Shutting Down Bitcoin – Taking Down The Bitcoin Network
The Bitcoin Network has 4 key points of weakness. Namely: The Wallet Software. The Trail. The Public Data set. The Exchange. What follows is a quick discussion of how each of these components may be compromised individually and thus possibly … Continue reading
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I agree. Taking down the Bitcoin Network would be very difficult but not impossible as everyone seems to be saying these days. I’ve held back from buying in to the hype and plan to “wait and see” what happens….
Bitcoin is stupid. You should just shut it down. Thanks in advance.
Thanks for your opinion, Ben.
Hahaha.
Nothing is perfectly secure, ever. This is an eternal certainty. However, the ‘exploits’ you list here are not valid for several reasons.
Bitcoin software backdoor.
Not realistic. This software is scrutinized more than your average open source project because of the potential loss that a breech would cause, and users are very wary of upgrading. Newbies not as much as they should be, but they will learn.
Bitcoin Trail
It’s trivial to hide the bitcoin network traffic, using Tor, I2P or a number of other methods. Count on a future client that does this natively.
Bitcoin Public Data
Although the transaction data is, indeed, public record; this does not mean that anyone could identify a user, or even a wallet, by the available data. Maintaining anonymity requires intentional care on the part of the users involved, but is not easily broken as a matter of data mining the blockchain alone.
Bitcoin exchanges
Now this is a real issue, but not really a bitcoin issue. These exchanges are all third parties to bitcoin, and users choose to use them at their own risks. Other, more hidden, exchanges already exist; for the truly paranoid. But the vast majority of users don’t need quite that level of anonymity, most just want privacy in their normal online business.
Gasull from HN wrote:
“Thanks for writing it. Point by point:
– Bitcoin software: It’s open-source. How would anybody compromise it with so many eyes watching?
– Bitcoin trail: Solved using Tor and adding noirc=’1′ to bitcoin.Conf file. Also you need to earn your bitcoins anonymously. Anyway, Bitcoin isn’t supposed to be anonymous. It can be anonymous if you do it right, like you can browse the web anonymously if you do it right.
– Bitcoin public data: Same as with bitcoin trail.
– Bitcoin exchange: Right, but you can buy bitcoins from someone without revealing him/her your name.
It seems your article analyzes if Bitcoin is good for money laundering. It can be used for that, but I don’t care. It isn’t what makes Bitcoin interesting. Bitcoin is an alternative to payment methods like paypal, to currencies like the dollar or the euro, to payment transfers like ACH or Western Union, and to bank accounts. That is what makes it an awesome currency. That is what makes it disruptive.
It can be used for money laundering just like cash and offshore bank accounts can be used for money laundering. Way more people are using cash than bitcoins for money laundering. And that isn’t what makes Bitcoin disruptive, because money laundering already exists.”.
My reply to the above:
“Open source code tends to give a false sense of security. Many people assume others will check the code, yet few do. In addition, it is possible to spread malicious code throughout a code base to prevent detection. (mentioned in article).
To use TOR you still connect through an ISP. That can be tracked and deep packet analysis can be done. TOR is not a magic bullet.
Exchange – Correct. That was coming in part 2 of the article covering methods around each point, but unlikely to find the time to write it up at this point.
I leave the question: Why else would one use an anonymous currency unless they don’t want to be detected? From there, who does not want to be detected? Usually those doing things they shouldn’t. Otherwise, you’d just use a credit card or normal payment service as an everyday citizen would.”
Nerdr.
Gasul from HN continued:
“Open source code tends to give a false sense of security. Many people assume others will check the code, yet few do. In addition, it is possible to spread malicious code throughout a code base to prevent detection.
Those few who do are usually enough. Closed-source code gives a false sense of security. There are way more exploits for closed source code and they tend to take longer to fix.
To use TOR you still connect through an ISP. That can be tracked and deep packet analysis can be done. TOR is not a magic bullet.
Untrue. Deep packet won’t see anything besides an encrypted connection. If you use Tor bridges nobody will know you’re connecting to Tor.
Why else would one use an anonymous currency unless they don’t want to be detected?
It isn’t an anonymous currency. That’s the main misconception about Bitcoin. Bitcoin can be anonymous using Tor. Just like the web can be anonymous using Tor. But the web isn’t anonymous per se, and so isn’t Bitcoin.
Again, the main point of Bitcoin is how disruptive it is for the banking industry. It makes micropayments easy, it makes transactions among individuals easy and decentralized, etc. It disrupts their business models based on an oligopoly.
