Octopus Overlords

Bitcoin is an open-source virtual currency generated by a computer algorithm that is completely beyond the reach of financial intermediaries, central banks and national tax collectors. Bitcoins could be used to purchase anything, at any time, from anyone in the world, in a transaction process that is almost completely frictionless. Yes, that's right, the hacktivists now have a virtual currency that's untraceable, unhackable, and completely Anonymous.

And that's where things start to get interesting. Veteran tech guru Jason Calacanis recently called Bitcoin the most dangerous open source project he's ever seen. TIME suggested that Bitcoin might be able to bring national governments and global financial institutions to their knees. You see, Bitcoin is as much a political statement as it is a virtual currency. If you think there's a shadow banking system now, wait a few more months. The political part is that, unlike other virtual currencies like Facebook Credits (used to buy virtual sock puppets for your friends), Bitcoins are globally transferrable across borders, making them the perfect instrument to finance any cause or any activity -- even if it's banned by a sovereign government.

Anonymous Bosch wrote:Has anyone else here been following the development of Bitcoin? It certainly is an intriguing concept:

Bitcoin is an open-source virtual currency generated by a computer algorithm that is completely beyond the reach of financial intermediaries, central banks and national tax collectors. Bitcoins could be used to purchase anything, at any time, from anyone in the world, in a transaction process that is almost completely frictionless. Yes, that's right, the hacktivists now have a virtual currency that's untraceable, unhackable, and completely Anonymous.

And that's where things start to get interesting. Veteran tech guru Jason Calacanis recently called Bitcoin the most dangerous open source project he's ever seen. TIME suggested that Bitcoin might be able to bring national governments and global financial institutions to their knees. You see, Bitcoin is as much a political statement as it is a virtual currency. If you think there's a shadow banking system now, wait a few more months. The political part is that, unlike other virtual currencies like Facebook Credits (used to buy virtual sock puppets for your friends), Bitcoins are globally transferrable across borders, making them the perfect instrument to finance any cause or any activity -- even if it's banned by a sovereign government.

It'll be interesting to see if it catches on. Perhaps Bitcoin will become the new coin of the realm for online poker?

Anonymous Bosch wrote:Perhaps Bitcoin will become the new coin of the realm for online poker?

noxiousdog wrote: What prevents you from making bitcoins?

noxiousdog wrote:What prevents you from making bitcoins?

Where Do Bitcoins Come from?
=========
Bitcoins are created by a complex algorithm. Only 21M can be made by the year 2140. Your desktop bitcoin software can make bitcoins, but at this point the electricity and time it would take to produce a bitcoin is larger than the actual value of a bitcoin (your laptop might take five years to make one, and they currently trade at $6.70 per bitcoin [ see https://mtgox.com/trade/buy" target="_blank for the latest exchange rate ].

Bitcoin miners use super cheap GPUs (not CPUs) to create the coins, but as more people come online to make them, the algorithm adjusts so that one block can only be made every 10 minutes.

How are new Bitcoins created?

New coins are generated by a network node each time it finds the solution to a certain mathematical problem (i.e. creates a new block), which is difficult to perform and can demonstrate a proof of work. The reward for solving a block is automatically adjusted so that in the first 4 years of the Bitcoin network, 10,500,000 BTC will be created. The amount is halved each 4 years, so it will be 5,250,000 over years 4-8, 2,625,000 over years 8-12 and so on. Thus the total number of coins will approach 21,000,000 BTC over time.

In addition, built into the network is a system that attempts to allocate new coins in blocks about every 10 minutes, on average, somewhere on the network. As the number of people who attempt to generate these new coins changes, the difficulty of creating new coins changes. This happens in a manner that is agreed upon by the network as a whole, based upon the time taken to generate the previous 2016 blocks. The difficulty is therefore related to the average computing resources devoted to generate these new coins over the time it took to create these previous blocks. The likelihood of somebody "discovering" one of these blocks is based on the computer they are using compared to all of the computers also generating blocks on the network.

