Status of the first million Bitcoins(bitcointalk.org)
bitcointalk.org
Status of the first million Bitcoins
https://bitcointalk.org/index.php?topic=175996.0
13 comments
According to these calculations: http://www.reddit.com/r/Bitcoin/comments/1c48u0/how_did_bitc...
The first 1.6 million bitcoins were mined by at most ~15 people.
The first 1.6 million bitcoins were mined by at most ~15 people.
"It seems disappointing (?) that significant chunks of the finite amount of possible Bitcoins might be lost 'forever.'"
So I'm kinda curious, as the power of the collective network grows, how difficult would it be to turn the incredible hashing rate toward discovering the the private keys of wallets lost long ago?
So I'm kinda curious, as the power of the collective network grows, how difficult would it be to turn the incredible hashing rate toward discovering the the private keys of wallets lost long ago?
Hashing doesn't help you crack private keys. Bitcoin uses ECDSA to sign transactions, which means you need to be able to solve the discrete logarithm problem over an elliptic curve. In any case, even the combined computational resources of the entire planet probably aren't enough to break a 256-bit ECDSA key in a reasonable amount of time.
Most one-time pubkeys are wrapped in RIPEMD-160 and SHA256, so you have to crack those first before you even get to cracking ECDSA. This also offers temporary protection against sudden appearance of quantum computer. QC can break ECDSA, but cannot break hashes fast enough. So people would have time to switch to another algorithm or at least agree on the last valid blockchain state and stop all transactions.
True, if by "break" you mean "break by brute force" (and of course with current, non-quantum computing technologies).
The protocol could be updated to allow "mining" of addresses that didn't move for sufficiently long time. But that's never going to happen.
The interesting thing here is that Bitcoin isn't set in stone to forever exist exactly as it does today — it depends on the majority of miners not modifying the protocol. I'm talking about what's essentially a 51% attack, but rather than it being performed by a malicious party, what if a technical/political decision with very strong opinions on both sides had to be made? It would be like a democracy where those with the most computing power win.
Or most money, or depending when it happens, most guns.
I suppose you could try and reach a consensus when possible, rather than have a majority dictatorship.
I wouldn't see any real opposition to changing the protocol to allow mining of lost coins for example if some precise and correct definition of a lost coin could be specified.
I suppose you could try and reach a consensus when possible, rather than have a majority dictatorship.
I wouldn't see any real opposition to changing the protocol to allow mining of lost coins for example if some precise and correct definition of a lost coin could be specified.
How do you know if the wallet is lost? I'm guessing most people who lost their wallets, probably lost their public address too. (Unless they were using it as a donation sink or something). Plus, if you can crack the keys, you would just target the biggest wallet and be done with it.
There's no difference between a lost bitcoin and one that is unused.
I imagine that cracking wallets that have been dormant for a long time carries less risk of being noticed and/or caught.
Cracking a wallet can be done completely offline. I guess if you mean extracting the coins, yeah. I suppose that's what you'd use a bitcoin laundry service for. (a "mixer" I believe)
So, there's 100 coins that represent an abstract value X.
Now there are only 50 coins because 50 were lost. Do they still count as that same value X? What if you can't know how many coins were lost?
Now there are only 50 coins because 50 were lost. Do they still count as that same value X? What if you can't know how many coins were lost?
In theory this is priced in already. Lost BTC is treated no differently than "hoarded" BTC; in either case it doesn't contribute to market liquidity.
Well, not exactly, right? I mean, they don't contribute to liquidity, but the difference is that hoarded bitcoins might, at some point in the future, be traded. So it has to be considered when assessing the risk of bitcoins as an investment.
Good point! But that's "1/f" (frequency) liquidity. If the true value of bitcoin is as an instantaneous transfer (and it is), then the chance of a shadow wallet emptying in between the time you received and when you cashed out is vanishingly small. The cost to insure against such fluctuations while it gets multiple confirmations is your "transaction fee".
Bitcoins shouldn't be considered an investment -- the business about hoarding them like taxi medallions because they only go up in value is nonsense. Their value is limited by the low transaction fee for another blockchain. But you're right, you'd have to factor that in if you were actually investing.
Bitcoins shouldn't be considered an investment -- the business about hoarding them like taxi medallions because they only go up in value is nonsense. Their value is limited by the low transaction fee for another blockchain. But you're right, you'd have to factor that in if you were actually investing.
Surely there is, or there would be eventually, value to knowing how much BTC is "hoarded" or even possibly just "saved" and how much is actually "lost".
The offer/demand will adjust the price of the remaining bitcoins. Think of lost bitcoins as a small donation to all bitcoin users.
If someone wants to go dumpster diving in Cleveland, there is a Samsung 80 gig hard drive with about 120 Bitcoins on it. I won them from a tor gambling site after betting a single bitcoin that was given to me. They were selling for less than $.20 at the time so I didn't care enough to do anything with them when I scrapped my hard drive.
I obviously didn't foresee Cypress.
I obviously didn't foresee Cypress.
Yeah, that tree was pretty unpredictable.
I've seen idle chatter about scouring the internet for posts from early bitcoin adpoters and offering to buy their old computers. And then of course searching the hard drives for forgotten wallets.
Not something I think anyone will actually do. Yet. But check those hard drives before you sell/donate any old PCs!
Not something I think anyone will actually do. Yet. But check those hard drives before you sell/donate any old PCs!
What is Cypress?
Cypress was a killer GPU firmware made by ATI that mined a lot of Bitcoins for me back in the day.
Cyprus on the other hand: that's a country that was just recently rocked by the world banksters.
Cyprus on the other hand: that's a country that was just recently rocked by the world banksters.
An alternative spelling to Cyprus, Ciprus, Chipre, Cipris, etc. It is one of two anglicized versions that I know of, and I can never remember which version is more accepted.
Anyway...https://en.wikipedia.org/wiki/2012%E2%80%932013_Cypriot_fina...
Anyway...https://en.wikipedia.org/wiki/2012%E2%80%932013_Cypriot_fina...
