The last time this address was touched was 2009, and has an even 8,000 coins (back in the day, this only amounted to 320 mined blocks. You could do that in what?... a few hours/half days?[1])
The owner probably ran his system for a few hours, collected 8000 coins, thought it was a ridiculous concept and deleted everything from his system.
This seems like a fundamental flaw in the currency that makes it's deflationary properties worse.
Let's say bitcoin is to last a century, over time, there will be gradual losses to all kinds of problems, like hardware failures, owner errors, etc that cause lost of wallets, and thus, coins, forever.
There's no way to replace these, so over time, the total number of coins it not only limited, but after the last bitcoin is mined, it must decrease.
This suggests to me that bitcoin is a marvelous experiment that finally proved that such a currency is possible on a wide scale, but as a foundational currency, it has serious flaws, and it sounds like it needs to ultimately be replaced by a Bitcoin 2.0.
However, creating a new Bitcoin that is incompatible with the old would massively destroy value in the old system, so it's an interesting proposition as to how you can 'version' the Bitcoin protocol over time while not causing great upheaval.
In theory there's no limit to how much a bitcoin can be divided. Currently 0.00000001BTC is the smallest amount possible. But if there's only 0.00001 bitcoins left in the world then the program can be easily updated to allow 0.00000000000000000001BTC to be sent and used.
Bitcoins are a bit like gold, you can just keep dividing a bar up smaller and smaller into dust.
Of course if all bitcoins in the world vanished after the last block (with a reward) had been mined then that would be the end of bitcoins but that seems pretty unlikely right now.
Creating a new Bitcoin that is incompatible with the old would NOT massively destroy value in the old system. Look at Litecoin and other forks. Bitcoin holders collectively add value to Bitcoin (by simply willing to hold them and willing to pay slightly below the market price to add to their holdings), there is no single person who can change its fate. Even big rich guy's wealth depends on many poorer people to accept his BTC for the service they provide him with.
To switch to Bitcoin 2.0 all holders need to see no future in Bitcoin 1 and panic-sell into Bitcoin 2. If this happens, it's another huge bet (like going from USD to BTC), but the prerequisite is to Bitcoin 1 really be in trouble. Divisibility problem is not a fatal flaw, it can be patched, worked around, or counted in as an extra cost.
On the other hand, USD has tons of fatal flaws: it's being printed like crazy and it needs to be stored in banks that easily freeze, tax and censor accounts. Essentially, USD is not even an asset. It's always a chain of promises by bankers and presidents, who brake them constantly in various ways. Compared to USD, Bitcoin is infinitely better, so people are willing to make a bet that Bitcoin can replace USD. Imbalance like that is the requirement to start discussing a jump from BTC1 into BTC2.
Well, we just use fractions of the one remaining. While the protocol currently supports 8 decimals, there isn't any hard limit; we can continue dividing forever as needed.
Are there any studies on the rate at which physical money disappears from the system? I know physical money can be printed to make up for it, but like all things the electronic counter part of physical money will become much more reliable than physical money over time. Do you worry about google corrupting a digital file you emailed to yourself?
Way smaller scale but back in 2011 I heard about bitcoins and crunched some numbers. I realized that at the current price (~$16), I was able to make profit mining them on my desktop since it would only cost about ~$12 in electricty per coin.
I got myself 3 or 4 coins (I wasn't even in a pool at that point) but then the price crashed in late 2011 and I eventually forgot about it. Since then I've reformatted and I remember having that "Oh shit" moment as I was reformatting but after looking up the price I realized I was only out about $10. This was late 2011.
Now every time I see a HN post about a new price milestone I kick myself. Today I could have sold them for ~$1500-2000.
>Now every time I see a HN post about a new price milestone I kick myself. Today I could have sold them for ~$1500-2000.
You shouldn't. You only lost $10 by reformatting that pc - your only loss is from not buying the bitcoins at that point, of which most of us are guilty.
I got 2 coins off a guy in a coffeshop about 1 year ago for $20. I sold them today for about $1600. About 2 years ago I almost dropped $1000 on bitcoins but was talked out of it by family and friends. It feels weird. I can't connect bitcoins to social or economic value. The "china explosion" of btc price won't last imho. And while I like bitcoin, it's just a currency and not an investment, as in it doesn't generate value itself. I have a hard time connecting stocks to social or economic values too. I'd like to think we can invest in actual businesses where it's a better connected to reality. I don't know how to do that however. Not yet anyway.
Any economy built on a currency that fluctuates this wildly is going to be unpleasant.
I don't know how someone can genuinely believe that bitcoin is a currency with this kind of pricing turbulence. It is behaving like the focal point of rampant speculation.
I suspect the current fluctuation is only a result of newness of bitcoin and that over the years as it becomes more familiar, the fluctuation will mirror more common currencies. I suspect that in order for that to happen, it will need to become more liquid, with more places accepting bitcoin for purchases, and more people using bitcoin to purchase goods rather than as an investment tool.
The "problem" is that the number of bitcoins is asymptotically bounded from above, but there is so far as we know no similar bound on human productivity and output. So there's really no reason to think that the deflation of bitcoin would ever die off. At most it would slow down, as right now the upward trend is fueled not just by the "natural" deflation of the currency but also as it plays catch-up to the market cap of more established currencies, like the USD.
It's worse than that. As the post at the root of this thread observes, it's possible for bitcoins to be lost forever. So while the total number of possible BTC is merely asymptotically bounded, the actual number of BTC in circulation is going to peak and then go into a period of inexorable decline once the rate at which BTC are "destroyed" by data loss exceeds the rate at which BTC can be mined.
