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How To Use Bitcoin – The Most Important Creation In The History Of Man

Discussion in 'General Discussion' started by Anonymous, Jun 1, 2011.

  1. Anonymous Member

    Libertarian News reports:
    Recently I wrote an article entitled The Most Dangerous Creation In The History Of Man. The article covered the emergence of Bitcoin; an electronic peer-to-peer currency that has no central banking server, is untraceable, and essentially can not be taxed through coercive measures. The article makes the point that if a currency can not be taxed and controlled, eventually it will topple the coercively funded fascist control grid you call the modern State. Read more about it in this Bitcoin forum post that explains it in more detail.

    I’ve received several requests for more information about how people can put Bitcoin to work for them. Most articles on Bitcoin, and even the Bitcoin site itself, don’t give a clear top to bottom description of how common users of Bitcoin can put the currency to use.
    The article goes on to explain how to use the new currency and why it is superior to all other currencies in existence.

    This will change the face of the planet.
  2. Anonymous Member

    Im mining already. Since febuary the exchange has gone from $1.62 to $8.45 - And you can buy stuff on Amazon! Pure. Win.
  3. moarxenu Member

    I was all set to be skeptical but then discovered that Reason.com wrote on this and created a vid with Jerry Brito of the Mercatus Center at George Mason University, whom I respect. Worth considering seriously.

    http://reason.com/blog/2011/06/01/reasontv-bitcoin-the-end-of-st

    Reason.tv: Bitcoin & The End of State-Controlled Money - Q&A with Jerry Brito

    Nick Gillespie & Joshua Swain | June 1, 2011

    Bitcoin is the world's first fully decentralized, peer-to-peer (p2p) virtual currency. It allows users to make anonymous and untraceable cash transactions anywhere in the world without any sort of real-world intermediary. So unlike PayPal and other online services, it can't be squeezed in the same way by governments or other control agents.
    Created in 2009 by a shadowy figure who goes by the name Satoshi Nakamoto, there are currently about 6 million bitcoins in circulation. That number will eventually rise, in regular intervals, to a total of 21 million by 2033. A money system without any sort of central bank? A currency whose supply increases at a steady and predictable rate according to a concept elucidated by the Nobel laureate economist Milton Friedman?
    Just how revolutionary is Bitcoin?
    Reason.tv sat down with Mercatus Senior Research Fellow Jerry Brito to learn how Bitcoin operates and what the implications are for traditional state-based fiat currencies. “Whether Bitcoin succeeds or fails is neither here nor there,” says Brito, who predicts that currencies in the future will almost certainly be deregulated and decentralized - with or without governments’ consent.
    Read Brito on Bitcoin here and here. For responses to his critics and more info on Bitcoin, go here.
    About 2.30 minutes.
    Interview by Nick Gillespie; shot and edited by Joshua Swain.
    • Like Like x 2
  4. Anonymous Member

    Interesting. Thanks op and moarxenu for this.
  5. Anonymous Member

    Hmmm. Interesting. For those of us that are lazy, if this a means like PayPal that makes it easier to transfer money to companies or whatever so as to buy something, or is it only useful to transfer money to other people (i.e other people using the same system)?
  6. SwordofTruth Member

    Whilst I do like the idea and it being safe from outside influence and manipulation, with this in mind though I will always stack and lean towards physical over digital and fiat, especially with the way every economy is and is heading.
    • Like Like x 1
  7. Anonymous Member

    No. Bitcoin is a ludicrously bad idea. It is a scam. A Scam. It is not a currency. The economic assumptions underpinning the Bitcoin ecosystem are laughable, and ignore hundreds of years of accumulated understanding of how currencies work with each other.

    Fortunately, it's such an obviously flawed system that it will probably never grow to a point where it causes any ill-effects,or even impact, to world economies.

    Still, I feel like it's worth pointing this out.

    Bitcoin, described most generously, is a system that makes digital transactions more like cash transactions. That's...fine. The problem is it does this not by offering dollar-denominated digital cash-transfers, but by bootstrapping an entirely new currency. The question to ask is why this would be at all desirable. Maybe you hate the US government, or all governments. Maybe you want to avoid bank interchange fees, or perhaps avoid tracking altogether because your payment is for something illegal, or because you're a particular private person. Or perhaps you just think that the world currency regime is going to collapse and you see Bitcoin as a technological salvation.