What's the other anglicized version? "Cyprus" is the only correct spelling, as far as I know, and I'm Greek. Or are you referring to the transliteration, "Kypros"? That's pretty much never used (same with "Hellas" for Greece).
I think he means Cyprus?
>Cypress is the name applied to many plants in the cypress family Cupressaceae, which is a conifer of northern temperate regions.
http://en.wikipedia.org/wiki/Cypress
http://en.wikipedia.org/wiki/Cypress
Seriously, this is worth knowing more details. When did you lose it, where, and what else is on the drive?
There is more mining to be done of hard drives, indeed, in your average metropolis ..
There is more mining to be done of hard drives, indeed, in your average metropolis ..
I threw it in the garbage in Mentor Ohio back when the price was less than $0.20. You'd probably have more luck panhandling.
Sorry I'm a complete Bitcoin noob, but is there some way for you to recover them via their transaction ID, or get the seller to re-issue them to you?
Bitcoin is decentralized, no one can reissue bit coins because no one runs bitcoin. If he lost his private keys (his "wallet") than he looses all of the coins associated with it.
Regardless of the cash value, I think it's interesting that so many people continue to accept that "Satoshi" was in fact a single real person, who created bitcoin out of an ideological desire.
Given the famous quality of its cryptographic design, it seems at least plausible to me that bitcoin is in fact a research project out of academia or a national government, with the Satoshi mythology a brilliant marketing wrapper.
Given the famous quality of its cryptographic design, it seems at least plausible to me that bitcoin is in fact a research project out of academia or a national government, with the Satoshi mythology a brilliant marketing wrapper.
There's a comment by Hal Finney on another bitcointalk thread on this
Today, Satoshi's true identity has become a mystery. But at the time, I thought I was dealing with a young man of Japanese ancestry who was very smart and sincere. I've had the good fortune to know many brilliant people over the course of my life, so I recognize the signs.[1]
Remember too that at the time noone could have foreseen the popularity and success of Bitcoin.
[1] https://bitcointalk.org/index.php?topic=155054.msg1643833#ms...
Today, Satoshi's true identity has become a mystery. But at the time, I thought I was dealing with a young man of Japanese ancestry who was very smart and sincere. I've had the good fortune to know many brilliant people over the course of my life, so I recognize the signs.[1]
Remember too that at the time noone could have foreseen the popularity and success of Bitcoin.
[1] https://bitcointalk.org/index.php?topic=155054.msg1643833#ms...
I still think it's the most probable scenario. If it were a group, there would be a lot more people who have incentive to go forward and "expose" the true story. There would be huge financial rewards for doing so.
It's definitely plausible it could be an institution, or a small group. But I'd bet my bitcoins that it's a single dude.
It's definitely plausible it could be an institution, or a small group. But I'd bet my bitcoins that it's a single dude.
I can't be the only one here to have lost some.
Somewhere in my house, or perhaps at my old workplace, there is a USB stick with approx 250 bitcoins on it, the gains from early mining and experimenting. I'd backed them up before I rebuilt my main machine, and then didn't restore them immediately (mining was approaching diminishing returns and I gave up).
I'm pretty sure I haven't over-written them, but I also have no idea where they are. A few weeks ago I looked again, fruitlessly. I'm sure they'll turn up some day.
Somewhere in my house, or perhaps at my old workplace, there is a USB stick with approx 250 bitcoins on it, the gains from early mining and experimenting. I'd backed them up before I rebuilt my main machine, and then didn't restore them immediately (mining was approaching diminishing returns and I gave up).
I'm pretty sure I haven't over-written them, but I also have no idea where they are. A few weeks ago I looked again, fruitlessly. I'm sure they'll turn up some day.
A $25,000 USD USB stick. (as much as $70,000 at one point) Pretty sure I'd search a bit harder :-)
I have searched harder! I can't find any of my USB sticks. I'm assuming they're all together and I tidied them up. I don't feel like I've lost them (hence no panic), just that I don't know where they are.
Though I really didn't comprehend they were worth so much. The last time I looked they were GBP 750. Am now leaving the keyboard to look again.
Though I really didn't comprehend they were worth so much. The last time I looked they were GBP 750. Am now leaving the keyboard to look again.
I love these stories. Please update if/when you find them. :)
I've found a few old SD cards, a hard drive I'd forgotten about, a Garmin for my bike I'd assumed I'd lent out, and a watch I'd mislaid years ago.
But no USB sticks.
They're here somewhere. May be time for a weekend of spring cleaning.
But no USB sticks.
They're here somewhere. May be time for a weekend of spring cleaning.
Satoshi's motivations are interesting to me. What was he/she/they actually trying to accomplish by creating bitcoin? Were they really hoping to anonymously buy things? Or were they trying to get rich? Or were they trying to get geeks to commit to a pseudonymous-but-public cryptocurrency to prevent a zerocoin-style really-anonymous currency from being developed? Or were they trying to get a distributed computing project going to really test the strength of sha256? Or were they trying to sabotage Folding@home and distributed.net?
"Nakamoto’s work appears to be politically motivated, as quoted:
“Yes, [we will not find a solution to political problems in cryptography,] but we can win a major battle in the arms race and gain a new territory of freedom for several years. Governments are good at cutting off the heads of a centrally controlled networks like Napster, but pure P2P networks like Gnutella and Tor seem to be holding their own.” – Satoshi Nakamoto
“[Bitcoin is] very attractive to the libertarian viewpoint if we can explain it properly. I’m better with code than with words though.” – Satoshi Nakamoto
In the Bitcoin network’s transaction database, the original entry has a note by Nakamoto that reads as:
“The Times 03/Jan/2009 Chancellor on brink of second bailout for banks”
Some claim this quote implies Nakamoto had great concern or contempt for the current central banking system."
http://bitcoinreport.com/who-is-satoshi-nakamoto/
http://bitcoinreport.com/who-is-satoshi-nakamoto/
But isn't that also exactly how someone would talk if they wanted to manipulate technolibertarians into joining a project?
Isn't the simpler explanation more likely?
