Bit gold (2005)(unenumerated.blogspot.co.uk)
unenumerated.blogspot.co.uk
Bit gold (2005)
http://unenumerated.blogspot.co.uk/2005/12/bit-gold.html
15 comments
The relationship between Szabo and Finney goes back way further than that. They were both on the cypherpunks list in the 90's. See this paranoid rant [0] from the 90's about Hal Finney, Szabo and others being fake personas invented by Tim May (author of the Cyphernomicon).
Additionally, Szabo was an employee of Agoric Systems, publisher of the Agoric Papers [1], a treatise on market based systems. He was also an employee of Digicash [2], a failed electronic money startup created by David Chaum.
However, Szabo has released a bit of code [3], which is very different than code I would expect Satoshi Nakamoto to have written.
That said, for someone who was a professor at GWU law school, there is a remarkably small amount of public information about Nick Szabo.
[0] - http://w2.eff.org/Net_culture/Folklore/Humor/squish.hoax
[1] - http://e-drexler.com/d/09/00/AgoricsPapers/agoricpapers.html
[2] - http://en.wikipedia.org/wiki/DigiCash
[3] - https://github.com/nicksz/jTime
Additionally, Szabo was an employee of Agoric Systems, publisher of the Agoric Papers [1], a treatise on market based systems. He was also an employee of Digicash [2], a failed electronic money startup created by David Chaum.
However, Szabo has released a bit of code [3], which is very different than code I would expect Satoshi Nakamoto to have written.
That said, for someone who was a professor at GWU law school, there is a remarkably small amount of public information about Nick Szabo.
[0] - http://w2.eff.org/Net_culture/Folklore/Humor/squish.hoax
[1] - http://e-drexler.com/d/09/00/AgoricsPapers/agoricpapers.html
[2] - http://en.wikipedia.org/wiki/DigiCash
[3] - https://github.com/nicksz/jTime
One coincidence is that Finney was diagnosed with ALS around the same time Satoshi stopped posting. On the other hand, if Finney is Satoshi, he would probably like to use his bitcoins to fund ALS research.
Similar to your {0} and even earlier:
https://groups.google.com/forum/#!topic/alt.privacy.anon-ser...
https://groups.google.com/forum/#!topic/alt.privacy.anon-ser...
I'm betting on Satoshi being Wei Dai.
My clues:
a) He lives in London. Satoshi's mining has been timezoned to indicate that he probably lived in the UK. The genesis block had a quote from The Times ("chancellor on brink of second bailout").
b) Wei is an expert C++ programmer, and the bitcoin client was written in C++
c) Wei created cryptopp, a C++ cryptographic library, so he definitely knew how to implement cryptographic features in C++. The bitcoin client heavily used the cryptopp library. The code seems similar too.
d) Wei Dai published 'b-money' system in 1998
e) 'British formatting in his written work implies Nakamoto is of British origin. However, he also sometimes used American spelling, which may indicate that he was intentionally trying (but failed) to mask his writing style, or that he is more than one person. ' - Bitcoin wiki
My clues:
a) He lives in London. Satoshi's mining has been timezoned to indicate that he probably lived in the UK. The genesis block had a quote from The Times ("chancellor on brink of second bailout").
b) Wei is an expert C++ programmer, and the bitcoin client was written in C++
c) Wei created cryptopp, a C++ cryptographic library, so he definitely knew how to implement cryptographic features in C++. The bitcoin client heavily used the cryptopp library. The code seems similar too.
d) Wei Dai published 'b-money' system in 1998
e) 'British formatting in his written work implies Nakamoto is of British origin. However, he also sometimes used American spelling, which may indicate that he was intentionally trying (but failed) to mask his writing style, or that he is more than one person. ' - Bitcoin wiki
> a) He lives in London. Satoshi's mining has been timezoned to indicate that he probably lived in the UK. The genesis block had a quote from The Times ("chancellor on brink of second bailout").
Doesn't Dai live in Washington...?
> d) Wei Dai published 'b-money' system in 1998
And Szabo says he first wrote about Bitgold around then too, so? Lots of people have written about digital currency over the years.
Doesn't Dai live in Washington...?
> d) Wei Dai published 'b-money' system in 1998
And Szabo says he first wrote about Bitgold around then too, so? Lots of people have written about digital currency over the years.
First of all, I wouldn't be surprised if you had reasons to try to discredit my claims :).
>Doesn't Dai live in Washington...?
I don't know. His website says that he's a lecturer at 'Department of Electrical and Electronic Engineering Imperial College London, South Kensington Campus'. His current location is irrelevant though, it's only relevant where Wei lived around 2007-2010. Do you have information on that?
>And Szabo says he first wrote about Bitgold around then too, so?
b-money is quite similar to bitcoin. Satoshi would be familiar with electronic money schemes, maybe even a public author.
>Lots of people have written about digital currency over the years.
Yes, and? I'm not saying that being an author of a digital currency means the he or she is Satoshi. I'm saying that it's evidence that he or she may be Satoshi, because authors of digital currencies probably want to have said currencies implemented.
>Doesn't Dai live in Washington...?
I don't know. His website says that he's a lecturer at 'Department of Electrical and Electronic Engineering Imperial College London, South Kensington Campus'. His current location is irrelevant though, it's only relevant where Wei lived around 2007-2010. Do you have information on that?
>And Szabo says he first wrote about Bitgold around then too, so?
b-money is quite similar to bitcoin. Satoshi would be familiar with electronic money schemes, maybe even a public author.
>Lots of people have written about digital currency over the years.
Yes, and? I'm not saying that being an author of a digital currency means the he or she is Satoshi. I'm saying that it's evidence that he or she may be Satoshi, because authors of digital currencies probably want to have said currencies implemented.
