

I have my doubts about Bitcoin - citizenkeys
http://www.cringely.com/2013/09/30/doubts-bitcoin/

======
nwh
This is woefully uninformed.

> _There can be only 21 million Bitcoins ever found or mined, though once
> found ,Bitcoins can be divided into 10^8 small subparts called shitoshis
> which are what’s actually used for buying things._

There's not really a limit to it. You can increase the precision to 64bit if
you really wanted to, 8 decimal places is just arbitrary for the moment.
Values below 0.00005 BTC aren't even spendable though at the moment to avoid
spam, so eight points is hardly a limiting factor.

> _but on the other hand Bitcoins are inflation-resistant because of
> constrained supply and can’t easily be counterfeited, either._

They can't ever be counterfeited actually. At one point an integer overflow
meant that additional ones were erroneously created, but that's been patched
since 2009.

> _Bitcoins, while possibly uncrackable are definitely not unhackable. Mining
> Bitcoins requires the validation of 90 other random miners before your
> Bitcoins are judged real and assignable_

120 blocks to mature, actually. The term "random" makes them sound
untrustworthy, but there's not really much trust put in them either. They
could be as malicious as the author.

> _but what’s to keep me from owning 90+ Bitcoin mining accounts and gaming
> the system?_

Nothing but the cost of doing so, which is the entire point of miners
competing.

> _What if Amazon Web Services simply assigned all unoccupied EC2 cores to
> this task?_

Nothing. EC2 rented servers are far too slow to attack the network at this
point, that's the point of having a faster hashing speed and overall
difficulty.

~~~
mb0
> > What if Amazon Web Services simply assigned all unoccupied EC2 cores to
> this task?

> Nothing. EC2 rented servers are far too slow to attack the network at this
> point, that's the point of having a faster hashing speed and overall
> difficulty. The point he's making is one that was referenced in the original
> bitcoin whitepaper. If one user were to amass more computing resources than
> the honest users, that person would have the ability to over-ride the
> transaction record. This however would incredibly difficult given the global
> hashrates are probably coming close to terahash/sec levels. If one extremely
> wealthy person wanted to, they could get butterfly labs' developers to sell
> them the design for their new 600ghash/sec mining card, then go on to fill a
> datacenter with systems that have several of those cards in each of their
> systems.

Consider what the following could do:

1) Supermicro X9DR3-F - server board with 3 pci-e x16 slots

2) Any 2U supermicro chassis

3) 3 Butterfly labs Monarch cards per server

4) 48U cabinet

Those cards mine at 600ghash/sec, put 3 of them in a single server, and the
single system can mine at 1800ghash/sec, or 1.8thash/sec/server. Fill a 48U
rack with 24 of those systems, you're mining at 43.2thash/sec. Fill 10
cabinets with these systems, and you're mining at 432.0thash/sec.

~~~
nwh
Possibly, but those devices don't exist. Given ButterFly Lab's record (12+
months late), I don't expect them to exist any time in the near future. The
Monarch cards are very much stretching what a normal motherboard would be able
to handle anyway, probably up to the point where you could only have one per
board.

------
sidko
1\. It's a free market. If it begins to cost more to mine Bitcoin than it is
worth (considering all costs into consideration), more people will start
exchanging fiat into Bitcoin and fewer people will mine. This will reduce the
mining difficulty while increasing the BTC/USD rates.

2\. You got to be kidding. The fastest US supercomputer is about 18 peta
flops. The world's fastest is about 35 peta flops. The Bitcoin network
difficulty crossed 12,000 petaflops or around that range, depending on how you
calculate it.

3\. The first mover advantage is a disadvantage because you might think of a
situation where some legal entity in some country might think of outlawing
Bitcoin without ever figuring out how to enforce it?

4\. If finance were about compassion, there wouldn't be thousands of people
dying of hunger while we have bajillions of tons of food literally destroyed
in other parts.

You've mentioned the 'bad' parts, without much merit, IMO. You didn't consider
the better cases, let alone the best. Everything from escrow payments to
digital identity to autonomous agents is encoded in the protocol that is yet
to be implemented. Bitcoin isn't a gold replacement or a cheaper credit card,
it's a fundamentally different way of thinking about finance and economics.

You should have your doubts about Bitcoin when there's a better competitor out
there.

~~~
pionar
There is a better competitor - real money. The fluctuations in Bitcoin are way
too risky for any serious investment (between $120 and $150 in just a month?
No thanks!)

~~~
ferdo
In its short life, Bitcoin has outperformed every other asset on the market
and is holding its value. It's up almost 10x from where it was this time last
year.

~~~
ars
That's not actually considered a good thing when it comes to currencies (as
opposed to commodities).

~~~
ferdo
That may be true for money issued by a central authority. Bitcoin appears to
upset a few apple carts as far as conventional wisdom goes.