Maybe! But by that metric, it would be impossible to catch scams - isn't it always simpler to assume that everyone is telling the truth?
He invented something a lot of geeks had been dreaming about for a long time. That alone is probably incentive enough.
You're over thinking this based on current information and developments.Seems pretty clear that the primary (and originally only) motivation was to create a decentralized cryptocurrency, just to show that it is feasible and practical, and for the satisfaction to see one's work have an impact.
Should Bitcoin succeed, that makes an anonymous crytptocurrency more likely in the future, not less.
If we have one main cryptocurrency, we'll also have a number of secondary ones, filling various niches.
For some reason, a lot of criticism of bitcoin seems to focus on it becoming the sole currency, but that's never going to be the case.
If we have one main cryptocurrency, we'll also have a number of secondary ones, filling various niches.
For some reason, a lot of criticism of bitcoin seems to focus on it becoming the sole currency, but that's never going to be the case.
If this is true and any individual holds 1M BTC, it must take an incredible amount of self restraint not to dump those coins. That means the book value of his coins would have fluctuated between approximately $250M and $100M this week.
You'd also have to keep in mind that he would have been through the previous crash in which his coins varied in worth between $29 M before falling back down to $2M.
It would take a special someone not to sell those coins before they hit the prices we've seen these past few weeks.
You'd also have to keep in mind that he would have been through the previous crash in which his coins varied in worth between $29 M before falling back down to $2M.
It would take a special someone not to sell those coins before they hit the prices we've seen these past few weeks.
Trying to liquidate that much would simply cause the market to collapse.
Yes, if the holder was liquidating it all at once.
What could be done though, is selling a little at a intervals, or selling a chunk whenever the price hit some level.
What could be done though, is selling a little at a intervals, or selling a chunk whenever the price hit some level.
Do you have any idea what the size of the order book is?
At this particular moment, selling 1,000,000 bitcoins would take the market price down to 0.10 USD.
The average price realized would be $14.288 USD, so you'd get $14,000,000. Not bad, really.
Source- "Gribble", the bot on the bitcoin irc channels that calculates these things based on the MtGox order book.
The average price realized would be $14.288 USD, so you'd get $14,000,000. Not bad, really.
Source- "Gribble", the bot on the bitcoin irc channels that calculates these things based on the MtGox order book.
Adding to jacquesm:
http://bitcoincharts.com/markets/mtgoxUSD_depth.html
I don't think you can tell if they aren't doing that. Large bitcoin transactions are fairly constant.
Note: I haven't looked at the bitchain and am guessing that you can't make assumptions about large holders from the bitchain alone.
Note: I haven't looked at the bitchain and am guessing that you can't make assumptions about large holders from the bitchain alone.
Please read the whole thread; the first million BTC are definitely not held by one person.
(Also, I think you'd get no more than $50M for 1M BTC but that's a minor detail.)
(Also, I think you'd get no more than $50M for 1M BTC but that's a minor detail.)
My point was not that he currently has them, it's that if any person were to have them, they'd have been sold a long time ago.
Why would he sell real bitcoins for fake fiat? This is Satoshi we're talking about, not your average joe.
To him, USD is riskier than BTC.
To him, USD is riskier than BTC.
> This is Satoshi we're talking about
I'm used to cult of personality on HN, but cult of anonymity is a novel thing! Who is Satoshi, and why do you put so much trust in them? What if I told you that "Satoshi" was brilliant quant working on Wall St., who came up with a scheme to invent an asset, give it incredible unreasonable value, then cash out for that value in USD, all while spinning a clever narrative about decentralized cryptocurrency for a new world?
I'm used to cult of personality on HN, but cult of anonymity is a novel thing! Who is Satoshi, and why do you put so much trust in them? What if I told you that "Satoshi" was brilliant quant working on Wall St., who came up with a scheme to invent an asset, give it incredible unreasonable value, then cash out for that value in USD, all while spinning a clever narrative about decentralized cryptocurrency for a new world?
If that were true it would be even more impressive.
Yes. I suppose we could try a game of making Satoshi look bad. Anything except for sex and murder, go...
True, to a degree, but day-to-day living still requires normal currency. Cash out $1M USD and you'd be comfortable to do whatever you liked for quite some time, while still keeping 99% of his coins.
Alternatively, sell half your remaining BTC every time they double in value relative to the USD. Infinite money!
I think there may have been an element of sarcasm in the GP.
Someone cashed out $1 million overnight. Dundundun!
that's some powerful delusion.
They could be playing the long game.
There are only 21M bitcoins possible. 1M is about 5%. The goal of many bitcoin-folk is for bitcoin to be in the top 3 currencies. Imagine only 5% of all the Euro in circulation... or 5% of the USD... $250M is nothing in comparison to that prize.
(BTW this is one problem I have with bitcoin)
There are only 21M bitcoins possible. 1M is about 5%. The goal of many bitcoin-folk is for bitcoin to be in the top 3 currencies. Imagine only 5% of all the Euro in circulation... or 5% of the USD... $250M is nothing in comparison to that prize.
(BTW this is one problem I have with bitcoin)
Fascinating, but I certainly don't hold it against him. 100 MM seems like a pretty modest take for a guy that invents a revolutionary currency.
There are certainly easier ways to make 100 million dollars.
There are certainly easier ways to make 100 million dollars.
Like what?
Being a co-founder of the internet company I work for? As much as I respect my company, it's no Bitcoin.
There are a lot of people and companies worth over 100 million dollars. I only know of one revolutionary crypto-currency.
Or the seventeen others founded on the same technology. It's important to distinguish the Bitcoin software from the particular block chain in whose private keys naive people are now speculating.
Selection bias. You only know of one popular revolutionary cypto-currency. There are loads of companies worth $0 (or much less than $100M)
Popularity is essential to 'revolutionary'-ness. It's not revolutionary if no one uses it
Winning the Nobel in physics, or winning one of the Clay Mathematics prizes.
The Nobel prize is just around $1 million.