Why would you use Bitcoin? Because you can:
– Be anonymous if you want, but you don’t have to.
– Transfer money to someone, overseas, without any fees.
– Charge money for your business without paying horrendous credit card or Paypal fees.
– Stash your money securely in case of Government collapse (think Argentina 10 years ago, Belarus 2 weeks ago, or Greece very soon)
– Make confiscation impossible if you leave in a corrupt country.
– Make micropayments (like tips) without fees.
– Buy stuff online from overseas (people are doing this with a NewEgg proxy that accept bitcoins)
And there are many more use cases that I’m probably forgetting right now.”.
My (partially rushed reply, sorry for not taking each point indivudally):
“1. Apologies for the misunderstanding. I didn’t mean to say the code will be open to exploits, I meant the code will intentionally contain a backdoor at an agencies behest. Exploits are another matter entirly and open source has its pros and cons for that purpose.
2. Then TOR bridges could be blocked at ISP level or made illegal. We’re starting to see censorship arise on the internet and it’s possible.
3. Many of these use cases are of course valid, But I will add their exist transaction fees which are paid when bitcoin are transferred, plus exchange fees when bitcoin is exchanged for real currency. It’s not a fee free currency as suggested. I would add (and this is of course a guess) that most users will have illegal purposes and intent in mind. If only because they have most to gain from Bitcoin use. Most average folk don’t ever see a 2% Visa fee as business absorbs this cost, so for a user purchase fees for everyday goods is not a value driver. I can see it being used for tax avoidance, money laundering and payment for nefarious purposes. Other use cases do not stand up to value analysis.”.
“Why else would one use an anonymous currency unless they don’t want to be detected?”
To that, I counter 2 points: Why else would someone want privacy, unless they are doing something wrong? (easily debunked by asking, “Do you close the bathroom door? And are you doing something wrong?”)
Also, I like Bitcoin not for it’s anonymity but for it’s convenience and price. Why would I accept Mastercard with its 2+% drain on my profits, when I can accept Bitcoin and boost my profits 2% instantly at no cost to me?.
1st – I close the door because I don’t want to be seen doing an act considered “dirty” by society. Same reason people use Bitcoin and same reason people like ot wipe their cookies.
Your second argument is great when the USD value of a bitcoin is increasing rapidly as it is now, I wonder if you will change your argument should it start to fall…losing 50% value in a day makes a 2% charge in exchange for massively reduced volatility seem negligable.
Bob asked you if you were doing something wrong, not if you were doing something that dictates a certain etiquette. Bob’s point stands: people value privacy for all kinds of reasons and sometimes for its own sake. And a point should be made that there is a big difference between doing something you shouldn’t and doing something illegal according to some state law. Laws can be unjust.
If the law is unjust, should you not seek to change it or move rather than using a veil of privacy and anonymity to work around it?.
Good point. People like Gandhi shouldn’t break the law. And I guess those people should have stayed in the back of the bus, right?.
Actually, even if there’s fees to use Bitcoin, some payment processors like BitPay do everything like Paypal does (and converts Bitcoins on the spot to USD and transfer at the end of every day balances to the merchant’s bank account.)
The fee charged? 1%
There’s no possible loss of USD value, even if price goes down. There’s no flat $0.30 + 2.9% like Paypal transactions. Sure there’s fees for such kind of services (processing, conversion, bank deposit) but when using Bitcoins and skipping the credit card’s corporation’s fees and Paypal service fees by using the almost free transfer system that is Bitcoin, you significantly reduce the transaction fees to just the payment’s processor service fee. There’s still a long way to go (especially in usability and adoption) but I’ve found Bitcoin convenient so far. Not that I’m saying it’s perfect/100% secure from anything, but the system is pretty solid.
You’re assuming one would ever need to exchange their BTC.
Idealistically, not Bitcoin itself, but perhaps another system not made yet could provide a currency for all people, citizens, merchants, shops, traders, even nations?
Nothing is going to change unless you’re truly open to an idea.
Really people, Bit coin is all about removing CENTRALIZATION and if you think bitcoin is a BAD idea, You must be a bank manager or something cause its only them, goverment, corporations etc etc that are making peoples lives hell. No one wants banks, No one wants controlling goverments and this could just be the first step in a new direction. A better one imho. And even if bitcoin is stopped somehow, the idea is out and people know its possible. They can see it working now.