The Meal wrote:

Anonymous Bosch wrote:Perhaps Bitcoin will become the new coin of the realm for online poker?

Interesting you say that along with Jason Calacanis' comments. Maybe it's not unrelated.

Pauly hypothesizes it was the banks, and their lack of control over the movement of usable currency, that were the true motivating factors behind online poker getting shut down in the first place. Crazy stuff.

Pauly wrote:I'm sure the tin foil hat-wearing, silver hoarding, Max Keiser disciples are going to love this, but I'm sharing this thought that has been bugging me ever since I dropped acid at the top of Machu Picchu....

Kraken wrote:How does one actually spend bitcoins? How do I convert one into $6.70 of actual spendable money?

Kraken wrote:How does one actually spend bitcoins? How do I convert one into $6.70 of actual spendable money?

Paingod wrote:

Kraken wrote:How does one actually spend bitcoins? How do I convert one into $6.70 of actual spendable money?

It becomes a currency unto itself, perhaps.

Say you start "spending" these to renew monthly subscriptions on things online, or to buy digital games. It effectively replaces normal currency (which is equally etherial, we've just gotten used to it being worth something).

Kraken wrote:I do not want money that can't buy beer.

Paingod wrote:

Kraken wrote:I do not want money that can't buy beer.

What if you had money you could spend instead of $$ - which meant you spend less $$ and can alternately trade that into more beer from the corner store?

SpaceLord wrote: It's strange. You can't use PayPal, so you use an exchange, like here: Mt Gox and trade there. I'm working on getting an account now. It'll be a fun way to spend few hundred bucks. The price of BitCoins, in January, was 40 cents, it's now over 7 dollars.

El Guapo wrote:This seems like the very definition of a speculation bubble. It seems like BitCoins aren't tied to anything, so their value derives solely (I gather) from people assigning them value and speculating that their value will increase in the future.

Assuming, as appears to be the case, that BitCoins are readily exchangeable into currency via Mt Gox and the like, isn't a run on BitCoins inevitable? Eventually the Warren Buffet of BitCoins is going to decide that they are overvalued and cash out en masse. That gets out, and others cash out for fear that they will be left holding worthless currency. That rush, in turn, makes the currency worthless.

To a degree this is true of any currency, but it's certainly different when it's backed by a loose agglomeration of people on the internet vs. the United States government.

Kraken wrote: Free money? Good deal if I don't have to trade $$ for bitcoins in the first place.

What the law accomplishes sounds mundane enough: it requires money transmitters--companies that act like banks, but aren't, such as PayPal--to get licenses. As usual, however, the devil is in the details. Previously, California corporations were only required to get money transmitter licenses for international funds transfers, and domestic transfers were unregulated. Now both kinds of transfers are regulated. Also, the price of each license is a little bit steep: half a million dollars and change.

...

You might argue that innovation in the financial industry is alive and well, but you'd only be right if you mean that in the most cynical terms. Case in point: Square, a payments company that is a media darling frequently cited as a leading innovator, does not disrupt the financial infrastructure in any way. In fact, Visa just invested in Square directly because it does such a good job of propagating the status quo. PayPal similarly exists to promote existing financial infrastructures, not replace them with something better.

Enough wrote:

Pauly wrote:I'm sure the tin foil hat-wearing, silver hoarding, Max Keiser disciples are going to love this, but I'm sharing this thought that has been bugging me ever since I dropped acid at the top of Machu Picchu....

I'm sure they do, is he one of them?

The Meal wrote:

Enough wrote:

Pauly wrote:I'm sure the tin foil hat-wearing, silver hoarding, Max Keiser disciples are going to love this, but I'm sharing this thought that has been bugging me ever since I dropped acid at the top of Machu Picchu....

I'm sure they do, is he one of them?

His is one of the more (if not the most) astute voices regarding online poker. The fact that he's so well grounded in who he is and his place in the world is just a bonus.