Really? Oh, but you can win them multiple times. Simply achieve 100 Nobel Prizes (or merely 97 if you resolve P?=NP, the Navier Stokes Equation, and the Riemann Hypothesis), and you will have made a similar contribution as Bitcoin or jQuery. That's not counting, of course, the millions you'd be raking in as a tenured professor in the meantime.
The same question/comment was posted to r/bitcoin a few days ago: http://www.reddit.com/r/Bitcoin/comments/1c48u0/how_did_bitc...
This comment on that post seems to calculate the number of people mining bitcoins for the first year: http://www.reddit.com/r/Bitcoin/comments/1c48u0/how_did_bitc...
If satoshi was indeed just testing the network... why not use "testnet" or simply re-set the blockchain once you were satisfied with the results of your work and release it to individuals?
Oh, wait... because you wouldn't hold 7.8% of all the Bitcoins that will ever exist then if you did that.
Just because almost half of those first 1.8M bitcoins mined were "transferred", doesn't mean that they ever transferred ownership.
This comment on that post seems to calculate the number of people mining bitcoins for the first year: http://www.reddit.com/r/Bitcoin/comments/1c48u0/how_did_bitc...
If satoshi was indeed just testing the network... why not use "testnet" or simply re-set the blockchain once you were satisfied with the results of your work and release it to individuals?
Oh, wait... because you wouldn't hold 7.8% of all the Bitcoins that will ever exist then if you did that.
Just because almost half of those first 1.8M bitcoins mined were "transferred", doesn't mean that they ever transferred ownership.
Bitcoin was announced on a cryptography mailing list and released to the public at most a week after the blockchain was created, as proven by the headline in the genesis block. The Bitcoin whitepaper was released months earlier. Anyone had an opportunity to mine early on.
Yeah, some guy recommended I mine back in the earliest of days. "If only I knew then what I know now" ... hahah. So sick to think that my old Core 2 Duo could've made me a millionaire. I was turned off by the ugliness of the bitcointalk forum, and decided it wasn't worth the time to understand the Satoshi client.
I don't think it's right to get on the case of the earliest bunch though for not being more egalitarian. How could Satoshi have been more fair to you? After all, nearly everybody had the short-lived opportunity to mine 50 BTC blocks with ease. Clearly Satoshi believed in his concept more than most of us did, and deemed it worthy of putting in lots of effort into mining. He did his part to warn the world of his invention. Fair's fair.
I don't think it's right to get on the case of the earliest bunch though for not being more egalitarian. How could Satoshi have been more fair to you? After all, nearly everybody had the short-lived opportunity to mine 50 BTC blocks with ease. Clearly Satoshi believed in his concept more than most of us did, and deemed it worthy of putting in lots of effort into mining. He did his part to warn the world of his invention. Fair's fair.
Tilting at windmills.
More accurately, asking the most ardent followers of bitcoin to help launch an investigation into their prime diety.
This discussion and variations of it has been going on for years now. Each new attempt has/will be dismissed by the faithful with some combination of the following:
A) You're wrong.
B) He deserves it.
C) That's just like everything else.
D) You're just envious.
More accurately, asking the most ardent followers of bitcoin to help launch an investigation into their prime diety.
This discussion and variations of it has been going on for years now. Each new attempt has/will be dismissed by the faithful with some combination of the following:
A) You're wrong.
B) He deserves it.
C) That's just like everything else.
D) You're just envious.
Greatest pyramid scheme ever.
Can you explain why?
I'll give it a go. The early distribution of bitcoins seems to have been enough to motivate lots of relatively early adopters to promote it aggressively, maybe out of ideology or maybe just out of greed. Their claims, which fueled the recent speculative frenzy, have always been that Bitcoin would have a continuous, exponential growth against all other currencies. "It always goes up." "Get in before it's too late."
I can see how relatively small amounts of money could be invested into Bitcoins as speculation or just play. Several tens of millions of dollars have presumably been transferred to Bitcoin holders so far, in the aggregate. But many people are investing on claims that a single bitcoin will eventually be worth $10,000, $100,000, or $1 million. For that to happen, the world would have to transfer massive wealth to the early adopters, as this early adopter explains:
https://bitcointalk.org/index.php?topic=175833.msg1830933#ms...
Why would anyone do that rather than setting up an alternative? Massive delusions are possible, but it seems far more likely that the claim that a bitcoin will be worth $10,000 will start to seem ludicrous to everyone, as it obviously is.
After that, why would anyone buy a bitcoin for $100, or even $30 or $10? There's little practical use for them other than drugs or illegal gambling. And they're hardly worth speculatively buying at $100 just so that they could be sold at $120 or $150.
It's got to die eventually, unless everyone decide that they don't mind depreciating the value of everything else just so that the early adopters of this scheme can have untold wealth dumped into their laps. It's a fascinating technology, but that doesn't mean the speculative delusion will last forever.
Pyramid scheme? Just so. Of course, to some degree so is gold -- but gold has a much wider existing distribution (compared to Bitcoin), a much deeper history, and backers far more significant, both intellectually and financially, than the childish ideologues of bitcointalk.org.
I can see how relatively small amounts of money could be invested into Bitcoins as speculation or just play. Several tens of millions of dollars have presumably been transferred to Bitcoin holders so far, in the aggregate. But many people are investing on claims that a single bitcoin will eventually be worth $10,000, $100,000, or $1 million. For that to happen, the world would have to transfer massive wealth to the early adopters, as this early adopter explains:
https://bitcointalk.org/index.php?topic=175833.msg1830933#ms...
Why would anyone do that rather than setting up an alternative? Massive delusions are possible, but it seems far more likely that the claim that a bitcoin will be worth $10,000 will start to seem ludicrous to everyone, as it obviously is.
After that, why would anyone buy a bitcoin for $100, or even $30 or $10? There's little practical use for them other than drugs or illegal gambling. And they're hardly worth speculatively buying at $100 just so that they could be sold at $120 or $150.
It's got to die eventually, unless everyone decide that they don't mind depreciating the value of everything else just so that the early adopters of this scheme can have untold wealth dumped into their laps. It's a fascinating technology, but that doesn't mean the speculative delusion will last forever.