All the voices in people's heads agree: Gwern is Satoshi.
> First of all, I wouldn't be surprised if you had reasons to try to discredit my claims :).
Well, if I were Satoshi, wouldn't I be encouraging you to fixate on Wei Dai...?
> I don't know. His website says that he's a lecturer at 'Department of Electrical and Electronic Engineering Imperial College London, South Kensington Campus'.
It does? Are you sure you are looking at the right Wei Dai, the Wei Dai of http://www.weidai.com/ ? It's not a unique name. There's more than one of them.
Well, if I were Satoshi, wouldn't I be encouraging you to fixate on Wei Dai...?
> I don't know. His website says that he's a lecturer at 'Department of Electrical and Electronic Engineering Imperial College London, South Kensington Campus'.
It does? Are you sure you are looking at the right Wei Dai, the Wei Dai of http://www.weidai.com/ ? It's not a unique name. There's more than one of them.
> However, he also sometimes used American spelling, which may indicate that he was intentionally trying (but failed) to mask his writing style, or that he is more than one person.
Note, non-exhaustive hypotheses. I've lived in England my whole life, but I've done a lot of talking to Americans online. I don't think I'm consistent with my locale, because I don't care enough to pay attention. (Also I don't even remember which of -ise and -ize is which, despite occasionally looking it up.)
Note, non-exhaustive hypotheses. I've lived in England my whole life, but I've done a lot of talking to Americans online. I don't think I'm consistent with my locale, because I don't care enough to pay attention. (Also I don't even remember which of -ise and -ize is which, despite occasionally looking it up.)
Not only that but programmers become used to using American spellings in identifiers. That can can come through in online communication simply through muscle memory. I even have problems typing 'with' without my fingers automatically making it 'width'.
interesting. at what odds would you bet? I think the distribution is fairly flat, because it could be a random, unknown guy who just happen to work on it his whole life. it seems to me that satoshi had to be non-academic.
it seems unlikely that it was an unknown guy who threw out a workable solution on his first attempt. If it wasn't his first attempt, he must have left an internet footprint somewhere with prior ramblings.
Much like DPR and silkroad.
Much like DPR and silkroad.
This looks interesting:
https://web.archive.org/web/20061202010422/http://www.weidai...
https://web.archive.org/web/20061202010422/http://www.weidai...
not so sure. the main ingredient is the torrent principle. incidentally that was also written by one guy in a basement. the risk of floating a half-baked proposals is too high, so it seems likely satoshi did it all in one go, or had very private discussions. question really if anonymity was on his mind from the beginning or not.
>Satoshi's mining has been timezoned to indicate that he probably lived in the UK.
It's possible that 'Satoshi' deliberately scheduled things to give the appearance of living somewhere else.
It's possible that 'Satoshi' deliberately scheduled things to give the appearance of living somewhere else.
And lots of computer people working on systems designed to span timezones prefer to just use GMT everywhere from the beginning. (My short foray into GPU mining used rigs on GMT, and all VMs or cloud systems for my web projects always exclusively use GMT.)
Satoshi also mined using a lab of computers so could have done it afterhours on a campus somewhere which explains the time difference.
Interesting. What bug classes would those be?
Well Satoshi and Hal definitely worked together in some fashion: https://bitcointalk.org/index.php?action=profile;u=3;sa=show...
There were a lot of problems in the early bitcoin client Kaminsky saw the refined product after Gavin, Satoshi and many others contributed
Agreed. Most people don't realize that is was Gavin, along with the other early devs (including Satoshi), who took what was a brilliant prototype and turned it into a very solid, multiplatform piece of software.
For example, Bitcoin didn't even run on Linux at first -- it was developed by Satoshi on Windows and had a lot of Windows-specific code despite the use of wxwidgets for UI.
For example, Bitcoin didn't even run on Linux at first -- it was developed by Satoshi on Windows and had a lot of Windows-specific code despite the use of wxwidgets for UI.
This is one of the greater reasons why so many are convinced that Nick Szabo is in fact Satoshi Nakamoto.
I'm personally undecided/don't have an opinion yet, one things for sure Nick Szabo must be bummed if he is not Satoshi Nakamoto.
I'm personally undecided/don't have an opinion yet, one things for sure Nick Szabo must be bummed if he is not Satoshi Nakamoto.
See this discussion about bitcoin, including the comment section:
http://unenumerated.blogspot.de/2011/05/bitcoin-what-took-ye...
http://unenumerated.blogspot.de/2011/05/bitcoin-what-took-ye...
FAQ on bitcoin FUD - http://justinvincent.com/page/2172/bitcoin-fear-uncertainty-... - Hope it's helpful :)
> Bitcoin deals with this issue by having 8 decimal places. The higher the Bitcoin value rises, the smaller the decimal transaction size will become. Each decimal place has a name, with the smallest unit being 1 Satoshi. If 1 Bitcoin was worth as much as one million dollars 1 Satoshi would still only be worth 1 USD cent. In other words, there is no need to print new currency, we can simply use smaller units of Bitcoin.
This explanation glosses over what I've always thought was the main problem with deflationary currency. Why would I want to use Bitcoins (or any other deflationary asset, for that matter) as a currency instead of an investment? It just doesn't make sense to the customer.
You wouldn't sell land that you own just to purchase basic necessities unless you had no other choice. In the same way, I'm not sure it will ever be a rational decision to buy something with Bitcoins unless you had no other choice of currency to use. I'm not an economist so I could be misunderstanding the nature of deflationary assets, but doesn't that imply that Bitcoins should be used only as an investment vehicle or to purchase things which other currencies can't (or shouldn't) be used?
