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Old 04-12-2011, 02:58 PM   #151
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Re: Bitcoins - digital currency

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Originally Posted by steelhouse View Post
Pegged Currency: 2x = 4y, y=2
Unpegged Currency: 2x = 4y, y is the goods and services merchants will accept divided by number of bitcoins.

I use to think bitcoin was going to $0.01 in 20 years,it still might. However, it could go to $50000 per BTC if it is not hacked or crashed. However, the number of transactions might crash, they could be 100000x more than now. As new merchants are added they will benefit from no rules, no taxes, no transaction fees, and no government regardless of the current price of bitcoin. In fact they will hurt themselves if they go to a new bitcoin network, as new coins will be distributed unfairly. Hoarding will not hurt bitcoin, it will only increase its value. Selling will lower its value but merchants will just lower their prices.

If you like, send a few bones to:
1uobKrAjFvDRcoZk6PSDZSBwBkswzvZi7
I have no idea what kind of math you are using on the pegged vs. unpegged. There will always be a natural price between two goods. Fixing a price of something never works because it never is in synch with what people actually want, so the undervalued good will always get hoarded and the overvalued good will be sent to whoever is redeeming it.

Pegging only really works when it's direct redemption (redeem this dollar coupon for 1/20th an ounce of gold). Even then, a natural price could deviate from the pegging (if a bank printed more certificates, people might not accept those coupons in place, or demand more of them). For FTP$ = USD, there are transaction costs, so some people are willing to pay a premium for USD for a FTP transfer, or vice versa.
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Old 04-12-2011, 03:00 PM   #152
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Re: Bitcoins - digital currency

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Originally Posted by mustmuck View Post
I'm not too sure what centralized p2p poker is?
If you make a poker client with instead of having a central server (think bank to finances... the current model for poker clients - they connect to servers in Costa Rica or Canada or Isle of Man or wherever), you have the players themselves host the games and have the network distributed all over the place. That makes it impossible for a government or any other entity to directly attack that poker network, since it is everywhere. There are a lot more challenges with distributing it since you need to make sure no one can see each others cards, that money is actually in the system (10 minute transaction times would not work for poker, where you would play several hands per minute).
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Old 04-12-2011, 06:13 PM   #153
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Re: Bitcoins - digital currency

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I have no idea what kind of math you are using on the pegged vs. unpegged. There will always be a natural price between two goods. Fixing a price of something never works because it never is in synch with what people actually want, so the undervalued good will always get hoarded and the overvalued good will be sent to whoever is redeeming it.

Pegging only really works when it's direct redemption (redeem this dollar coupon for 1/20th an ounce of gold). Even then, a natural price could deviate from the pegging (if a bank printed more certificates, people might not accept those coupons in place, or demand more of them). For FTP$ = USD, there are transaction costs, so some people are willing to pay a premium for USD for a FTP transfer, or vice versa.
BTC is about $0.70 right now. Suppose two people want to trade 2 bushels of corn (2 man-hours) for 1 ounce of gold (2 man-hours). Suppose one does not have the gold but will get it in 3 months. For this transaction they can do a tally stick, more of a contract between commodities. However, they decide to choose BTC, what causes the price of BTC to be $0.70 since a BTC was created with zero man hours? The only answer is someone is willing to accept $0.70 (1/10 of a man-hour) for a BTC (0 man-hours). Now the next day BTC is $0.01. What changed? Nothing BTC is not fixed to any price or commodity. It is not demanded to be used. It seems the exchange services set the BTC exchange rate to anything they want however, they make profit off BTC on transfer fees so they set BTC at about $1 since most people using it are from the USA.
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Old 04-12-2011, 06:25 PM   #154
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Re: Bitcoins - digital currency

Labor theory of bitcoin right there.
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Old 04-12-2011, 07:10 PM   #155
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Re: Bitcoins - digital currency