"The "china explosion" of btc price won't last imho"
You might be wrong ;) This week, Yi Gang (a very high-ranked chinese government official: no less than the Director of the State Administration of Foreign Exchange and Deputy Governor of the People's Bank of China), said he would personally adopt a long-term perspective on the currency! See https://news.ycombinator.com/item?id=6782870
Did you get actual cash for the transaction, or some kind of goods or service? I'm having a hard time finding people who actually got CASH MONEY for a bitcoin.
There are dozens of exchanges where you can get "cash money" for Bitcoins. Lately, the buy side (the people with cash money wanting to buy Bitcoin) is much more active than the sell side, which is why it's been climbing. In the US there's Coinbase and CampBX. Worldwide, there's Mt Gox (probably the largest, and, I believe, the oldest), and a whole lot of others. But, to get US dollars deposited into a US bank account, I'm using Coinbase.
Ugh, I kick myself all the time for not investing in bitcoins. I did end up buying 30 of them back in the earlier days of SilkRoad... Wish I saved them instead.
Given tptacek and colleagues' paper on the RSA-doomsday scenario that might not be too far out in the future, I think it might be possible to reclaim (steal?) that money in the future.
Obviously when RSA's end nears, assuming bitcoin is still around then, we'll see some sort of managed transition to a newer cryptosystem. I imagine the network will probably support announcing transactions saying something like, "Wallet X will now be known as wallet Y" where Y uses the new cryptosystem. And presumably only the first valid signed announcement will count and make its way into the block chain. It's at this point that I think people with enough compute power might be able to "steal" lost wallets.
Thanks, I did not know that. But there's little reason to believe that whatever encryption that bitcoin uses (presumably EC?) won't be vulnerable at some point in the future.
DES was broken about 23 years after it was designed.
I'd be surprised if 30 years into the future (probably earlier given the incentives we have to break crypto today are so much than those we had in '98) if these algorithms weren't broken.
There is actually no precedent of a cryptographic system relying on computational hardness surviving for more than a generation. And given that our fundamental theoretical understanding hasn't really evolved beyond, "we think a bunch of these problems are hard", things are likely to stay that way for a while.
That's an oversimplification. The field of cryptography has advanced by orders of magnitude since DES and RC4. Each time one of those breaks, we abstract the weakness into a class of vulnerability that the next algorithm will be immune to.
>There is actually no precedent of a cryptographic system relying on computational hardness surviving for more than a generation.
That's because cryptosystems relying on computational hardness aren't that old.
>And given that our fundamental theoretical understanding hasn't really evolved beyond, "we think a bunch of these problems are hard", things are likely to stay that way for a while.
These assumptions haven't really broken though. You give an example of DES, but that doesn't rely on computational hardness assumptions. Asymmetric crypto with a trapdoor function does. There hasn't even been a big breakthrough in the original prime number factorization assumptions of RSA/DH.
I'm confused, how can you break EC but not be able steal people's money?
Similarly, if you found had preimage attack for ripemd160(sha256(x)) (you can find a public key with the same hash as any other hash), how could you not steal people's money?
The public key behind an address is only revealed if you do a transaction to spend the bitcoins in that address. So the public key is effectively secret until just before it is scrapped with normal use.
Say public key x receives 1 BTC in block A. I'm guessing it's encoded as ripemd160(sha256(o)) -> 1 BTC -> ripemd160(sha256((x)) where o is some other public key with sufficient funds. I create a new key pair with public key y, such that ripemd160(sha256((x)) = ripemd160(sha256((y)). From now on let's call this address hash h.
In block B, I make a transaction h -> 1 BTC -> s. Where s is a securely generated public key that I own. I then sign this transaction with my forged public key, which hashes to h.
If you want to play the Bitcoin lottery, it's a far better idea to focus your computing power on solo mining. You have far more chance guessing a 25 bitcoin block than getting a valid private key.
Actually the Bureau of Engraving and Printing will replace damaged or destroyed US currency if they can determine to their satisfaction how much has been destroyed. They replace over $30 million of currency yearly. The most common causes of mutilation are are fire, water, chemicals, explosives; animal, insect or rodent damage; and petrification or deterioration by burying.
Damaged US Currency can be replaced ONLY if:
(1) 51% or more of the bill is recovered (in some form)
(2) the serial number of the bill can be identified
(Or at least that's what I was told during a tour of a US Mint several years ago.) Money burned up in a fire is not replaceable.
Correct. Except most of us don't keep all our money in our wallet or under our mattress. We keep it in a bank. Which is insured by the federal government. Bitcoin is akin to keeping all your money in a big bag in a single location if you don't back it your digital wallet offsite.
That is the local effect, which is the same for cash vs bitcoin and different for deposit vs bitcoin (though of course there is nothing preventing bitcoin-denominated deposits). The global effect for bitcoin is more like nuking a bit of gold - you have reduced the total supply permanently - whereas for cash we can just print more.
Hmm, so that means that someone who solved the crypto problem (say, NSA) could simply take over [presumably] abandoned wallets, which would be nearly undetectable compared to other uses of such attacks, but could still have a huge impact on Bitcoin ecosystem simply due to the large mass of such wallets.
And this is one of many reasons why it will become increasingly important to beef up the security and robustness of the Bitcoin network and ecosystem. It has some of the same failure modes as traditional bank/government-backed currency. But it also has a set of a different kind of failure modes that should also be minimized or mitigated.
Look at this address:
http://bitcoinrichlist.com/address/198aMn6ZYAczwrE5NvNTUMyJ5...
The last time this address was touched was 2009, and has an even 8,000 coins (back in the day, this only amounted to 320 mined blocks. You could do that in what?... a few hours/half days?[1]) The owner probably ran his system for a few hours, collected 8000 coins, thought it was a ridiculous concept and deleted everything from his system.
[1]: https://blockchain.info/charts/total-bitcoins?timespan=all&s...