This explanation glosses over what I've always thought was the main problem with deflationary currency. Why would I want to use Bitcoins (or any other deflationary asset, for that matter) as a currency instead of an investment? It just doesn't make sense to the customer.
You wouldn't sell land that you own just to purchase basic necessities unless you had no other choice. In the same way, I'm not sure it will ever be a rational decision to buy something with Bitcoins unless you had no other choice of currency to use. I'm not an economist so I could be misunderstanding the nature of deflationary assets, but doesn't that imply that Bitcoins should be used only as an investment vehicle or to purchase things which other currencies can't (or shouldn't) be used?
By the same logic why wouldn't you use all the extra cash you have to buy bitcoins? If you frame it that way then the answer is obvious, there is no guarantee the value will continue to rise so you will use it to purchase when you think it's over priced (I bought a TV and new camera when the price was over 1k).
The volatility actually ends up being a good thing in this regard because sometimes you are better off purchasing other goods with bitcoin, sometimes you are better off holding.
If the value eventually balances out and is truly deflationary against inflation then I don't think people are going to lose sleep over selling bitcoins that are going up 3% each year the same way they don't worry about taking money out of a savings account to buy something they don't really need.
The volatility actually ends up being a good thing in this regard because sometimes you are better off purchasing other goods with bitcoin, sometimes you are better off holding.
If the value eventually balances out and is truly deflationary against inflation then I don't think people are going to lose sleep over selling bitcoins that are going up 3% each year the same way they don't worry about taking money out of a savings account to buy something they don't really need.
That's easy to answer. You wouldn't convert your dollars to bitcoins because bitcoin will only appreciate in value if it becomes an important instrument of commerce; it has no other value even in theory. If you believe the deflationary attribute of bitcoin will cause it to be hoarded instead of used as a tool of commerce, you also believe that hoarding bitcoin is irrational, because the system is eventually going to collapse.
It doesn't take any insight about bitcoin to arrive at that conclusion ("deflationary currencies are unusable, therefore don't bother hoarding bitcoin"); it's just logic.
It doesn't take any insight about bitcoin to arrive at that conclusion ("deflationary currencies are unusable, therefore don't bother hoarding bitcoin"); it's just logic.
For certain transactions you MUST use Bitcoin. Bad currency generally drives out good, but if the good is the only way you can anonymously buy dildos in Saudi Arabia, then it is the only currency. Furthermore, bad currency drives out good generally when they hold the same face value. Otherwise there is a free float of exchange.
Also, for people living in "weird" countries, like Angola, there is often no way for them to buy things online since payment processors flag them as suspicious transactions.
Also, for people living in "weird" countries, like Angola, there is often no way for them to buy things online since payment processors flag them as suspicious transactions.
To "Alpha Black Lotus Depository Certificates" I hereby add "Saudi Arabian Dildo Vouchers" as a synonym for cryptocurrency.
"If you believe the deflationary attribute of bitcoin will cause it to be hoarded instead of used as a tool of commerce"
I don't believe that, I think we can see that people are willing to sell it when there is something they want.
I don't believe that, I think we can see that people are willing to sell it when there is something they want.
My problem with that argument is that it's like a yogi berrism: "no one wants that anymore: it's too valuable".
To the extent that a currency becomes unusable in trade (perhaps as you say too illiquid due to hoarding), then that bids down its value, thus counteracting whatever problems arise from having excess value.
Generally speaking, arguments that it will fail because "deflationary currencies fail" are saying that it will be worth so much that it will be worthless. Even in the often-cited examples of deflationary currencies causing problems, the currency itself did fine -- people were still willing to "buy" it on favorable terms; it's just that the associated economy did poorly.
To the extent that a currency becomes unusable in trade (perhaps as you say too illiquid due to hoarding), then that bids down its value, thus counteracting whatever problems arise from having excess value.
Generally speaking, arguments that it will fail because "deflationary currencies fail" are saying that it will be worth so much that it will be worthless. Even in the often-cited examples of deflationary currencies causing problems, the currency itself did fine -- people were still willing to "buy" it on favorable terms; it's just that the associated economy did poorly.
Contracts in a deflationary currency can and will account for the deflationary nature of the currency. For instance if the real interest rate you wanna charge someone is 10% and currency is deflating at the rate of 5% then you'd charge the individual 4.5% interest rate.
[deleted]
Startup.com (2001)
Bit gold (blog post, 2005)
The Social Network (2010)
The Cryptocurrency (2014) ... it staggers the mind at what the plotlines could be and the characters incolved. Some rags to riches to rags story meets its opposite. Maybe a 2015 release would yield more possiblities... the greater awakening of cryptocurrency is about putting money into perspective, and finding some equality in it all: it's not about replacing one paper elite with another (who could end up the same people anyway.) I think this was SM's intention to begin with: new technical structures, creating new economic structures, creating new social stuctures... the characters that realize this earn or retain their money (or fame) in the film.
Bit gold (blog post, 2005)
The Social Network (2010)
The Cryptocurrency (2014) ... it staggers the mind at what the plotlines could be and the characters incolved. Some rags to riches to rags story meets its opposite. Maybe a 2015 release would yield more possiblities... the greater awakening of cryptocurrency is about putting money into perspective, and finding some equality in it all: it's not about replacing one paper elite with another (who could end up the same people anyway.) I think this was SM's intention to begin with: new technical structures, creating new economic structures, creating new social stuctures... the characters that realize this earn or retain their money (or fame) in the film.
I like this quote from Nick in 1999 (http://szabo.best.vwh.net/intrapoly.html - linked from TFA as "obscure"):
> spammers may be able to defeat compute-cost postage by using custom chips optimized for computing the particular puzzle function.
