Re: [cryptography] Digital cash in the news...
Nicholas Bohm write: Now I find I can exchange a little over five bitcoins for a 50 Amazon gift certificate that Amazon seems happy to credit to my account. Danilo Gligoroski wrote: Your example is about two actors: Amazon and BitCoin, acting within small amounts of goods, services and issued currency. John Levine wrote: No, it's not. There's someone who will trade you Amazon gift certificates for bitcoins. snip Amazon neither buys nor sells bitcoins. Not (directly, yet), but for the end user who possess a bitcoin it appears as that. The concept of having several entities in the financial chain between the end consumer of the goods and the issuer of those goods is present in the human history for thousands of years. I see that those kind of financial chains are building around the concept of Bitcoin too. I still am not aware of anything you can actually buy for bitcoins (as opposed to trading them for various kinds of real and fake money) other than drugs. Insisting on the story that you can only buy drugs by bitcoins in my view is too harsh toward the concept of Bitcoin. Last week I was in Helsinki on a summer school for cloud computing and there a guy offered me to buy me a beer with his bitcoins. I do not have any Bitcoin (yet), but as time goes on, probably I will have one. CERTAINLY NOT FOR BUYING DRUGS, but because I want to see how that nice crypto design works and grows in practice. The allegations that the Bitcoins are tool for buying drugs will probably repel some potential Bitcoin owners and sadly will imprint them as a dangerous social group. To paraphrase Peter Gutmann from his post on this topic from last week: How about the allegations about The Bitcoin-based Child Porn Market and The al-Qaeda/Bitcoin Connection. Regards, Danilo! ___ cryptography mailing list cryptography@randombit.net http://lists.randombit.net/mailman/listinfo/cryptography
Re: [cryptography] Digital cash in the news...
On 2011-06-15 7:58 AM, Nico Williams wrote: Let's say you have an unbreakable code. Which we do. But there's still traffic analysis, and even with onion routing and such, you don't know if your peers are ratting you out, If one of the mixers is my own, I know that that mixer is not ratting me out. One valid mixer in the chain is sufficient to be a serious obstacle to the state. Two is very serious obstacle. And chances are that both I and the guy I am talking to are running our own mixers. Do the same thought experiment regarding cryptographic coins if you like. The state could easily make it so insignificant amounts of business gets transacted in a cryptographic coin that the state cannot subvert or control. I observe that a large part of the world's economy is run though virtual private networks running through tax haven islands. Looks to me that the horse is already bolting. Wealthy individuals and big corporations use transferable promises to pay by other wealthy individuals transferred over video conference as money, which hawala like money is difficult or impossible for the state to track. So for the very rich, particularly wealthy Chinese businessmen located outside of China, the cypherpunk program is becoming real. Unfortunately, it is not becoming real for cypherpunks, who hoped that the white middle class would get in on it. But *some* people are getting in on it. Chinese are respectful of authority, and superficially compliant, but they have a long history of quiet evasion and subtle resistance, so are naturally inclined to cypherpunkish solutions. The growth of China is in substantial part the growth of the economy mediated by virtual private networks. Much of the Chinese economy, notably real estate development and mining, is transparent to the state and run by companies that legally Chinese, and Chinese in reality, but much of the Chinese economy, notably hi tech, is run by companies that are not legally Chinese, indeed their location is hard to find. ___ cryptography mailing list cryptography@randombit.net http://lists.randombit.net/mailman/listinfo/cryptography
Re: [cryptography] Digital cash in the news...
Bitcoin is not a pyramid scheme, and doesnt have to have the collapse and late joiner losers. If bitcoin does not lose favor - ie the user base grows and then maintains size of user base in the long term, then no one loses. I think in the current phase the deflation (currency increasing in value) helps increase interest and number of users. Say that in the next phase bitcoin stops rapid expansion and reaches some stable number of users, the deflationary period stops, and the remaining users use it for transactions only (not speculation). I dont see the losers in that scenario. Adam However. Unless the laws of financial conservation have been repealed by the design, those who follow have to invest a lot and come out with less... ___ cryptography mailing list cryptography@randombit.net http://lists.randombit.net/mailman/listinfo/cryptography
Re: [cryptography] Digital cash in the news...
On Mon, Jun 13, 2011 at 6:50 AM, John Levine jo...@iecc.com wrote: PS: For anyone who wants a crypto currency backed by gold, that's functionally equivalent to a gold ETF, of which there are several, such as ticker symbols IAU, GLD, GTU, SGOL, and AGOL. They do what they do perfectly adequately, but they are in no sense currency. Bubble sceptics can trade put options on them. Too bad there's no options on bitcoins. There already are options on bitcoins. #bitcoin-otc [1] nominally supports them in its order book, though I see little use so far [2]. Apparently someone wrote a put for 100BTC at a strike price of $0.75/BTC with a 1.50BTC premium two months ago, maturing 31 May 2011 [3]; the option did in fact sell but I have no idea whether it was exercised. Bitcoin calls have been around on the forum since at least January [4], complete with risk reversal strategies ([5] is a textbook example of a collar though not a zero-premium one). [1] http://www.bitcoin-otc.com [2] http://bitcoin-otc.com/vieworderbook.php?notes=option [3] http://www.bitcoinmoney.com/post/4585101363/first-bitcoin-put-option-contract [4] http://forum.bitcoin.org/?topic=2986.0 [5] http://forum.bitcoin.org/index.php?topic=2986.msg41580#msg41580 Cheers, --mlp ___ cryptography mailing list cryptography@randombit.net http://lists.randombit.net/mailman/listinfo/cryptography
Re: [cryptography] Digital cash in the news...