    No matter what your reasoning, Bitcoin is a ridiculous idea that will not accomplish what you want.

    Severe Problem Number 1: Seeding Initial Wealth

    When the federal reserve "prints money", it doesn't just mail million-dollar checks to random Americans. It does one of two things. It either (a) purchases some other asset [generally US treasury bonds] on the free market, thereby injecting more cash into the system than there had been before, or (b), loans money to a bank, who will then loan it to other people who will then spend it.

    Importantly, the people on the other end of those transactions did not just get free money. They either sold an asset for cash, or they borrowed cash that they will eventually repay (with interest).

    Bitcoin does not have a central bank capable of printing and lending bitcoins; it has an "algorithm" which through some convoluted mechanism allows bitcoins to be "mined". Essentially it randomly allocates bitcoins to early adopters. This is a very good system for early adopters (free money!) It is a nonsensical system for a real currency, not to mention being obviously unscalable (what happens when everyone tries to mine bitcoins all day long?). To solve this second problem, the supply of bitcoins is algorithmically limited, which is again good for early adopters. But that brings us to...

    Severe Problem Number 2: Built in Deflation

    Economics lesson time! Deflation is the phenomenon where cash grows in value relative to everything around it (that is, prices go down). More specifically, deflation occurs when people expect the value of cash to grow in relative value to everything around it, and prices trend down consistently.

    Question: if your money is getting predictably more valuable, why would you want to spend it? Answer: marginally speaking, you wouldn't.

    The supply of bitcoins is programmed to grow at a known but decreasing rate over time, topping out relatively quickly at about 21M.

    But Bitcoin is not designed to be a functioning currency, it's designed to enrich early adopters. Again, that is why it is a scam. Period.

    As a quick thought experiment, let's say demand for bitcoins grew as more people found out about them. Well, you'd expect the price of Bitcoin in dollars to grow rapidly. Now assume I own one bitcoin. I also have a dollar bill. I would like to purchase a Pepsi. Which one of those will I spend? Obviously the devaluing dollar gets spent before the skyrocketing bitcoin.

    In the best case scenario [the one where it becomes popular] the limited supply of bitcoins will cause crippling deflation, drying up most Bitcoin-denominated commerce save whatever speculative buying and selling happens on exchanges. Some new world order. All that transparency and all those low interchange fees aren't going to do you much good if you don't ever want to spend these things and no one wants to give them to you anyway.

    Severe Problem Number 3: Lack of Convertibility

    There is a common misconception among people that there is such a thing as an inherent value of money. There is no such thing. Paper assets are literally only valuable to the extent they can be exchanged for other paper assets. A dollar is worth a certain number of euro cents. A euro is worth a certain number of yen. A yen is worth a certain number of dollars. A dollar can be put in a bank for a certificate of deposit, which can then be exchanged for a dollar. It can be turned into a cashier's check or a personal check, and then converted back to cash or deposited. It can be converted to traveler's checks which can then be converted to yen on your vacation. Even if you spend your money and buy a sandwich, the sandwich stop only took that money because it was convertible to something else, such as his payroll check and then his bank account. Paper <--> Paper <--> Paper. All the same, all different. It's a beautiful circular equilibrium. Envision a tee-pee. Paper assets are the poles; they fall over by themselves, but leaning against each other they form an edifice.

    The critical point here is that exchange rates might change, but they never go away completely. The term in economics is "convertibility". For Bitcoin to work as a currency, it would have to act as a predictable store of value, which means it needs to be easily convertible to all other stores of value depending on an individual's needs or wants. It needs to be a part of that tee-pee. It isn't.

    The problem here is that because Bitcoin is completely decentralized, no one is completely invested in the long-term success of the system. No one is literally making the market, saying "no matter what happens, I'll buy Bitcoins from you at some price". I understand that there are "exchanges" floating around. Their commitment to this market is (in my opinion) not credible. Anyone and everyone can just pick up their ball and leave.