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If you make a poker client with instead of having a central server (think bank to finances... the current model for poker clients - they connect to servers in Costa Rica or Canada or Isle of Man or wherever), you have the players themselves host the games and have the network distributed all over the place. That makes it impossible for a government or any other entity to directly attack that poker network, since it is everywhere. There are a lot more challenges with distributing it since you need to make sure no one can see each others cards, that money is actually in the system (10 minute transaction times would not work for poker, where you would play several hands per minute).
That isn't p2p poker. That's still a client-server model it's just that one of the players is the server and you trust them instead of the poker company. Bitcoin would make that easier to be sure, but there are already ways of transferring money and self hosted internet poker hasn't proved at all popular.

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BTC is about $0.70 right now. Suppose two people want to trade 2 bushels of corn (2 man-hours) for 1 ounce of gold (2 man-hours). Suppose one does not have the gold but will get it in 3 months. For this transaction they can do a tally stick, more of a contract between commodities. However, they decide to choose BTC, what causes the price of BTC to be $0.70 since a BTC was created with zero man hours? The only answer is someone is willing to accept $0.70 (1/10 of a man-hour) for a BTC (0 man-hours). Now the next day BTC is $0.01. What changed? Nothing BTC is not fixed to any price or commodity. It is not demanded to be used. It seems the exchange services set the BTC exchange rate to anything they want however, they make profit off BTC on transfer fees so they set BTC at about $1 since most people using it are from the USA.
Congrats, you've rambled your way on to my ignore list.
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Old 04-12-2011, 07:24 PM   #156
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Re: Bitcoins - digital currency

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Originally Posted by mustmuck View Post
That isn't p2p poker. That's still a client-server model it's just that one of the players is the server and you trust them instead of the poker company. Bitcoin would make that easier to be sure, but there are already ways of transferring money and self hosted internet poker hasn't proved at all popular.



Congrats, you've rambled your way on to my ignore list.
The idea of p2p is you have lots of mini servers all over the place handling all of the things a central server might do. Similar to how bitcoin operates, where there is no central server.

There really are two separate issues. One is using BTC to fund accounts. The second is the distributed server issue. Using BTC is useful mostly to cut down on transaction costs. It would cut out a gigantic portion of a poker sites expenses. Chargebacks and fraud are very expensive. People play and lose then charge back their credit card, the site is out the money most times. They eat transaction costs going through intermediaries, they eat transaction costs sending checks through intermediaries, etc... They make it up on rake.

If you can lower transaction costs, you could operate more profitably or run at a lower cost to your customers.

But right now, that transaction cost benefit is not there. Hardly anyone has bitcoins to play with, hardly anyone wants them to cash out. But it's one market where it would be very useful. I transfer money from Stars to Full Tilt easily. I transfer money to any site, perhaps it takes 10 minutes or an hour, but it can be done. That's what I loved about Neteller, only a few cash outs with large amounts, then move the money around super easy. Although the poker sites were paying the fees every time I did that, and funding that from all the rake I was paying.

Also, don't ignore steelhouse. He's like the Gary Busey of the forum.
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Old 04-12-2011, 07:49 PM   #157
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Re: Bitcoins - digital currency

I think BTC would make a great method of funding poker accounts. I would expect to see one of the established poker rooms accept it before too long if Bitcoin follows its current development curve.

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The idea of p2p is you have lots of mini servers all over the place handling all of the things a central server might do.
That isn't really p2p. That's more like some sort of distributed client-server model. The "mini servers" are still special, they aren't peers of the clients and they have more privilege/trust than the clients. This all started when RedManPlus brought it up, the mini-server plan was not what he meant.

I'm not even sure p2p poker would be possible. I haven't studied p2p models but I haven't heard of any ideas that would provide anything like the functionality required.