This presaged the ASIC miners that so quickly came to dominate Bitcoin. It's almost wonder that new types of coins are being mined without (semi) custom chips at all; perhaps only because FPGA development tools have improved much slower than software in general.
> spammers may be able to defeat compute-cost postage by using custom chips optimized for computing the particular puzzle function.
This presaged the ASIC miners that so quickly came to dominate Bitcoin. It's almost wonder that new types of coins are being mined without (semi) custom chips at all; perhaps only because FPGA development tools have improved much slower than software in general.
The Internet Archive says this was first posted in May 2013, not 2005 or 2008.
https://web.archive.org/web/*/http://unenumerated.blogspot.c...
What's the deal?
https://web.archive.org/web/*/http://unenumerated.blogspot.c...
What's the deal?
That's not what IA does. It says this is the first copy of that URL they have archived.
Blogspot does some beyond idiotic redirection to locale TLDs which fucks up all kinds of stuff. See https://web.archive.org/web/*/http://unenumerated.blogspot.c...
Blogspot does some beyond idiotic redirection to locale TLDs which fucks up all kinds of stuff. See https://web.archive.org/web/*/http://unenumerated.blogspot.c...
This is fairly convincing for me:
https://likeinamirror.wordpress.com/2013/12/01/satoshi-nakam...
https://likeinamirror.wordpress.com/2013/12/01/satoshi-nakam...
No. It's completely smoke and mirrors and the method he claims to have done cannot deliver reliable answers. He refuses to approve any comments at all which are critical of him or his blog post, and has not corrected factual mistakes in it. For my detailed rebuttal, see http://www.reddit.com/r/Bitcoin/comments/1ruluz/satoshi_naka...
the analysis is fairly flawed. the words are naturally related, because of the topic. szabo might have collaborated on the project, but its hard to tell. his counter arguments to bitcoin are quite convincing (which of course implies he is not satoshi).
Has someone the refutation of Szabo that he is not Szabo? haven't been able to find the comments of Szabo and Dai.
What's up with the witch hunt?
If someone wants to remain private, why don't we just leave him alone?
If someone wants to remain private, why don't we just leave him alone?
Is it really a witch hunt? People are just fascinated with the enigma that is Satoshi. He's (they've?) done something amazing in many people's eyes but has avoided taking credit for it -- in an arena where people are often seeking credit and fame (financial, if you'd call it that).
It reminds me a lot of Isildur1 in the online poker scene a few years ago. This guy played an insane style at the highest stakes, went millionaire to busto more times than I can count on my hand, and completely hid his identity -- all in an industry where people nearly always seek fame. People suspected he was Victor Blom (along with a few others) but I'm not sure if they were more fascinated because of what he did or that he did it while hiding behind an online identity.
This situation bears many similarities, so its no surprise people are very interested for no other reason than that he's made an effort to be an enigma.
It reminds me a lot of Isildur1 in the online poker scene a few years ago. This guy played an insane style at the highest stakes, went millionaire to busto more times than I can count on my hand, and completely hid his identity -- all in an industry where people nearly always seek fame. People suspected he was Victor Blom (along with a few others) but I'm not sure if they were more fascinated because of what he did or that he did it while hiding behind an online identity.
This situation bears many similarities, so its no surprise people are very interested for no other reason than that he's made an effort to be an enigma.
Never heard about the poker guy before, but I looked it up and it seems it was confirmed first-hand: http://en.wikipedia.org/wiki/Viktor_Blom#cite_note-starsblog...
Nick was guessed to be Satoshi weeks ago. Has he not made a statement on this?
Ask HN: What backs the value of a Bitcoin? Isn't Bitcoin the only currency which is in fact backed by Nothing valuable?
Paper money imo is backed by regional Economy or iow labor + what labor can buy/buys/saves.
Paper money imo is backed by regional Economy or iow labor + what labor can buy/buys/saves.
I think what 'backs' a currency is secondary. The primary factor is 'how readily will people accept as payment.' Backing a currency with a physical asset or with government authority have been the traditoinal means of achieving this - but maybe there are other ways.
People often point out that citizens can pay their taxes in dollars, so they are happy to accept them as payments. You cannot of course pay taxes in Bitcoin but interestingly there's been a virus going about recently that basically takes user data hostage and demands a ransom payment in Bitcoin. So there you have a sizeable base of economic actors who need to acquire Bitcoin to settle their ransoms.
People often point out that citizens can pay their taxes in dollars, so they are happy to accept them as payments. You cannot of course pay taxes in Bitcoin but interestingly there's been a virus going about recently that basically takes user data hostage and demands a ransom payment in Bitcoin. So there you have a sizeable base of economic actors who need to acquire Bitcoin to settle their ransoms.
My problem is not just what backs Bitcoin, but what backs its value. Nothing.
Money is backed by goods and services already created + other real things like consumption, etc... Then we had a need to create money to easily exchange between these things.
Bitcoin on the other hand already comes with a random value of $650.00 usd with no good, no services previously created, no VALUE. It's just one giant gamble, in my view.
Again, I am sure I am wrong, but I have yet to read anything that convinces me.
EDIT: Actually it is not one giant gamble. That was the wrong analogy. Bitcoin is more like a card trading game where the players get cards for making them or solving a problem related to the game. So yes, you can later take those cards and sell them, but it really becomes the last fool game.
Money is backed by goods and services already created + other real things like consumption, etc... Then we had a need to create money to easily exchange between these things.
Bitcoin on the other hand already comes with a random value of $650.00 usd with no good, no services previously created, no VALUE. It's just one giant gamble, in my view.
Again, I am sure I am wrong, but I have yet to read anything that convinces me.
