Explain Bitcoin Please

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Ed Hartouni

Trad climber
Livermore, CA
Nov 6, 2017 - 06:05pm PT
I think nah000 covers it, but the basic technology is much broader than the currency application, and allows for tamper-proof information to be exchanged confirming the validity of that information without revealing the path that it took.

This is incredibly important for shipping, for instance, and even for banking where you will find the same technology applied in the coming years, which will provide a more secure way to transfer such information. It is not too hard to see a transition to cryptocurrency from just "normal" banking transactions made more secure.

As for the basis of a currency, we all (the entire world) buy into the idea that the Federal Reserve is the monetary regulator.

Ideas like cryptocurrency make it possible to decentralize the currency system. This may be advantageous in the long run, especially given the limited "lifetimes" of nations.
MikeL

Social climber
Southern Arizona
Nov 6, 2017 - 07:38pm PT
A billion here, a billion there, pretty soon, you're talking real money.” (Misattributed to Everett Dirksen)

Just for comparison, the overnight repurchase market in the U.S. alone by the end of 2010 has been estimated to be about 8 trillion dollars. That’s every single night.

Value and money have a loose association. Money is worth what the market says it is, and that is a game of consensus among a great many people, most of whom are not aware that they are a part of the consensus. Both value and money are socially constructed.

Almost every effort that’s ever been made to control and stipulate the durability of the value of a unit of measurement has been met with failure—the Federal Reserve’s efforts not withstanding. (Perhaps the Gold Standard should be recalled as the monetary standard--just kidding.)

As for printing money, every bank does it with every loan. Loans create money (a multiplier effect).

Inflation occurs for a reason—not just a tangible reason. Ditto for the increase value in any commodity or investment.

A billion here and there won’t be making much of a difference anywhere.

I think Reilly has focused on the right parameter: liquidity. It will enable a buyer or seller to get in or out of a desirable or undesirable financial position.

It might be better to focus on what’s of value to one. I suppose it could be money, but that’s just a count of a unit of measurement.
Ghost

climber
A long way from where I started
Nov 6, 2017 - 07:52pm PT
nah000 has it as far as bitcoin is concerned, but the currently more relevant thing is the impact on pretty much everything in the world of the tech behind bitcoin.

Blockchain offers the possibility of tamper-proof recording of transactions, and, in the industry I work in (logistics) the potential is enormous.

As always, though, all this wonderfulness comes with a couple of caveats:

First, as far as I know, "tamper-proof" is a pretty short-term concept. Eventually someone will figure out how to tamper. But, even so, blockchain is a big step forward.

Second, regarding the original subject of bitcoin: Yes, there have been fortunes won and lost. But I still think you're better off investing in real estate. Cuz they ain't making any more of it.
Ed Hartouni

Trad climber
Livermore, CA
Nov 6, 2017 - 08:14pm PT
It's actually meaningless since the bitcoin holder has no access ascertain the security of the technology.

No, the holder can see everything that insures the security, and make assessments, it is a public ledger system.

As for the promise of quantum computing, so far we have little to worry as most practical systems do not perform much better than "classical" computing.

As for insecurity, oddly, humans are largely responsible...
https://www.nytimes.com/2017/08/21/business/dealbook/phone-hack-bitcoin-virtual-currency.html

'...But Mr. Pokornicky said the virtual currency industry needed to alert new users to the added risk that comes with the new features of the technology.
“It’s powerful to be able to control your money and move things without any permission,” he said. “But that privilege requires a clear understanding of the downside.”'
Jon Beck

Trad climber
Oceanside
Nov 6, 2017 - 08:40pm PT
The recent run up in the value of bitcoin was the direct result of big companies hording bit coin in case they had to pay off ransomware demands. Criminal activity mainly
nah000

climber
now/here
Nov 6, 2017 - 08:59pm PT
DMT: as per the first three lines of your argument... it seems to me your argument is predicated on the assumption that what/how money is/was organized in this day today is somehow necessarily rooted in what/how it originally is/was...

and so while you'll get no argument from me that there is a lineage, i'd argue that the lineage is kind of like the following image of a photocopy of a photocopy of a photocopy of a photocopy of a...:


ie. there is a semblance of the original in the final, but damn... it's pretty distorted...