Its truely time for change and lets remove these ‘powers that be’ because i for one am sick of the phatt ClownS!.
This is exactly true. The threat isn’t because it somehow helps criminals. Criminals will commit those crimes with or without bitcoin. Saying it enables them and should therefore be outlawed is like saying hardware tools enable burglars and should be outlawed. “Omg, a hammer? What are you going to do, break into someplace, smash a window, rob somebody, assault somebody?!” -_- Really? The threat is to the banks, and the inefficiency of their currencies.
This kind of coercive collectivism is very childish, and at the core of every inhumane and disgusting ideology: fascism, racism, communism, fundamentalism, etc..
Bitcoin isn’t hurting anybody, and only offers competition with fiat currencies. Fiat currencies are used by criminals just as well. And the cops can still catch criminals even if they’re using bitcoins. So, your argument is baseless.
Wrong, there is over 90% of ppl, who wants goverment to control THE OTHER PPL.
That’s why it’s so HUGE and draing our pockets.
Also, the dark side of bit copin with silk road (and the other million sites that the news doesnt seem want to pick up on, silk road is haveing it full flack, IS A SOCIAL ISSUE, not a CRIMINAL ISSUE. Drugs are not criminal, they are social. FACT. Everyone needs a vise or whatever. Drinking is drugs, caffine is drugs, Hell, id put any herbal; remidy ion me over the pharmacutical industry in a flash. BNut thats just me. Im not wrong, and im not right either. This is the problem. Getting people to understand, EVERYONES DIFFERENT!!!!.
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Even if someone does manage to compromise an open source project as you describe (which I consider quite unlikely), this will hardly be the death of bitcoin.
You can’t “deep packet inspect” tor traffic to find bitcoin transactions. It’s encrypted data. Noob!
Laundering bitcoins is easy and will get easier.
The biggest threat to bitcoin is a better cryptocurrency.
I don’t think you quit understand the nature or purpose of backdooring software, so i’ll leave that one out.
You can deep packet Bitcoin traffic, since it has a destination. That’s why you follow the trail.
Your last two points I agree with. True and partially true. The believe the gates have been opened.
I don’t think you understand software to start with.
You assume bitcoin traffic is traceable! What if all you see is SSL obfuscated traffic. Check tor again!.
Timing attack.
* Bitcoin Trail
You can’t identify recipients or their wallet by looking at the transaction stream. You can determine the receiving key, but there is no need for Deep Packet Inspection (DPI), you can just look at the block chain. The way bitcoin works is that every transaction is broadcast to every node, just because a machine received a packet, doesn’t mean that they were the recipient of the bitcoins and, everyone, including the intended recipient will rebroadcast the transaction. DPI will tell you nothing about the intended recipient. If you had DPI at the ISP of the sender you could determine the IP of the sender because there would be an outgoing transaction without a corresponding incoming transaction, however, you wouldn’t know if they were sending the coins to someone else or to another key in their own wallet. So it doesn’t do you much good.
With the backdoor thing, i can definitely see that being a potential threat, but no more than say, using your credit card online.
Say you compile your own software with a backdoor. Get it to rank #1 on google for a few key search terms to do with bitcoin. People download it thinking it’s the legitimate software, but of course it takes your bitcoins and gives them to someone else.
That’s not a weakness with bitcoin though, that’s a user education weakness, and that user could have just as easily downloaded a keylogging trojan horse and had all his credit card details stolen.
If you wanted to use that to collapse the bitcoin currency, the backdoor would have to be so prevalent that even experienced users couldn’t feel safe using the bitcoin software. I’m not sure how feasible that is, but it seems unlikely.
So…like a backdoor in the official Bitcoin software? Which is exactly what I was getting at in the article. Be careful who you trust.
What is “nefarious” about freedom?.
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While a trail is possible, this ignores the fact that Bitcoin is able to generate new sending and receiving addresses on demand, and that it’s recommended practice for every transaction.
Still need to exchange to real money eventually, and that’s when we’ll get you.
You’ll set us?.
Nerdr, you do not seem to value privacy and anonymity of the individual very much.
Everybody should have their right to privacy (on the Internet this often means pseudonymity or even anonymity) — by principle, not because they have something “to hide”.
I can send cash anonymously to everybody I like, and The Man is not allowed to open my mail in order to check.
I can call anybody I want anonymously, and nobody is required to know why and when I did it.
I can go to a store and buy anything I want with cash, and nobody is required to know about that transaction.
