Cryptocurrency is a neat and stupid idea
 

http://www.nytimes.com/2014/02/25/bu...d.html?hp&_r=0

Bitcoin is neat. So is the whole idea of cryptocurrency.

But really, in reality, what is it being anonymously used for? Drugs, porn, pizza and weapons. And it can be stolen anonymously.

So why bother using it, unless it is to buy those things?

Bitcoin is designed for online payments, you can pay without fee. I already bought some legal things with bitcoin, as i don't have paypal.

I think it's a scam. I don't think it will last long either.

But, what does this have to do with Linux ?

Not much if anything, but you can't avoid it cropping up in conversation.

Unfortunately, it is a very clever scam, and there are essentially two reasons why this is so:

1. "Coin mining gear" is sold for unit prices as high as $40,000 USD ... and, kindly notice, you cannot pay with Bitcoin! You're being promised and sold a "magic money-machine." And you're being relieved of a very large amount of real money to do so. There is, alas, a sucker born every minute, and sometimes the easiest "marks" are the ones with a fair amount of disposable income who see themselves as being very clever and smart. :rolleyes:
2. Fundamentally, it goes against what "currency" actually is and must be. A financial system cannot, by definition, "run out of currency." Nor may any transaction that is tendered serve to destroy, or even to alter, any one of those currency-units. Currency-units are and must be fungible, not one-of-a-kind and uniquely identifiable. If someone wants to buy $1 million worth of avocadoes, and the grower is then going to use some of those proceeds to make a payment against an agricultural loan used to grow the crop, we simply can't have anyone saying, "oops, we don't have enough currency with which to do that ... gotta wait until we can dig some more up." A real currency system must provide liquidity, and it must be possible to make loans. (And, having made them, to immediately fund them.)

Even though these technologies are a novel and useful application of cryptography, they are entirely unsuitable for use as a currency system.

Many reasons NOT to use cryptocurrency / bitcoin:

1) Completely unregulated. Need I say more ?
2) It relies on cryptography, which relies on mathematically hard problems. Some mathematician may quickly become the richest on earth ...
3) Hard to police. Who's gonna get your coins back in an anonymous money system ? Nobody knows who took it, or at least it is much more difficult to track down.
4) Ties to the underworld. What's the purpose of anonymous currency except for to do bad things with it. I'm not saying that anonymity is bad, because it can be good, but combine anonymity with money and that's just the essence of pure evil.
5) It has scam-like qualities as sundialsvcs suggests. The person who supposedly created it may not even exist, and may be a group of people.
6) It isn't really a currency as sundialsvcs suggests. Sure, there are problems with all currencies, but they abide by some basic rules, none of which are being followed.

If you feel like rolling the dice on cryptocurrency, try a casino instead. The house always wins, but at least you have a small chance of winning something temporarily.

It's unfortunate that people have misused a distributed currency, effectively leaving it all in one 'bank'.

1: How does the availability of some product or service being sold for US dollars have anything to do with the legitimacy of bitcoin itself?

2: There was a gold standard for hundreds of years and people made loans. Loans are contracts. Contracts are decidedly not bound to any currency system (until written to include them).

1: You should say more. Everywhere you go today, there's heaps of regulation, and very little of it is helpful at all. In fact, most regulation is just patchwork for earlier regulatory failure.

2: Math is hard, so someone who is good at math will magically inherit the Earth. This assumes that nobody would notice and/or correct the flaws in the software. Further, just like all of our favorite software, anyone can fork the software and make a better one at any time.

3: Who's going to get your dollars back when you hand them to some random dude on the street? You suppose this is some sort of solved problem that's otherwise being traded away. It's not; people regularly get ripped off or lose their own money in all sorts of ways without getting any of it back.

4: You're going to have to go into more detail about why combining anonymity with money is the essence of pure evil. Without unpacking that, it comes off as pure FUD. I'll go ahead and say this, just for a preemptive measure: those things you'll try to say that cryptocurrency enables are all possible with any other currency available today, just a little harder.

5,6: Already covered. Further, what attributes that make up a currency have yet to be defined. And no, loans aren't part of a currency.

There was a "gold standard," yes, until a couple of countries had the audacity to present banknotes at the US Treasury and to demand that they actually be redeemed for gold bullion. Richard Nixon promptly went on TV and announced that the deal was off ... forever. But, commerce didn't stop.

Actually, the money supply had exceeded the amount of gold in those vaults for quite some time. The gold was merely symbolic. And, except to jewelers and electronics manufacturers, it mostly still is.

The essential fallacy of bitcoin is that "money has intrinsic value." It does not. Money cannot be "rare." It isn't "discovered." Money is a medium of exchange, and it is "that which is exchanged" that has the value.

If bitcoin were really "money," then makers of those expensive computer systems would "of course" be willing to accept payment for their wares in bitcoin. But, quite specifically, they do not. What's valuable to them is that folks with a certain amount of disposable income are willing to dispose of that income in order to buy what they perceive to be a money-making machine.

The attributes of a currency are: (among others ...)

