Especially the part about scripting the currency made my inner nerd explode in excitement.
bitcoin as a currency isn't particularly exciting
however it has the possibility to completely revolutionize transaction banking with the technology - just ask a banker how a transaction REALLY works and you'll get a headache for sure (assuming he even knows the answer)
One interesting thing is still the entire network deals with a very small number of transactions, and one would be interested on how it handles a massive stress test Also especially in terms of say, if i were to just screw around with the miners by sending 1 satoshi every single block for the rest of my life, what are they going to do about that? It has implications on working out something as simple as say, your wallet balance and other technical quibbles
considering that bitcoin has the largest network of computing power in the history of the world and still counting, id say the blockchain would handle worlds bitcoin transactions just fine.
you also cant send dust transactions without a fee, so the 1 satoshi thing would end up costing a lot to do. miners would very much welcome a flood of transactions on the network due to fees they collect.
On December 27 2013 10:26 Cheerio wrote: How can anyone guarantee that at some point those controlling BitCoin business will not create huge amounts of BitCoins for themselves? As far as I understand they are only stopped by their own regulations, and they've said themselves that there is no higher regulator.
Lets say you me and dudethree have a special currency between us called favors. Theres no physical thing being traded, we just keep three sheets of paper where we write every single transaction down. You do me a favor, so now i owe you one and its written on every one of the three sheets that each of us keep. Now you think, heh couldnt i just write more IOUs on it with stuff i havent actually done/given out? Sure, nothing stops you from doing that. So next time i need a favor from you, youre like: "hey wait, you actually already owe me x amount of favors, i wont do anything for you until you pay". And ill look at your sheet and see that its different from mine and dudethree's sheet. I COULD accept that and scrap my sheet, or i could tell you to go fuck yourself and exclude you from my currency. Now you have your own currency, and dudethree and me have our own currency. But you cant trade with us anymore and have to find new people who believe that your currency is superior and buy in. Thats how bitcoin works. If anyone wanted to just "invent" some more bitcoins form himself, no one has to accept that and they would tell you to fuck off.
what you are saying is like angry customers depriving the management of the company from control over it, so there is no way any company can ever go wrong. And back to your example. As long as I am the only one who can print the "favor" notes (which are also indistinguishable from each other) and the one who controls the exchange market for them you can't just exclude me from the trade. All you can do is just sell the notes you got left (on my market) for whatever they are worth still.
On December 28 2013 22:20 Cheerio wrote: Whatever it is there are people who organized it and there are people supporting it's operations, who are essentially in control of it.
It it unknown who invented it, as he used a pseudonym, but the whole protocol is open source. And yes, what you are saying is true and doesnt contradict my example. The people who are supporting its operation and in control in my example would be all three of us. If you fall out of line we kick you out and now we're only two. Obviously the example doesnt really work with just two or three people, but if we broaden that to the millions of computers currently mining bitcoins, you can see that one person cant alter the blockchain in his own favor, everyone else would just reject it. However, yes, if someone controlled 51% or more of the network they could theoretically do that. And yes, the people invested in bitcoin are aware of that and in fact, one mining pool is already pretty close to that with currently 37% or so of the whole network capacity.
As for the exchanges, they dont have anything to do with bitcoins themselves. They dont control it and they cant alter it. All they do is act as a third party between someone who wants to sell his bitcoins and someone who wants to buy them. If you wanted, you could start an exchange right now. In fact, there are many people running micro exchanges, by sitting in a starbucks and selling their bitcoins for crazy prices to people who want bitcoins but dont trust the major exchanges with their personal information. Anyway, if you want a more indepth explanation watch this video:
On December 28 2013 22:20 Cheerio wrote: Whatever it is there are people who organized it and there are people supporting it's operations, who are essentially in control of it.
This sounds like a forfeit. Bitcoins have value because people place value on them. Same thing can be said about real money or "favors" as the above example. The physical artifact (the paper sheet with the IOU's) represent no value, only the belief that one owes another a favor, and once you alter the physical artifact to your gain (by adding non-existant favors) the other believers in the system will see you as non-legit and kick you out of the circle, meaning that you are no-longer trustworthy. Sure you can approach other people with the favors you have earned in your 3-man circle (plus the fake one added), but why would they accept your altered version if they themselves doesn't subscribe to the favor thinking?
On December 28 2013 22:20 Cheerio wrote: Whatever it is there are people who organized it and there are people supporting it's operations, who are essentially in control of it.
Yes, everyone involved is. How are you not getting this? There is no Bitcoin King who mints Bitcoins and writes Bitcoin Law. There is no Bitcoin Incorporated. It's an open source free association of individuals choosing to exchange bills of exchange through a verification protocol. Bitcoin is just a structure with a unit and a verification process for those units.