I could go on, but this is the kind of privacy and anonymity we take for granted in our daily, AFK lives, and taking it away from people would cause major outrage.
While, on the Internet, if you want to have a similar kind of privacy, you are branded as an outlaw. Even by people like yourself, who I honestly think should know better.
If the privacy that comes with BitCoin and similar systems is used for “nefarious” purposes, that’s because of the perpetrator, and not the technology. I still want my right to trade anonymously on the Internet. I don’t care if there are people who do that to escape the law.
Also, as somebody else above remarked: it must be allowed to defy unjust laws. Like for example laws that allow The Man to eavesdrop on all my Internet communications. And I defy them by using anonymization technology, or maybe software like BitCoin.
Why do you want to trade anonymously?
Let me suggest a reason. Maybe you have something to hide? Maybe it is not legal or maybe it IS legal, but considered “bad” by the society you live in… Either way, you seek privacy to evade (for legal, or non legal reasons) those who wish to stop you, and that is why people seek anonymity within a society. If you go to the store to buy a coke, you can pay cash or credit card. No one will stop you either way and no one cares how you pay. Now, why would you prefer cash in this scenario? I guess you would have no preference buying a coke. Cash provides no additional value here.
Now let’s take a second scenario, you are buying a certain type of magazine you do not want your neighbours to know you buy. In this case, you would prefer cash, because the anonymity of cash provides additional value, making it the preferred method.
That is what I mean. Yes, we all like privacy, it is nice to know we have it should the need arise for us to take certain actions, we like to remain in as advantageous position as possible. However, for those who fight for anonymity fiercely, there is usually a nefarious reason. They have most to lose from it being taken away. Now that means they have most to gain from seeking anonymity. That is the criminals and those whose legal acts are frowned upon by society.
They are attracted to Bitcoin because Bitcoins provides them the avenue to gain a significant advantage over those who wish to stop them. The majority of citizens.
If you are a legal, law abiding citizen, who does no acts unsupported by the society you live in, you will not seek Bitcoin.
If you are legal but take part in acts frowned upon by society, then consider joining a new society. You may seek Bitcoin.
If you are conducting non-legal acts, then it is the right of the citizens of the society you are part of to find you and prevent your actions. You will seek Bitcoin.
Let’s assume there is an organization who takes significant risks in order to uncover criminal, corrupt behavior in the banking sector.
Let’s assume this organization requires funds in the form of donations. It then goes on to use these funds to expose the banks.
Then banks don’t like this, and they shut off the funding of the organization by freezing their accounts, banning the use of their payment systems, which they have complete control over, to fund the organization. This is in order to avoid exposure of their criminal acts.
Let’s give the organization uncovering the fraudulent acts a name: let’s call it “WikiLeaks”.
Wouldn’t it be nice if this organization now had a new way to fund its operations, for example and anonymous, decentralized currency?
Wouldn’t it be nice if civil rights activists in a country like China could fund themselves in a similar manner?
I absolutely do not deny that there are countless opportunities for criminals to use an anonymous payment system to their advantage. They will do it. It’s the obligation of law enforcement to go after them — but it’s not our moral obligation to give up our rights in order to make it easier for law enforcement to go after criminals. Some people think that, but I’m not one of them.
As part of a society, should the criminal element within yours expand it WILL affect you. It will affect your livelihood, your family and your property. Do not be so quick to wash your hands of its actions Sigi, as one day it may be your turn.
The use case for Bitcoins is primarily (almost exclusively) criminal, once the greed element is removed (which I would say, having read the Bitcoin forums, currently dominates). Bitcoins use for funding of human and civil rights and similar movements will be almost negligable in comparison should Bitcoins intended popularity be attained. In addition, these organizations have alternative means of aquiring funds.
I will add here, should you send Bitcoins to Wikileaks, how then do you expect them to exchange back to usable funds? Oh that’s right, they’d need a bank account.
May I remind you that there are quite a few countries where cash is the normal payment method for next to everything? (This includes Germany and Austria, as far as I know.)
A lot of people don’t even have a credit card over here. If you don’t have one, you’ll mostly have a single online payment option: Paypal. But Paypal is a trouble maker, you don’t want to use Paypal unless you really have to.
Bitcoin would be a really nice alternative here… Thus, people seek Bitcoin.
Regarding Paypal. They are problematic because dealing with transactions is problematic. At least with Paypal there is the option to arrange a refund should a product not arrive or similar troubles occur. Does such a facility exist with Bitcoin? Of course not. Bitcoin relies entirely upon trust between those completing the transaction. And that is Bitcoins inherent weakness. How can you trust someone you don’t know? Well, for now all Bitcoin users assume they can trust other users until proven otherwise.