Enough wrote:

The Meal wrote:

Enough wrote:

Pauly wrote:I'm sure the tin foil hat-wearing, silver hoarding, Max Keiser disciples are going to love this, but I'm sharing this thought that has been bugging me ever since I dropped acid at the top of Machu Picchu....

I'm sure they do, is he one of them?

His is one of the more (if not the most) astute voices regarding online poker. The fact that he's so well grounded in who he is and his place in the world is just a bonus.

He comes off as a fantastic top-notch read, no doubt. But going down the road of Federal Reserve conspiracy theory sort of hurts that street cred imo. Maybe it's the history of banking in my family, but it rubbed me the wrong way and it seemed Pauly was out of his depth. We need PreacherMan to get my back...

Kraken wrote:I'll sell you my 0.02 btc for one...DOLLAR!

Mark, a software developer, had ordered the 100 micrograms of acid through a listing on the online marketplace Silk Road. He found a seller with lots of good feedback who seemed to know what they were talking about, added the acid to his digital shopping cart and hit "check out." He entered his address and paid the seller 50 Bitcoins—untraceable digital currency—worth around $150. Four days later the drugs, sent from Canada, arrived at his house.

Since it launched this February, Silk Road has represented the most complete implementation of the Bitcoin vision. Many of its users come from Bitcoin's utopian geek community and see Silk Road as more than just a pace to buy drugs. Silk Road's administrator cites the anarcho-libertarian philosophy of Agorism. "The state is the primary source of violence, oppression, theft and all forms of coercion," Silk Road wrote to us. "Stop funding the state with your tax dollars and direct your productive energies into the black market."

Smoove_B wrote:Gizmodo just released an exclusive piece on how people are using bitcoins to purchase all kinds of drugs on an "underground" website.

Last line of linked article wrote:Republished from http://gawker.com" target="_blank

The Meal wrote:That bodes well for online poker.

El Guapo wrote:Untraceable, huh? I can't imagine it would be too hard for investigators to create accounts, offer drugs or what have you for sale, and then send the police instead of a shipment when someone enters their address.

I feel like a lot of people are going to find that the oppressor state has some very practical tools available to it, though this will be interesting to observe.

SpaceLord wrote:

El Guapo wrote:Untraceable, huh? I can't imagine it would be too hard for investigators to create accounts, offer drugs or what have you for sale, and then send the police instead of a shipment when someone enters their address.

I feel like a lot of people are going to find that the oppressor state has some very practical tools available to it, though this will be interesting to observe.

Yeah, getting actual stuff shipped to you is hard to hide. BitCoin itself, however, is very, very anonymous.

Odin wrote:

SpaceLord wrote:

El Guapo wrote:Untraceable, huh? I can't imagine it would be too hard for investigators to create accounts, offer drugs or what have you for sale, and then send the police instead of a shipment when someone enters their address.

I feel like a lot of people are going to find that the oppressor state has some very practical tools available to it, though this will be interesting to observe.

Yeah, getting actual stuff shipped to you is hard to hide. BitCoin itself, however, is very, very anonymous.

That's not my experience - when I got my fraction of a bitcoin from the faucet, they put my email address (modified with the addition of a single letter that was easily recognizable as not being part of my address) AND my IP address. I found that rather annoying, actually.

SpaceLord wrote:

Odin wrote:

SpaceLord wrote:

El Guapo wrote:Untraceable, huh? I can't imagine it would be too hard for investigators to create accounts, offer drugs or what have you for sale, and then send the police instead of a shipment when someone enters their address.

I feel like a lot of people are going to find that the oppressor state has some very practical tools available to it, though this will be interesting to observe.

Yeah, getting actual stuff shipped to you is hard to hide. BitCoin itself, however, is very, very anonymous.

That's not my experience - when I got my fraction of a bitcoin from the faucet, they put my email address (modified with the addition of a single letter that was easily recognizable as not being part of my address) AND my IP address. I found that rather annoying, actually.

That's not BitCoin, that's the Faucet. BitCoin to BitCoin only require your public key, which changes with every transaction, and is effectively unbreakable due to the strict implementation of PGP.