• Currency units are guaranteed to be available in sufficient quantity to denominate every transaction that takes place. You might be broke, but the system never is.
• Currency units are indestructible and indistinguishable. Currency units received in one transaction can immediately be used again.
• Currency units can be freely and immediately exchanged for the currency units of any other authorized issuing agency, at predictable rates.
• Forging or counterfeiting of currency units by unauthorized parties is a crime, and actively punished.
• Currency units are accountable, by which I mean that you do not have to present any sort of bill or token to confirm that you possess one, if a regulated system of cross-checks (e.g. "a banking system") indicates that you do, and if it will immediately account for the transaction. (Thus, you can swipe your card at the gas station.)

1) Regulation is better than no regulation, regardless of how well it works or is enforced currently.

2) Not necessarily good at math, but good at finding shortcuts. By the time you find out, millions of coins will be gone and there will be nowhere to look.

3) There are credit and debit cards and .357 magnums and serially numbered bills for large transactions to solve cash handling issues. Also see:
http://dealbook.nytimes.com/2013/12/...=business&_r=2

4) The FBI has the largest bitcoin wallet after seizing it from Silk Road (illegal drugs) operator Ross Ulbricht.
http://yro.slashdot.org/story/13/12/...bitcoin-wallet
It's true that this is kind of a counter argument for myself because they did seize the bitcoins, so there is some policing involved.

You're the only one spreading FUD here.

5) 6) I don't see how your answer have covered anything at all. First you prove that "cryptocurrency" is an actual currency and follows the same rules, then we'll see.

Well, I don't think there is too much left to discuss on this topic without flaming, so I'll leave. There's no way I'm trying to convince anyone not to use cryptocurrency, by all means go right ahead. If I want to lose money, I'll stick to the casino.

C'mon, we can discuss any topic successfully here! :) And leave the fire-extinguishers at home.

I, for one, am extremely interested in this very-novel use of cryptography ... basically, a distributed-processing technique for creating an undeniable token, etc. It is "a neat idea." Very unusual, and with lots of interesting applications. Except ... "money." It's just no-good as "money." It might be fun to discuss what else it could be used for.

I can burn or mark a $20 dollar bill, does that mean it isn't currency?

But exchange rates fluctuate all the time...

Before banks invented debit cards, we didn't have currency?

Nope, and every $20 bill has a unique serial number. But it doesn't matter which $20 bill I use, nor even that I physically possess one, in order for me to "spend $20." The dollar-bill is not affected by having been spent.

Yes, they do. And when you decide to exchange your $20 USD for Russian Rubles, there will always be Rubles available to hand to you on-demand. Russia will never run out of Rubles.

Sure ... we had currency. But that didn't prevent them from introducing debit cards, or ACH wire-transfers, or its predecessor long ago by which "money" could be and was "sent" using a (hand-keyed) Morse Code telegraph. The physical token, or lack thereof, is irrelevant. In fact, physical tokens tend to get in the way, because you have to print them, schlep them around, store them in vaults, worry all the time about them being lost or stolen, and eventually, recycle or burn them.

A pragmatic, practical currency-system must be able to accommodate trillions of dollars' worth of transactions ... every day, even every hour! ... a transaction volume far in excess(!) of the number of currency-units said to exist at that particular moment, because a transaction is a movement of value: literally, "a debit and an accompanying credit." You hand $10 to the clerk at the hamburger stand, and not one minute later that same $10 bill is given to the next customer in line who handed the clerk a $20. But you didn't hand the next guy in line a $10, and two, not one, transactions took place. In the days when you could actually retrieve data from http://www.wheresgeorge.com or other sites which track the movement of physical dollar-bills, it is quite interesting to see just how far a particular piece of paper travels.

(The next guy after that in the hamburger line "swiped his card," and that guy is not permitted to receive a dollar-bill as change. Hamburger stands don't let you do "cash-over" because their constantly-fluctuating store of currency units is not deep, lest they be robbed.)

The essential fallacy of crypto-currency is that it treats the currency-unit (token), itself as "a thing of intrinsic value." Currency has no intrinsic value, and any system which tries to be supported by such a thing fails to operate as a currency system.

I count at least 3 transactions:
1 Your payment of $10 to BurgerGuy.
2 Customer B's payment to BurgerGuy.
3 BurgerGuy pays Customer B his change.


There' s probably a payment between 1/2 where BG gives you change.


Which now leads to even more interesting things with electronic payment depending on how BurgerGuy processes epayments with things like "overnight sweeping", pre-authorisation / collection, whether or not BG has a merchant account or is using a shared merchant account (such as those provided by PayPal etc.)


We are currently doing things with NFC using phones as replacements for physical cards for low value transactions. Local Starbucks is now used to us rolling in ordering two coffees and swiping a phone over their terminal and it accepting the payment. Customers behind get confused :)

Bitcoin is a toy for the privileged.

If you can't afford and don't know how to use ginormous computer(s) and don't have broadband, if you are peasant or an orphan in wartorn country, you are dead to bitcoin.

Like any other fiat currency, bitcoins are worth only what persons think they are worth.

They are today's tulips.

http://www.marketwatch.com/story/are...ips-2014-02-28