I suggest this “trust first, ask questions later” methodology will not last long as a status quo.
You’re making less sense with every post. I’m completely unsure by now, if you’re just trolling, or misinformed.
If somebody wants additional security (“refunds”), they have to go through an escrow service (and they exist for BitCoin, too). You can even remain (fairly) anonymous that way.
If you treat BitCoin like cash, skipping the middle-man, you gain independence but lose some security (people can “walk off” with your money without giving you wares — not different with cash if you send money up-front by mail, for example).
All cash transactions require trust between the involved parties. How is that “an inherent weakness of BitCoin”?
Regarding the morals involved: BitCoin will be useful for moral and immoral people alike. No new forms of crime will emerge due to BitCoin. Money laundering already exists, truck trafficking already exists, corruption and bribery already exist. Those things might become a tad more convenient for the tech savvy criminal, but that’s about it.
Welcome to the world of the Internets (a.K.A. Information Age), when suddenly technologies emerge that wipe out industries because the “user” can do things unthinkable 20 years ago (cf. File sharing and anonymous cash transactions). A lot more is going to happen, like it or not.
It is an inherent weakness because you are trusting an anonymous identity. If I send money to Paypal in exchange for goods and they fail to arrive, I have a chance to open a dispute. If it’s any similar service, I have the opportunity to have a (somewhat poorly managed, sure) trusted third party look at the deal and refund if required. No such functionality exists with Bitcoin right now. And should it exist, it destroys the very notion of an Anonymous currency.
Cash is used in face-to-face transactions. If I pay you “cash in your hand” and you don’t give me the TV I paid for, you then stand to lose much more than that. With Bitcoin, there is no action I can take, other than of course, the token complaining on the Bitcoin forum that another scammer has appeared and why did I fall for their scam.
Saying you can “treat Bitcoins like cash” is nice, but in reality we don’t use cash for online sales and that is what Bitcoin was created for. Online, primarily between networks across borders. For person-to-person deals, we would, of course, just use cash.
Crime – Bitcoin is a critical crime enabler. It is a game changer, yes, giving criminals a new method of avoiding detection. They can still be caught, in fact their trust in Bitcoin, irrespective of the flaws mentioned, is what will lead to many being brought to justice for their crimes. However, understand that the creation of Bitcoin will have far reaching consequences as far as law enforcement and your freedom online is concerned.
I believe the creation of Bitcoin provides a justifiable reason to begin “locking down” the internet, as we are seeing today. Many of your elected leaders feel the same. A position, as someone with significant interest in technology, I would have never seen myself supporting just a few short years ago.
I think the turst issue can be removed using routine escrow mechanism, but here too you need a third party to moderate the exchange. For instance, if A wants to buy from B using bitcoins, you go through another bitcoin wallet. A puts his coins in escrow agents wallet, wallet notifiies B, B sends good. When A receives good, escrow agent releases funds to B.
But, this gets rid of the whole point of bitcoin, to eliminate a trusted third party. Behind the veil of the internet, when you aren’t dealing face to face, you have to have a trusted third party.
True. A possible solution would be “ratings” style system, which can of course be gamed and fake accounts created to prop them up, as we see on Ebay and forums. The current system of assigning trust to Bitcoin Exchange owners, and Bitcoin services in general, is wide open to being gamed. Combine this with Bitcoin owners and users who (through greed) “want to believe” and you have a situation waiting to go bad.
I think it was a month or so ago when one of the Bitcoin forum users, who had become trusted to product Bitcoin Wallet software by the forum users, had in fact decided to steal Bitcoin wallet keys. He was outed and attempted an apology. I didn’t stick around long enough to see how it turned out, but no doubt he cleaned his cookies and created a new account and all was well again.
A public facing, real-world third party with a real-world reputation at stake would work. Maybe the Bitcoin software creator or technical founder (Satoshi Nakamoto) himself could run such an operation.
I am currently reading the source code cover to cover – and I am impressed. Most of it is rock-solid programming. Excellent work, given the young age of the program.
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Thanks a ton for spending some time to line all of this out for all of us. This kind of post was in fact extremely useful in my opinion.
Plain cash is the most anonymous currency. Does McDonald’s ask for your mothers maiden name, or favourite pets name, when buying fries with that?.