So there is no guy? But there is always a guy. What about creator guy who "supposedly kept 900k BTC from the start"? Surely that guy is above some other guy in the chain of influence.
I wouldn't say he kept 900k bitcoins from the start. He was just one of the first miners when the difficulty was so low (at 1.0 then vs now I think over 1 trillion lol) so he was easily collecting coins. It's like being the first person to discover gold and starting to mine it before everyone else. Somebody had to be that person.
On December 29 2013 00:53 AlternativeEgo wrote: So there is no guy? But there is always a guy. What about creator guy who "supposedly kept 900k BTC from the start"? Surely that guy is above some other guy in the chain of influence.
What chain of influence? The Bitcoin Knights don't report to the Bitcoin Lords who serve the Bitcoin King. This is an protocol people can use to communicate debts. It's like saying "but what if the guy who came up with friendship starts changing all my friends and making new friends for himself and changing the terms of my friendships so I have to help them move". It's a nonsense.
On December 29 2013 00:53 AlternativeEgo wrote: So there is no guy? But there is always a guy. What about creator guy who "supposedly kept 900k BTC from the start"? Surely that guy is above some other guy in the chain of influence.
Go read up on Open Source and the mystery is explained.
On December 22 2013 21:40 wingpawn wrote: Can anyone explain to me how Bitcoin isn't a scam?
So, basically, someone not willing to reveal his identity creates a currency out of a thin air, not backed up by any goverment authority, with additional mechanism of money creation which also happens out of thin air...
The only reason of it's relative success is that a) standard currencies aren't backed up by anything real either and b) standard currencies are currently being managed in equally scamming ways (aka printing dollars without limits, salvaging private banks that are too big to go down etc.). But that doesn't add anything positive to Bitcoin itself; just exposes the shittyness of regular money that made people to look for the alternatives on-line.
Currencies aren't scams, they're just a way to make trade more convenient.
Medium of exchange: If I'm an artist, I can sell my paintings to person A to get money, and then use that money to buy wine from person B; I don't need person B to have an interest in paintings in order to make a transaction, as I would in a barter system.
Unit of account/measure of value: The value of money is standardized and easily divisible, so you can express the value of any good in terms of money, and thus also serves to be able to compare prices for different goods.
Store of value: You can save money, and then be able to take it out and use it later. A currency whose value changes significantly over time (e.g. a currency that suffers from high inflation, such as the Zimbabwean Dollar or the Venezuelan Bolivar) gets bad grades in this function.
Just wanted to add a few cents to what Zato-1 wrote.
Zato-1 is pretty much right on when he describes a currency. For anybody that has taken a macro-economics course, let's take it one step further:
Currency is ultimately used to trade the goods & services in an economy. Back in the days before currency was invented (however long ago that was), people used to trade their goods/services directly for other goods/services. For instance, before currency was invented, if we're both farmers, I may opt to trade my two cows that I raised for your bushel of wheat, (trading a good for a good).. Or I may have traded my bushel of wheat for 8 hours of your time in helping me till the soil (trading a good for service). Of course, the invention of currency simplified this.
Before we continue, let's consider this for a moment: value is based on our perception. For instance, I don't think there is much value in horse manure today. But let's say one day, there is some scientific revolution, and we discover we can generate unlimited energy from horse manure (and horse manure only). I guarantee you the value of horse manure will spike.
Paper fiat currency today represents a method to trade all the goods and services in our economy. If you think of it, it's not really the paper fiat currency that has value, but the goods and services you can trade for it that has value. Thus, paper fiat currency has "intrinsic" value because you can obtain goods and services from the economy with it. Paper fiat currency is also backed by the government that issues it - it serves as legal tender for people to trade goods and services within a country's economy. What happens when people lose faith in a country's economy? In a nutshell, you can possibly have a currency crash like Nigeria and Argentina (assuming the central bank loses control of the currency).
This all ties into Bitcoin. Most likely, if more and more merchants accept Bitcoin, and more and more people use Bitcoin to pay for goods/services, it may be here to stay. However, if people stop using Bitcoin and merchants stop accepting Bitcoin, it's use may vanish overnight and its value may plummet (think Tulip bubble).
I'm not going to get into more advanced macro economic topics like inflation, deflation, interest rates, money supply, etc, which you should probably know if you really want to speculate whether Bitcoin will become a long term use of currency.
Anyone have any good links to articles about the environmental impact of the current levels of bitcoin mining. I've done a fair bit of googling, and the estimates vary from nothing to more than commercial aviation, but none seem to have any solid maths behind them
Especially the part about scripting the currency made my inner nerd explode in excitement.
bitcoin as a currency isn't particularly exciting
however it has the possibility to completely revolutionize transaction banking with the technology - just ask a banker how a transaction REALLY works and you'll get a headache for sure (assuming he even knows the answer)
One interesting thing is still the entire network deals with a very small number of transactions, and one would be interested on how it handles a massive stress test Also especially in terms of say, if i were to just screw around with the miners by sending 1 satoshi every single block for the rest of my life, what are they going to do about that? It has implications on working out something as simple as say, your wallet balance and other technical quibbles
considering that bitcoin has the largest network of computing power in the history of the world and still counting, id say the blockchain would handle worlds bitcoin transactions just fine.
you also cant send dust transactions without a fee, so the 1 satoshi thing would end up costing a lot to do. miners would very much welcome a flood of transactions on the network due to fees they collect.
