Alaric,
* Alaric Snell-Pym ([email protected]) [110623 02:32]: > On 06/21/11 22:06, Jon Cox wrote: > > > Institutions with the market share of Mt Gox become part of > > the de-facto monitary policy. Hence they are not external > > to "the currency" at all. > > I'd say there's multiple layers. "Bitcoin" is defined by name in a paper > describing the crypto algorithms. But there's a "bitcoin economy" that > is based around bitcoin itself, plus a number of traders who will swap > bitcoins for things (some of those things being other currencies). Then > there's a "bitcoin community" that encompasses those traders as well as > mere players in the market, interested parties, pundit bloggers... Well put. I think I'd add "bitcoin legal environment", which would include things like recent proposals to ban currencies like this on the basis of laws pertaining to "know your customer" legislation. The justification for things like that is to thwart money laundering rings and/or track money used to fund terrorism. The net effect is to create a legal basis for denying any sort of right to privacy when it comes to mediums of exchange, be they in the form of traditional government-issued currencies, commodities, precious metals, and so forth. The most recent example of this is the Dodd-Frank Act. > Bitcoin itself seems to be weathering the recent turmoil of the bitcoin > economy well. The economy is in tatters because it's small and immature, > but such things can only be grown upwards from tiny seeds, so this is a > hard-to-avoid stage of growing pains. Whether it will succeed or not > remains to be seen, but even if the bitcoin *economy* fails, bitcoin > itself may well still succeed, perhaps by finding a new application in > more limited economies... we'll see. I hope something does. Some scary stuff is happening in the privacy arena lately. A few states (including my own, Massachusetts) are trying to criminalize the videotaping of __public__ police actions, claiming it violates "wiretapping" laws. At the same time, Feds are asserting that the subject lines of your emails and the URLs your browsers fetch are "public disclosures", thereby forfeiting any protections you might hope to have under the 4th Amendment... and besides, the Patriot Act now creates an environment where warrants aren't needed anymore and "gut feeling" establishes probable cause. :) Nice, huh? Will Dodd-Frank be used against alternative currencies? Maybe. Would is stand up on court? Well... this is the same court that said under Citizens United that Corporations now have the right to make unlimited campaign donations to an already coin-operated Congress. Yes, we'll see. Given what we've seen lately though, I'd also say that all bets are off. > >>> Bitcoin is therefore a 100% faith-based immature currency > >>> with full code transparency but almost no institutional > >>> transparency or independent auditing. > >> > >> For sure. However, it's got to start somewhere. > > > > > > Plainly. > > > > I am asking raising some specific issues here > > that go above and beyond that obvious fact. > > > > o Is this the only option for an anon/decentralized currency? > > Who knows? It's the only decentralized algorithm I've seen yet for > *electronic* currency (gold/diamonds/etc work in the Real World). Decentralize on, of course, comes in degrees -- both in terms of the theoretical decentralisation something might achieve in a conceivable world, and the actual level of decentralisation it tends toward in this one (and/or in worlds to come). Electronic currencies themselves don't need to be entirely abstract either, as the trust model might be made to depend upon real relationships. Therefore, it may be fruitful to expand the discussion from "decentralized electronic algorithm" to "decentralized system". For example, hawala is a 400 year old distributed debt exchange network based on absolute trust, informally secured by p2p self-regulation. Hawala is somewhat like a social Forex. There are components to a hawala-like system that could probably be updated/replaced by public key crypto, and the thing(s) being transferred could be generalized. That's the sort of thing I've been tossing around as a thought-experiment lately. The hawala system works much better than you'd think it might from just hearing a high-level description. > > o How decentralize is Bitcoin mining in the long run anyway? > > That's hard to predict... let's wait and see! Yup. Though I think the potential for hijacking a currency that is based on a global efficiency contest is worrisome. > > o What out-of-band factors influence its __effective__ anonymity? > > Communications interception powers vs. Tor and VPNs, mainly Yup. Add to that warrant-less wiretaps, and os-level and/or hardware level keylogging. That sounds utterly paranoid, but there