*raise bread thread*
There’s some very wrong things going on with this.
Nerdr – you rail against anonymity yet you use a pseudonym. Why? What are you hiding? Your real name, perhaps? Hypocritical fundamental positions reveal an agenda.
“Still need to exchange to real money eventually, and that’s when we’ll get you.” You self-identify with the powers that be. Are you part of LE; is that why you hate bitcoin? Is that why you use a pseudonym? This suggests you have a need to be accepted by authority. A definite psychological weakness.
If you want to show some genuine clever thinking apply the same agenda against existing currency systems: say, how would one take down “The Fed”? Compromise leadership, perhaps? Lobby for protective legislation? Ultimately it comes back to the same immoral action – initiating the use of force when you are not genuinely threatened.
Bitcoin is no threat to people. It’s a threat to an idea – the idea that the State has primacy over people. The fact is the State killed over 500 million people in the last century. Empowering individuals empowers everyone.
I’ll pass over psychology 101 and get to the interesting points.
The second part is not something discussed openly on public forums but it is out there if you want it. I am unable to cover it here.
I say Bitcoin is a threat to people. It is dangerous since it’s unstable and primarily used for criminality. We both know it is, it’s an enabler. Let’s not pretend it’s not.
Empowering individuals over the collective is dangerous. I suggest, if I can now wear my therapist hat, that you think you are part of the elite who will win under Bitcoin. The truth is you most likely won’t. Very few will. It’s the American dream mentality. We’ll all be Millionaires eventually so let’s not tax Millionaires. The truth is very few enter the top tier.
The fact is the state exists to protect our collective interests, not an individuals. I say it’s doing a very good job so far and say Bitcoin is against that collective interest in a free country.
“I say Bitcoin is a threat to people. It is dangerous since it’s unstable and primarily used for criminality. We both know it is, it’s an enabler. Let’s not pretend it’s not.”
In your opinion it’s a threat – but one you can’t identify. Unstable: like the US dollar is unstable? Like stock market values are unstable? Like mortgage interest rates are unstable?
Cash is an enabler according to that logic. Let’s not pretend anything: police power is a criminal enabler, so is legislative power, so is physical strength, and social status. Why are so many legislators worth more than $10 million US in personal wealth?
“Empowering individuals over the collective is dangerous.”
In your opinion it’s dangerous. But I’m sure you like empowering some individuals more than the collective: Like police? Like legislators? Like the courts? Like the US president?
“Bitcoin is against that collective interest in a free country.”
In a free country people can use what ever they want; including Bitcoin. That’s what freedom means. Clearly it only means “free to do what we allow you” in your mind.
The threat is identified: Bitcoin enables criminality. Laws we have all agreed to follow. The US dollar is not unstable when compared to Bitcoin with it’s 17x price fluctuations.
Police power, legislative power…yes, the are all given by us, the citizens, and we have systems in place to keep them in check. Bitcoin follows no laws. It has no systems in place to protect citizens when things go wrong, no oversight of transactions to be sure users are following the laws of this nation.
No. In a free country you can do whatever you want so long as you do not bump the rights of others. Bitcoin, by enabling criminality affects those rights. It allows breaking of our laws and protective systems and that is why no free country can ever allow Bitcoin to exist.
I didn’t agree to follow any laws, I was FORCED to follow them. We would have agreed on most points, but the fact remains that no one asked me. Forcing your views on another human being is a crime (according to Jainism), so I say the lawmakers are the real criminals.
Hehe.
Regardless of which side of the discussion you’re on, I would like to commend the intelligent and very interesting debate you are having. BitCoin is certainly a game-changer, one that, yes, enables criminal intent. But it also decentralizes currency, a noble aim in my book. And that independence, that non-reliance on currency-issuing institutions, will be what draws people to BitCoins, no matter their intent. One of the biggest non-criminal incentives to use BitCoins is the desire for independence, an innate instinct of humans.
So I read all of the comments posted, and I have to say that it was a very well-thought out debate for the most part, even if some of us kept banging the same notes over and over.
Nerd: It’s not enough to say Bitcoin is enabler. As has been mentioned, literally everything could be an enabler. I think Burger King’s cheap value meals “enables” people to forgo a healthy lifestyle because they can spend $1 on fast food in 3 minutes.
Everyone: This is just a general point, but Nerd did say something interesting. He said that the only reason Bitcoins have value is because people still play ball. In other words, because there is trust in Bitcoin as a common currency, it can be traded for goods and services.