Quote:
Also, don't ignore steelhouse. He's like the Gary Busey of the forum.
Well, he's on ignore for the moment anyway. However, I generally shoot myself in the foot with these things by spending my time constantly clicking "view post".
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Old 04-12-2011, 07:51 PM   #158
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Re: Bitcoins - digital currency

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Originally Posted by TomCollins View Post
Also, don't ignore steelhouse. He's like the Gary Busey of the forum.
You said you are going to mine bitcoin and sell it for $50,000 in one year. Who is going to pay that money to you? The bankers. However, they will make it back later with all the drug money that is going to use bitcoin.
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Old 04-12-2011, 09:22 PM   #159
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Re: Bitcoins - digital currency

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You said you are going to mine bitcoin and sell it for $50,000 in one year. Who is going to pay that money to you? The bankers. However, they will make it back later with all the drug money that is going to use bitcoin.
Possibly. It's actually a friend of mine who has access to the computers, but I helped him figure it out.

My guess is bankers don't give half a crap about bitcoin. But speculating geeks is more likely to be the source of the money.
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Old 04-12-2011, 09:27 PM   #160
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Re: Bitcoins - digital currency

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I think BTC would make a great method of funding poker accounts. I would expect to see one of the established poker rooms accept it before too long if Bitcoin follows its current development curve.
The problem is they need to convert cash to bitcoins, and then back. That's expensive (although less than credit cards). But if you had games where they were in bitcoin, no conversions would be needed.

It really is a great idea if an established poker site converted to bitcoin and back. You buy chips, you get to convert at the rate equivalent to a premium ask, you cash out, you get a rate equivalent to a premium bid. No risk to the poker site, they keep a bunch of funds in mtgox, and instantly exchange it. If this happened, you'd see bitcoin's go up hugely in value.

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Originally Posted by mustmuck View Post
That isn't really p2p. That's more like some sort of distributed client-server model. The "mini servers" are still special, they aren't peers of the clients and they have more privilege/trust than the clients. This all started when RedManPlus brought it up, the mini-server plan was not what he meant.
Not sure how it's that different. Maybe I am explaining it poorly. Everyone playing would have a mini server and a client interface. They are peers in that respect. Similar to bitcoin now.

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I'm not even sure p2p poker would be possible. I haven't studied p2p models but I haven't heard of any ideas that would provide anything like the functionality required.
I'm not sure it's even necessary or if there are that many benefits, other than someone makes it doesn't want to own the servers. There are a lot of technical challenges to ensure a fair game there, though.


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Well, he's on ignore for the moment anyway. However, I generally shoot myself in the foot with these things by spending my time constantly clicking "view post".
Steel makes some strange posts, and they tend to be far off base, but they at least are entertaining.
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Old 04-12-2011, 11:09 PM   #161
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Re: Bitcoins - digital currency

RedManPlus,

I think you may be underestimating the value of being a market maker. Although the spread is typically $.03, the amounts available at the bid and ask price is generally quite small. You may see closer to $.10 spread on any serious transactions. A few people may take a few orders here and there in the middle, but if can get decent volume at a $.10 spread, that's at least more respectable. 10,000 volume at $.10 is $1000 in profits a day. Surely not much for a serious trader, but more than the $200 pittance you talked about. 40k volume just today on the huge upswing.
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Old 04-13-2011, 12:29 AM   #162
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Re: Bitcoins - digital currency

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Originally Posted by TomCollins View Post
If you make a poker client with instead of having a central server (think bank to finances... the current model for poker clients - they connect to servers in Costa Rica or Canada or Isle of Man or wherever), you have the players themselves host the games and have the network distributed all over the place. That makes it impossible for a government or any other entity to directly attack that poker network, since it is everywhere. There are a lot more challenges with distributing it since you need to make sure no one can see each others cards, that money is actually in the system (10 minute transaction times would not work for poker, where you would play several hands per minute).
That is an excellent concept. There are some technical issues, but I am sure that they can be solved. Thinking of poker as bit torrent instead of Napster is an excellent concept.
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Old 04-13-2011, 01:09 AM   #163
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Re: Bitcoins - digital currency

there was some discussion on a possible distributed bitcoin poker setup in the (locked) Internet Poker thread: http://forumserver.twoplustwo.com/28...munity-938389/ also a little here: http://www.liquidpoker.net/poker-for...m_session.html
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Old 04-13-2011, 10:17 AM   #164
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Re: Bitcoins - digital currency