so no need on your part to assume any need from my perspective for the bilderburgers, masons, etc.

in no small part, because i ain't smart enough to know exactly how we got from a to b.



but here's what i do know about b.:

when the u.s. ran into troubles because of a bunch of a fUck ups directly at the hands of the financial authorities having "something vital and core to the[ir] authority" guess who footed the bill?

and how was that bill footed?

and as i don't have time to walk all of the way through it, i'll just stick to the most important conceptual distortion, imo.

we talk all the time about how the obama led government took on "debt". simply put, that "debt" that the u.s. took on at that point is as related to the common sense idea of "debt" [taking something that is owned and has therefore been earned by one person, so that they no longer have use of it and giving it to another person who doesn't own it because they haven't earned it] as the word "wench" [which once apparently meant "female child"] is related to the present usage. ie. we're seriously saying that financial private interests creating a ledger line, that did not exist before, then giving it to we the people, so that we can try to get out of the situation that said financial private interests got us into in the first place, is "debt" that we get to pay interest and principle back to the private financial interests on?

uh. ok.



to be clear, i'm not arguing that the way we do things is necessarily "wrong". there are pros to having centralized and privately held authority to modes of exchange that are quite literally created as ledger lines out of thin air.

only point i'm trying to make is that it hasn't necessarily been all peachy over the last bit.

ok i guess there are two points, with the second being that the terminology we use to describe our system is as related to what we common sense think it is, as old school wench is to the new school version.

and don't worry i don't think bitcoin, or the blockchain is necessarily "our lord, and saviour", either.



alls i am saying is that new modes of human organization will require new modes of human organization.

and blockchains [and bitcoin] are very early explorations of new modes of human organization.

that's it, that's all.





as far as: What about those alleged missing bitcoins out of that alleged bitcoin exchange? Who went to jail? Who paid up? Who did the peasants lynch below the castle walls?

who went to jail when those u.s. dollar banks "busted" recently [and to be clear in your example above it was the equivalent of a bitcoin "bank" and not bitcoin itself that went bust]? and all those people that lost their homes? who got lynched? who paid up?



anyway i could keep going but i have one final point: What we all need to remember is money is simply a representation of labor; that's it.

no. this is only true to us plebs.

as a whole money is simply a representation of value. that's it.

whether bitcoin comes to represent value in a way that threatens the u.s. or other national bucks is hard to say.

in no small part because if it did, i suspect, the dudes with the nukes will end it... or at least distort it, so that it becomes a facsimile of a facsimile of a facsimile of a...



time will... as always... tell.
nah000

climber
now/here
Nov 6, 2017 - 09:08pm PT
^^^^

if that's what you got from what i said, it looks like we're talking past each other.

all the best.
IntheFog

climber
Mostly the next place
Nov 6, 2017 - 09:09pm PT
I think Bitcoin enthusiasts are more like to go for Ron Paul than for Bernie. Among other things, Bitcoin makes it hard for the government to see how much you are spending, and on what. It's hard for the government to tax what it can't see. I'm not sure wiping out taxes works for Bernie's bros.

PS FWIW, Neil Stephenson's Cryptonomicon is all about the computer currency/tax linkage. It was written long before Bitcoin or even Paypal, but it's full of insights, especially about the computer currency/taxes/war linkages. Taxes are, after all, the sinews of war.
Cole

Trad climber
los angeles
Nov 6, 2017 - 09:28pm PT
A lot of people in this thread bashing bitcoin like they're an expert or something. Blockchain technology and crypto currency are extremely complex and new, I seriously doubt anyone in this forum understands what is going to happen, so acting like you do seems a bit foolish.
nah000

climber
now/here
Nov 6, 2017 - 09:33pm PT
DMT: i was referring to this:

But enjoy, if that's what you want. Ask your employer to pay you in bitcoin. Cash em in down at the... oh wait. No bank! No cash. Good luck with your new ways to try to execute the same ole function.

as a response to what i wrote.

i'm pretty sure i pretty clearly stated the antithesis to a bunch of that...



as far as your quote of mine misrepresenting what you wrote.

even though i still disagree with you on that, it's possible that i might not have understood what you were intending for me to take away...