The interesting thing here is that the US Dollar also falls under the same line of fire. The only reason the dollar has value is because Americans and others (think China here) keeps playing ball.
Now while China is likely to continue playing ball for a long time, this is only because most of the goods we purchase are MADE in china. I would expand on this notion , but then this post would never end.
Basically, everyone in the US could decide to stop playing ball tomorrow, and stop buying Chinese-made products (right?). What would happen then is that China would drop the dollar as the global standard of currency (it doesn’t make sense to keep it, American’s aren’t buying China products) and THEN the purchasing power of the dollar would drop DRAMATICALLY since all dollars would need to be converted to Euros before buying a pencil.
Just my two cents: The dollar is just as volatile and on as much thin ice as Bitcoin. At least with Bitcoin there’s a global demand, and there’s not a 17 trillion dollar debt weighing it down.
There are scales to enablers. Different things are more or less enabling than others. It’s not a good idea and over simplifies to throw them all into the same bucket.
You pay your taxes in US dollars. That’s what keeps it reliable as a currency, gives it value, and cements its position as a common currency. Bitcoin has none of those advantages. Bitcoin is literally a number. Bitcoins only value is in solving the chain from mining. A useless problem in the real world, meaning the number itself has no value.
Inflation of a currency keeps it moving. It’s for this reason that inflation is good for the economy, and why quantitive easing (printing more money) is seen as a good thing for helping an economy in difficult times. Inflation is necessary for a viable economy and prevents hoarding of value. Bitcoin is deflationary. People don’t spend Bitcoins, they hoard them. Forever. Because it is never a good time to sell a Bitcoin except when the value is crashing.
Many claim citizens could stop playing ball tomorrow and crash out the US dollar. The reality is this can’t happen. The markets are too efficient to allow for trillion dollar volatility. But it’s nice to think it can.
The US will also never stop importing in goods from China so long as it remains the economically best decision to do so. Should the scenario you mention actually happen (trade war) we would just buy from a third party who buys direct from China. Globalization exists and checks on sourcing are hard to impossible.
The US dollar is not even close to the volatility of Bitcoin. Come on.
The Bitcoin price right now is around $60 on exchanges around the world. Bitcoins exchange price has dropped 60% over a 24 hour period. Would you use such a volatile currency day to day? To buy your groceries? If not, is it really a viable replacement currency? Really?.
Nerdr,
I would like to commend you on your comments regarding having “nothing to hide”. Also, what’s the event in your life that you were most ashamed of, which you feel you haven’t yet resolved?
Have you ever been involved in civic activism? Have you ever experienced racial, gender or profession-based discrimination? Have you ever avoided saying something in public or on the telephone that you might have said in a private bedroom? Have you ever lived in a country where the police could ID you at any moment, enter your house on false pretenses and get away with it (systematically), and arrest you arbitrarily?
Sarcasm aside, your point about bitcoin’s volatility IS a valid one for now, and I’m glad that you bring it up. “Wait and see” is an appropriate slogan, and one should invest only with a full appreciation of the risk involved.
Also, systematic timing attacks on popular Tor exit nodes? Correlating outgoing data with large numbers of users on the same node, between jurisdictions, and in spite of the noise added by the propagation delays? Are you sure this is feasible?
Also, illegalize Tor bridges? Really? HOW? The list of Tor bridges is not public.
(The above objections hold if the US government doesn’t own a majority of Tor relays…)
I would also like to correct your claims about the value of the US dollar. While it does (fortunately) remain stable for now, its value on the international market has nothing to do with internal dynamics. A currency’s exchange value is determined by inter-currency trade. Since actual goods in the US are predominantly imported, if foreign governments sold their dollars, the exchange rate would fall, and many goods would become too expensive in dollars to import. The US would suffer. Just… explaining.
You are completely and utterly right about at least one thing: The backdoor issue.
Bitcoin should not be a software package, it should be a protocol, with multiple, independent implementations in a variety of programming languages, released by creators in different jurisdictions.
Thanks for that point!.
We need to stop treating things as black and white. Policeperson asking for ID is not the same as the SS knocking your door down and taking away your babies. Some rules ARE required for a functioning society. Some of those rules, while uncomfortable, do have net positive value on society. Like stop and search. A high proportion of crimes are stopped because of police randomly searching someones car.
The volatility will never go away. It is in the nature of a valueless, instant trade currency to crash and burn, then rise up, then crash again.