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there was some discussion on a possible distributed bitcoin poker setup in the (locked) Internet Poker thread: http://forumserver.twoplustwo.com/28...munity-938389/ also a little here: http://www.liquidpoker.net/poker-for...m_session.html
Cool link on mental poker in there. So it certainly seems doable. You still need a solution to handle the money. Waiting for BTC to handle it is slow. But you would have some sort of escrow (putting money at the table), perhaps somehow escrowed by the entire system? If you want to take money from the escrow, you show a transaction history for each game somehow? Still a lot of challenges of course, but I'm sure it can be done.
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Old 04-13-2011, 10:56 AM   #165
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Re: Bitcoins - digital currency

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Originally Posted by _dave_ View Post
there was some discussion on a possible distributed bitcoin poker setup in the (locked) Internet Poker thread: http://forumserver.twoplustwo.com/28...munity-938389/ also a little here: http://www.liquidpoker.net/poker-for...m_session.html
The liquid poker link starts off about actual p2p poker then turns towards some sort of distributed server model. A few months later the same guys crop up starting the 2+2 thread, but now they seem to have dropped all of that and are just writing standard client-server poker software. All of that illustrates the differences pretty well actually.

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Cool link on mental poker in there. So it certainly seems doable. You still need a solution to handle the money. Waiting for BTC to handle it is slow. But you would have some sort of escrow (putting money at the table), perhaps somehow escrowed by the entire system? If you want to take money from the escrow, you show a transaction history for each game somehow? Still a lot of challenges of course, but I'm sure it can be done.
It would have to be escrowed. Slowness isn't the only problem with Bitcoin, when I make a bet I'm transferring my money to the pot, not to another player. This pot is an escrow and is core to the problem of p2p poker in my eyes. Traditional models solve this by having a TTP.

I think that p2p poker is a great thought experiment, but I don't think there's a pressing need in the real world. I'm not sure it would even be all that popular if it did exist.
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Old 04-13-2011, 11:42 AM   #166
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Re: Bitcoins - digital currency

This is really fascinating. I think the future for bitcoin poker has to be someone trustworthy running a room for a very small fee or donations or something. This should work for small stakes.

Looking at the betco.in site mentioned in the other thread it looks decent. Took about 2 minutes to transfer my bitcoins into the site. Unfortunately there is no one to play. If anyone here wants to try it, I will be sitting with my whole bitcoin roll (0.10) at the 0.01/0.02 limit table for the next couple hours.
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Old 04-13-2011, 01:55 PM   #167
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Re: Bitcoins - digital currency

I received your sendback. There are two addresses for the system.

The p2p model needs to have internal accounting for pots in play. The depositing function is where transactions would occur. Once you have them in the p2p system, the system can allocate them to players and manage the pots accordingly.

It takes only a few minutes to receive confirmation of a transfer, which is followed by many other confirmations. With more systems running confirmations, the speed should increase.
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Old 04-13-2011, 02:03 PM   #168
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Re: Bitcoins - digital currency

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Originally Posted by Grasshopp3r View Post
I received your sendback. There are two addresses for the system.

The p2p model needs to have internal accounting for pots in play. The depositing function is where transactions would occur. Once you have them in the p2p system, the system can allocate them to players and manage the pots accordingly.

It takes only a few minutes to receive confirmation of a transfer, which is followed by many other confirmations. With more systems running confirmations, the speed should increase.
Even if a lot more people started mining all of a sudden, an increase in block generation speed would only be temporary until the difficulty level was readjusted. For more instant transfers, you would need to use a Bitcoin wallet of some sort.
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Old 04-13-2011, 02:13 PM   #169
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Re: Bitcoins - digital currency

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Originally Posted by Grasshopp3r View Post
I received your sendback. There are two addresses for the system.