    As a result, my ability to turn a bitcoin into a dollar or a euro or a yen is no greater than my ability to sell my laptop on eBay. I can probably do it, but that doesn't mean I'm going to start measuring my bank account in MacBook Pros, because one day I might not be able to find a buyer, and then what?

    Because of this, Bitcoin is not really a currency, it's an asset [and a particularly useless one at that]. It is being marketed as a currency to appeal to people who are crazy, idealistic, or afraid, and it is a scam.

    Severe Problem Number 4: When Something Goes Wrong, It Will Die

    In the early days of the great depression, some Americans started to worry that if their bank closed, they would lose all of their money. They then tried to take money out of banks all at the same time, which actually caused some banks to fail. That made even more people nervous, which caused even more banks to fail. That's called a bank run, and for obvious reasons we want to avoid them.

    After that happened, the US government started explicitly guaranteeing savings deposits (as well as implicitly guaranteeing other forms of financing, see Bush, Obama et all, "Bailouts", 2008). Despite everyone's frustration with this state of affairs, it turns out to be vastly preferable to a complete collapse of our banking system, so it continues on.

    Now, fast forward five years. The Bitcoin economy is roaring! Everybody owns these things. Life is great. But then...something goes wrong. Maybe it's a slight hardware glitch. Maybe there's a rogue node somewhere in the system that causes transaction delays. Maybe some people were storing their bitcoins on Amazon Web Services and they lost it when it crashed again. It doesn't really matter what: something will eventually go wrong, and Bitcoin will be tested.

    Will it pass this test? People will get nervous. Some will panic. Few will run for the exits. The exchange rates will dip. Others will get nervous. Some will realize they never really had faith in the system to begin with. That will make them really nervous. Who is going to step in to backstop this system?

    More importantly, is there anyone that even CAN do that? When a bank collapses, the federal reserve can honor deposits by quite literally printing money and giving people their cash back if need be. That slight increase in expected inflation (maybe) is a small price to pay for avoiding a financial meltdown. In the Bitcoin economy, that's literally impossible. It's decentralized; it's a published algorithm. No one can change it, and even if they could, it's no one's job to do so. Anyone with a large stake in Bitcoin will be too busy trying to get their own money out to worry about systemic risk.

    Bitcoin (and really, any e-currency) is inherently unstable. And with currency, stability is everything.

    In Conclusion
    So, do I think Bitcoin is a good idea? The cryptography system seems to have technical merit although I'm not a cryptologist. If it were thoughtfully integrated into a legitimate banking product it might be a good idea. But this is not a good idea, this is a scam. Someone out there is trying to become very rich off of this system, and anyone who participates will be playing hot-potato until the inevitable collapse.

    Do. Not. Buy. These.

    http://www.quora.com/Is-the-cryptocurrency-Bitcoin-a-good-idea
    • Like Like x 9
  8. moarxenu Member

    Hey, thanks anon! Great to get data from both sides.
    • Like Like x 2
  9. LocalSP Member

    From Gawker, a way to spend you Bitcoin.

    Gawker
    136,379 views, Jun 1, 2011 1:14 PM

    Full size
    xlarge_0601_silkroadnew.jpg
    exclusive
    The Underground Website Where You Can Buy Any Drug Imaginable

    80916_32.jpg Adrian Chen — Making small talk with your pot dealer sucks. Buying cocaine can get you shot. What if you could buy and sell drugs online like books or light bulbs? Now you can: Welcome to Silk Road.
    About three weeks ago, the U.S. Postal Service delivered an ordinary envelope to Mark's door. Inside was a tiny plastic bag containing 10 tabs of LSD. &quot;If you had opened it, unless you were looking for it, you wouldn't have even noticed,&quot; Mark told us in a phone interview.

    Full size
    medium_0601_silkroad2.jpg
    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 &quot;check out.&quot; 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.
    &quot;It kind of felt like I was in the future,&quot; Mark said.