On 2011-06-13 2:50 PM, John Levine wrote: But that really has nothing to do with the crypto part. You can have crypto out the wazoo, and it's worth nothing unless there's an issuer in meatspace who will accept your crypto coins, cancel them, and hand you the agreed amount of money. But clearly, bitcoins are worth something. Maybe that is only a bubble, but then federal reserve dollars are also only a bubble. ___ cryptography mailing list cryptography@randombit.net http://lists.randombit.net/mailman/listinfo/cryptography
Re: [cryptography] Digital cash in the news...
On 13/06/11 10:31, James A. Donald wrote: The difference was Fannie, Freddie, and the CRA. This is entirely off topic. Please drop it. -- __ \/ o\ Paul Crowley, p...@ciphergoth.org /\__/ http://www.ciphergoth.org/ ___ cryptography mailing list cryptography@randombit.net http://lists.randombit.net/mailman/listinfo/cryptography
Re: [cryptography] Digital cash in the news...
Nicholas Bohm write: Now I find I can exchange a little over five bitcoins for a £50 Amazon gift certificate that Amazon seems happy to credit to my account. I see the example of an institution (organization, company, entity, ...) willing to happily credit the current value of *whatever currency* with *concrete products (goods)* or *concrete services* is the best example how and why *that currency* can become a trade tool for exchanging the goods as well as services. Your example is about two actors: Amazon and BitCoin, acting within small amounts of goods, services and issued currency. But there is another example with two other actors that are playing the currency spiral game of trust with HUGE, HUGE amounts: I am talking about China and the US Federal Reserve System. The amounts are in trillions of dollars, issued by Federal Reserves, and are happily (oh, maybe lately not that happily) accepted by China. Now, instead of Amazon, if we start to see similar Chinese entities (but not necessarily just Chinese, maybe some of the BRIC countries) that will be happy to credit the BitCoins with concrete products and services, then BitCoin as a trade tool for exchanging goods and services will probably survive in the next period. Or, seeing the latest Chinese-made crypto products like the latest ZUC portfolio of crypto primitives for the new 4G standard, instead of BitCoin, I expect to see a BitYuan. Regards, Danilo! ___ cryptography mailing list cryptography@randombit.net http://lists.randombit.net/mailman/listinfo/cryptography
Re: [cryptography] Digital cash in the news...
On 13/06/11 5:54 PM, Adam Back wrote: Bitcoin is not a pyramid scheme, and doesnt have to have the collapse and late joiner losers. If bitcoin does not lose favor - ie the user base grows and then maintains size of user base in the long term, then no one loses. Um, Adam, that's the very definition of a pyramid scheme :) No-one need lose as long as the size of the user base grows, long term! So everyone is incentivised to bring in new victims^H^H^H^H^H^H users :P That's why they're illegal, typically. I think in the current phase the deflation (currency increasing in value) helps increase interest and number of users. Um, yeah, whatever. Look, whatever you do, don't tell anyone of your friends or family to invest in it. Say that in the next phase bitcoin stops rapid expansion and reaches some stable number of users, the deflationary period stops, and the remaining users use it for transactions only (not speculation). I dont see the losers in that scenario. No, but the scenario is incomplete: Those speculating on an increase in value will realise it has reached stability. So they'll sell. Which will cause a reduction in value. Which will cause a run, as those that didn't understand the mechanics of a pyramid scheme get their rude lesson. However. Unless the laws of financial conservation have been repealed by the design, those who follow have to invest a lot and come out with less... iang ___ cryptography mailing list cryptography@randombit.net http://lists.randombit.net/mailman/listinfo/cryptography
Re: [cryptography] Digital cash in the news...