Pyramid scheme? Just so. Of course, to some degree so is gold -- but gold has a much wider existing distribution (compared to Bitcoin), a much deeper history, and backers far more significant, both intellectually and financially, than the childish ideologues of bitcointalk.org.
Everything you've described can be applied toward any type of asset.
1. Early adopter wants more buyers in their market to drive up share price? Check.
2. Price bubbles up and crashes due to high expectations? See number 1? Check.
Unlike any asset I'm aware of, this one is open-source and completely transparent.
> There's little practical use for them other than drugs or illegal gambling.
I think these types of statements will be looked back at contemptuously years from now, even if bitcoin fails and is replaced by something else. This is a completely new field. How can you imagine bootstrapping a currency like this? It can't start with nobody receiving any coins, or it couldn't be used. You could give all the coins to a single entity and have that entity distribute (like Ripple is doing) but this is even less fair than Bitcoin, especially since OpenCoin is keeping half of the coins they're minting.
Practically speaking, there is plenty of use for Bitcoins. I don't have to give anybody my personal information to transfer value, which is impossible to fathom in any other existing commodity. There's even more use for them as it grows and concepts which have not been fully implemented (smart property and the like) are developed into/around the protocol. Every month a great new idea pops up, like fidelity bonded ledgers or some zero-knowledge proof system which makes bitcoins pop into and out of existence without a linear path -- all without a central entity and only some crazy tricky math and sometimes game theory.
Gold itself has had a nasty history too. Remember, it was bootstrapped (relatively speaking) off a market of financing war and has been periodically seized by governments for that end. I personally think gold is much more secure of an asset now, as we have to trust that nobody will seize a majority of the hashing power in the bitcoin network for our coins to be valuable, whereas with gold we only have to trust that they are scarce. It's something like NSA vs. Science, really.
Every bubble could be its last bubble and just like the early adopters who were smart enough to cash out in 2011 when they saw the opportunity, there are some who were smart enough to cash out during this last bubble. This is why it is absolutely pointless to call it a ponzi scheme. The economic base does not depend on new users financing it. Massive bubbles do, which is why they should be ignored/hedged against.
1. Early adopter wants more buyers in their market to drive up share price? Check.
2. Price bubbles up and crashes due to high expectations? See number 1? Check.
Unlike any asset I'm aware of, this one is open-source and completely transparent.
> There's little practical use for them other than drugs or illegal gambling.
I think these types of statements will be looked back at contemptuously years from now, even if bitcoin fails and is replaced by something else. This is a completely new field. How can you imagine bootstrapping a currency like this? It can't start with nobody receiving any coins, or it couldn't be used. You could give all the coins to a single entity and have that entity distribute (like Ripple is doing) but this is even less fair than Bitcoin, especially since OpenCoin is keeping half of the coins they're minting.
Practically speaking, there is plenty of use for Bitcoins. I don't have to give anybody my personal information to transfer value, which is impossible to fathom in any other existing commodity. There's even more use for them as it grows and concepts which have not been fully implemented (smart property and the like) are developed into/around the protocol. Every month a great new idea pops up, like fidelity bonded ledgers or some zero-knowledge proof system which makes bitcoins pop into and out of existence without a linear path -- all without a central entity and only some crazy tricky math and sometimes game theory.
Gold itself has had a nasty history too. Remember, it was bootstrapped (relatively speaking) off a market of financing war and has been periodically seized by governments for that end. I personally think gold is much more secure of an asset now, as we have to trust that nobody will seize a majority of the hashing power in the bitcoin network for our coins to be valuable, whereas with gold we only have to trust that they are scarce. It's something like NSA vs. Science, really.
Every bubble could be its last bubble and just like the early adopters who were smart enough to cash out in 2011 when they saw the opportunity, there are some who were smart enough to cash out during this last bubble. This is why it is absolutely pointless to call it a ponzi scheme. The economic base does not depend on new users financing it. Massive bubbles do, which is why they should be ignored/hedged against.
On "little practical use," I mean today. Why does anyone buy a bitcoin today? The only reasons that I can see are (1) ideology, (2) illegal activities (including the circumvention of gambling restrictions), or (3) speculation, hoping to sell it to someone who will pay more later.
I think the technology is great. The technology itself gives absolutely no reason for those who don't own bitcoins (in the main block chain) to buy them for any value.
I think the technology is great. The technology itself gives absolutely no reason for those who don't own bitcoins (in the main block chain) to buy them for any value.
Are we talking about "anyone" buying a bitcoin, or some people? The latter is what truly matters, as it's not immediately useful for anybody. It'll have to grow into its niche.
Want to transfer value to someone half-way around the globe without dealing with Western Union, paying huge international fees, or giving your personal information out? I invested in a Chinese company which went on to pay my investment back and I still collect weekly BTC dividends. I never had to pay more than a dollar in fees the entire time, or give anybody my information (except the tax man).
Circumventing government controls is part of the value, the other part is removing the balkinization of finance which has made a global economy impossible or extremely unaffordable. Imagine being able to 'settle' a gold transaction with someone within 10 minutes, knowing it's not fake gold, half-way around the world, and being able to spend it immediately after back in the 1800's. What is this USD you speak of?
Want to transfer value to someone half-way around the globe without dealing with Western Union, paying huge international fees, or giving your personal information out? I invested in a Chinese company which went on to pay my investment back and I still collect weekly BTC dividends. I never had to pay more than a dollar in fees the entire time, or give anybody my information (except the tax man).
Circumventing government controls is part of the value, the other part is removing the balkinization of finance which has made a global economy impossible or extremely unaffordable. Imagine being able to 'settle' a gold transaction with someone within 10 minutes, knowing it's not fake gold, half-way around the world, and being able to spend it immediately after back in the 1800's. What is this USD you speak of?
How about simple person to person micro-transactions? Tipping on reddit is a great example. I think it'll find a great niche there. Want to send someone a few cents for reading a good blog post? No problem
Secondly it also excels in that I can send money to someone I don't know for a service, and while they could disappear and run without me having much recourse, they can't steal/lose my bank details or credit card number. There's a different level of risk, one that pays off with small transactions rather than large. Credit cards are the other way, I'm unlikely to call mastercard to reverse a $0.2 transaction, and lots of the consumer protections (in the UK) only apply on certain size transactions.
