Re: [cryptography] Digital cash in the news...

2011-06-16 Thread Jeffrey Walton
 On Sun, Jun 12, 2011 at 9:44 PM, James A. Donald jam...@echeque.com wrote:
 On 2011-06-12 8:53 AM, Nico Williams wrote:
 [SNIP]
 Greece is going broke from too much vote buying.  Governments are reluctant
 let Greece go broke, for fear of contagion.  So they lend the Greeks more
 money, which is another form of contagion.

MSNBC reports folks are rioting in Greece due to budget cuts, layoffs,
and higher taxes required to get receive money from the IMF. It seems
the citizens have rejected both the economists and politicians.
___
cryptography mailing list
cryptography@randombit.net
http://lists.randombit.net/mailman/listinfo/cryptography


Re: [cryptography] Digital cash in the news...

2011-06-15 Thread James A. Donald

On 2011-06-15 7:58 AM, Nico Williams wrote:

Uncivilized state actors will not give a damn about your crypto.  They
will torture you, your friends, your family.


If they can find you.
___
cryptography mailing list
cryptography@randombit.net
http://lists.randombit.net/mailman/listinfo/cryptography


Re: [cryptography] Digital cash in the news...

2011-06-14 Thread Danilo Gligoroski
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...

2011-06-14 Thread James A. Donald

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...

2011-06-13 Thread Adam Back

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...

2011-06-13 Thread Meredith L. Patterson
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...

2011-06-13 Thread James A. Donald

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...

2011-06-13 Thread Paul Crowley

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...

2011-06-13 Thread Danilo Gligoroski
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...

2011-06-13 Thread Ian G

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...

2011-06-13 Thread Adam Back

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...

2011-06-13 Thread Nico Williams
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...

2011-06-13 Thread James A. Donald

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...

2011-06-13 Thread James A. Donald

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...

2011-06-13 Thread James A. Donald

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...

2011-06-13 Thread Jeffrey Walton
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...

2011-06-13 Thread lodewijk andré de la porte
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...

2011-06-13 Thread James A. Donald

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...

2011-06-12 Thread Peter Gutmann
James A. Donald jam...@echeque.com writes:

There is a small but not totally insignificant chance that after fiat monies
collapse, the world will go bitcoin standard.  

ITYM:

There is a small but insignificant chance that fiat monies will collapse.
There is a small but insignificant chance that if this happens, the world will
  go to the bitcoin standard.
Since the Vogon Construction Fleet will have been and gone by this time, this
  will be a mostly academic issue.

Am I the only one who thinks it's not coincidence that the (supposed) major
use of bitcoin is by people buying hallucinogenic substances?

Peter.
___
cryptography mailing list
cryptography@randombit.net
http://lists.randombit.net/mailman/listinfo/cryptography


Re: [cryptography] Digital cash in the news...

2011-06-12 Thread Ian G

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...

2011-06-12 Thread Nicholas Bohm


  
  
On 12/06/2011 13:23, Ian G wrote:
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.
  


Ah well. I joined bitcoin quite early, seeing it as like donating
spare cycles to an interesting experiment. I ended up with quite a
substantial balance, at no cost that I can identify.

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 quite see the force of the critical comments made here; but they
remind me of a (probably apocryphal) remark attributed to the late
Garret Fitzgerald when Prime Minister of Ireland. After a new
scheme had been outlined to his cabinet, and greeted with enthusiasm
by several ministers, he remarked, "Well, it's all very well in
practice; but will it work in theory?"

Nicholas Bohm
-- 

  Contact
  and PGP key here

  

___
cryptography mailing list
cryptography@randombit.net
http://lists.randombit.net/mailman/listinfo/cryptography


Re: [cryptography] Digital cash in the news...

2011-06-12 Thread James A. Donald

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...

2011-06-12 Thread James A. Donald

On 2011-06-11 10:41 PM, Ian G wrote:

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].


All money is a bubble.  The non monetary value of a bitcoin is exactly 
the non monetary value of a federal reserve dollar, which is to say, zero.


Gold has real non monetary value, but far less than its monetary value.

___
cryptography mailing list
cryptography@randombit.net
http://lists.randombit.net/mailman/listinfo/cryptography


Re: [cryptography] Digital cash in the news...

2011-06-12 Thread James A. Donald

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...

2011-06-12 Thread James A. Donald

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 ...


Fiat currencies are subject to wild gyrations, which gold was not.

 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.)


I would say that giving total power to the people who brought you 
affirmative action lending is a flaw.  The people operating the system 
are printing money to benefit cronies and voter blocks.


Greece is going broke from too much vote buying.  Governments are 
reluctant let Greece go broke, for fear of contagion.  So they lend the 
Greeks more money, which is another form of contagion.


That governments keep bailing out Greece is a sign of weakness and 
fragility.  They fear that if Greece goes, then the next weakest 
government will go, and then if the next weakest goes, then the one 
after that, the dominos falling all the way to Washington.