Bitcoin does not have to end with the pyramid scheme outcome - where it stalls and all those still holding any lose - so long as there remain people willing to exchange goods for bitcoin after the dust has settled. Anyway my point is even if the deployment phase is a wild ride, with some winners and some late losers who bought in above the final stable value, so long as a stable value results at the end, I dont see that as a big problem. Its not like we havent had bubbles and instability in various phases of any other forms of money or assets. If you take out the speculation, currently with people minting coins until they get to 21 million coins that would be inflation (limited inflation due to the mining cost); but also that more people are joining is deflationary (less coins per person). Then there is supply and demand - supply from minting (so long as the sell price is above minting cost), supply from people cashing out, and demand from people buying in. Cashing out and buying in maybe for trading or speculation. Once the 21 million coins are created bitcoin would remain deflationary during the next phase as until the user base grows to saturation. Once bitcoin grows to saturation, the remaining deflation would be limited by the underlying population and economic growth. That might be workable rate of deflation. Adam On Mon, Jun 13, 2011 at 11:55:38PM +1000, Ian G wrote: On 13/06/11 5:54 PM, Adam Back wrote: Bitcoin is not a pyramid scheme, and doesnt have to have the collapse and late joiner losers. If bitcoin does not lose favor - ie the user base grows and then maintains size of user base in the long term, then no one loses. Um, Adam, that's the very definition of a pyramid scheme :) No-one need lose as long as the size of the user base grows, long term! So everyone is incentivised to bring in new victims^H^H^H^H^H^H users :P That's why they're illegal, typically. I think in the current phase the deflation (currency increasing in value) helps increase interest and number of users. Um, yeah, whatever. Look, whatever you do, don't tell anyone of your friends or family to invest in it. Say that in the next phase bitcoin stops rapid expansion and reaches some stable number of users, the deflationary period stops, and the remaining users use it for transactions only (not speculation). I dont see the losers in that scenario. No, but the scenario is incomplete: Those speculating on an increase in value will realise it has reached stability. So they'll sell. Which will cause a reduction in value. Which will cause a run, as those that didn't understand the mechanics of a pyramid scheme get their rude lesson. However. Unless the laws of financial conservation have been repealed by the design, those who follow have to invest a lot and come out with less... iang ___ cryptography mailing list cryptography@randombit.net http://lists.randombit.net/mailman/listinfo/cryptography
Re: [cryptography] Digital cash in the news...
On Mon, Jun 13, 2011 at 10:50 AM, Nathan Loofbourrow njl...@gmail.com wrote: The good old market played a role here too. There are lots of investors whose risk profile dictates that they should be in safe investments, e.g. pension funds and old people. With the interest rates held on the floor, and Greenspan and Bernanke sitting on their chest, those safe investors started to buy up mortgages, because mortgages were big dumb investments and everyone paid their mortgage. You just proved the point: the market was distorted, with private actors acting _within_ the distorted market parameters. Thus people who needed to make low-risk investments did make what _seemed_ like low-risk investments (after all, real estate had been a low-risk investment for decades in the U.S.), but actually were not just high-risk, but bound to fail. You can blame the derivative sinners (pun not intended) all you like, but there's an original sin here. Everyone else was either fooled into sinning, peer-pressured into it, or outright forced, and though there surely were some who understood what was happening and sought to profit from it, you can hardly blame them either -- we all do something of the sort (if you see inflation coming and manage your money accordingly, are you ripping off all those who can't or don't know to do anything about inflation? and if so, are you a terrible person for it?). After a while you run out of big dumb mortgages, and we did. So the pressure was on to create more of them. Once everyone has a mortgage, or maybe two, you start lending to folks with a risk profile that wasn't so hot anymore. The whole tranching process masked the fact that this was happening because you could still issue AAA bonds out of these and everyone bought in. tl;dr: everybody gets to wear a hat that says dummy, whether private, public or individual. The whole tranching thing was almost brilliant, and would have worked out fine (securitized mortgages from the 80s seem to have done fine, no?) if there had been no bubble (but in a bubble the securitization helped it along), and if all the issues in tracking the underlying loans (and thus pricing the securities) had been worked out correctly. ObCrypto: sorry, got nothing. Yeah, well, we need a sub-list for OT discussions. At Sun we used to have lists with sub-lists named the same + a -extra suffix, where people who wanted to participate in these sorts of long, flame war-ish, OT discussions could. Nico -- ___ cryptography mailing list cryptography@randombit.net http://lists.randombit.net/mailman/listinfo/cryptography
Re: [cryptography] Digital cash in the news...
On 2011-06-13 11:55 PM, Ian G wrote: Um, Adam, that's the very definition of a pyramid scheme :) No-one need lose as long as the size of the user base grows, long term! If bitcoin stabilizes, no one loses. If a pyramid scheme stabilizes, last to invest loses. ___ cryptography mailing list cryptography@randombit.net http://lists.randombit.net/mailman/listinfo/cryptography
Re: [cryptography] Digital cash in the news...
I was at ground zero of the crisis: Sunnyvale California. And every person I saw buying a seven hundred thousand dollar house was a cat eating no hablo english wetback with no regular job. On 2011-06-14 1:29 AM, Nico Williams wrote: First, there were plenty of middle class (and better off) people who used their ever-increasing home values as an ATM card. I checked foreclosures by suburb last time I had this argument: Back then, in East Palo alto (Black and hispanic) ninety nine forclosures. In Palo Alto west of the freeway, (white upper middle class) one foreclosure. Similarly for Cupertino (white and asian) and Gilroy (overwhelmingly hispanic) Therefore, middle class did not irresponsibly use their ever rising home values as an ATM card Or if they did, they paid up, rather than being foreclosed upon - unless you count as middle class those hispanics with no regular job who were buying upper middle class housing. Second, we don't need to use derogatory terms here. There's a difference between being polite and being PC, If someone mugged you, you were mugged by a non asian minority, probably black, and if someone failed to pay a toxic mortgage in the bay area, he is a non asian minority, probably hispanic. The street crime problem is a race problem, and the financial crisis in America is a race problem. People who bought overpriced houses no money down in the Bay area were overwhelming non asian minority, and in the case of hispanics, conformed distinctively to stereotype. It is probable that they had no idea of the lies that were written on the loan application, which they could seldom read, so one can reasonably argue that the literate and frequently white loan officers were to blame, and the non white illiterates signing the papers were innocent ignorant dupes. I suppose they often were. But if innocent, also ignorant - thus stereotypical. The guy who mugs you is usually a stereotypical black, and the guy who bought an expensive house no money down at the peak of the bubble and never made a payment is usually a stereotypical hispanic. Those crooked loan officers were frequently white, and those crooked bankers were all white. But the guys who borrowed the money and never made payment are not white, and are for the most part Hispanic, and for the most part, stereotypical Hispanic. ___ cryptography mailing list cryptography@randombit.net http://lists.randombit.net/mailman/listinfo/cryptography
Re: [cryptography] Digital cash in the news...
