This is how I see it is probably wrong. Suppose you own a bitcoin on the blocks. You are have the coin signed and have public encrypted. You sell a coin. You take the persons address. You put on his public key on it remove your public key sign and send it back to the blocks. Since his name is on a later block it is his coin not yours. Timestamps don't matter, it is the location on the blocks.

Max,

One of the keys to your question is public key cryptography. You can easily create a public/private key pair and distribute the public key. This has two main functions: 1) People can encrypt data with the public key but the private key is required to decrypt it. 2) You can sign data with the private key. This last part essentially means you add the signature to the data and anybody with the public key can easily verify that the signature must have been created using the private key. So, when you transfer a bitcoin you sign the transfer order. If I have two transfer orders for the same coin both signed by you, I will believe the one that I received first (see block chain later).

Another part is that, yes, EVERYTHING in Bitcoin is public. Every transaction, every account (called addresses). The system has some smart ways of scaling the size of the data. It deals with privacy because the addresses have no direct link the the identity of the owner. Every address has a public key (the address is a hash of the public key) and a private key.

The last part is the block chain. This is the timestamping mechanism. "Logging" in or out of bitcoin is meaningless to your accounts. When you publish a transfer request, all miners who accept it will add it to the block they're trying to create. The network sets the difficulty of generating these blocks such that one should be created somewhere on the network every ten minutes on average. Every block references its preceding block, therefore must have been created afterwards.

So let's say you DO issue two transfer orders for some coin you have. Your requests will be received by different peers in one order or the other. At this point they are both valid requests. The first hurdle is that some node will succeed in creating a block containing the request that it received first. It will then send this block around the network. Nodes that accept it will start generating blocks that reference it. If the entire network accepts it then that's the end of the "other" transaction. However, now lets say that at almost the same time a different node created a block containing the other transaction. This is a fork in the block chain. These competing blocks will be sent around the network and at this point each node will choose the one that it first received and build on that. This will partition the network with each partition building on one side of the fork. However, eventually one of the sides (usually the side with more processing power) will create and distribute a new block. As that blockchain is now longer (difficulty-wise) than one being created by the other partition, and it is "valid", the nodes on the other side of the partition will accept the longer blockchain and the transaction and blocks they were working on will be dropped.

The "confirmations" you see in the client are simply the amount of blocks in the longest block chain that contain or are chained to your transaction. The longer this chain is, the more stability your transaction has as it becomes computationally infeasible for a inferior partition to catch up.

So, you MIGHT be able to fool two parties into thinking that you transferred them some coin, but after a relatively short amount of time one of the chains will become dominant and one of the transactions will cease to exist. This is why some places will wait for six "confirmations" (or blocks) to be created containing a transaction before they accept it as a done deal.

They know you aren't me because of signatures I think.

Might be decent discussion. I am a cryptography novice, but the topic is interesting.

I'm a crypto novice as well, but is fascinating that it's working. If someone asked me if such a system was possible a year ago, I'd of probably said "almost certainly no, you need some central authority". I want to study it and see how it works, it's fascinating.

I have a much harder time ruling something impossible, but I would have had no idea how to pull it off. Still, I am somewhat nervous that flaws have not been ironed out yet in the idea. There are always unintended things that happen with software.

Thanks. I figured there were public/private keys but I didn't think having every transaction public was feasible but I guess it's not that big of a deal.

I'm not even sure a proof exists that "digital gold" is impossible. Defining digital gold as

1. Has a minimum level of difficulty/cost to create for everybody (no mint).
2. Almost impossible to copy but easy to transfer.
3. Can be verified as authentic locally. No central authority or need to communicate with the network as in bitcoin.

I know there are papers written on quantum money, that can do all of these things except it has to be made by a mint who controls the money supply. Here is my favorite one, since it uses knot theory, but the first half is a good overview of the concept that should be readable even without a math background.

http://arxiv.org/abs/1004.5127

This thread just got more relevant.

+1

The transactions are recorded in a distributed DB. Older transactions can be pruned somewhat. I don't remember exactly, but the estimated annual increase in necessary diskspace was quite small.

https://en.bitcoin.it/wiki/Weaknesses

Some good discussion here, better then most sites I've seen. Poker people must be pretty smart. ;-) Hopefully I can clarify some points.

The core of bitcoin is what I call a distributed notary service. To solve a "block" a computer must solve a difficult problem. A block gets solved approximately every 10 minutes. A block notarizes the bitcoin transactions that occurred in the previous 10 minutes. Once a transaction has been notarized it would be extremely difficult to reverse. An attacker would have to control more than 50% of the processing power running the bitcoin network. Even at this early stage that would require one of the biggest computers in the world (not impossible but already quite hard).