The p2p model needs to have internal accounting for pots in play. The depositing function is where transactions would occur. Once you have them in the p2p system, the system can allocate them to players and manage the pots accordingly.

It takes only a few minutes to receive confirmation of a transfer, which is followed by many other confirmations. With more systems running confirmations, the speed should increase.
Getting a tx in a block and each subsequent confirmation will take an average of 10 minutes no matter how many nodes there are. This is because the requirement for a valid block is reset periodically.

More nodes do improve the system though, they make it more secure from double spends, which are possible if you can redo all the work done by the whole network since the spend.
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Old 04-13-2011, 02:39 PM   #170
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Re: Bitcoins - digital currency

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I received your sendback. There are two addresses for the system.
Great, thanks. You have many many more addresses than two, though. The client actually pre-computes 100 of them so that a backup will contain your currently used accounts and the ones you'll be using over the next while.

Quote:
The p2p model needs to have internal accounting for pots in play. The depositing function is where transactions would occur. Once you have them in the p2p system, the system can allocate them to players and manage the pots accordingly.
Exactly, or more likely it would need an internal account for the entire game at a minimum. This is the part that may not be possible. To do it the network would need to be able to create a public/private key pair, publish the public part for you to transfer bitcoin to and remember the private part without any one node having access to it. Even if you manage this, when it comes to paying back the player (or doing anything involving bitcoin accounts) then one node will necessarily need to know a private key for a bitcoin account and therefore be able to do something with the account that it isn't supposed to do. I don't currently see any way around that. Even if the accounts are split each selected node will still get access to some money.
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Old 04-14-2011, 08:34 PM   #171
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Re: Bitcoins - digital currency

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RedManPlus,

I think you may be underestimating the value of being a market maker. Although the spread is typically $.03, the amounts available at the bid and ask price is generally quite small. You may see closer to $.10 spread on any serious transactions. A few people may take a few orders here and there in the middle, but if can get decent volume at a $.10 spread, that's at least more respectable. 10,000 volume at $.10 is $1000 in profits a day. Surely not much for a serious trader, but more than the $200 pittance you talked about. 40k volume just today on the huge upswing.
I've been a MM in illiquid stocks for 15 years...
My main interest in this is... in order of interest:

(a) take directional positions using Quant Analysis
And keep scalping/MM in the meantime...
But there is no where near the volume yet...
And MMs will come out of the woodwork as volume rises.

Within about a week I'll have full daily data for one year...
All conceivable technical data available...
I'll even include real world stuff like BitCoin Forum growth...

http://www.bitcoin.org/smf/index.php?action=stats

And do lots of multiple regression analysis...
To understand what drives BTC value besides speculation...
Really drill down to understand/predict BTC valuation...
Right now with BTC at $1.00...
My wild guess would be it's >>> 50% pure speculation...
Just people betting it's gonna work.

My approach is not some Mickey Mouse TA bull****.

I've only known about this for 5 days...
In a week or two I will understand this much better...
Subject to my quant analysis over the next 10 days ...
There is nothing stopping me from buying 1% of all BTC...
$60,000 would be < 3% of my hedge fund.

(b) start a hedge fund focusing on crypto-currencies...
(There will be dozens of BTC clones in the next decade...
This will be a classic example of arcane expertise = $$$)...
100% offshore and listed on, say, Irish Exchange...
Or whatever...
Provide a vehicle for people to bet on this space.

(c) develop something that leverages BitCoin design
As a software engineer I'm like 8 out of 10...
Not nearly good enough (I'm better = 9/10 as a trader)...
I'd have to finance/partner...
With a true off-the-charts 10+ engineering genius...
Most of these guys are working for Google or Wall Street.

http://www.cio.com.au/article/380394...avin_andresen/
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Old 04-14-2011, 10:18 PM   #172
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Re: Bitcoins - digital currency

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I'm still utterly baffled by what people are mining with that computing power? Hashes?
Yeah, I think it is just hashes, so much of what it does seems like it has around for a really long time, which is a good thing.