hence the we are talking past each other...
Reilly

Mountain climber
The Other Monrovia- CA
Nov 6, 2017 - 09:59pm PT
nahoo explained it? I explained it in 4 sentences, or was it 3? WTF?
Here, 8 words:
No liquidity, no accountability, no transparency, no regulation.
mcreel

climber
Barcelona
Nov 7, 2017 - 12:17am PT
Bitcoin uses a lot of energy to solve useless problems, so the people who solve them have the chance to participate in a speculative investment scheme. A lot of carbon is going into the atmosphere in the process. Investing in heroin distribution may be better, from a moral point of view.
TomCochrane

Trad climber
Cascade Mountains and Monterey Bay
Nov 7, 2017 - 01:12am PT
The earth shaking technology here is uncrackable encryption.

Uncrackable encryption potentially takes away the ability of the banksters to control the populations of the world.

People just haven't assimilated the implications, as this thread well illustrates. As pointed out above, Neil Stevenson did a great job of thinking this through in his book Cryptonomicon. (I highly recommend all his books!)

The banksters are madly trying to obfuscate and circumvent the implications of this encryption technology breakthrough into the public domain. One of my author friends wrote a book that she is afraid to publish called Money, Power, and Purpose. She had several sessions interviewing and educating Alan Greenspan on this subject, until he saw the light and told her she was very dangerous and to get out of his office. She hid out for at least a decade after that.

As Ed pointed out up thread, Bitcoin is simply one of many applications for the major technology developments in encryption. It may have started out as a haven for gamblers and the sex trade. But you don't have to be a shady character to want to operate out of reach of the Fed. There are many other block chain currencies going to town out there, besides Bitcoin. The neocons took advantage of the 2008 crash to run off with about a trillion dollars of the public's money ... not likely stashed in US dollars.

A few decades ago I knew some math geniuses who were hired by the CIA to develop unidirectional algorithms which no amount of computer power could compute in reverse. My understanding is that they succeeded nicely.

This was followed by a couple of decades of the CIA/NSA trying to prevent this new encryption technology from getting out into the wild. They needed it to hide their massive collection of secrets. But they didn't want anyone to be able to hide from them.

Eventually they failed to keep the encryption cat in the bag. Bitcoin is just one of the many potential application domains, all of which bode poorly for the world's bankster controllers.

healyje

Trad climber
Portland, Oregon
Nov 7, 2017 - 02:02am PT
A few decades ago I knew some math geniuses who were hired by the CIA to develop unidirectional algorithms which no amount of computer power could compute in reverse. My understanding is that they succeeded nicely.

The CIA? Seriously? No CIA or NSA was required (unless of course they managed to hire some Flemish cryptographers...) and it was never not out in the 'wild'...
Winemaker

Sport climber
Yakima, WA
Nov 7, 2017 - 06:17am PT
A good history and explanation of primes, factoring, modulo arithmetic and truncation, and public keys is in "The Code Book" by Simon Singh. It's written at a level even I can understand. The development of asymmetic ciphers was really done by Rivest, Shamir, and Adleman at MIT in the late 70's. There is no known method of quickly factoring the product of prime numbers to the original primes, and that's the key to asymmetric encryption. The factoring idea was also independently developed by British Intelligence at about the same time, but was kept secret.

Check out today's Dilbert (11/07/17) for more discussion.

http://dilbert.com/
StahlBro

Trad climber
San Diego, CA
Nov 7, 2017 - 06:27am PT
Obfuscation

“This thing, what is it in itself, in its own constitution? What is its substance and material?”


― Marcus Aurelius
MH2

Boulder climber
Andy Cairns
Nov 7, 2017 - 06:40am PT
Information, Marcus.
mcreel

climber
Barcelona
Nov 7, 2017 - 07:16am PT
Energy consumption of bitcoin mining: https://digiconomist.net/bitcoin-energy-consumption

This wouldn't be so offensive if the "work" was solving some problem of interest or importance, but it's not, it's just serving to inject new bitcoins into the system.
healyje

Trad climber
Portland, Oregon
Nov 7, 2017 - 07:21am PT
Exactly. Ghastly inefficient and, as stated, anything but a 'green' currency.
Jon Beck

Trad climber
Oceanside
Nov 7, 2017 - 10:09am PT
Not sure how they come up with 240kwh per transaction, sounds like BS to me
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