EDIT: Actually it is not one giant gamble. That was the wrong analogy. Bitcoin is more like a card trading game where the players get cards for making them or solving a problem related to the game. So yes, you can later take those cards and sell them, but it really becomes the last fool game.
A bitcoin is a token which gives the user the right to transact on the bitcoin network. It derives its value from this right.
The bitcoin network provides global near-instantaneous transference of ownership records for negligible transaction fees. It enables transactions to occur without a trusted third party, and also represents the advent of scriptable money. For these reasons, the right to transact on the network has value.
The bitcoin network provides global near-instantaneous transference of ownership records for negligible transaction fees. It enables transactions to occur without a trusted third party, and also represents the advent of scriptable money. For these reasons, the right to transact on the network has value.
The line I'm starting to draw for people is from the network itself, to the resources that run it. Power powers the network - compute, storage, network (physical). Power is where we derive value. With Bitcoin, it's like we're parking power (work) into a storable unit of trust. Then you have compute, storage, network, trust.
I know what 'backed by gold is', but what the hell is 'backed by goods'? USD is backed by taxes (try to pay taxes not in USD) - yes, I can see that, but backed by goods?
Money is a token, a debt unit that passed on down the chain in exchange for product. Many things can and did serve as such token: gold, bank note, cowry shells. Their only 'value' is that they all are scarce resources (well, in case of bank notes less and less so) and socially accepted as a measure of debt. So can be bitcoin. In many ways bitcoin is much better money then others.
Money is a token, a debt unit that passed on down the chain in exchange for product. Many things can and did serve as such token: gold, bank note, cowry shells. Their only 'value' is that they all are scarce resources (well, in case of bank notes less and less so) and socially accepted as a measure of debt. So can be bitcoin. In many ways bitcoin is much better money then others.
'Backed by goods.'
I make a tea pot. You own a goose. That is our economy. The money in economy should never go beyond the value of that goose + the tea pot. Now add the hours you work, the hours I work etc. The economy grows, but not beyond what has been produced. Now let's say you want to buy a home but the money is not there, then the government knowing that the value will exist, they push FUTURE money out in the system and indirectly lend it to the guy who is going to build the house. The economy grows, but this is more like forecasted revenue. You see E.V.E.R.Y. single dollar in this economy can be traced back to some good or service.
I make a tea pot. You own a goose. That is our economy. The money in economy should never go beyond the value of that goose + the tea pot. Now add the hours you work, the hours I work etc. The economy grows, but not beyond what has been produced. Now let's say you want to buy a home but the money is not there, then the government knowing that the value will exist, they push FUTURE money out in the system and indirectly lend it to the guy who is going to build the house. The economy grows, but this is more like forecasted revenue. You see E.V.E.R.Y. single dollar in this economy can be traced back to some good or service.
If 'backed by goods' == 'can be tracked to something that this money unit has been exchanged for' - OK, I understand that. Now, why is this definition not applicable to bitcoin? BTC also can be exchanged for goods and can be traced back to some good or service (with great precision thanks to the public block chain).
By the way, normally it is not government, but banks (private corporations) who 'push FUTURE money' into the system in a form of credit. Same can happen in BTC economy.
I still fail to see how BTC is fundamentally different from any other currency.
By the way, normally it is not government, but banks (private corporations) who 'push FUTURE money' into the system in a form of credit. Same can happen in BTC economy.
I still fail to see how BTC is fundamentally different from any other currency.
Shitgoose,
You create something. I create something. We create money to exchange these things.
You don't create money. Give it a value. Trade it. Raise its value. Then after 3 years, ask people to BUY that and use it to trade other things.
Bitcoin is nothing like money. Bitcoin is a card trading game and the card have a value now. Saying a bitcoin is like money or currency is like saying a car is like money/currency.
You create something. I create something. We create money to exchange these things.
You don't create money. Give it a value. Trade it. Raise its value. Then after 3 years, ask people to BUY that and use it to trade other things.
Bitcoin is nothing like money. Bitcoin is a card trading game and the card have a value now. Saying a bitcoin is like money or currency is like saying a car is like money/currency.
'backed by goods' is more commonly called commodity money. http://en.wikipedia.org/wiki/Commodity_money
It is the very definition of fiat money, but one could argue that almost all currency in use today is fiat.
> [...] but interestingly there's been a virus going about recently that basically takes user data hostage and demands a ransom payment in Bitcoin. So there you have a sizeable base of economic actors who need to acquire Bitcoin to settle their ransoms.
This is brilliant.
This is brilliant.
This is an interesting question but there is not really a definitive answer in the way it is asked. "Backed by" gold has a very literal meaning in the sense that you can trade something for gold. "backed by government" doesn't translate since you cannot trade money for government (unless you're a lobbyist!); but the fact that an entity with a monopoly on force accepts a certain type of paper to relieve debts in a sense "backs" it.. or at least gives reason for people to use; not to mention you are legally obliged (at least in the states) to accept us currency for a debt.
You say yourself
> Paper money imo is backed by regional Economy or iow labor + what labor can buy/buys/saves.
In this sense, bitcoin is exactly the same. And this is actually more important than the government part; as evidenced by every fiat currency that has ever undergone hyperinflation. You can pay taxes with bolivars in Venezuela; but everyone would rather have dollars. The local economy runs almost entirely on bolivars; people are paid in bolivars, yet.. people want dollars. Why?
You can buy things with bitcoin; you can trade it for labor, services, goods. this begs the question of course.. why would anyone trade it in the first place? This is what the 'regression theorem' [1] tries to answer; not for bitcoin, but for everything that becomes a medium exchange.
The notion that money needs to be "backed by" something is just conjecture and a relatively recent idea. It only comes about when we use fiat currencies; when gold coins were used, or cowrie shells in africa.. no one asked what a cowrie shell was backed by.