It’s interesting you said to ‘invest only with a full appreciation of the risk…’. Why call it an investment? Do you really think of Bitcoin as an investment vehicle? Which implies positive gain over a long term. Not happening.
Short term – news is no longer talking about Bitcoins. The price of Bitcoins only goes up when new ‘users’ ‘invest’. These new Bitcoin users come from news articles. Without them the ‘currency’ is over. Mid term – you will get some pricing stability. Long term – no chance, quantum computing will crack 256 encryption very quickly, and it’s started already.
Bitcoin isn’t an investment, it’s a speculative ponzi scheme. It’s cute with it’s encryption and distributedness, and it’s many other things too, but it’s also a ponzi scheme. Bitcoin ticks all the boxes of a ponzi scheme.
Timing captures are done at the ISP level and are automated. You enter what came out (ip) and the system pops out the start ip. Think of it like a reverse ping.
Tor nodes can be found. They can also be cut at, again, ISP level. You might think someday why we have such minimal competition in the ISP sector. This is not an accident. Same with the cell networks. 5 cell networks and no new entries for a decade in such a profitable market as cell. Why? Who’s stopping the new players? Think about it. And yes, it’s global.
With your dollar drop scenario, the US would only suffer temporarily. One of the great strengths of a capitalist society is quick self adaptation to external anything.
The final point, no problem.
I think what everyone here that’s ranting and raving about how the BitCoin is flawless and fool-proof and disruptive and whatever other establishment hating adjective they can come up with are forgetting is that this pseudo-currency has no real intrinsic value besides that value that is placed onto it by the people that hold the BitCoins. In essence, the BitCoin is just an open-source Ponzi scheme with everybody who hops on board either becoming an immediate victim or someone smart… *cough cough* greedy *cough* enough to become a participant. The problem here is that one way or another, the entire system is flimsy and I think a house of cards is the perfect way to put it. In fact, I would say accepting BitCoins for a service or product is possibly the dumbest thing ever considering they’re technically worth nothing. You just gave up a real item, worth real money to someone for nothing? How is that not the stupidest decision ever?
My next point is the “community.” It’s a myth and if BitCoins are as anonymous as you claim they are, who’s to say that someone with a large amount of resources couldn’t come in using multiple ISPs, over TOR, and simply begin buying up everyone’s BitCoins (Using real money I might add, which already ruins the idea of decentralization considering most people would sell off their BitCoins in an instant if they thought they could make a buck. I know if I had them I would considering there’s no actual useful thing I can purchase like a house, car, electricity, etc.). And who’s to say it isn’t already happening considering somehow this “industry” has cracked the $1 Billion marker. I know if I was a Wall Street fat cat I’d be staring at this market and absolutely licking my salivating chops while rubbing my grubby hands together, repeating “There’s one born every minute.”
My point is the entire thing is an illusion bolstered by a bunch of people who claim to have created a foolproof system (that’s already been rhymes with quacked and almost crashed) that isn’t. It’s the perception that’s selling. The US Dollar at one time was an independent currency like this but the problem is there will always develop a gap between the rich and the poor and someone will always end up holding most of the cards. I’m not here to argue whether it’s used for non legit things or whether it could be shut down via cyber atack because I don’t care about either, but I am here to argue, that if it doesn’t collapse, it will become lopsided in one way or another and all of you “free thinking, independent” people will get sucked dry, ultimately, by someone whose got more COLD, HARD CASH than you, because frankly, it’s worth a hell of a lot more to most people. The US Dollar, as f up as it is now, started the same way as the BitCoin and now look, all of you people are trying to run away from it.
Okay, rip me apart now, because I’m sure you’re going to. Oh, and no I’m not some kind of bank manager or anything like that, I keep a full time labor job, vote Republican, and spend most of my time taking care of my cancerous mother. I just wanted to clear that up before someone wrongly accused me of being some rich rhymes with bhole. The most expensive things I own are this laptop, my smartphone, a 2000 Pontiac, and my Cocker Spaniel: Lutece.
I realize now that I re-hashed some points I already missed but the idea behind what I’m saying is pretty darn simple.
I agree that it is a “house of cards” and any honest person who participates is giving a hand up to dealers in dragswink and winkwink and even paid ninjaswink. It is too complex mathematically to be understood by the vast majority of people who are involved with it. I suspect that anonymous person or group of person who started it had selfish motives and at some point all of its dollar value will be dumped into their wallet. Using real dollars to buy bitcoins is a sucker bet … but … some of them will win at the expense of those who lose.