has already been one case of a government doing that for a localization of Microsoft Windows. > > o What trade-offs / dynamics are implied by the trust model? > > That's complex :-) Yeah. So complex, it's nearly impossible to figure. That's why I'm curious about hawala, from a historical perspective. > > o Is the trust model used the best option available, overall? > > It's hard to say... People need to think of more electronic currency > systems so they can be compared. Digital bearer cash has never quite > taken off, for mainly commercial reasons. The decentralisation of > Bitcoin seems to be an important factor. > A funny twist in all this is that people don't like to think trust models true, they just like to use them and assume that they work (cf: SSL certs) > > o Is it having zero intrinsic local value a necessary feature? > > Not necessarily Agreed. Though a complicating factor is the legal framework part. I don't have a good understanding of that at all, but it definitely comes into play. > > o Can audited digital commodity/credit receipts be used instead? > > It's been tried, and not taken off; but if the exact reasons why can be > pinned down sufficiently, and fixes found, they may have legs in the > long run. The existence proof that something like this could work are the commodities exchanges and futures contracts that exist today (most contract buyers never "take delivery"). Again though, the legal environment may exert a centralizing force. > > Once we accept that we're making trade-offs in > > the area of de-facto centralization, anonymity, > > validation, security, and coupling to the > > underlying real economy of goods and services, > > a different picture emerges. The mathematical > > guarantee validating that a quantity of (otherwise > > worthless work) was done has some good and bad > > properties that are not contained within the > > code itself. > > > > This is the kind of analytical dialogue that I'm > > hoping we can engage in. > > Yep! But I think we need to watch and see for now... stuff is happening > faster than people seem able to reason about it :-) Agred. > >> Why shouldn't it? The bitcoin economy is tiny; Mt Gox dominates it like > >> the Bank of England dominates GBP. However, Mt Gox has no de jure power, > >> and in due course, competitors will challenge it, thereby decentralising > >> the economy again. > > > > The reason is simple: the goal is to design something better. > > It'd be nice if something better could be designed, but as I see it, > while currencies can be designed, economies and communities are complex > dynamical systems that have to *evolve*. Yes. I'm hoping to push that evolution forward in my own head by conversations like this one. There is probably some real-world data out that that someone has. > >> > >> I hole 18 bitcoins; I'm not too worried that it's dropped like that - > >> because I think it'll rise again. In fact, now would be a good time to > >> buy some more... > >> > > > > People lose more at Las Vegas. > > Have fun! > > Exactly... I wouldn't bet my life savings on it, but it's an interesting > gamble, and an investment into something that could lead to an > interesting new economy if it takes off :-) Makes sense. > There's not much I actually want to buy with bitcoins, but I try and > spend them when I can, to encourage the actual merchants into the market > - all this currency speculation is well and good, but I'd like more of > an actual products market. I've bought a "I bought this badge with a > bitcoin!" badge from nerdmeritbadges.com, and donated a few bitcents to > some folks who were doing good work for the community; but most of the > fun stuff for sale in BTC is in the States (bitmunchies.com and the > alpaca socks people), while the same products can be had a LOT nearer me... > > > Regulatory structures in the US are so weak that most folks will > > remain in a state of nervous denial until it's too late for them. > > When all debt obligations are factored totaled, we supposedly > > owe $500k/person. I can only think of 5 options that have > > been used (alone or in combination) by countries that get > > into this kind of difficulty: > > Ouch Yeah. There was a big article about this in a few major US newspapers recently. > > My central message is very simple: the real-world institutions > > that sustain currencies are *part* of them, not external to them. > > Bitcoin is no exception. Bitcoin software is not the sum total > > of Bitcoin as a currency. Not even close. > > Quite. We're mainly disagreeing over terminology ;-) Looks like it. > > I believe that the sooner we embrace these ideas, the sooner > > we'll have a digital "people's currency" that's more than > > a play-thing. Bitcoin is a groundbreaking play-thing, > > but we need more than that. > > Yep! > Cheers, -Jon
