Bitcoin discussion

benjamen

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Hazards of Bitcoin: Theft!

http://www.theverge.com/2013/12/19/5183356/how-to-steal-bitcoin-in-three-easy-steps

"Earlier this month, someone pulled off the largest heist in the history of Bitcoin, the virtual currency that approximates cash on the internet. The illegal drug bazaar Sheep Marketplace was plundered, either by hackers or insiders, and about $100 million worth of the currency was stolen from customers."
 

Jay

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Karl Denninger speaks out also:
"I Too Stupid To Understand"
http://market-ticker.org/akcs-www?post=227045

edited to add this comment from comments:
Hey! I've found a way to make a regular Dollar act as a Bitcoin.
1. Take an ordinary $100 bill
2. Buy drugs from your local drug dealer
3. Write your SSN, and his SSN on the bill
4. Under that, write the date, time, and location of the transaction
5. Take it to your local post office and have the bill notarized
6. Make 5 copies of the bill
7. Keep one copy for yourself, give one to the dealer
8. Post one copy at city hall
9. Mail the other two copies, one to the IRS, the other to the Police
10. Post online about how you are freeing yourself from the government. (We won't ask what you're smoking because we'll already know)
 
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dontdeBasemebro

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Not surprising at all.

While I do support the ida of multiple competing currencies, there are two things about Bitcoin (and the like) that give me strong pause. First, being completely computer based, it is too easy for things to just disappear, at least for non-computer wizards like me. Second, even if the governments of the world can't control Bitcoin itself, they can lock up those who use it.
 

helenmoss

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Bitcoin theft drama began when FBI shutdown the SIlk Road. The value crashes down but look at it now, soaring high at $1000 per BTC.
 

helenmoss

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Some called it ponzi scheme other defines it like Beanie Baby, but you know it's still a big mistery why many risk a huge investment for this. One biggest invesment I've heard was one in Iceland, imagine bitcoin factory. Do you guys have any idea how big their mining efforts are?
 

Unbeatable

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Not surprising at all.

While I do support the ida of multiple competing currencies, there are two things about Bitcoin (and the like) that give me strong pause. First, being completely computer based, it is too easy for things to just disappear, at least for non-computer wizards like me. Second, even if the governments of the world can't control Bitcoin itself, they can lock up those who use it.
People over 40, while still young, that didn't grow up in the computer age seem to have trouble comprehending that something can 'exist' in the digital world and that this is actually far preferable to something you can hold in your hand in the real world but that banks and governments can manipulate as soon as it enters their system.
 

pmbug

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A doomsday scenario that has long been dismissed by bitcoin’s biggest boosters is now a clear and present danger. At 3am ET this morning, a single bitcoin mining collective known as Ghash.io reached 45% of the computing power of all global bitcoin miners, just six points short of the 51% that would be required to break bitcoin by arbitrarily manipulating the record of future transactions upon which it rests. The result could be, at minimum, “double spending” of existing bitcoins, which would render the currency effectively unusable.

To put this in context: Imagine that tomorrow, a single corporate entity gained the ability to clone all of its dollars, and then immediately went on an asset buying spree. To say that it would undermine trust in the US dollar would be an understatement. That’s what could happen to bitcoin.

Update: Ghash.io has issued a press release on the potential for it to launch an attack on bitcoin. The mining pool says it is taking steps to make sure that Ghash.io never reaches 51% of the world’s bitcoin mining capacity, “as it will do serious damage to the Bitcoin community, of which we are part of.” Ghash.io also said that they will temporarily stop accepting new independent bitcoin miners in their pool, and will allow existing members of Ghash.io to mine bitcoins through other pools.

Update 2: Bitcoin magazine has weighed in, asserting that the success of Ghash.io is indicative of a larger problem in bitcoin: nearly unprecedented centralization of the mining upon which the currency’s security depends.