On 2011-06-14 1:50 AM, Nathan Loofbourrow wrote: After a while you run out of big dumb mortgages, and we did. So the pressure was on to create more of them. Once everyone has a mortgage, or maybe two, you start lending to folks with a risk profile that wasn't so hot anymore. This happened in commercial real estate, which also got bubbled, and also got falling credit standards - yet no crisis in commercial real estate. Developers went bust, and financiers forclosed, sold the properties for markedly less than loan value. And that was that. No crisis, no drama, no bailouts. The difference was that with mortgages to individuals, (usually black or no hablo English individuals) the bank issued liar loans, or like Beverly Hills bank, got rated Substantially non compliant with the CRA ___ cryptography mailing list cryptography@randombit.net http://lists.randombit.net/mailman/listinfo/cryptography
Re: [cryptography] Digital cash in the news...
On Mon, Jun 13, 2011 at 9:22 PM, James A. Donald jam...@echeque.com wrote: I was at ground zero of the crisis: Sunnyvale California. And every person I saw buying a seven hundred thousand dollar house was a cat eating no hablo english wetback with no regular job. On 2011-06-14 1:29 AM, Nico Williams wrote: First, there were plenty of middle class (and better off) people who used their ever-increasing home values as an ATM card. I checked foreclosures by suburb last time I had this argument: Back then, in East Palo alto (Black and hispanic) ninety nine forclosures. In Palo Alto west of the freeway, (white upper middle class) one foreclosure. Similarly for Cupertino (white and asian) and Gilroy (overwhelmingly hispanic) Therefore, middle class did not irresponsibly use their ever rising home values as an ATM card Or if they did, they paid up, rather than being foreclosed upon - unless you count as middle class those hispanics with no regular job who were buying upper middle class housing. Second, we don't need to use derogatory terms here. There's a difference between being polite and being PC, If someone mugged you, you were mugged by a non asian minority, probably black, and if someone failed to pay a toxic mortgage in the bay area, he is a non asian minority, probably hispanic. The street crime problem is a race problem, and the financial crisis in America is a race problem. People who bought overpriced houses no money down in the Bay area were overwhelming non asian minority, and in the case of hispanics, conformed distinctively to stereotype. It is probable that they had no idea of the lies that were written on the loan application, which they could seldom read, so one can reasonably argue that the literate and frequently white loan officers were to blame, and the non white illiterates signing the papers were innocent ignorant dupes. I suppose they often were. But if innocent, also ignorant - thus stereotypical. The guy who mugs you is usually a stereotypical black, and the guy who bought an expensive house no money down at the peak of the bubble and never made a payment is usually a stereotypical hispanic. Those crooked loan officers were frequently white, and those crooked bankers were all white. But the guys who borrowed the money and never made payment are not white, and are for the most part Hispanic, and for the most part, stereotypical Hispanic. On the east cost (Baltimore, MD), I know of three families (neighbors of friends) who purchased and were later foreclosed upon. All were caucasian, so I'm not sure are for the most part Hispanic is an appropriate characterization. Jeff ___ cryptography mailing list cryptography@randombit.net http://lists.randombit.net/mailman/listinfo/cryptography
Re: [cryptography] Digital cash in the news...