    Silk Road, a digital black market that sits just below most internet users' purview, does resemble something from a cyberpunk novel. Through a combination of anonymity technology and a sophisticated user-feedback system, Silk Road makes buying and selling illegal drugs as easy as buying used electronics—and seemingly as safe. It's Amazon—if Amazon sold mind-altering chemicals.
    Here is just a small selection of the 340 items available for purchase on Silk Road by anyone, right now: a gram of Afghani hash; 1/8th ounce of &quot;sour 13&quot; weed; 14 grams of ecstasy; .1 grams tar heroin. A listing for &quot;Avatar&quot; LSD includes a picture of blotter paper with big blue faces from the James Cameron movie on it. The sellers are located all over the world, a large portion from the U.S. and Canada.
    But even Silk Road has limits: You won't find any weapons-grade plutonium, for example. Its terms of service ban the sale of &quot;anything who's purpose is to harm or defraud, such as stolen credit cards, assassinations, and weapons of mass destruction.&quot;
    [IMG]Getting to Silk Road is tricky. The URL seems made to be forgotten. But don't point your browser there yet. It's only accessible through the anonymizing network TOR, which requires a bit of technical skill to configure.
    Once you're there, it's hard to believe that Silk Road isn't simply a scam. Such brazenness is usually displayed only by those fake &quot;online pharmacies&quot; that dupe the dumb and flaccid. There's no sly, Craigslist-style code names here. But while scammers do use the site, most of the listings are legit. Mark's acid worked as advertised. &quot;It was quite enjoyable, to be honest,&quot; he said. We spoke to one Connecticut engineer who enjoyed sampling some &quot;silver haze&quot; pot purchased off Silk Road. &quot;It was legit,&quot; he said. &quot;It was better than anything I've seen.&quot;
    Silk Road cuts down on scams with a reputation-based trading system familiar to anyone who's used Amazon or eBay. The user Bloomingcolor appears to be an especially trusted vendor, specializing in psychedelics. One happy customer wrote on his profile: &quot;Excellent quality. Packing, and communication. Arrived exactly as described.&quot; They gave the transaction five points out of five.
    &quot;Our community is amazing,&quot; Silk Road's anonymous administrator, known on forums as &quot;Silk Road,&quot; told us in an email. &quot;They are generally bright, honest and fair people, very understanding, and willing to cooperate with each other.&quot;
    Sellers feel comfortable openly trading hardcore drugs because the real identities of those involved in Silk Road transactions are utterly obscured. If the authorities wanted to ID Silk Road's users with computer forensics, they'd have nowhere to look. TOR masks a user's tracks on the site. The site urges sellers to &quot;creatively disguise&quot; their shipments and vacuum seal any drugs that could be detected through smell. As for transactions, Silk Road doesn't accept credit cards, PayPal , or any other form of payment that can be traced or blocked. The only money good here is Bitcoins.
    Bitcoins have been called a &quot;crypto-currency,&quot; the online equivalent of a brown paper bag of cash. Bitcoins are a peer-to-peer currency, not issued by banks or governments, but created and regulated by a network of other bitcoin holders' computers. (The name &quot;Bitcoin&quot; is derived from the pioneering file-sharing technology Bittorrent.) They are purportedly untraceable and have been championed by cyberpunks, libertarians and anarchists who dream of a distributed digital economy outside the law, one where money flows across borders as free as bits.
    To purchase something on Silk Road, you need first to buy some Bitcoins using a service like Mt. Gox Bitcoin Exchange. Then, create an account on Silk Road, deposit some bitcoins, and start buying drugs. One bitcoin is worth about $8.67, though the exchange rate fluctuates wildly every day. Right now you can buy an 1/8th of pot on Silk Road for 7.63 Bitcoins. That's probably more than you would pay on the street, but most Silk Road users seem happy to pay a premium for convenience.
    [IMG]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 place to buy drugs. Silk Road's administrator cites the anarcho-libertarian philosophy of Agorism. &quot;The state is the primary source of violence, oppression, theft and all forms of coercion,&quot; Silk Road wrote to us. &quot;Stop funding the state with your tax dollars and direct your productive energies into the black market.&quot;
    Mark, the LSD buyer, had similar views. &quot;I'm a libertarian anarchist and I believe that anything that's not violent should not be criminalized,&quot; he said.
    But not all Bitcoin enthusiasts embrace Silk Road. Some think the association with drugs will tarnish the young technology, or might draw the attention of federal authorities. &quot;The real story with Silk Road is the quantity of people anxious to escape a centralized currency and trade,&quot; a longtime bitcoin user named Maiya told us in a chat. &quot;Some of us view Bitcoin as a real currency, not drug barter tokens.&quot;
    Silk Road and Bitcoins could herald a black market eCommerce revolution. But anonymity cuts both ways. How long until a DEA agent sets up a fake Silk Road account and starts sending SWAT teams instead of LSD to the addresses she gets? As Silk Road inevitably spills out of the bitcoin bubble, its drug-swapping utopians will meet a harsh reality no anonymizing network can blur.
    Update: Jeff Garzik, a member of the Bitcoin core development team, says in an email that bitcoin is not as anonymous as the denizens of Silk Road would like to believe. He explains that because all Bitcoin transactions are recorded in a public log, though the identities of all the parties are anonymous, law enforcement could use sophisticated network analysis techniques to parse the transaction flow and track down individual Bitcoin users.
    &quot;Attempting major illicit transactions with bitcoin, given existing statistical analysis techniques deployed in the field by law enforcement, is pretty damned dumb,&quot; he says.
    • Like Like x 2
  10. veravendetter Member

