet may even be based on
> some suitably long password or passphrase which is not stored physically
> anywhere (as http://brainwallet.org/ demonstrates).
>
>  So long as you don't forget and don't disclose this secret your funds
> are safe.
>
>
> Doesn't this password have to be transmitted over the internet (via the
> NSA?).
>

No, the password need never leave your own computer (where it is used to
derive the appropriate keys). I am not 100% sure this is true of
brainwallet.org in particular or not, but it is certainly possible.  For
example, if its entire derivation is based on java-script then all the code
runs entirely in your browser, and the password you enter never needs to
leave your computer.

You can test this by loading brainwallet.org then unplugging your computer
from the internet and seeing if the brainwallet.org site (left open in your
browser) still generates new keys for different passphrases. If it does,
then it functions off-line and your password is not sent over the Internet.
You could then use the "File>Save Page" option in your browser to save this
key-generating code locally to your own computer and continue to use it
even if brainwallet.org shuts down.

Jason

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