I get back from vacation and suddenly my inbox is filled with misconceptions. While this is supossed to be a fairly technical mailinglist (about cryptography) it seems clear many people haven't quite understood bitcoins' workings. Let me break it down: * With a private/public key combination you can sign a message stating you're transferring a certain fraction of value (a bitcoin is what we call the 1 value). * This message you sent to nodes within the bitcoin network. * Each node checks whether or not your transaction can be executed and compiles these correct transactions into a 'block'. * Each node will try to find a proof-of-work for the block he made. Once he has it, he can ship the block off towards everywhere (as many as possible other nodes). * Recieving nodes will check the block and when they accept it, put a reference (hash) to it in their next block. The resulting chain of blocks is called the block 'chain' Now that the transaction is solidified in a block one can proof he has some amount of money, by referencing a payment to him in the block. How do the first bitcoins enter the system? By making a block one gets an award. The amount given per award is getting steadily lower. If you're thinking you can get rich quick by letting your computer solve blocks, think again! There's only one block to be solved every ten minutes, if it goes to fast the blocks will get harder, and there's a lot of people trying to solve it, you're electricity will likely cost you more than solving blocks is going to earn you. You're welcome to try though, solving a block makes transactions happen. What will happen when the awards are nearly gone? Then the total amount of bitcoins will stay nearly the same. This'll happen after quite some years. The total amount will be nearly 21 million bitcoins. The transactions will be paid for by bounty set on every transaction. As long as someone is willing to make the proof-of-work your transaction will end up in the block chain and be made permanent. That is basically the system. The whole whitepaperhttp://www.bitcoin.org/bitcoin.pdfisn't long or hard to understand and I highly suggest reading it. I know of only two (not dealbreaking) issues: 1. Transactions take time to happen (they are non-instant) (bank transactions are much worse though). 2. Because of the deflation all coins gotten earlier were easier to get and are now worth as much a block gotten now. I prefer deflation over inflation and if this really takes of the earliest of adaptors really deserved the money. On the (geo)economical side I think this is the best that every happend to the world. The bitcoin is quite violent right now, because there's still so little value being traded with them. But that will sort out and after that it'll just keep on getting more stable. Regular currency's (dollars, euro's, yen, whatever) are only as stable as their backing organisations or resource. Anything that goes up has got to fall, and bitcoins aren't anything, not even air! Trade has always been based on when I give you this, what can I do with what you give me back? and so, when people accept a certain amount of bitcoins for something, bitcoins have use and thus value. There is a wonderfull elegance in something we can trade at no costs, without any ability to cheat or adversely manipulate it's amount. Even without saying who (exactly) we are! It's propable that when you swap something as elementary as our not-wonderfull money with this it'll give some turbulance. And as with anything new, especially when it gives true freedom, people will get their panty's all up in a bunch. Usually their arguments either rest on not understanding what's going on, or claiming that this gives a security issue. The first argument I'll always counter with knowledge and logic. For the second argument I'd like to parphrase Benjamin Franklin: He who sacrifices essential freedom for safety, deserve neither.. Surely being able to own and transfer what you own is an essential freedom. I'd prefer not going into political conversation on here but I think it far too interesting not to have it at all. -- Lodewijk Lewis Andre de la Porte 2011/6/13 Nico Williams n...@cryptonector.com On Mon, Jun 13, 2011 at 10:50 AM, Nathan Loofbourrow njl...@gmail.com wrote: The good old market played a role here too. There are lots of investors whose risk profile dictates that they should be in safe investments, e.g. pension funds and old people. With the interest rates held on the floor, and Greenspan and Bernanke sitting on their chest, those safe investors started to buy up mortgages, because mortgages were big dumb investments and everyone paid their mortgage. You just proved the point: the market was distorted, with private actors acting _within_ the distorted market parameters. Thus people who needed to make low-risk investments did make what _seemed_ like low-risk investments (after all, real estate had been a low-risk
Re: [cryptography] Digital cash in the news...
ObCrypto: sorry, got nothing. This crisis has a lot to do with the fact that Bitcoin is doing well, and suggests demand for other cryptographic solutions. As orthodox places to put your money and perform transactions are increasingly suspect, people are now willing to consider unorthodox places to put their money and unorthodox means to transact, when formerly there was really no demand. Now there is demand. And that the crisis was caused by regulators is a major reason for that demand. If crypto's mission is to enable people to sign on to their banks without being phished, then this discussion is wholly irrelevant. If crypto's mission is to enable people to do transactions without being scammed, then existing scams not employing cryptography are wholly relevant. If government regulation was ineffectual or actively damaging, then we need cryptographic solutions that provide security in ways that bypass the government and regulators - hence the demand for bitcoin. If the crisis was lack of wise regulation, then we need a solution in which all transactions are, like paypal transactions and the various cell phone money schemes, rendered visible to authority and traceable. If the crisis was immoral and corrupt regulation, with politicians directing money to voting blocks and regulators spinning in the revolving door between government and banks, and often changing their hats without even changing their offices, wearing a regulator hat at the same desk where a short time before they had worn a banker hat, then we need a more cypherpunkish solution - such as bitcoin, and there is customer demand for a more cypherpunkish solution. ___ cryptography mailing list cryptography@randombit.net http://lists.randombit.net/mailman/listinfo/cryptography
Re: [cryptography] Digital cash in the news...
On 12/06/11 4:21 PM, Peter Gutmann wrote: Am I the only one who thinks it's not coincidence that the (supposed) major use of bitcoin is by people buying hallucinogenic substances? The best way to think of this is from the marketing concepts of product diffusion or product life cycle. http://www.quickmba.com/marketing/product/diffusion/ The challenge for the new product is to migrate from left to center to right of that graph in above link. In doing so, the newer groups come to dominate the earlier groups, and the earlier groups typically fall away. Recall the video story? The innovators got in very early, and bought Betamax because it was better quality. But they got stuck when the market was captured by the VHS system. So lesson #1 is that early groups are risking punishment. Same story for DVD. Also, the backroom story for video was that the porn films, the big market that lifted the revenues of the distribution chains, and made it worthwhile. These products/people/chains kept the industry alive while it built up steam for the mainstream. Lesson #2 -- you need these strange uncomfortable groups to get to where you want to get. Later on, as more mainstream comes into play, these strange uncomfortable groups can be eased out. Or they go somewhere else, or we change our minds about them. We also write them out of history... So, as far as recreational pharma product is concerned, this is typical of these things (if that is what it is). E.g., SSL certificates early revenue was also porn, Paypal had some dodgy customers, and for e-gold, it was ponzis / games that pushed the business into the black. The challenge is what to do next, how to grow up. This is going to be practically impossible for BitCoin because it has no guiding hand like e.g., Paypal had. It's only got the invisible hand, which suits the innovators fine ... but it also means it hasn't got much of a chance of going mainstream. iang ___ cryptography mailing list cryptography@randombit.net http://lists.randombit.net/mailman/listinfo/cryptography
Re: [cryptography] Digital cash in the news...