The main part I don't get is how do they verify ownership? Like if I sell you a bitcoin what prevents me from selling it again later? Eliminating that is one of the major reasons why paypal exists and why they can charge a fee. I'm guessing that they distribute the verification as well.... but now the entire network has to be notified when a coin is traded and record that information? Seems like that scales very badly if it starts becoming popular..... It's certainly possible I don't understand something about it though.
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Old 04-14-2011, 10:36 PM   #173
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Re: Bitcoins - digital currency

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BitCoin is still super early, so it's pretty user unfriendly right now, but that can easily change. I'm trying to figure out how this could actually take off mainstream. It needs an easier way for people to buy bitcoins if the economy is to ever expand. But why would people buy them if there's nothing to spend them on?
These are pretty much the key questions. If the internet has taught us anything, it's that being first doesn't guarantee a dominant position in the marketplace (Friendster/Myspace, yahoo, AOL etc). So even if this form of currency becomes hugely popular in the near future (which is unlikely due to political issues and not filling a need that most people have imo) there is no guarantee that Bitcoin won't be replaced.

Last edited by Max Raker; 04-14-2011 at 10:43 PM.
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Old 04-14-2011, 11:18 PM   #174
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Re: Bitcoins - digital currency

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Yeah, I think it is just hashes, so much of what it does seems like it has around for a really long time, which is a good thing.

The main part I don't get is how do they verify ownership? Like if I sell you a bitcoin what prevents me from selling it again later? Eliminating that is one of the major reasons why paypal exists and why they can charge a fee. I'm guessing that they distribute the verification as well.... but now the entire network has to be notified when a coin is traded and record that information? Seems like that scales very badly if it starts becoming popular..... It's certainly possible I don't understand something about it though.
It's timestamped. If you try to double-spend, the system will see that and it will not confirm the later payments. People will not "accept" a transaction as valid until it gets a lot of confirmations. I'm not sure exactly how it works, but the idea is if you wanted to double-spend, you'd need to spend in a block, then build a longer block chain than the rest of the network. This is really, really hard to do unless you can solve blocks faster than everyone else combined.

You don't need everyone to know about the blocks, you need a lot of people to know. They broadcast confirmations on the transactions, and that's enough to know it's good. But the details of how it works, I'm yet to understand.
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Old 04-14-2011, 11:40 PM   #175
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Re: Bitcoins - digital currency

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Originally Posted by TomCollins View Post
It's timestamped. If you try to double-spend, the system will see that and it will not confirm the later payments. People will not "accept" a transaction as valid until it gets a lot of confirmations. I'm not sure exactly how it works, but the idea is if you wanted to double-spend, you'd need to spend in a block, then build a longer block chain than the rest of the network. This is really, really hard to do unless you can solve blocks faster than everyone else combined.
I don't see how timestamps can help since both parties have the timestamp. To make it concrete, let's say I sell you a bitcoin for $1. Niether of us log back in to the platform for a month. In a month I come back and try to sell the same coin I sold you, how do they know I am not you? Naively, whatever information you have has the coin owner I also have as the coin seller. Bittorrent works on the same math principle but, from what i see, ownership is not relevant, just producing the info is all that matters. I am sure this problem is solved, I just am not sure how.

Quote:
You don't need everyone to know about the blocks, you need a lot of people to know. They broadcast confirmations on the transactions, and that's enough to know it's good. But the details of how it works, I'm yet to understand.
Yeah, I guess I only care about the details. I find it interesting theoretically but don't have any desire to use it as of yet. Maybe it's better to move this discussion to SMP...

Last edited by Max Raker; 04-14-2011 at 11:48 PM.
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