[ExI] extropy-chat Digest, Vol 122, Issue 15

[Kelly Anderson]

On Thu, Nov 7, 2013 at 2:26 PM, Omar Rahman <rahmans at me.com> wrote:

>
>
> I guess the 21 million thing is sort of 'old fashioned' of me. It doesn't
> technically matter if I can or can't have a whole bitcoin but it 'feels'
> wrong to me that each person on the planet on average can only have about
> 1/300 of a bitcoin. So, I actually do think that the upper limit of
> bitcoins is a problem unless the value of a single coin goes right through
> the roof. I guess that's what you're all hoping for and good luck to you.
> If all 21 million coins were available right now you would have a currency
> worth something like $6 000 000 000 or so, yes? On the other hand, if you
> have a bitcoin you might have 1/21 000 000 of the future money supply.
>

Earlier today the market cap of bitcoins was 3.1 billion dollars. Kind of
exciting to be able to have that much money. But I don't personally see
Bitcoin displacing ALL OTHER currencies. It's never worked that way, except
by firm governmental control. Given a choice, people will choose other
things sometimes. Like my space gold backed Bitcoin idea... some people
might really like that more.


> What, if any, do you think the weaknesses of bitcoin are?
>

Technically, I know of no significant weaknesses. In practice, it doesn't
provide the kind of privacy some people expect of it, but that doesn't
reduce it's usefulness as money, just its usefulness at things like money
laundering and buying illegal stuff.

One of the weaknesses of bitcoin that is most often pointed out is it's
volatility. Of course, it is volatility on the way to the stratosphere, so
not all bad.


> The potential for forking in the block chain, the continuing assault on
> public-private key encryption, and adopting changes to the hashing function
> seem like serious concerns for bitcoin. Well to be fair any weakness of
> public-private key encryption is a more general problem.
>

I think there is some good math behind bitcoin that keeps it fairly safe.


> The most obvious weakness I saw for bitcoin was the possibility for a DDOS
> attack with many micro-transactions but they have eliminated this with
> 'transaction fees'. It seems to me that the limits one places on processing
> a transaction through these fees represent some sort of limit on the
> effective divisibility of the coin.
>

The fees should go down over time, as the coins become more valuable.


> As the number of bitcions produced goes down towards zero as we approach
> the 21 million limit these fees are envisioned as the incentive for people
> to continue processing blocks. At some point won't that actually
> commoditise bitcoins into a function of the cost of processing power?
>

Not really, as the difficulty keeps increasing, and the overall number is
limited.


> What do you do if someone steals your bitcoins?
>

What do you do if someone steals the money from your wallet. You have to
take precautions. You don't carry your retirement portfolio around in your
wallet, do you?


> Can't they just transfer them to some other address and they are gone.
> Isn't your ability to recover them nil?
>

Yes.


> Even if someone is forced by some court to make reparations in real world
> goods or a traditional currency could they be compelled to accept some
> exchange rate?
>
> For many libertarians bitcoin is probably a dream come true.
>

The libertarian and the technologist in me loves bitcoin. Micropayments is
a dream come true. Bitcoin's libertarian bent just makes it all the better.


> However, world politics could force the issue if a major government or
> group of governments declared that contracts in bitcoins are not
> enforceable. This seems an obvious move if a government felt threatened by
> bitcoins. And of course if they can't tax it and revenues fall they will
> feel threatened.
>

In theory, bitcoin transactions are taxable, just like giving the
neighborhood boy 50 tomatoes to mow your lawn. In practice, it's just like
giving the neighborhood boy 50 tomatoes to mow your lawn, at least at this
time. You pay these sorts of taxes if your reputation as a tax payer is
important to you for some reason.


> As a digital currency which relies on it's users and community to confirm
> the transactions and use the same hash function it is profoundly democratic
> and I like that. But it is also therefore open to the possibility of a
> split if enough people could choose to fork the block chain. This might
> even be a good thing, but it is something that should be considered.
>
> As I said later in my post I think a digital currency is a good idea, I'm
> just not sure bitcoin is the right implementation.
>

When you get it right, let us know so we can buy in on day one... :-)

-Kelly
-------------- next part --------------
An HTML attachment was scrubbed...
URL: <http://lists.extropy.org/pipermail/extropy-chat/attachments/20131109/46410c4b/attachment.html>