Polar Bear mentioned the reason why BitCoin is an inferior currency. It is not recognized and backed up by the laws of the U.S. government. If someone steals from you, you can't go to the government for help. If a bitcoin bank sprang up and you deposited at it, the government would not guarantee your deposit. If the bank went bust, you're out of luck you lose your money. That isn't even to mention that the owners of the bitcoin bank could just take your deposits and skip town and again you can't go to the government for help. Because of this disadvantage noone will deposit at a bitcoin bank and there will therefore be no lending involving bitcoins and in the end this currency will never become widely adopted for actual transactions.

Ironically the one characteristic about bitcoins people think is its greatest advantage is actually the reason for its inevitable downfall.

What is the pre-specified rate of growth for Bitcoins? And if they are growing, who gets the new ones that are created?

Which poker sites operate in Bitcoins? :S

7200 per day for 4 years, then 3600 per day for the next 4, then half after another 4 years, etc...

bitcoins are designed to not be able to be shut down. there is no central website people connect to, everything is done to peer to peer. and if even all the "principals" were arrested, other people can continue the project since its open source.

Worst poem ever

Shouldn't the number of Bitcoins added go up every 4 years instead of down? Because the total number of coins is growing so the new coins added make up less of the total. For the success of the currency I would guess you'd need a small controlled amount of inflation, not a situation where the inflationary rate decreases over time.

Also, I'm still interested in knowing who gets the new bitcoins. It would be smart for the longevity of the currency if only people new to bitcoins were allowed to purchase the new coins. This would help the number of users go up and in turn help the currency.

if you need a few coins pm me

IIRC there will only be a limited # of bitcoins ever available.. something like 21M... so this will not work.. If sites used something like liberty reserve... that might work...

This isn't really true, because each bitcoin at present is split into 1000 pieces and could easily be split further. It is true there is a finite amount, but for example if you said there was a finite limit of 21 trillion would you see a problem? What if you added another zero?

The real issue that doesn't seem like it's going to change any time soon is the stability of the currency.

my thoughts exactly lol... not exactly Sonnet 18 is it

good post.

No, the idea is for a steady money supply, not inflation. This is a feature, not a bug.

You get the new coins by running your computer solving very hard problems. If more people do it, they make the problems harder. This means it will never be super profitable since there are hardware and electricity costs for doing it. You also are logging transactions whenever you create the coins, so you are serving some purpose.

It was good except for all the wrong parts.

It might be true if the government was able to stop cash <-> drug transactions. But they can only slow it down, not stop it. And not even very well.

it was at least the best counter-argument I read. I like counter-arguments for reasons such as: I'm still can't believe a ponzi scheme like groupon just happened. It's mindblowing that they really think they can get away with it.

Also people are putting too much TRUST into this algorithm. Who makes the algorithm? The human designs the equation. So it's not going to be perfect. You have to ask yourself, who do you trust more? The U.S. gov't (and you've seen their stance on embracing the 'new') or this new currency that's been set up by people who are arguing a "fair" currency but I mean, they need to make money right? And they're generating value by selling only a limited # of DIGITAL BITCOINS IF IM NOT MISTAKEN. DIGITAL.

The security is great and whatnot, but I'm not a fan of trading in paper for a digital form that isn't acknowledged by the U.S., a pretty big ****ing powerful government

The bitcoin network validates transactions based on massive peer to peer computing power. This ensures no single entity can amass enough computing power to cheat the network.

The new coins are awarded to the computer which authenticates a block of transactions. Given the mind staggering complexity of the problem most people who participate in the bitcoin network join mining "teams" which split the bitcoin reward (50 bit coins) when a member "solves" the validation problem for the current block.

Cliffs:
Anyone can make a bitcoin it just requires computing power (a lot of computing power).

The algorithm is not that complex. If there's one thing I trust, it's the protocol. The source code is out in the public, there is nothing to hide.

The people who created this already have made tons of money by getting coins when they were easy.

I have no idea why you capitalize the word DIGITAL. It's impossible to create more than 21 million without changing the source code, and if you do that, everyone else on the network will not recognize your transactions as valid.

