On 6/15/2011 11:03 AM, michael perelman wrote: > NPR had a story about an Amazon-like system for ordering recreational > drugs online using bitcoin.
Bitcoins looks to me like dorktastic anonymous gold. You need to be able to use tor (The Onion Router) network to view the drug site. "Amazon-like" is a pretty generous description, since it is fairly crude in design. But yes there are dealers selling drugs (the site is called the Silk Road and once on tor you go to https://ianxz6zefk72ulzz.onion/index.php ) and there is a feedback/comment system which allows you to comment on sellers and buyers. But it isn't designed to be user friendly: searching is unreliable and it isn't obvious how to use the site. The technical hurdle of tor and bitcoin are not insurmountable for the non-geek (I think there is a tor/proxy/firefox all-in-one install available) but they still take some effort to configure. I keep a proxy into the tor network running so it was easy for me to check out. I spent a couple of hours reading about bitcoin and installing the software...so to answer Jim's questions: On 6/15/2011 10:05 AM, Jim Devine wrote: > two thoughts: couldn't the service that limits the supply of bitcoins > be hacked? and: can't the problem of deflation that results from a > limited supply of bitcoins be solved if banks spring up and create > credit based on their reserves of bitcoins (or alleged bitcoins)? Well nothing is hack-proof but the system is secure since it is distributed. There is no one place (or even a set of places) that control the bitcoin supply; bitcoins are "mined" and new coins can only enter the system when enough nodes know about them. The only way to make a bitcoin is to brute force your way through the math to "solve" a block (a math problem whose inputs are previous blocks of bitcoins). So in a sense the "service that limits the supply of bitcoins" is the mathematics in the cryptography that is used to make bitcoins. The only hack would be a breakthrough in math theory - which certainly people are working on. If such a breakthrough occurred, then the bitcoin system may need to adopt different math for solving blocks and making coins. There are currently exchanges for bitcoins - where you can pay some other currency and get a bitcoin in return. But they aren't like commercial banks that lend currency to customers. All they do is bring bitcoin buyers and sellers together and charge a bit for the transaction. The exchanges look and feel like ScottTrade, rather than a bank. A bank which issued credit based on reserves of bitcoins would break the anonymity of the system. The bank would have to keep a ledger identifying to whom they've given notes and which bitcoins they are backed by. If I sold my bank note to you and you decided you wanted to cash it in for a bitcoin, the bank would have to have a record of giving me the original note. However if you and I want to exchange a bitcoin directly there would be no record: I would add a very long number to the distributed chain of blocks indicating bitcoin 12345 was sold and you would add a very long number to the chain indicating 12345 is bought. No one other than you and I would know we've exchanged that bitcoin. It might be helpful to think of bitcoins less like "digital coins", which makes most people think of traditional electronic banking. A better description is that the currency units are solutions to very large and complex math problems. Each math problem is unique and each solution is unique. The only way to get a new coin/solution is to solve a unique problem which takes a really long time (mining). When a math problem is solved and a solution is found, that math problem can never be solved again. Once you have a solution you can give it to someone else, but the only way to give it to them guarantees you'll forget it. I don't think bitcoin is a big deal - it is cool for math/crypto nerds since it solves a number of things simultaneous vis-a-vis anonymous digital cash, but it is kind of a pain to use. Most people don't need that level of anonymity and such a high cost to convenience. And the drug deal has to eventually take place in meatspace - you have to email the dealer an address to send your buds - which creates an obvious way to un-anonymize the transaction. It is kind of cool though for Internet services - I could get a server/website using bitcoins and the payment piece can now be done anonymously rather than using a credit card. Useful if I didn't want a government or corporation to link my website back to me by figuring out who is paying the bills. Matt -- GnuPG Key ID: 0xC33BD882 aim/google/MSN/yahoo: beyondzero123 _______________________________________________ pen-l mailing list [email protected] https://lists.csuchico.edu/mailman/listinfo/pen-l