On 2011-06-13 9:26 AM, Ian G wrote: However. Unless the laws of financial conservation have been repealed by the design, those who follow have to invest a lot and come out with less... Financial conservation does not apply to money. If paper currency collapses, and is replaced by gold, those who invest in bitcoin will come out with nothing. If paper currency collapses, and is replaced by bitcoin, they will come out with immense fortunes. The market is at present rating the prospect of the world going to a bitcoin standard rather than a gold standard at two chances in a million, which seems reasonably conservative. ___ cryptography mailing list cryptography@randombit.net http://lists.randombit.net/mailman/listinfo/cryptography
Re: [cryptography] Digital cash in the news...
On 2011-06-12 6:13 AM, John Levine wrote: Useful for something, but not useful for money. I can't help but note that the level of economic knowledge in the digital cash community is pitifully low, and much of what people think they know is absurd. (Anyone who thinks that a gold standard is better than what we have now, or that the supply of gold is fixed in any but a purely hypothetical sense, is either ignorant of economic history or shilling for gold speculators.) What we have now has been tried many times before, and failed many times before. The gold standard has never suffered the kind of wild alarming fluctuations that fiat currencies routinely suffer. Gold inflation was always very slow, and gold deflation was always very slow, possibly because people expected the value to remain stable, so in the event of deflation, disinvested in gold and increased their investment in other things, and on gold inflation, vice versa. The most alarming gold deflation was the long depression, caused by the demonetization of silver and accompanying rise of the value of gold. By modern standards, it was not even a recession. The most alarming gold inflation was caused by the conquest of the new world, which resulted in inflation at about 1% per year for about a hundred years. ___ cryptography mailing list cryptography@randombit.net http://lists.randombit.net/mailman/listinfo/cryptography
Re: [cryptography] Digital cash in the news...
On Sun, Jun 12, 2011 at 10:44 PM, James A. Donald jam...@echeque.com wrote: On 2011-06-12 8:53 AM, Nico Williams wrote: A fiat currency with no capital controls and reasonably free trade is probably the best currency system yet. Details do matter though. If operated by far sighted men with an eye for the long term - for example if operated by a hereditary monarchy. Operated by the current lot of crooks who can scarcely see as far as the next election ... I think Sparta had it right in this instance: put the public officials on trial when their term is over, and make them accountable for their actions. Its funny how those lessons were lost. Jeff ___ cryptography mailing list cryptography@randombit.net http://lists.randombit.net/mailman/listinfo/cryptography
Re: [cryptography] Digital cash in the news...
On Sun, Jun 12, 2011 at 10:34 PM, Jeffrey Walton noloa...@gmail.com wrote: I think Sparta had it right in this instance: put the public officials on trial when their term is over, and make them accountable for their actions. Its funny how those lessons were lost. Doesn't help. The trials would be political trials, and it's all politics, which in its most naked form is who has the guns, and next most is who has the votes. Truth is not dispositive in politics, sadly. ___ cryptography mailing list cryptography@randombit.net http://lists.randombit.net/mailman/listinfo/cryptography
Re: [cryptography] Digital cash in the news...
On Sun, Jun 12, 2011 at 11:54 PM, Nico Williams n...@cryptonector.com wrote: On Sun, Jun 12, 2011 at 10:34 PM, Jeffrey Walton noloa...@gmail.com wrote: I think Sparta had it right in this instance: put the public officials on trial when their term is over, and make them accountable for their actions. Its funny how those lessons were lost. Doesn't help. The trials would be political trials, and it's all politics, which in its most naked form is who has the guns, and next most is who has the votes. Truth is not dispositive in politics, sadly. I'd be willing to take a chance with doesn't help since we now have doesn't work (or broken, or severly bent). I recall Obama boasting: My Administration is the only thing saving you from the pitchforks of the American people [sic] at a banker's lunch after he took office. On the campaign trail, he received over 1M USD from Goldman Sachs alone. In this case, Obama took the bride money (err, PAC contributions) and provided political cover. If you game the Ticket Master system, you will be faced with a PATRIOT Act like rsponse from the US governemnt [1]. If you make a PAC contribution, you can crash the economy with impunity. Obama upset the balance of powers (the best I can tell, the SEC investigations have been laughable - civil fines, but no criminal prosecurtions), and I would love to see him spend the rest of his natural life in jail for conspiring with the economic terrorist who crashed the economy. Its nothing against Obama: I had high hopes for him. I had my fingers crossed for him since he was not from the white, good ole' boy stock. He has turned out to be no better than the rest of them. Jeff [1] http://www.wired.com/threatlevel/2010/11/wiseguys-plead-guilty/ ___ cryptography mailing list cryptography@randombit.net http://lists.randombit.net/mailman/listinfo/cryptography
Re: [cryptography] Digital cash in the news...