Update 3: Bitcoin entrepreneur Henry Brade weighs in on Ghash.io’s proposed solution, and finds it wanting. Quartz’s Ritchie King weighs in: No, bitcoin isn’t about to be taken over by a massive cartel.
...
More: http://qz.com/165273/the-existentia...oosters-said-was-impossible-is-now-at-hand/#/
 

bushi

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...see, here's the difference between purely free market, and not so much free market - the guys who are very much invested in Bitcoins, are the ones who are very much interested in Bitcoins preserving their value/utility, and are immediately making all the steps necessary to convince people, that the Bitcoin stays the way it is- i.e. secure and reliable.

Simply love it for that reason - it is like a free market laboratory, how the ENTIRE economy might have work, if not for the fuckers in governments... who always try to scare us with monopolies, greedy capitalists and such... But see what the reality is? Not so much scary, and truly self-regulating!

Sent from my SM-N9005 using Tapatalk
 

Unbeatable

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I know precious metal forums tend to lean towards being crypto-currency negative. I've also seen a lot of negative posts claiming there are a mass of fatal flaws with Bitcoin, most I just laugh at, because with minimal research they can be proved wrong.

Having said that, I thought you guys would be interested in what in IMO is Bitcoin's major current flaw.

https://blockchain.info/pools?timespan=24hrs

The massive computing power that we constantly hear is protecting Bitcoin is actually in the hands of a few pool operators. There is one at the moment, Ghash.io that had 45% of the hashing power a few days ago.

You've probably heard of the 51% attack. but even with 40% hashing power -

If a party controlling 40% hashpower tries, they'll successfully reverse 6 confirms 50% of the time.
Pools controlling too much hashing power has occasionally been a problem in the past, but the pool operators were known 'friendlies' who took significant steps to address the issue if they got too big.

Ghash.io are not necessarily 'friendlies', they have actually been caught doing a small double spend in the past and they have taken only minimal steps to reduce their current hashing power. (The problem stems from the fact that people who have 'hashing power' get a better result directing it a pool than doing it in a more decentralised way.)

If a central bank controlled that hashing power for example, and there's nothing that lets us know they're not already in control of Ghash.io, then they literally have a switch that can destroy the price and trust in Bitcoin at a critical moment.

Other crypto-currencies have evolved to make the above a non-issue & Bitcoin is taking steps to address it, but whether they will be successful is unknown. But for those who are sceptical of Bitcoin this is the most serious problem I've found to be negative about. I will be paying close attention to this myself.

Edit: Ha snap, I see PMBug just posted the same issue. Yes for once I agree this is quite serious.
 

Unbeatable

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I've looked into the above issue a bit more myself. The results aren't great. It seems TPTB may have successfully gained control of Bitcoin imo.

The below is an excerpt from a post I made on a crypto-currency forum,

__________________________

Bitcoin was a great invention! It gave us a decentralised peer to peer value exchange system, outside the current banking system, with pre-determined inflation & a publicly verifiable ledger. It was a solution to over-reaching central banks and governments.

But Bitcoin may already have failed :(

Bitcoin is potentially already under the full control of the central banks it was originally a solution for.

Central banks have private owners. It is plausibly speculated that the company with the biggest stake in them, is Goldman Sachs. As you may be aware they have entered the Bitcoin market via Circle. The board members of Circle also include directors and employees from some of the world's largest companies.

Central banks wouldn't enter the Bitcoin market unless they were sure, they could subtly control and dictate it.
They're hardly going to pump hundreds of billion of dollars into the vehicle of their own destruction.

How do you subtly control and dictate Bitcoin? By discreetly being able to control >51% of the hashing power.

The basic security premises of bitcoin concept was that there would be decentralized network of bitcoin nodes each with small share of hashing power to ensure that there is no single person or small group who can control Bitcoin network. That premise was broken by pools.
Why doesn't Bitcoin address the problem?