To pay for something, I have to give someone enough information to take money out of my account. To send bitcoins to someone, it's up to me to send it.
Secondly it also excels in that I can send money to someone I don't know for a service, and while they could disappear and run without me having much recourse, they can't steal/lose my bank details or credit card number. There's a different level of risk, one that pays off with small transactions rather than large. Credit cards are the other way, I'm unlikely to call mastercard to reverse a $0.2 transaction, and lots of the consumer protections (in the UK) only apply on certain size transactions.
To pay for something, I have to give someone enough information to take money out of my account. To send bitcoins to someone, it's up to me to send it.
Currently, the maximum transaction rate that Bitcoin can theoretically handle is about 7 transactions per second. Increasing that limit will require a hard fork that breaks all existing clients. A chunk of the community and at least one of the developers is really hostile to the idea, partly because it increases resource usage - every node needs to receive every single transaction and store it forever. At the current, fairly low, transaction rate limit that's 52 gigabytes of new transactions every year.
The other reason is that they feel that, without transaction rate limits, mining won't be profitable when the rate of coin subsidy drops off. Some argue that we need the competition for limited block space in order to drive fees up enough to keep mining profitable. Those same fees kill microtransactions.
Since a hard fork would require agreement from essentially everyone involved in Bitcoin, there's essentially no chance of this limit being increased.
The other reason is that they feel that, without transaction rate limits, mining won't be profitable when the rate of coin subsidy drops off. Some argue that we need the competition for limited block space in order to drive fees up enough to keep mining profitable. Those same fees kill microtransactions.
Since a hard fork would require agreement from essentially everyone involved in Bitcoin, there's essentially no chance of this limit being increased.
> Since a hard fork would require agreement from essentially everyone involved in Bitcoin, there's essentially no chance of this limit being increased.
The bitcoin network underwent a hard fork a couple weeks ago due to a bug in the implementation of the on-disk database.
The developers reached out to the mining pools and got the vast majority downgraded within 8 or 12 hours. A day or two later a new version was pushed out that mimicked the old behavior up until the point that a supermajority of nodes were upgraded, and then switched to the new behavior.
Forks have happened before, and the community is close-knit enough to resolve them. Everyone's primary goals are a) being ideologically neutral and b) keeping the network running, in equal measure.
The bitcoin network underwent a hard fork a couple weeks ago due to a bug in the implementation of the on-disk database.
The developers reached out to the mining pools and got the vast majority downgraded within 8 or 12 hours. A day or two later a new version was pushed out that mimicked the old behavior up until the point that a supermajority of nodes were upgraded, and then switched to the new behavior.
Forks have happened before, and the community is close-knit enough to resolve them. Everyone's primary goals are a) being ideologically neutral and b) keeping the network running, in equal measure.
My music collection grows more than 52GB per year, and I've run databases that grow that much each day.
That's simply not a lot of data anymore.
That's simply not a lot of data anymore.
Unless of course the value of bitcoins goes up because a bitcoin economy has taken roots.
I'm sorry, but your comment seems blinded a bit by ... I'm not sure what the right word is? angst, self-hatred, jealousy? There's a lot of negativity in general coming from the HN crowd towards BTC, I'm guessing because everyone here was more than capable of installing the original Satoshi client and mining early on, but chose not to or didn't hear about it. With BTC now on the rise, of course it all seems so obvious, and oh so unfair.
Everyone had the chance to mine in the earliest of days, that's certainly true for me and I sometimes kick myself about it. Hindsight is 20/20.
Everyone had the chance to mine in the earliest of days, that's certainly true for me and I sometimes kick myself about it. Hindsight is 20/20.
Well, rather than armchair psychology, you could consider the points I made themselves. Do you think there is a good reason for the world to transfer massive wealth to those who currently own bitcoins, rather than setting up an alternative (assuming that the fascinating technology of Bitcoin solves a problem that anyone except ideologues have in the first place)?
I considered your points. You pretend as if the claims of early adopters are to blame for fueling the recent "frenzy". Really? Are you really saying a group of early adopters are entirely to blame for a market appraising a formerly unknown asset?
If you lacked the vision, the luck, the timeliness, etc. of an early adopter, fair's fair. Pay them their respects. I still kick myself for not having my wits about me when I first heard about Bitcoin.
As for your alternative, I don't see why not. You could create a clone of Bitcoin today, why not do it yourself? They did that with Litecoin, too. In fact the author of Litecoin created it because he felt "wronged" the same way you do now. He felt as if too many people missed the boat with Bitcoin, and clearly people should have a second chance of early adopting such a revolutionary concept.
I don't feel the same way.
If you lacked the vision, the luck, the timeliness, etc. of an early adopter, fair's fair. Pay them their respects. I still kick myself for not having my wits about me when I first heard about Bitcoin.
As for your alternative, I don't see why not. You could create a clone of Bitcoin today, why not do it yourself? They did that with Litecoin, too. In fact the author of Litecoin created it because he felt "wronged" the same way you do now. He felt as if too many people missed the boat with Bitcoin, and clearly people should have a second chance of early adopting such a revolutionary concept.
I don't feel the same way.
As you'll see from my comment history, I was playing with significant money in Bitcoin early on. I have at least paper gains that are quite satisfying. Nothing I'm saying is personal or is based on any kind of jealousy. It's weird of you to assume that it is.
I call BS here absent a Bitcoin signature proving your supposed ownership of "significant" Bitcoins. If anything is weird, it's that someone who was supposedly interested enough in Bitcoin to buy or mine a significant amount "early on" has spent the vast majority of your past umpteen comments bashing Bitcoin. I think it's sour grapes, and it surprises me that so many on HN, who cheer on every Instagram knock-off that's sold for millions of dollars, are so bitter toward the person or persons who invented and built a truly revolutionary technology that has the potential to vastly change the way we do business.