We can therefore see that someone has to make that worth mean something, so for this we need an issuer sometimes known as Ivan. It's beyond the scope of a crypto list to discuss this in depth, but typically Ivan would deposit $1 for every issued electronic dollar in some bank account somewhere. You're right, for a crypto currency to be credible in the long term, it needs to be convertible into Real Money(tm), i.e., something you can use to pay your taxes. (That's the actual working definition of money, by the way.) But that really has nothing to do with the crypto part. You can have crypto out the wazoo, and it's worth nothing unless there's an issuer in meatspace who will accept your crypto coins, cancel them, and hand you the agreed amount of money. Or think about the ETF model I suggested a few years ago, which provides a close approximation to convertibility without requiring that the issuer be able to redeem every individual coin on demand. Regards, John Levine, jo...@iecc.com, First Unitarian Society of Ithaca NY Between 200 and 500 members, depending on who's counting PS: For anyone who wants a crypto currency backed by gold, that's functionally equivalent to a gold ETF, of which there are several, such as ticker symbols IAU, GLD, GTU, SGOL, and AGOL. They do what they do perfectly adequately, but they are in no sense currency. Bubble sceptics can trade put options on them. Too bad there's no options on bitcoins. ___ cryptography mailing list cryptography@randombit.net http://lists.randombit.net/mailman/listinfo/cryptography
Re: [cryptography] Digital cash in the news...
On Sun, Jun 12, 2011 at 11:28 PM, Jeffrey Walton noloa...@gmail.com wrote: I recall Obama boasting: My Administration is the only thing saving you from the pitchforks of the American people [sic] at a banker's lunch after he took office. On the campaign trail, he received over 1M USD from Goldman Sachs alone. In this case, Obama took the bride money (err, PAC contributions) and provided political cover. If you game the Ticket Master system, you will be faced with a PATRIOT Act like rsponse from the US governemnt [1]. If you make a PAC contribution, you can crash the economy with impunity. Obama upset the balance of powers (the best I can tell, the SEC investigations have been laughable - civil fines, but no criminal prosecurtions), and I would love to see him spend the rest of his natural life in jail for conspiring with the economic terrorist who crashed the economy. Perhaps it's because I earn some of my living from a financial institution (but I doubt it, since I held this opinion back when I didn't), but I don't think it's fair to blame private financial institutions for the ill-effects of an ill-advised government plan to subsidize housing ownership by individuals. Without Frannie, CRA, or anything of the sort I don't think we'd have seen the degree of financialization of housing that we saw, meaning that we wouldn't have seen the home mortgage credit growth that drove the housing bubble, thus neither the bubble nor the crash. (Well, bubbles can happen without the help of the government, so let's say that the likelihood of such an immense bubble would have been pretty low without Frannie and CRA). Now, financial institutions clearly played a role, but mostly it was a fee-taking role (since they mostly passed mortgages through to Frannie), and it was a role they had to play (see CRA). Some played a role in the securitization of lousy mortgages, but I'm not sure that they understood the systemic risk -- the securities' buyers certainly didn't, even though most were also financial institutions with sophisticated people in charge, so it's not too much of a stretch to think that this was all really just a necessary consequence of CRA and Frannie. That's my theory anyways. Nico -- ___ cryptography mailing list cryptography@randombit.net http://lists.randombit.net/mailman/listinfo/cryptography
Re: [cryptography] Digital cash in the news...
On 2011-06-11 3:12 PM, James A. Donald wrote: On 2011-06-11 1:58 PM, Peter Gutmann wrote: I wouldn't call bitcoins digital cash. They're more like digital tulip bulbs, Misattribution, that was John Levine, not Peter Gutman. ___ cryptography mailing list cryptography@randombit.net http://lists.randombit.net/mailman/listinfo/cryptography
Re: [cryptography] Digital cash in the news...
On Sat, Jun 11, 2011 at 02:16:55AM -, John Levine wrote: In article 021ccba9-9203-4896-8412-481b94595...@cs.columbia.edu you write: http://gcn.com/articles/2011/06/09/bitcoins-digital-currency-silk-road-charles-schumer-joe-manchin.aspx?s=gcndaily_100611 I wouldn't call bitcoins digital cash. They're more like digital tulip bulbs, or bearer shares of theglobe.com. Whatever they are, it's a self limiting problem since the bubble will burst soon enough. Unlike fiat currencies, algorithms assert limit of total volume. And the mint and transaction infrastructure is decentral, so there's no single point of control. These both are very useful properties. I don't expect Bitcoin to be it, but it is definitely a predecessor to a number of such currencies which will become practical both for machines and people. ___ cryptography mailing list cryptography@randombit.net http://lists.randombit.net/mailman/listinfo/cryptography
Re: [cryptography] Digital cash in the news...