Yes, the government can make mainstream adoption difficult. It can hammer a few people here and there for using it. But it's very hard to stop completely since it's so distributed, there is no central authority. Everyone has records of every transaction. You need to stomp everyone out, including in other countries, to stop it. This was designed that way for a reason.

At its root the bitcoin validation block is a SHA-256 hash of all transactions in that block. There are no shortcuts. It requrires immensive computing power and can only be solved by brute force (try every possible key until you find a solution).

SHA-256 is crytographically secure and has no know cryptographic flaws despite thousands of cryptolgists research it for a decade. If SHA-256 is broken there will be a lot more problems then just bitcoin. Everything from banking networks to secure webpages to nuclear launch code use SHA and if compromised they would also be compromised.

Lastly bitcoin network adjusts the difficulty of the solution ever 2016 blocks based on how quickly the last block was solved. This is done to keep average solution to about 10 minutes regardless of how much computing power joins the network (both new miners and more powerful computers).

So if you compromised SHA-256 and could solve bitcoin solutions billions of times as fast as anyone else at most you could get all the 50 BTC validation rewards (one every 10 minutes about $108K per day). A trivial amount of money considering you could steal billions from banking networks using the same flaw or simply sell that cryptographic flaw to other criminals for millions.

I love it, I'm just playing Devil's Advocate because I'm clearly not as informed as you are.

That's very cool but even though it is so unlikely, you never know what the major governments are going to argue imo. For instance, wikileaks I would imagine may at least have spread the notion to gov'ts "oh ****, the Internet is really ****ing scary, we should figure out how to control it" Maybe not a novel idea, but I would be surprised if there wasn't some argument for controlling it.

Was it Syria's government that just shut down the internet a couple weeks ago in their country? It's pretty badass, I guess the U.S. has technology where they can somehow support access to the internet via a briefcase (i'm not wording this very well, i'm pretty tired)

It's a funny ponzi scheme and it's real fun to follow how the nerdy fanboys are blinded by the fact that it is peer to peer, distributed, omg-free-from-tyranny-of-evil-banks-and-bilderbergs and everything else that makes nerdy fanboys all over the world drool and have their dicks harden. Yes it is cool, yes it is still just naive children playing with cool new toys, yes it is still a ponzi scheme.

Why? Why would transactions need to be in whole numbers. Bitcoins can be transfers in transactions as small as 0.00000001 BTC.

Bit-torrent, the internet, email were originally all nerdy new "toys". There is significant use for a transaction system controlled by nobody in which transactions can't be faked, reversed, or tracked.

If I trade dollars to bitcoins the govt knows I have bitcoins but not what or where I spent them. If I trade bitcoins for dollars the govt now knows I have dollars but not where I got them from.

So govt will still have some control, they can see the "edge" of the network where current dollar based transaction systems (banking accounts, credit cards, dwolla, etc) connct to bitcoin network but they can't see inside the network. They can't know who has how many coins, where they spent them on, when, or how. That is useful. It bitcoin doesn't provide the solution eventually some other system will.

aside from money laundering, why is bit-coin necessary?

To ensure no cheating the network validates transactions. If I send 10 bitcoins to you the network will eventually verify that transaction making it impossible to "fake" a transaction or reverse it.

That validation requires massive amount of computing power. The network takes all the unverified transactions and attempts to create a hash that matches the solution. The network makes the solution harder based on how quickly the last solution was found so that on average a solution is found every 10 minutes. 10 minutes of the entire computing network trying to solve it. To encourage entities to partcipate (provide computing power, and electricity) a reward of 50 BTC is given to the computer that solves the problem. So the bitcoin monetary supply grows very slowly roughly 7200 BTC per day. The new coins are given to those who validate transactions.

There is no central authority. You don't need permission to attempt to validation transactions. Anyone in the world with computing power can attempt to validate transactions and if they validate a block first they get 50 BTC.

To be clear, are you arguing that all fiat currencies are Ponzi schemes? Or are you making a point about Bitcoin specifically?