I'm not "bitter" at Satoshi Nakamoto, or really at anyone. I'm trying to do what I can, as I have from the beginning, to prevent people from falling for a scam. I'm not alone in doing this, and many other good analysts are doing the same thing. Is it worthwhile to try to apply arbitrary, amateur, and frankly embarrassingly bad psychology to all of them?
I sign onto most of what is written here: http://www.slate.com/articles/news_and_politics/view_from_ch...
I sign onto most of what is written here: http://www.slate.com/articles/news_and_politics/view_from_ch...
It is unfair of jnbiche to close discussion by simply saying sour grape, but you seem to be too determined - maybe even evangelical looking at your nick - perhaps its something to do with leftist ideology?
In any event, the article raises two points.
1 - the currency is deflationary.
I'd argue that it is an inherently stable currency no different than gold. Many economists may say that a hard currency is not a good basis for an economy, but many economists say it is. That includes Hayek who won a Nobel for his theory of how best to allocate resources.
So to say that bitcoin will fail because it is deflationary is at best an opinion. You're free to hold it but that hardly makes bitcoins a scam.
2. Something better may come along.
That is basically saying bitcoins may fail, therefore it is a scam. In that case, most of the companies YC funds are a scam. They too disproportionately reward the founder and the first employees. You may say but they create a hard product of value or offer a service. Firstly, I'd say bitcoins is a product. It is not tangible, it is only 0s and 1s, but it is a product created out of applied mathematical theories and formulas and computational power. I'd also say it is a service for obvious reasons.
Even assuming you disagree with the latter points, lets go back to the YC funded company. Lets say they create something like google - a service - facebook - a service - wordpress - a product. Lots of people invest in these - making the founder and first employees rich beyond means - then something better comes along. Are you suggesting google is a scam? Oh but google has value. Say who? It provides a service - so does bitcoin.
In any event, the article raises two points.
1 - the currency is deflationary.
I'd argue that it is an inherently stable currency no different than gold. Many economists may say that a hard currency is not a good basis for an economy, but many economists say it is. That includes Hayek who won a Nobel for his theory of how best to allocate resources.
So to say that bitcoin will fail because it is deflationary is at best an opinion. You're free to hold it but that hardly makes bitcoins a scam.
2. Something better may come along.
That is basically saying bitcoins may fail, therefore it is a scam. In that case, most of the companies YC funds are a scam. They too disproportionately reward the founder and the first employees. You may say but they create a hard product of value or offer a service. Firstly, I'd say bitcoins is a product. It is not tangible, it is only 0s and 1s, but it is a product created out of applied mathematical theories and formulas and computational power. I'd also say it is a service for obvious reasons.
Even assuming you disagree with the latter points, lets go back to the YC funded company. Lets say they create something like google - a service - facebook - a service - wordpress - a product. Lots of people invest in these - making the founder and first employees rich beyond means - then something better comes along. Are you suggesting google is a scam? Oh but google has value. Say who? It provides a service - so does bitcoin.
The world already has done so. And of course there is a good reason. Like with every creation, they made this possible, they took the risk, maybe even high risk since the government could have gotten involved, and now they are rightly being rewarded for it.
What do you suggest, we tax them 90% so that we can all be equal?
What do you suggest, we tax them 90% so that we can all be equal?
My dislike of BTC is if it prevents an anonymous cryptocurrency from being deployed -- either by displacing it (like craigslist displaces better alternatives), or by collapsing and scaring everyone away.
If it's just a proof of concept of cryptocurrency in general, it's cool. It might remain a decent currency for certain uses in addition to other more transactional currencies, though.
If it's just a proof of concept of cryptocurrency in general, it's cool. It might remain a decent currency for certain uses in addition to other more transactional currencies, though.
For me, the main thing that says "more like a pyramid scheme than like a currency" is that the number of BitCoin in circulation is limited.
Suppose that BitCoin becomes so popular that a country wants to join in. The normal way to do that is to have the central bank exchange your current currency with newly minted 'new' currency. With BitCoin, that isn't possible. The only way to join in is to somehow get BitCoin from existing owners. That will make the BitCoin exchange rate go up. The ones benefitting from that are those who already are 'in'.
Another way to look at this: if this becomes the world's currency, that 1 BTC you mined years ago for $1 of electricity on that $500 PC will be worth 1/21M-th of the wolrd's wealth, and will keep its worth forever.
Suppose that BitCoin becomes so popular that a country wants to join in. The normal way to do that is to have the central bank exchange your current currency with newly minted 'new' currency. With BitCoin, that isn't possible. The only way to join in is to somehow get BitCoin from existing owners. That will make the BitCoin exchange rate go up. The ones benefitting from that are those who already are 'in'.
Another way to look at this: if this becomes the world's currency, that 1 BTC you mined years ago for $1 of electricity on that $500 PC will be worth 1/21M-th of the wolrd's wealth, and will keep its worth forever.
No different than the person who discovered a gold mine.
The earlier you get in, the more you get.
An actual pyramid scheme involves you giving a cut of your profits to the person who signed you up, and getting a cut of profits from people you sign up. Nothing remotely like this happens with bitcoin.
Similarly it's not a Ponzi scheme because it doesn't involve the fraudulent transfer of new capital into fictional profits. Nothing remotely like this happens with bitcoin.
If we alter the definition of pyramid scheme so that Bitcoin qualifies, that definition would match every successful startup company.
Similarly it's not a Ponzi scheme because it doesn't involve the fraudulent transfer of new capital into fictional profits. Nothing remotely like this happens with bitcoin.
If we alter the definition of pyramid scheme so that Bitcoin qualifies, that definition would match every successful startup company.
It's a kind of distributed Ponzi scheme that lacks the ordinary intent and centralized accounting associated with them.
It's different from startup in that a startup's shares increase in value, at least theoretically, on the likelihood of future dividends from the company. Startups can have bubbles or be Ponzi schemes too, but if they're indeed successful, they can earn money, and that money (or at least the bet that it will materialize) is a basis for sound investment by passive third parties who have capital.