    • Like Like x 2
  11. Herro Member

    Somewhere, the ghost of adam smith has a boner. Good analysis.
    • Like Like x 1
  12. Jippo Member

  13. Anonymous Member

  14. Anonymous Member

    Wot about Mephedrone I used to have 48 hour fuks sessions with my girlfriend when we was bolloxed on meow (when it was £10 and legal)
  15. Anonymous Member

    U.S. Senators Want to Shut Down Bitcoins, Currency of Internet Drug Trade
    PCWorld Jun 10, 2011 1:58 P

  16. The Economics Of Bitcoin – Why Mainstream Economists Lie About Deflation

    As many of my regular readers know, I’ve already written a few articles on Bitcoin that explain whyit is money. In those articles I have addressed why the inherent properties of Bitcoin give it value as a medium of exchange. One of those properties that I mentioned, but did not go into very deeply, is the deflationary aspect of the currency system.

    Bitcoins are inherently deflationary as a currency because they will eventually top out in the number that can be produced. Eventually total Bitcoin circulation will reach about 21 million coins, and after that, no new coins can be created. Thus, if no new money can be created, yet if the productive capacity of the economy increases, prices will fall since there will be more goods chasing the same amount of coins.

    Most people remember hearing that deflation is just as bad (or worse) than inflation from their high school or college economics teachers. In this article I will explain why those assumptions are wrong. Deflation is when a currency gains value over time (i.e. you need less and less of it to buy the same amount of goods in the future).

    So let’s list off the reasons why crackpot Keynesian economists think deflation is bad for the economy. Then I will address each of those points. You are about to see a guy with a BBA in MIS smash a Noble prize winning PhD economist’s arguments using simple common sense.

    Deflation is supposedly bad because:

    There are actually three different reasons to worry about deflation, two on the demand side and one on the supply side.
    So first of all: when people expect falling prices, they become less willing to spend, and in particular less willing to borrow…even a zero rate may not be low enough to achieve full employment.
    A second effect: even aside from expectations of future deflation, falling prices worsen the position of debtors, by increasing the real burden of their debts.
    Finally, in a deflationary economy, wages as well as prices often have to fall – and it’s a fact of life that it’s very hard to cut nominal wages — there’s downward nominal wage rigidity.

    Those arguments against deflation are typical Keynesian dogma. In fact I actually wrote out the exact same three arguments before I even read Krugman’s article, but I figured it would be better if I listed them off right from the horse’s mouth.

    The article is longer than 10,000 characters but it explains why all of those assumptions are economic fallacies.

    Anyone claiming that inflation is necessary for an economy or that deflation somehow creates unemployment is essentially making the claim that counterfeiting is good and necessary for an economy. There is no difference. Clearly such claims are utterly preposterous.