The real question is "what makes bitcoin sound money?" Opinions differ on that and I will leave the question to the reader; but, there is no fundamental difference between a US dollar and a bitcoin in terms of 'backing'.
A government decree is worth nothing if you don't have sound money, and sound money is sound regardless of a government decree; again, this is evidenced by countless government-mandated currencies becoming worthless and bitcoin, gold, silver, cigarattes, cowrie shells, and rai stones acting as currency without anyone ever declaring them to be currency.
1. http://wiki.mises.org/wiki/Regression_theorem
You say yourself
> Paper money imo is backed by regional Economy or iow labor + what labor can buy/buys/saves.
In this sense, bitcoin is exactly the same. And this is actually more important than the government part; as evidenced by every fiat currency that has ever undergone hyperinflation. You can pay taxes with bolivars in Venezuela; but everyone would rather have dollars. The local economy runs almost entirely on bolivars; people are paid in bolivars, yet.. people want dollars. Why?
You can buy things with bitcoin; you can trade it for labor, services, goods. this begs the question of course.. why would anyone trade it in the first place? This is what the 'regression theorem' [1] tries to answer; not for bitcoin, but for everything that becomes a medium exchange.
The notion that money needs to be "backed by" something is just conjecture and a relatively recent idea. It only comes about when we use fiat currencies; when gold coins were used, or cowrie shells in africa.. no one asked what a cowrie shell was backed by.
The real question is "what makes bitcoin sound money?" Opinions differ on that and I will leave the question to the reader; but, there is no fundamental difference between a US dollar and a bitcoin in terms of 'backing'.
A government decree is worth nothing if you don't have sound money, and sound money is sound regardless of a government decree; again, this is evidenced by countless government-mandated currencies becoming worthless and bitcoin, gold, silver, cigarattes, cowrie shells, and rai stones acting as currency without anyone ever declaring them to be currency.
1. http://wiki.mises.org/wiki/Regression_theorem
> Paper money imo is backed by regional Economy or iow labor + what labor can buy/buys/saves.
In this sense, bitcoin is exactly the same.....
I am afraid I think your answer and everyone who is trying to compare the Trust we have in today's paper money to bitcoin, is very much flawed. I want to be explained that I am wrong, but I am not convinced by your argumentation.
Imagine a country of 200 people. They each work and provide products and services to one another. They gradually value the value of theirs service rendered and production. Then they need to easily exchange cows for shoes for houses for legal advice for whatever goods and services. They then come up with a way to value these goods and services for ease of exchange. So they say your one hour of work is worth $4 then you can easily take that and buy 1 hour of legal advice + 1 piece of bread and be left with 35 cents. That representation and value-holding entity is money as we know it today. It did not just appear.
Bitcoin is the EXACT opposite. 10 people come together in the 200 people economy. They decide they create pieces of cloth and give it a value of X. Then they make X amount of those, granted the task of creating them becomes harder as you go. Then as they create more, X magically is worth 1 lawyer hour today, 4 cows more tomorrow, etc... Then after creating these many pieces of cloth, and valuing them at X, then tell ME that I can exchange my car for it.
With what we have today as money, we created goods and services, then accepted to use that as a way to exchange, hence the entirety of the money in circulation was equal to exactly the amount of Good and Services rendered, debt, etc...
With Bitcoin, it is equal to nothing other than what a few people decided and did not create anything for it.
I am sure I am wrong, but that is just how I see it. Bitcoin could very well succeed, but the only thing this would mean is that everybody was duped.
In this sense, bitcoin is exactly the same.....
I am afraid I think your answer and everyone who is trying to compare the Trust we have in today's paper money to bitcoin, is very much flawed. I want to be explained that I am wrong, but I am not convinced by your argumentation.
Imagine a country of 200 people. They each work and provide products and services to one another. They gradually value the value of theirs service rendered and production. Then they need to easily exchange cows for shoes for houses for legal advice for whatever goods and services. They then come up with a way to value these goods and services for ease of exchange. So they say your one hour of work is worth $4 then you can easily take that and buy 1 hour of legal advice + 1 piece of bread and be left with 35 cents. That representation and value-holding entity is money as we know it today. It did not just appear.
Bitcoin is the EXACT opposite. 10 people come together in the 200 people economy. They decide they create pieces of cloth and give it a value of X. Then they make X amount of those, granted the task of creating them becomes harder as you go. Then as they create more, X magically is worth 1 lawyer hour today, 4 cows more tomorrow, etc... Then after creating these many pieces of cloth, and valuing them at X, then tell ME that I can exchange my car for it.
With what we have today as money, we created goods and services, then accepted to use that as a way to exchange, hence the entirety of the money in circulation was equal to exactly the amount of Good and Services rendered, debt, etc...
With Bitcoin, it is equal to nothing other than what a few people decided and did not create anything for it.
I am sure I am wrong, but that is just how I see it. Bitcoin could very well succeed, but the only thing this would mean is that everybody was duped.
So they say your one hour of work is worth $4 then you can easily take that and buy 1 hour of legal advice + 1 piece of bread and be left with 35 cents. That representation and value-holding entity is money as we know it today. It did not just appear.
The problem that bitcoin is trying to solve is that the currency representation you're talking about does just "appear." It appears, potentially in vast quantities, whenever the government issues more of it. This is a big problem for anyone who has savings denominated in the currency.
The problem that bitcoin is trying to solve is that the currency representation you're talking about does just "appear." It appears, potentially in vast quantities, whenever the government issues more of it. This is a big problem for anyone who has savings denominated in the currency.