___
cryptography mailing list
cryptography@randombit.net
http://lists.randombit.net/mailman/listinfo/cryptography


Re: [cryptography] Digital cash in the news...

2011-06-12 Thread Jeffrey Walton
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...

2011-06-12 Thread Nico Williams
On Sun, Jun 12, 2011 at 9:44 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 ...

Clearly.  The nice thing about the U.S. was, and still might turn out
to be once the current statist episode is over, that its political
system didn't stray too far in the direction that so many democracies
have tended to in the 20th century.

 Fiat currencies are subject to wild gyrations, which gold was not.

Clearly, but at least as long as you have property rights and there's
no capital controls to speak of you can work around those gyrations
(really, long periods of low, but higher than gold inflation, followed
by short but sharp credit contractions, with occasional bouts of
hyperinflation, but with the degree of inflation being a political
problem, thus manageable in countries with institutions and political
traditions that value low inflation).

You might note that in the long run all fiat currencies will be
debased, but you might also note that in the long run all gold
standards tend to get abandoned.  The problem is democracy, which you
might remember is the worst form of government _but for all the
others_.

 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.)

 I would say that giving total power to the people who brought you
 affirmative action lending is a flaw.  The people operating the system are
 printing money to benefit cronies and voter blocks.

Let's not exaggerate, total power looks a bit different than what you
see here, so far.  Granted, it's getting there, but there's hints that
the ship of state might yet right itself, and if not, well, there's
not a lot of options (obcrypto: and crypto won't get you any real
protection).

 Greece is going broke from too much vote buying.  Governments are reluctant
 let Greece go broke, for fear of contagion.  So they lend the Greeks more
 money, which is another form of contagion.

 That governments keep bailing out Greece is a sign of weakness and
 fragility.  They fear that if Greece goes, then the next weakest government
 will go, and then if the next weakest goes, then the one after that, the
 dominos falling all the way to Washington.

The real issue in Europe is that if Greece (and Portugal, and Ireland,
...) default then most of the banking system in the rest of Europe
will be insolvent, which means that either they are allowed to fail,
and people are allowed to lose part or even most of their deposits, or
their debt (deposits) will have to be nationalized and monetized, all
in a credit contraction environment (deflation).  Either way real
wealth has been frittered away, destroyed, and no one wants to be the
one to tell the public that they are poorer, thus the game is to make
the process by which the loss of wealth becomes apparent take much
longer, which only delays real recovery, thus making things worse.

Nico
--
___
cryptography mailing list
cryptography@randombit.net
http://lists.randombit.net/mailman/listinfo/cryptography


Re: [cryptography] Digital cash in the news...

2011-06-12 Thread Nico Williams
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...

2011-06-12 Thread Jeffrey Walton
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...

2011-06-12 Thread John Levine
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...

2011-06-12 Thread Nico Williams
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...

2011-06-11 Thread James A. Donald

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...

2011-06-11 Thread Eugen Leitl
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...

2011-06-11 Thread Morlock Elloi
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...

2011-06-11 Thread Jeffrey Walton
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...

2011-06-11 Thread Kevin W. Wall
;-)

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...

2011-06-11 Thread Nico Williams
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...

2011-06-11 Thread Ian G

On 12/06/11 8:29 AM, Jeffrey Walton wrote:

On Sat, Jun 11, 2011 at 4:13 PM, John Levinejo...@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?



Unfortunately, those in central banks and other similar places have 
largely forgotton a lot of the processes of new issuance.  Also, they 
are really only familiar with their own type of issuance (e.g., worried 
about inflation).  They don't need more knowledge because it is no 
advantage to them to promote free market issuance.


Issuance is somewhat a lost art.  Before 1900 or so we knew a lot more 
because free banking was prevalent.  The 20th century can be described 
as the century of the central bank, which unfortunately split the 
issuance of monies into various components, so the knowledge stagnated 
and dispersed.  What then became important to central banks as 
custodians of the already issued national unit was monetary economics, 
which isn't the same thing as issuance.


Some of that knowledge has been re-learnt in the financial cryptography 
tradition.  You can see some of the lessons in e.g., the history of 
Paypal, e-gold, webmoney, goldmoney etc.  Other parts of that knowledge 
are vested in IPOs and the bond markets.  Yet other parts are found in 
contract law, accounting, and governance.  Another important part would 
be applications, which could be seen as a cross between software 
architecture and startup venture innovation.


I wrote a paper about John Levine's observation of low knowledge, way 
back in 2000, called Financial Cryptography in 7 Layers.  The sort of 
unstated thesis of this paper was that in order to understand this area 
you had to become very multi-discipline, you had to understand up to 7 
general areas.  And that made it very hard, because most of the digital 
cash startups lacked some of the disciplines.


iang
___
cryptography mailing list
cryptography@randombit.net
http://lists.randombit.net/mailman/listinfo/cryptography


Re: [cryptography] Digital cash in the news...

2011-06-10 Thread John Levine
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