    Continue reading here.
    • Like Like x 1
  17. I like the concept of a system that isn't controlled by any type of authority figure. But until Bitcoins become more stable or a more viable option is offered...I will stick to the gubberment money...
  18. SwordofTruth Member

    So someone hacked into Bitcoins biggest exchange Mtgox, change shit loads of user information including passwords, then had access to someones bitcoins they then put in an order to sell these bitcoins. This triggered loads of purchases at this new price which caused the trading value of Bitcoins to fall to $0.01.

    The trading exhange shut things down, last I heard they were attempting to secure the system and get people back into their accounts. Then they will fix the price of Bitcoins at $17.5 and allow trading to continue. So Bitcoins are supposed to have no central authority, nearly all trades apparently go through this website and now they are fixing they value of Bitcoins. It's supposed to be run on everyones computers making it "unhackable" with no central system, doesn't sound so free market.
  19. SwordofTruth Member

  20. PresidentShaw Member

    So, you put your computing power to work, making complex calculations that have no real purpose, and you get bitcoins in return?

    Now you want more bitcoins, so you buy or rent more computer hardware to make it possible. You spend real money on that hardware. You become quite addicted to the idea of having more bitcoins in your wallet.

    You keep buying buying buying more hardware to be a top miner.

    Now the question I ask myself is, who profits from this?
  21. Probably a kid in a bedroom somewhere who find a way to hack it to bits, pun intended, virtual money? Really safe!
  22. The Wrong Guy Member

    'Zerocoin' Add-on For Bitcoin Could Make It Truly Anonymous And Untraceable - Forbes

    By Andy Greenberg

    Many users of the crypto-currency Bitcoin see it as the first fully anonymous and untraceable currency. It’s not. But with the addition of a clever piece of code called Zerocoin, it could still fulfill that dream of truly private payments.

    Zerocoin, the work of a a group of cryptographers at John Hopkins University who plan to present their system at next month’s IEEE Security and Privacy conference in San Francisco, offers an extension to Bitcoin that would make the task of identifying Bitcoin users or tracing their transactions nearly impossible. If adopted by enough of the Bitcoin network, Zerocoin’s inventors believe it could become a fundamental upgrade to Bitcoin’s code, integrating itself into the currency and solving what many see as privacy flaws in Bitcoin’s current implementation.

    “A lot of people have tried to make systems of anonymous digital cash over the years, and they’ve failed. Bitcoin has almost made it, but it’s come just a little short,” says Matthew Green, the computer science professor who designed Zerocoin along with graduate students Ian Miers and Christina Garman. “How do we get it that last 10% of the way? It’s taken us nearly two years to come up with the answer, and this is what we’ve got.”

    Continued at
    www.forbes.com/sites/andygreenberg/2013/04/12/zerocoin-add-on-for-bitcoin-could-make-it-truly-anonymous-and-untraceable/
    • Like Like x 1
  23. DeathHamster Member

    http://www.theregister.co.uk/2013/04/11/bitcoin_currency_meltdown/
  24. Anonymous Member

    http://mises.org/daily/6399/The-Moneyness-of-Bitcoins
  25. genoramix Member

  26. Anonymous Member

    It's going to be interesting to see how it develops over time. It's like watching the creation of a new form of money, .Will it be accepted or will it fail?
    Hell if I know, but it'll be interesting to watch.

    And as long as places like Iran and Cyprus need ways to get around currency restrictions, then having a cryptocurrency will help them survive.

    also, see
    https://whyweprotest.net/community/...ion-in-the-history-of-man.89159/#post-2294477
    • Like Like x 1
  27. Me too. I am fascinated by this.

    It seems to have a few issues but I love the anonymity and the big FU to the gummint. It will probably pave the way for a better system
    • Like Like x 2
  28. Anonymous Member

    I've been hearing the anonymity is not what you think, that with a warrant and IP stuff that all of the transaction can be traced. Not sure who to believe on that.

    and here's an interesting article about if BitCoins actually can be considered money
    http://mises.org/daily/6399/The-Moneyness-of-Bitcoins
  29. Anonymous Member

    Mine have gone missing : (
  30. Anonymous Member

  31. Anonymous Member

    • Like Like x 1
  32. This video does not exist?

    lol, What video? The video that never existed and was removed? How exactly does one remove a non=existent video?

