Bitcoins

BoracicLint

Satoshi wrote: »

What a waste of energy mining for virtual units of currency. The world is in an energy crisis we are looking at a huge deficit going forward and after Fukushima the entire world wants to turn their back on nuclear generation. Why are all these powerful computers around the world using up large amounts of power to solve blocks of problems created by Satoshi Nakamoto to try and make people think these virtual units of currency as the same as money gold and silver which need actual mining which also uses lots of energy. This almost infinitely complex mathematical block solving, that all this energy is being used for (wasted on) is just a charade to deceive people into thinking bitcoins are similar to gold and silver, but on top of all that power being wasted not producing anything even more power has to be given by the miners to run all the bitcoin systems around the world. The entire thing is a waste of energy as well as being very unstable and open to limitless problems that could make bitcoin go to its intrinsic value of nothing.

The 'wasted energy' as you call it is exactly where Bitcoins intrinsic value comes from. Everyone says it's just conjured out of thin air, but the massive amounts of energy expended on mining, and the proof-of-work requirement of every new block added to the blockchain is what gives Bitcoin inherent value.

JohnRo

I take the point but I'd suggest the "value" of bitcoin is far beyond the cost of any energy needed to secure the integrity of the transaction system.

BoracicLint

JohnRo wrote: »

I take the point but I'd suggest the "value" of bitcoin is far beyond the cost of any energy needed to secure the integrity of the transaction system.

I agree, the current price is being driven by supply's lack of ability to satisfy demand. The price will stabilise, but not before several boom and bust cycles and in many years to come. Until it does stabilise, the price will always be fuelled by bullish speculators, cashing out at each opportunity and buying back in.

JohnRo

I was also implying the btc system has an intrinsic value, whatever the market decides that might be, contained within the incorruptibility and integrity of the whole decentralised concept, truly a breath of fresh air in a financial world dominated by central control, privileged access and special interest.

Marazan

So , Bitcoin down $200 today so far. I take it you'll all be piling in now because it's great value?

EDIT: Well, speak of the devil, 5 seconds later and it's gained $100.

BoracicLint

JohnRo wrote: »

I was also implying the btc system has an intrinsic value, whatever the market decides that might be, contained within the incorruptibility and integrity of the whole decentralised concept, truly a breath of fresh air in a financial world dominated by central control, privileged access and special interest.

Not to mention the absence of charge-backs, almost no double-spend risk (with the exception of the 51% attack, although that is very unlikely), no transaction fees etc..

We are only really scratching the surface of what Bitcoin can achieve, the encryption and authentication aspects of the system would make it useful for digitally signing transactions, that could be used for example, by only releasing funds to a merchant once a purchase is deemed of satisfactory quality. The protocol has uses in many types of transaction, not just the exchange of money.

[Deleted User]

BoracicLint wrote: »

Not to mention the absence of charge-backs, almost no double-spend risk (with the exception of the 51% attack, although that is very unlikely), no transaction fees etc..

Double spend is a genuine risk, it's easy to mitigate with confirmations but that does delay the process. To accept payments near-immediately merchants have to take the risk on double spend. There's information on the various double spend attack types on ther wiki: https://en.bitcoin.it/wiki/Double-spending

There are transaction fees with Bitcoin, that's how miners are incentivized to mine once all of the bitcoins have been released, transaction fees are actually a fairly contentious issue at the moment because they're quite high given the current valuation, but it's something that can be changed by the developers. I believe at the moment it's something like $0.20. That said, transactions don't require fees, but a transaction without fees is not guaranteed to be accepted by any miners, and even if they do it can take literally days.

The lack of charge backs is good for merchants but awful for customers, that's why there's going to have to be a consumer layer on top of the protocol for wide scale adoption (in the vein of PayPal, a bank). Just look at what has happened with BFL as an example of why the lack of charge backs is not good.

BoracicLint wrote: »

We are only really scratching the surface of what Bitcoin can achieve, the encryption and authentication aspects of the system would make it useful for digitally signing transactions, that could be used for example, by only releasing funds to a merchant once a purchase is deemed of satisfactory quality. The protocol has uses in many types of transaction, not just the exchange of money.

This is to me why Bitcoin is worth paying attention to, there are so many incredible possibilities. Bitcoin is an asset register, it's programmable money, it's an excellent example of what peer to peer can do. Bitcoin may not succeed, but it has at least validated the idea of digital currency being possible.

I really like this talk by Mike Hearn that discusses some unexplored Bitcoin protocol possibilities, it really shows just how powerful Bitcoin can be and how right now it's just scratching the surface: http://www.youtube.com/watch?v=mD4L7xDNCmA -- worth the 30 minutes.

Personally I don't care about the $ value of Bitcoin (I've committed to never selling mine), it's the technology that is fascinating. As a programmer I cannot wait for the things that we'll be able to do with Bitcoin if it becomes a globally used currency (and asset register and escrow and and and everything else it can be)

dryhat

Bitpay, the largest Bitcoin payment processor, has over 20,000 merchants using its system and has processed millions of transactions over the last year or so.

It has not recorded a single attempt at a double-spend.

BoracicLint

citricsquid wrote: »

Double spend is a genuine risk, it's easy to mitigate with confirmations but that does delay the process. To accept payments near-immediately merchants have to take the risk on double spend. There's information on the various double spend attack types on ther wiki: https://en.bitcoin.it/wiki/Double-spending

True, but I still believe that if you were in the fortunate and unlikely position to have 51% of all the mining power, the incentive would be in mining genuine blocks, rather than trying to fork the blockchain. How this would change once mined Bitcoins become more scarce however, I don't know.

[Deleted User]

BoracicLint wrote: »

True, but I still believe that if you were in the fortunate and unlikely position to have 51% of all the mining power, the incentive would be in mining genuine blocks, rather than trying to fork the blockchain. How this would change once mined Bitcoins become more scarce however, I don't know.

A double spend attack does not require control of 51% of the hash rate, as the linked article explains if someone is accepting transactions without confirmations (which is common because requiring confirmations is not practical for a lot of purchase types) then they are vulnerable to double spend and double spend does not require any real overhead.

The cited paper is worth reading, here is the conclusion:

In this paper, we addressed the double-spending resilience of Bitcoin in fast payments, in which the time to acquire a service is in the order of few seconds. More specifically, we showed that not only these attacks succeed with overwhelming probability, but also that, contrary to common beliefs, they do not incur any significant overhead on the attacker. For that purpose, we analyzed the conditions for performing successful double-spending attacks against fast payments in Bitcoin and we experimentally confirmed our analysis. As far as we are aware, our experiments constitute the first comprehensive double-spending measurements in Bitcoin. It is noteworthy that we have performed thousands of double-spending attempts using fixed Bitcoin addresses without having to bear any type of penalty.