You are correct, bitcoin and dollar are exactly the opposite. Dollar prices inflate on a whim thanks to Nixon, Greenspan or whoever is at the helm (speaking of cows, check car prices in 1980s and compare to today). Bitcoin prices theoretically should be much more stable since the rate of growth of BTC monetary base is algorithmically limited and grows predictably and slowly.
> as evidenced by every fiat currency that has ever undergone hyperinflation.
Currencies controlled by sovereigns devalue.
It happened in Rome (see Joseph Tainter's description of the silver denarius's 94% devaluation), in England (Adam Smith writes at length on British currency, its tri metallic standard (copper, silver, and gold), and the devaluations of same), and elsewhere.
Devaluation of currency is a symptom of a deeper cause. It's not an intrinsic property of fiat currency alone. And the inability to, say, devalue government debts denominated in Bitcoin or other digital currency not subject to deflation would result in some other expression of the problem (likely a sovereign default), which would wipe out wealth as well, though with a different allocation of losses.
Currencies controlled by sovereigns devalue.
It happened in Rome (see Joseph Tainter's description of the silver denarius's 94% devaluation), in England (Adam Smith writes at length on British currency, its tri metallic standard (copper, silver, and gold), and the devaluations of same), and elsewhere.
Devaluation of currency is a symptom of a deeper cause. It's not an intrinsic property of fiat currency alone. And the inability to, say, devalue government debts denominated in Bitcoin or other digital currency not subject to deflation would result in some other expression of the problem (likely a sovereign default), which would wipe out wealth as well, though with a different allocation of losses.
> What backs the value of a Bitcoin
Value is always backed by perception of individuals(micro) and groups of individuals(macro). A change in perception of these groups manifests as volatility.
> Isn't Bitcoin the only currency which is in fact backed by Nothing valuable
Depends on what you perceive as valuable.
Theoretically, it could be argued that BTCs value ought to be as valuable as the time, equipment and energy dispensed in mining it + a perceived premium or discount.
In that it is similar to most commodities and currencies.
Further, if someone(Alice) doesn't mine but rather buys bitcoins, then on an individualist scale the price paid is the notional value of the bitcoin's that they hold. Next, Alice just need one person willing to accept her perceived value in exchange of goods and services rendered.
> Paper money imo is backed by regional Economy
You're right. But the same may hold true for bitcoin in the future, if they can develop economies that accept it at all stages of production and final use. They only such economy that exists in part is for mining equipment. Unfortunately, that too is exposed to other(less volatile) currencies which render it inefficient.
> Isn't Bitcoin the only currency which is in fact backed by Nothing valuable
Depends on what you perceive as valuable.
Theoretically, it could be argued that BTCs value ought to be as valuable as the time, equipment and energy dispensed in mining it + a perceived premium or discount.
In that it is similar to most commodities and currencies.
Further, if someone(Alice) doesn't mine but rather buys bitcoins, then on an individualist scale the price paid is the notional value of the bitcoin's that they hold. Next, Alice just need one person willing to accept her perceived value in exchange of goods and services rendered.
> Paper money imo is backed by regional Economy
You're right. But the same may hold true for bitcoin in the future, if they can develop economies that accept it at all stages of production and final use. They only such economy that exists in part is for mining equipment. Unfortunately, that too is exposed to other(less volatile) currencies which render it inefficient.
Money/labour input does not equal value. I could spend 10 years pulling all the grass from my backyard and sorting it from longest to shortest in length. A lot of effort went into it. Doesn't make it valuable.
Paper money is backed by the willingness of other people to price their goods and services in it. If people stop pricing their goods and services in it then it is no longer money. eg: a Zimbabwe dollar is no longer money. No one will exchange anything for it except for a novelty value.
Generally vendors exchange those paper monies for goods and services due to the requirement to pay taxes in fiat dollars. Vendors aren't required to sell for dollars, they can sell for whatever medium of exchange they want. It's just convenient to do so due to the tax reason. That reason alone can't save a currency though. eg: $Zim.
Paper money is backed by the willingness of other people to price their goods and services in it. If people stop pricing their goods and services in it then it is no longer money. eg: a Zimbabwe dollar is no longer money. No one will exchange anything for it except for a novelty value.
Generally vendors exchange those paper monies for goods and services due to the requirement to pay taxes in fiat dollars. Vendors aren't required to sell for dollars, they can sell for whatever medium of exchange they want. It's just convenient to do so due to the tax reason. That reason alone can't save a currency though. eg: $Zim.
> Money/labour input does not equal value. I could spend 10 years pulling all the grass from my backyard and sorting it from longest to shortest in length. A lot of effort went into it. Doesn't make it valuable.
Doesn't make it valuable to 'you', but if you found someone willing to pay you with another object of value, that's another story.
Better answered by another user here "money is backed by the willingness of other people to price their goods and services in it.Vendors aren't required to sell for dollars, they can sell for whatever medium of exchange they want. It's just convenient to do so."
Doesn't make it valuable to 'you', but if you found someone willing to pay you with another object of value, that's another story.
Better answered by another user here "money is backed by the willingness of other people to price their goods and services in it.Vendors aren't required to sell for dollars, they can sell for whatever medium of exchange they want. It's just convenient to do so."
But the same may hold true for bitcoin in the future, if they can develop economies that accept it at all stages of production and final use.
Yeah, but in the case of an economy, you create the value first, then you create the currency to help hold that created value. You do not start a country and say, here is $1 trillion. With Bitcoin, you create $1 trillion, then you say "Go buy things from other countries with it."
Yeah, but in the case of an economy, you create the value first, then you create the currency to help hold that created value. You do not start a country and say, here is $1 trillion. With Bitcoin, you create $1 trillion, then you say "Go buy things from other countries with it."
> Yeah, but in the case of an economy, you create the value first
In any transaction the value can only be determined if the buyer thinks the product or service is valuable enough to pay for. Which is why products and companies fail all the time.