Transactions are done using public key cryptography. To simplify a lot, to spend, you sign the amount and the receiver's address with your private key. The network knows the coin belongs to you because of the sequence of blocks. In fact, the P2P network always knows which public keys own which bitcoins. That's a bit of a downside wrt anonymity but anyone can create more keys and that frustrates tracking money flow.

Finally, we get to mining. I leave it last because many people seem to focus too much on it and get confused. Bitcoin is not really about mining. In order to bring the 21m bitcoin into existence, the currency is inflated according to a pre-determined schedule. Right now people solving blocks get 50 bitcoin per block. This serves to expand the money supply in a relatively distributed fashion. It also gives incentive to the notaries (aka miners) to do their work. Later on in bitcoin's life that notaries will be paid with transaction fees, not with inflation. The montary inflation rate will eventually be zero and notaries will be paid fees based on free market rates.

The entire system is really quite ingenious. I'm not a crypto guy but the cyptographic building blocks are all quite standard. The creative part was putting it all together. It is possible that a crypto weakness will be found in the system. As time goes on, that seems less likely. There are already quite a few smart people studying the system.

Thanks for the info. It is a very interesting topic. Coincidentally, it has become relevant in our neck of the woods because the US government seems hell bent on shutting down online poker in the US.

It only takes a few mins to buy 20 bitcoins.

I'm sitting down at a table at https://betco.in .. it looks a little rough but nothing has broken yet except my gravatar picture.

If anyone has any bitcoins sit down with me, damnit. I'm sitting down at "Ough" .01/.02 holdem just to try it out.

TRying this out right now on betco.in if anyone is interested in super low stakes.

I'll play super low stakes anytime there's three or more people playing, and I'd like to see 25nl, 50nl, or 100nl run as well sometime if someone wants to set up a game once more people have money in bitcoin (Just bought a bunch yesterday).

I'm sitting at a table. Only going to be up for a little while longer though. We should pick a time(s) to try to bump into each other.

The software is really flaky. I don't know if it's really ready for anything but people trying it out. I don't know that html5 is the best technology to build a poker client on. There's a lot of waiting.

I did catch someone with KK while I had AA. +2 BTC! Having your aces hold up makes it automatically better than most poker rooms.

Nice article in TIME today.

http://techland.time.com/2011/04/16/...e-governments/

BTC breaks down for real-time gaming...
Because transactions are finalized every 10 minutes...
So you are back to Old Model...
Site takes BTC deposits and you play your Site Account.

The existing poker site is a primitive version of Old School...
It's some Russian guy working part-time (read his Forum posts)...
So what????

In order to leverage P2P, crypto-currency and poker...
And actually run distributed, anonymous poker...
You have to think about poker differently.

More in terms of Rush Poker...
And breaking everything down into HTH pieces, etc...
That's the "killer app"...
Anyone can run a Poker Server and plug into the network...
Anyone can run a Poker Client and plug into the network...
All machines plugged in can also be a Big Mining Pool.

All I'm saying...
Is you have to re-invent Low Stakes Poker here...
And whoever does it will cash in big-time.

I understand how it is set up and how it works, but I am not sure why anyone should be jumping in on it.

It looks like it is too late to take advantage of initial appreciation. At this point, it depends on whether retailers will accept it as payment, and why would they? Governments regulate payment processors very stringently. That is why payment processing is so shady for poker and small processors get shut down and go to jail regularly. So the Feds can just tell Amazon that if they start accepting it as payment they are in trouble and tell Paypal to stop these transactions and that is the end of Bitcoin - AS A PRACTICAL MATTER. Just because you can send some hypothetical money to some random people doesn't mean much unless you can go to the store and buy stuff with it.

Ok I'm ready to play some real money pokerz for the first time since Friday. Anybody wanna help a brother out and donate? :-D

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Why can't the existing poker sites just accept bitcoins as a payment processor? They'll always be able to operate their software in some country.

I don't see why the poker client has to be p2p. Their biggest problem is receiving payments.

The day they start accepting Bitcoins is the day that Paypal and everybody else shuts of relations with Bitcoins.

Yes, Bitcoins works, but money flow is still regulated by the Feds. Bitcoins are worthless if no retailer and no bank will accept - and those places do what the Feds tell them to do.

I can think of some recent events that might make existing poker sites reluctant...

They aren't worthless as long as other people will pay for them. There are a lot of people paying $1+ per coin right now. Sure, it's gambling, but they certainly aren't worthless right now.