Bitcoins increase in value only if you can sell them to future owners who are willing to pay more than you did. It's not quite a Ponzi scheme, but it has all of the important characteristics of one: old money is paid back from the new, and the value increases only on the hope that you can involve more new money.
It's different from startup in that a startup's shares increase in value, at least theoretically, on the likelihood of future dividends from the company. Startups can have bubbles or be Ponzi schemes too, but if they're indeed successful, they can earn money, and that money (or at least the bet that it will materialize) is a basis for sound investment by passive third parties who have capital.
Bitcoins increase in value only if you can sell them to future owners who are willing to pay more than you did. It's not quite a Ponzi scheme, but it has all of the important characteristics of one: old money is paid back from the new, and the value increases only on the hope that you can involve more new money.
And if there are less future owners who are willing to buy then it decreases in value.
You make it sound as if there is a set amount of buyers and transactions and the only way bitcoin can have value is if its price goes up which isn't the case.
As long as people are willing to accept bitcoins as having value then people are willing to buy it at a certain price. What that price is is determined by the market. It isn't necessary for bitcoin to either go up or go bust.
"old money is paid back from the new, and the value increases only on the hope that you can involve more new money."
Old money isn't necessarily paid back from the new. Money has already exchanged hand. Those that hold bitcoins hold a value of whatever the market considers worth. That may be 0, that may be 1m. That isn't any different from anything else. I.e. those who have dining tables hold such a value as the market is willing to pay.
And of course the value increases only if more people are willing to buy than sell i.e. involve more money.
What exactly is the ponzi part?
You make it sound as if there is a set amount of buyers and transactions and the only way bitcoin can have value is if its price goes up which isn't the case.
As long as people are willing to accept bitcoins as having value then people are willing to buy it at a certain price. What that price is is determined by the market. It isn't necessary for bitcoin to either go up or go bust.
"old money is paid back from the new, and the value increases only on the hope that you can involve more new money."
Old money isn't necessarily paid back from the new. Money has already exchanged hand. Those that hold bitcoins hold a value of whatever the market considers worth. That may be 0, that may be 1m. That isn't any different from anything else. I.e. those who have dining tables hold such a value as the market is willing to pay.
And of course the value increases only if more people are willing to buy than sell i.e. involve more money.
What exactly is the ponzi part?
I'm making no such assumptions; I don't think I'm making the argument you think I'm making.
As for "money has already exchanged hands," that can be true of any Ponzi scheme as well. When we talk of "old" and "new" money in a Ponzi investment scheme, we don't mean two literally segregated categories. You might have some old money and some new money at the same time.
As for "money has already exchanged hands," that can be true of any Ponzi scheme as well. When we talk of "old" and "new" money in a Ponzi investment scheme, we don't mean two literally segregated categories. You might have some old money and some new money at the same time.
For all we know about satashi he/she/it could be working with in-q-tel or any other politically motivated entity.
What really matters though is that whoever owns 7.8% of existing bitcoins has the ability to manipulate the market, due to their 'I got there first with my old gpu farm' advantage. Want to crash the market? Go for it... Of course they don't have the control that the Federal Reserve has, but they also don't have anywhere near the flak. Treat bitcoin like you treat going to the casino, except Mt. Gox doesn't give out free drinks.
Take my advice with a grain of salt, but I would put my faith in currencies that are backed by strong operational second-strike nuclear capability and a developed economy. This leaves USA/FR/UK as the winners, with India/Russia/China as runners up, since they are not developed nations yet. CHF is also a good reserve, but everyone especially the Europeans have been fleeing to it, and the Swiss caved to the USA so their 'banking secrecy' is not what it is advertized to be.
What really matters though is that whoever owns 7.8% of existing bitcoins has the ability to manipulate the market, due to their 'I got there first with my old gpu farm' advantage. Want to crash the market? Go for it... Of course they don't have the control that the Federal Reserve has, but they also don't have anywhere near the flak. Treat bitcoin like you treat going to the casino, except Mt. Gox doesn't give out free drinks.
Take my advice with a grain of salt, but I would put my faith in currencies that are backed by strong operational second-strike nuclear capability and a developed economy. This leaves USA/FR/UK as the winners, with India/Russia/China as runners up, since they are not developed nations yet. CHF is also a good reserve, but everyone especially the Europeans have been fleeing to it, and the Swiss caved to the USA so their 'banking secrecy' is not what it is advertized to be.
The "yes men"/cult mentality on bitcointalk.org is infuriating.
Namely comments like this: https://bitcointalk.org/index.php?topic=175996.msg1834237#ms...
It's obvious what's going on. They own a lot of bitcoins, but can't be made to look stupid by admitting to this travesty of a pre-mine that they all overlooked.
Namely comments like this: https://bitcointalk.org/index.php?topic=175996.msg1834237#ms...
It's obvious what's going on. They own a lot of bitcoins, but can't be made to look stupid by admitting to this travesty of a pre-mine that they all overlooked.
There was no pre-mine. The genesis block contains a headline:
> The Times 03/Jan/2009 Chancellor on brink of second bailout for banks
He made bitcoin public exactly after this. He even announced it on a mailing list months before. Unless he had a time machine it's impossible for there to be foul play.
> The Times 03/Jan/2009 Chancellor on brink of second bailout for banks
He made bitcoin public exactly after this. He even announced it on a mailing list months before. Unless he had a time machine it's impossible for there to be foul play.
Though there are some interesting comments:
If someone decided to go 'all out' and threw significant computing power behind Bitcoin in the early stages, how would this have affected the outcome. Would it have encouraged others to join in (i.e. "look what he's doing, there must be something to this thing")? Would it have effectively pushed everyone else out of the space (i.e. "I can't match his resources, and he seems to be mining significant amounts of Bitcoins; may as well give up on this Bitcoin thing")?
It seems disappointing (?) that significant chunks of the finite amount of possible Bitcoins might be lost 'forever.'
[1] "Status of the first million Bitcoins ever created" as of this writing.
[2] "Satoshi's Fortune lower bound is 100M USD"