    This post does not exist either then..........
  33. You don't exist man
    • Like Like x 1
  34. The Wrong Guy Member

    Firesign Theater - How Can You Be Two Places At Once When You're Not Anywhere At All?

    • Like Like x 2
  35. The Wrong Guy Member

    How porn links and Bernanke snuck into Bitcoin's code

    Once a message makes it into site's ledger it can't be removed

    Here's a little-known quirk of cyber currency Bitcoin: There are coded messages hidden in the ledger that track Bitcoin transactions. Most are innocuous, but this week, the discovery of a malicious transmission filled with porn links set the Bitcoin community abuzz.

    Bitcoin, a four-year-old digital currency developed by a hacker who still remains anonymous, is a favorite plaything of libertarians and cryptography geeks. It burst into the mainstream this year when investors took note of its wild price swings. One bitcoin is now worth around $112, down from a record high of $266 last month, but up from $5 a year ago.

    At the core of the bitcoin network is a database recording every single transaction.

    Bitcoin enthusiasts have long known about a technical loophole that allows people to inject coded messages into the database. The trick is typically used for pranks or harmless notes, but Bitcoin discussion boards lit up on Monday with the news that someone took advantage of it for a nastier purpose: adding encoded links that claim to lead to porn sites, some featuring children. (CNNMoney verified that the links exist in Bitcoin's database, but did not check to see if they actually went to child porn sites.)

    A technical analysis posted on BitcoinTalk.org delves into the details. There doesn't seem to be much danger for the casual Bitcoin user. The porn links are concealed in hexadecimal code, and a decoder is needed to translate them into English. In other words, you'd really have to be looking for it.

    But once a message makes it into the Bitcoin ledger, it can't be removed.

    "There are very large ramifications to filtering out transactions, even ones that are obviously data spam," Jeff Garzik, a developer who works on Bitcoin's core software, wrote in a blog post responding to the porn discovery.

    Continued at
    www.wbaltv.com/news/money/how-porn-links-and-bernanke-snuck-into-bitcoins-code/-/9379180/19993378/-/format/rsss_2.0/-/9epj7sz/-/
    • Like Like x 1
  36. Budd Member

  37. Anonymous Member

    no it doesn't, actually. The price fluctuations are part of the process. It is a highly speculative investment, but with fiat currency at the mercy of Helicopter Ben and his ilk, BC might supplant national fiat currency as the way to go.

    BitCoins may or may not pan out (pun intended) but they are a fascinating new idea in money
    • Like Like x 2
  38. Anonymous Member

    • Like Like x 1
  39. The Wrong Guy Member

    The coming political battle over Bitcoin - The Washington Post

    By Timothy B. Lee, May 15, 2013

    Given that Bitcoin first broke into mainstream attention when Gawker explained how to use it to buy drugs, perhaps the surprise is that it took federal regulators this long to take action against it.

    In the wake of the Gawker story two years ago, Sen. Chuck Schumer (D-N.Y.) described Bitcoin as an “online form of money laundering” and called for the authorities to shutter the Bitcoin-based drug market Silk Road. Yet until recently, the feds have taken a relatively hands-off posture. Agencies have issued guidelines and signaled that they are monitoring the situation, but none have taken active steps to force Bitcoin intermediaries to comply with federal regulations.

    That hands-off stance may have started to change this week when the feds took action against Mt. Gox, the world’s leading Bitcoin exchange. Many people use Dwolla, a PayPal-like payment network, to send dollars to their Mt. Gox accounts. They then use those dollars to buy Bitcoins. On Tuesday, Dwolla announced that it had frozen Mt. Gox’s account at the request of federal investigators. It’s the first federal action against the currency.

    CNet has confirmed that the asset seizure was initiated by Homeland Security Investigations, a division of Immigration and Customs Enforcement. Among other things, that agency has the power to enforce laws against money laundering and drug smuggling.

    Continued at
    www.washingtonpost.com/blogs/wonkblog/wp/2013/05/15/the-coming-political-battle-over-bitcoin/
    • Like Like x 1

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