BitCoin has only one problem: maintenance of the relationship between unit BitCoin value and the material world (energy, as in KWh) is 'soft', it requires some sort of a volatile communal effort, which sets it for failure (as a counter example, the amount of Au atoms on this planet is rather independent from any communal effort.) The relationship between unit value and the material world needs to be fixed. It's just a matter of time. Then we may name it ButtCoin. We expect money to be a store of value, among a few other things. BitCoin has nothing in it that speaks to that goal, that I can see [0]. This anti-property would however make it more ideal for a bubble [1]. Quite how to fix that and retain the decentralised control aspect, I'm unsure. The essence of a contract is that someone delivers something to someone else; without that first party (which speaks to centralisation at some level) it is hard. ___ cryptography mailing list cryptography@randombit.net http://lists.randombit.net/mailman/listinfo/cryptography
Re: [cryptography] Digital cash in the news...
On Sat, Jun 11, 2011 at 4:13 PM, John Levine jo...@iecc.com wrote: Unlike fiat currencies, algorithms assert limit of total volume. And the mint and transaction infrastructure is decentral, so there's no single point of control. These both are very useful properties. Useful for something, but not useful for money. I can't help but note that the level of economic knowledge in the digital cash community is pitifully low, and much of what people think they know is absurd. OK, I bite - who has the knowledge? Is it the expert folks who have the US 14 trillion or so in debt? Or is it embodied in experts in other countries, such as Greece? [SNIP] Jeff ___ cryptography mailing list cryptography@randombit.net http://lists.randombit.net/mailman/listinfo/cryptography
Re: [cryptography] Digital cash in the news...
;-) On Sat, Jun 11, 2011 at 6:29 PM, Jeffrey Walton noloa...@gmail.com wrote: On Sat, Jun 11, 2011 at 4:13 PM, John Levine jo...@iecc.com wrote: Unlike fiat currencies, algorithms assert limit of total volume. And the mint and transaction infrastructure is decentral, so there's no single point of control. These both are very useful properties. Useful for something, but not useful for money. I can't help but note that the level of economic knowledge in the digital cash community is pitifully low, and much of what people think they know is absurd. OK, I bite - who has the knowledge? Is it the expert folks who have the US 14 trillion or so in debt? Or is it embodied in experts in other countries, such as Greece? [SNIP] Jeff ___ cryptography mailing list cryptography@randombit.net http://lists.randombit.net/mailman/listinfo/cryptography -- Blog: http://off-the-wall-security.blogspot.com/ The most likely way for the world to be destroyed, most experts agree, is by accident. That's where we come in; we're computer professionals. We *cause* accidents.-- Nathaniel Borenstein ___ cryptography mailing list cryptography@randombit.net http://lists.randombit.net/mailman/listinfo/cryptography
Re: [cryptography] Digital cash in the news...
On Sat, Jun 11, 2011 at 3:13 PM, John Levine jo...@iecc.com wrote: (Anyone who thinks that a gold standard is better than what we have now, or that the supply of gold is fixed in any but a purely hypothetical sense, is either ignorant of economic history or shilling for gold speculators.) +1. A fiat currency with no capital controls and reasonably free trade is probably the best currency system yet. Details do matter though. It helps when the issuer doesn't inflate, for example. Still, the U.S. dollar has been that sort of currency since the 70s, and it's worked out rather well. (Which isn't to say it will continue, but if it doesn't, it won't be due to any flaws in this currency system.) ObCrypto: it would be interesting to figure out how to create a digital currency that has the characteristics of real money. One possibility is to set up a sufficiently credible central bank that can manage the supply, but I doubt that would work unless that central bank was a national central bank, which would make the digital money fully convertible with real money. A simple digital coin would be one with double spend detection, and blind signatures for anonymity. Double spend detection is a problem, because it requires online infrastructure, which then becomes a super-critical part of the economy, but I'm not sure how we can avoid it. The proof of computation idea is a total waste of precious energy (check the news, energy shortages are likely to be a common problem in Japan and Europe as a result of Fukushima, and probably elsewhere too). Another interesting model is ETFs, exchange traded mutual funds. They are tradable in arbitrarily small quantities, but only convertible to and from the underlying assets in large chunks by parties who have to register with the issuer. The trades are close to anonymous, fully so if you use an offshore bank, the conversions are not. The idea is that the conversions are done by arbitrageurs who track the prices of the asset and the ETF and buy or sell when they are sufficiently out of line. This works pretty well, and other than in chaotic markets it is quite rare for the values to get more than a fraction of a percent apart. The underlying asset can be anything with an easily determinable price such as a single currency or a basket of currencies. Good point. It's all in what's in that basket, and the rate of transactions (i.e., whether people use this thing). Nico -- ___ cryptography mailing list cryptography@randombit.net http://lists.randombit.net/mailman/listinfo/cryptography
Re: [cryptography] Digital cash in the news...
In article 021ccba9-9203-4896-8412-481b94595...@cs.columbia.edu you write: http://gcn.com/articles/2011/06/09/bitcoins-digital-currency-silk-road-charles-schumer-joe-manchin.aspx?s=gcndaily_100611 I wouldn't call bitcoins digital cash. They're more like digital tulip bulbs, or bearer shares of theglobe.com. Whatever they are, it's a self limiting problem since the bubble will burst soon enough. R's, John ___ cryptography mailing list cryptography@randombit.net http://lists.randombit.net/mailman/listinfo/cryptography