The core development team have (deliberately?) not taken steps to address it

As far as I can tell there is no significant resources allocated from Bitcoin Foundation group to make mining more decentralized
Their response to Ghash.io gaining 45% of Bitcoin was also muted, even though last week GHash.IO openly gained over 50% of Namecoin's hashing power. (This is very different to Deepbit/BTC Guild in the past, now that the central banks are in the game, it is quite possible between GHash, unknown mining pools and Asic farms that have yet to be turned on, that Goldman Sachs already comfortably controls 51% of Bitcoin's hashing power.)

In fact, instead of responding to the threat of central bank involvement, one of the key people who could address the problem, Mike Hearn has joined Circle to sit along side them - http://www.coindesk.com/circle-advisory-board-members-burns-appointment/

There are also many additional indications that the core development team has sold out. Though this is currently speculation, I think it will shortly turn into fact.

__________
 

Unbeatable

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http://finance.yahoo.com/news/two-b...ney-laundering-scheme-162424352--finance.html

"Two men who operate bitcoin exchange businesses have been charged with money laundering for helping drug merchants exchange $1 million in cash for bitcoins, the digital currency, U.S. prosecutors said on Monday."

:popcorn:
Yeah, saw that. Not that I agree with the drug laws. But that is clearly breaking the existing laws. Of course HSBC did the same thing on a massive scale and no-one was arrested but still...
 

ancona

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Just like JPM et.al., they should get a fine and a wrist slap. they should have to say they are sorry and that should be the end of it. Good for one should be good for everyone else.

If these guys get any time at all, then their sentences should be scaled up to represent the crime and fraud at the big banks and those bankers should get sentenced to time as well. By rights, there should be tens of thousands of people doing millions of years of time for financial crimes.
 

Unbeatable

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On another note, many will know I've called Bitcoin a good buy since it was $40 and started this thread. So if anyone wants to know, despite my concerns about Bitcoin I still own some, however my big call for the future at the moment is NXT. NXT is another digital currency that solves a lot of the concerns I have about Bitcoin.

Bitcoin

+-10% inflation + Fees paid to miners (So a cost of +-$100 per user per $1000 per year)

What do you get for $1 Billion per year in costs?

-Centralised mining. GHash.IO gained over 40% hashing power. This allows 6 confirmation double-spends to be successful
50% of the time. And they have been caught double-spending in the past.
-Very low transactions per second & 10 minute block times

Vs. NXT

0% inflation, currently $0.07 fees which is paid back to active users based on holdings.

What do you get for virtually free?

-Decentralised mining & no double spend possible even with 90% of coins/network.
-Able to handle Visa/Mastercard transaction rates & has fast 1 minute block times (With future options for expedited transactions.)

_______________________________

This means the mining isn't expensive or a weak spot like Bitcoin and with fast transaction times, it means centralised merchant services like Bitpay may not be a weak spot either.

NXT's major weak point is that although they had a 6 week IPO there were only +-70 initial investors which means that it wasn't initially very distributed in crypto-currency terms.

_______________________________

I'm not expecting huge moves in the short term, and not necessarily recommending it for others as it's still fairly early stages.

I believe in the idea of Bitcoin, but also said a descendant of it might end up being superior, and NXT seems to solve a lot of issues I have with Bitcoin.

I also wanted my call to be in writing :)

It's currently valued at +-$70 million or $0.07 per NXT.
 

11C1P

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You can't slip nothing pass those TSA super sleuths and that's apparently what this guy was trying to sneak past them I guess. Like I posted in another bitcoin thread, I was also laughing when they were talking about it on TV yesterday as one of the guys said, it has nothing backing it like gold or a govt. and One genius defending bitcoin pointed out that gold has nothing backing it either. Of course in the grand scheme of things it's just a metal, you can't eat it, drink it, breathe it, or bang it. BUT, gold has always had value, and I don't think most people foresee anytime in the future it being worthless either.

Also Buffet said he wouldn't be surprised if there was no more bitcoin in 10-20 years, so is he saying that cause he wants it to tank even more before he buys it, or does he think it will be gone it 10-20 weeks and trying to help it keep going so he can get whatever money out of it him or his friends have in it.
 
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