> You do not start a country and say, here is $1 trillion.
This hasn't been done in a while. But, it has been done before with a few variations. It's never pretty. Usually leads to hyperinflation. It's definitely way beyond the scope of this discussion. Though for a primer you could read up on the history of the Deutsche Mark.
> With Bitcoin, you create $1 trillion, then you say "Go buy things from other countries with it."
Actually that is excessively exaggerated scenario. At their peak $14.5 billion. In my opinion they were way above their market cap even then. I'd elaborate but that too is out of scope for this conversation.
What I can say is $14.5 billion was the speculated value, which is a different beast within itself.
Also, I think there are some gaps in your understanding of concepts such as crypto-currencies, proof-of-work and proof-of-stake.
In any transaction the value can only be determined if the buyer thinks the product or service is valuable enough to pay for. Which is why products and companies fail all the time.
> You do not start a country and say, here is $1 trillion.
This hasn't been done in a while. But, it has been done before with a few variations. It's never pretty. Usually leads to hyperinflation. It's definitely way beyond the scope of this discussion. Though for a primer you could read up on the history of the Deutsche Mark.
> With Bitcoin, you create $1 trillion, then you say "Go buy things from other countries with it."
Actually that is excessively exaggerated scenario. At their peak $14.5 billion. In my opinion they were way above their market cap even then. I'd elaborate but that too is out of scope for this conversation.
What I can say is $14.5 billion was the speculated value, which is a different beast within itself.
Also, I think there are some gaps in your understanding of concepts such as crypto-currencies, proof-of-work and proof-of-stake.
The value of bitcoin, as of any other instrument of exchange, is backed by the trust that someone else will exchange it for something else in the future.
Everyday goods, like corn or crude oil, additionally have intrinsic usefulness and thus gain value from this. Government issued currencies have another aspect, namely that you have to pay taxes in gov issued currency, and thus there is always someone who wants gov issued currency, thus it is easy to trust. There are also often "legal tender" laws, which force people selling to the public to accept gov issued currency. This also makes it easy to invest that trust.
But basically it is just how much you (and by extension the market) believe you will be able to get for your instrument of exchange in the future that determines its value.
Everyday goods, like corn or crude oil, additionally have intrinsic usefulness and thus gain value from this. Government issued currencies have another aspect, namely that you have to pay taxes in gov issued currency, and thus there is always someone who wants gov issued currency, thus it is easy to trust. There are also often "legal tender" laws, which force people selling to the public to accept gov issued currency. This also makes it easy to invest that trust.
But basically it is just how much you (and by extension the market) believe you will be able to get for your instrument of exchange in the future that determines its value.
That's not quite how legal tender laws work. If I want to operate a business that only accepts Bitcoin, that's not illegal. You give me the Bitcoin and I give you the donut. Legal tender only applies to debts, which include things like damages from lawsuits. In fact, if you want to receive anything other than dollars in a lawsuit, that's considered "specific performance" and is not always available. For instance, if I have a contract to ship you ten tons of flour for $10,000 and I don't ship the flour, most of the time you can sue me for some dollar amount of damages. Specific performance would be if the court ordered me to ship you flour--or indeed, gold, Bitcoin, or Euros.
I thought in France, for instance, companies may not refuse to take gov issued money as payment for their goods, but I cannot find a reference right now. So I suppose you are right.
Thanks for correcting me.
That wouldn't surprise me. The French are protective of their national institutions, and back in the day, the Franc would have been one of them. (Another, the French language, has lots of legal protections.)
Another way to ask what backs a currency is "Why would I want to acquire this currency, even if I had alternative methods for procuring the goods and services I want?" For a national currency, the answer is that the government puts a gun to your head if you don't pay your taxes in it. A national currency is a very agreeable way for a government to express its power through taxing and spending.
The answer for bitcoin appears to be that currently you can use it for low-friction transactions.
The answer for bitcoin appears to be that currently you can use it for low-friction transactions.
> What backs the value of a Bitcoin?
Electricity mainly. The cost of a bitcoin is proportional to the cost of the electricity to make it.
Every time a new machine comes out that is more efficient in electricity the difficulty rises such that you are back where you started.
Electricity mainly. The cost of a bitcoin is proportional to the cost of the electricity to make it.
Every time a new machine comes out that is more efficient in electricity the difficulty rises such that you are back where you started.
https://en.bitcoin.it/wiki/Myths#Bitcoin_is_backed_by_proces...
What backs the US dollar? Sure, you've got FDIC insurance and all of that, but it isn't backed by anything in the sense that many people are thinking.
What backs the US dollar? Sure, you've got FDIC insurance and all of that, but it isn't backed by anything in the sense that many people are thinking.
Should be captioned (2008)
Nope, 2005.
http://classic-web.archive.org/web/20060329122942/http://une...
Blogger updates the date in the article but not in the URL if you repost something you posted earlier.
http://classic-web.archive.org/web/20060329122942/http://une...
Blogger updates the date in the article but not in the URL if you repost something you posted earlier.
Look at the URL. Blogspot allows you to retroactively change the date, but the URL stays the same. Obviously one might wonder why he changed the date.
It was first published in 2005 according to the URL and comment permalinks.
References all the way to 1998 can be found over the internet these days..
But can they be trusted? How much do google and archive.org control?
I hope the identity of Satoshi is never confirmed. If it's them, good for them! If not, it doesn't matter!
[1] https://bitcointalk.org/index.php?topic=34458.0
[2] http://www.wired.com/opinion/2013/05/lets-cut-through-the-bi...
[3] http://unenumerated.blogspot.com/2008/04/bit-gold-markets.ht...