------
damian2000
He fails to mention the two biggest weaknesses of Bitcoin (in my uninformed
opinion) :-

\- The stability and security of the various online exchanges

\- The relative difficulty of converting BC to/from cash

~~~
javert
> \- The stability and security of the various online exchanges

The exchanges are not "part of" Bitcoin. Shitty exchanges will go out of
business, good exchanges will survive.

The only thing that can interrupt that is government regulation. For example,
the best US exchange that I know of, CampBX, doesn't have much competition,
because nobody wants to spend millions of dollars to get money transmitter
licenses in all 50 states.

Government regulation could also simply make bitcoin exchanges illegal.

So if you replace this point with "government regulation," I would agree.

Of course, not all governments will outlaw Bitcoin. Those that don't will have
a potential economic advantage. This creates a game theoretical situation
where it's in every country's interest to just allow it. (Of course,
governments do not act in self-interested ways.) Regardless, it would be hard
to outlaw bitcoin _everywhere_.

> \- The relative difficulty of converting BC to/from cash

Coinbase.com is really good for converting money in your bank account to
bitcoin and vice versa. That model is sufficient, in my mind.

Credit and debit cards are a good analogy for "using bitcoin for everyday
transactions." Nobody has complained that you can't convert cash into money on
your debit or credit card.

~~~
etherael
I must admit though, these criticisms are _billions_ of times more valid than
the ones in the article. Though you do a good job responding to them.

------
mithras
>Bitcoins can be divided into 10^8 small subparts called shitoshis

Stopped reading there, do some research. First off they are calles satoshis,
also that limit is far from hard.

~~~
AJ007
Shitoshis, I think he was actually researching Buttcoins.

------
droopyEyelids
We've passed the point where superficial (non-technical) analysis of Bitcoin
can add anything useful to the discussion.

Right now, we need thought put into the permanent, public history of the block
chain and how that accountability, fully harnessed, will interface with the
power structures of the world. It's an unfathomably complex topic.

~~~
bcoates
Given the massive, long-term and apparently ongoing breaches at major data
collection agencies, a complete leak (to the public) of _non_ -pseudonymous
transaction history for any given credit card has probably either already
happened or it's just a matter of time. You probably shouldn't use a credit
card or checking account to do anything you wouldn't put a picture of on
Twitter.

There seem to be a lot of forces that make it impractical for institutions to
keep secrets of any kind secret. This does not seem to be stopping said
institutions from acquiring vast volumes of sensitive data. The volume of data
used to be a practical limit on it becoming public, but that's fading fast
too. This is going to get weird before it gets better.

~~~
hendzen
I would be more concerned about CC agencies selling the data. I'd rather have
the data public than only available to large corporations.

~~~
dmix
Rewards cards are 100% about selling/analyzing that data.

There are billion dollar publicly traded companies who specialize in mining
consumer data (something for example, highly valuable in pharmaceuticals).

I'd be curious to see the laws preventing CC companies from doing the same.
Most likely the data is anonymized when sold.

"Big-data" marketing is heavily at work in the background of our society.

------
JackMorgan
I read somewhere a post where the author figured the amount of bitcoins the
creator likely owns, and that it would be enough to vastly devalue the
currency if he ever wanted to sell. I thought it was Schneier's blog, but now
I cannot find it. Does anyone have the source?

------
etherael
This is just wrong. The analysis he links to on the profitability of mining is
based on litecoin, he claims it's the same, but it's simply not.

Quick calculations on bare avalon chips with a 100k investment gives a current
ROI of _4 days_ , this does not account for risk, does not account for setting
up the chips, etc etc etc. However, it is indicative of the idea that the
pursuit would be "unprofitable" is pretty insane.

The 90+ bitcoin mining accounts giving you the ability to game the system is
even worse, it's like he doesn't have the faintest idea of how bitcoin mining
even works. I should go hook up 1000 fake SETI@home accounts and reap the
massive kudos for my epic performance this will surely provoke. What the hell?

In 3, he goes back to cheerlead for litecoin, even though in 1 he proved the
mining of litecoin wasn't even profitable. Simultaneously acknowledging that
any state attempts to ban bitcoin in a given jurisdiction won't actually be
effective at any rate.

And 4 basically says "Because I'm a keynesian". Well, that's nice, go buy
freicoins or some other cryptocurrency that supports your pet economic theory,
there are likely dozens by now. Nobody else wants to be forced onto an
inflationary store of value and will not accept your McBucks? You don't say,
maybe there's something to be learned from that.

~~~
ars
> Quick calculations on bare avalon chips with a 100k investment

Does that include the electricity?

~~~
nwh
Which with avalon gear is a huge cost; something like 8W/GH.