Of course you can send transactions without a fee
It just depends on the miners on whether they decide to process your transaction or not (and due to the way that the consensus and chain acceptance works, there is a big incentive to take on non-fee'd transactions)
And still the volume of bitcoins transaction is very very small compared to other currencies. There are complications that can happen as the volume gets to a level of a real currency (which i don't think it ever will)
On December 22 2013 04:01 revy wrote: However in the real world bitcoin has only faith to keep it's value. A fiat currency at least has a large entity backing it which drastically reduces the risk. However, with nothing backing it, it seems plausible to me that bitcoin could go illiquid overnight.
If by "large entity" you mean the government, that's not really the whole story. Ultimately, the value attributed to a currency is backed by the goods and services that you can purchase with it (ie. it's backed by the economy). Consider the case of Zimbabwe - whilst their government "backed" their currency, international investors had little faith in the Zimbabwe economy so in the end, the Zimbabwe currency was practically worthless.
On December 29 2013 01:16 Azide wrote: I wouldn't say he kept 900k bitcoins from the start. He was just one of the first miners when the difficulty was so low (at 1.0 then vs now I think over 1 trillion lol) so he was easily collecting coins. It's like being the first person to discover gold and starting to mine it before everyone else. Somebody had to be that person.
On January 08 2014 08:01 Svetz wrote: Anyone have any good links to articles about the environmental impact of the current levels of bitcoin mining. I've done a fair bit of googling, and the estimates vary from nothing to more than commercial aviation, but none seem to have any solid maths behind them
As far as I'm aware they are none. With the recent introduction of ASIC which now dominate the network, the electricity consumption have drastically fallen. However all the GPU miners are now mining alt-coin so the "pollution" generated by crypto currency is ever increasing.
It is still a minor concern for crypto currencies atm because they're many more "useless" things in this world that could be attacked by environmentalist before bitcoin. The amount of energy used by buisnesses like mastercard, visa or paypal is probably 100x more than the bitcoin network, not that I call them useless but you see the point. Computer wise you could think of things like HFT which only benefits Wall Street and such.
None sounds silly. You are using electricity, thus you are producing polution. If you are building specific hardware, you are also producing pollution. The only question is how much.
Basically, you can't just say something like that without numbers. One way to get numbers would be to get a rough idea of how many miners work, and then estimate how much energy one consumes per hour. From there to pollution is pretty easy, then compare that number to other numbers. But don't just be lazy and say there is none, or there is tons, if you actually have no idea.
Well we can make a reasonable estimation of the network cost in a quite straightforward way.
If we assume that every miner will mine as long as the coins produced have a dollar value higher than cost of the electricity used for the generation of those coins, given that a block is mined roughly every 10 minutes by the network, which generates 25 coins for the miner, and that the current dollar price of a coin is currently ~800$, this gives us:
3600 new coins every day, which will generate a benefit for the miners of 2.88M$. Assuming they will spend almost as much for the power used to generate the coins, we have a daily electricity expenditure of 2.88M$ worldwide. This is a very high ball estimation, since iirc the main cost of mining is buying the hardware rather than the electricty costs which are very low in comparison, but for this estimation we are considering free hardware and all electricity costs.
Taking a kWh price of 0.05$, which is apparently lower than what you can pay anywhere in the US, that money would buy a total daily power of 58*10^6 kWh or 207*10^6 MJ in the international system. Bitcoin mining companies probably have them in a server farm somewhere in China so I don't know what the electricity costs would be for them, but that sounded like a reasonable estimation.
A regular sized Nuclear Power plant produces 2000 MW of power, or MJoules per second, so it would take 1.2 such powerplants to generate the electricity consumed by the whole worldwide bitcoin network in a day. There are 100 nuclear reactors in the US, and they amount to ~20% of all the country power generation, so the whole global bitcoin network would be consuming around 0.24% of the daily electricity geneated only in the US. And keep in mind that my estimations are ridiculosly high, so very likely the real amount of electricity being actually consumed is orders of magnitude lower than this result.
TL;DR: Not much electricity consumed by the bitcoin network at the moment.
A different story would be to estimate what would be the consumption in a few years if the hashrate keeps climbing up exponentially as it is doing now. Then we might start seeing BTC minig corps buying small nuclear powerplants for themselves lol
EPT
