Author Topic: Is it too late [bitcoin]?  (Read 35281 times)

GuitarStv

  • Walrus Stache
  • *******
  • Posts: 9657
  • Age: 36
  • Location: Toronto, Ontario, Canada
Re: Is it too late [bitcoin]?
« Reply #300 on: December 08, 2017, 10:50:02 AM »
L.A.S., I gave you the rebuttal I did because it is clear from your posts that after information like this is provided for you, you still continue to post FUD information about bitcoin such as an article about a data breach that is not unique to bitcoin, but is commonplace among every industry out there. The fact that the bitcoin that were stolen cannot be recovered is no different from the billions of USD that are stolen every year before even the data breaches that were the root cause were even discovered. At least when bitcoin is stolen, it is apparent immediately that they are gone compared to the covert fraud that takes place from compromised payment information every single day before it becomes clear there was a breach somewhere.

The difference with bitcoin is that there is no consumer protection at all.  Once money has been stolen it's gone.  I mean, if there's a data breach at my bank at a billion dollars are lost . . . I don't care because it doesn't impact me.  If my credit card is stolen and there are fraudulent charges, they don't impact me.  When there's a data breach at a place holding bitcoin for people, each of those people will lose their funds.  There also currently exists no real way to trace the missing money.

While I agree with you that there's a lot of cool security technology involved with crypto-currencies, your continual refusal to acknowledge the poor (non-existent) level of consumer protection that comes from using them is a bit odd.

Shall I assume that you don't agree that bitcoin is suitable for wide adoption and a general acceptance as a standard of value and a medium of exchange?

I have no noteworthy disagreements with your post.  Just curious. ;)

I think that the potential exists, but this is one of several bugs that needs to be worked out for that to happen.

ILikeDividends

  • Stubble
  • **
  • Posts: 152
Re: Is it too late [bitcoin]?
« Reply #301 on: December 08, 2017, 10:52:21 AM »
I think that the potential exists, but this is one of several bugs that needs to be worked out for that to happen.

Then we have nothing to argue about.  Apologies for the intrusion. ;)
« Last Edit: December 08, 2017, 10:57:51 AM by ILikeDividends »

simonsez

  • Bristles
  • ***
  • Posts: 476
  • Age: 31
Re: Is it too late [bitcoin]?
« Reply #302 on: December 08, 2017, 11:11:14 AM »
If we're talking about individuals holding their own private keys, then the comparison there is no different to anyone holding cash. Once its stolen, its likely gone forever unless you can find who stole it. The same is true for bitcoin.
Wait, Bitcoin has something similar to FDIC?  If someone robs my bank, I'm still good to go.

Or do you mean if someone robs me on the street and takes the cash I carry with me that is the same as people's Bitcoin private keys being stolen?  The former is likely to be $20.  I'm not sure what the average value of Bitcoin private keys is but I suspect the order of magnitude is different.

maizeman

  • Handlebar Stache
  • *****
  • Posts: 1815
Re: Is it too late [bitcoin]?
« Reply #303 on: December 08, 2017, 11:17:03 AM »
If we're talking about individuals holding their own private keys, then the comparison there is no different to anyone holding cash. Once its stolen, its likely gone forever unless you can find who stole it. The same is true for bitcoin.

I think cash is actually a very good analogy.*

Many of the concerns people have about using bitcoin as a store of wealth (as apposed to a method of facilitating transactions) are the exact same concerns which would arise with using cash as a store of wealth. In both cases, transactions are irreversible, which both decreases transaction costs and increases wealth.

The lack of consumer protections against either theft of fraudulent protections really isn't a big concern for me in either case as long as the overall sums of money are small. (If someone steals my wallet with a few hundred bucks in it, I'm out that money in just the same unrecoverable fashion as if someone steals the private key to my bitcoin wallet.) I've never used the chargeback functions on credit cards, so for me they don't provide a lot of extra value over using cash/bitcoin for day to day transactions.

In contrast, if I had a significant fraction of my total net worth tied up in either a bitcoin wallet or a big pile of 100 dollar bills in my apartment, I suspect I would be much more stressed, and sleep less well at night, than I am with most of my total net worth tied up in index funds, bank accounts, and real estate.

*For a sense of the logistical and security problems faced by using physical cash as a store of wealth, reading up on the marijuana industry in the USA, where many states have legalized the trade, but the federal government prevents these business from opening bank accounts, is a great resource.

GuitarStv

  • Walrus Stache
  • *******
  • Posts: 9657
  • Age: 36
  • Location: Toronto, Ontario, Canada
Re: Is it too late [bitcoin]?
« Reply #304 on: December 08, 2017, 11:23:13 AM »
If we're talking about individuals holding their own private keys, then the comparison there is no different to anyone holding cash. Once its stolen, its likely gone forever unless you can find who stole it. The same is true for bitcoin.

I think cash is actually a very good analogy.*

Many of the concerns people have about using bitcoin as a store of wealth (as apposed to a method of facilitating transactions) are the exact same concerns which would arise with using cash as a store of wealth. In both cases, transactions are irreversible, which both decreases transaction costs and increases wealth.

The lack of consumer protections against either theft of fraudulent protections really isn't a big concern for me in either case as long as the overall sums of money are small. (If someone steals my wallet with a few hundred bucks in it, I'm out that money in just the same unrecoverable fashion as if someone steals the private key to my bitcoin wallet.) I've never used the chargeback functions on credit cards, so for me they don't provide a lot of extra value over using cash/bitcoin for day to day transactions.

In contrast, if I had a significant fraction of my total net worth tied up in either a bitcoin wallet or a big pile of 100 dollar bills in my apartment, I suspect I would be much more stressed, and sleep less well at night, than I am with most of my total net worth tied up in index funds, bank accounts, and real estate.

*For a sense of the logistical and security problems faced by using physical cash as a store of wealth, reading up on the marijuana industry in the USA, where many states have legalized the trade, but the federal government prevents these business from opening bank accounts, is a great resource.

Forgive me if I'm wrong, but isn't that the complete opposite scenario of most bitcoin investors at the moment?  Few people have only a couple hundred dollars of bitcoin, most appear to be hoarding large sums with the intent to use as an investment rather than for any transactions that can be carried out.

maizeman

  • Handlebar Stache
  • *****
  • Posts: 1815
Re: Is it too late [bitcoin]?
« Reply #305 on: December 08, 2017, 11:27:59 AM »
Well, to clarify, I'm not an (intentional) bitcoin investor. So don't take any of my posts as representing the "buy bitcoin" worldview.

lifeanon269

  • Bristles
  • ***
  • Posts: 333
Re: Is it too late [bitcoin]?
« Reply #306 on: December 08, 2017, 11:44:07 AM »
Again, to reiterate though, the critique about protection from breaches is not a critique against bitcoin itself, it is just a critique against centralized organizations that don't provide adequate protections for their consumers. It is only a matter of time where it is common place to have larger bitcoin institutions (like Coinbase) that provide the same consumer protections against data breaches that today's traditional institutions provide.

The benefit that bitcoin does provide the individual is that if they choose not to trust that central authority (which many around the world don't and shouldn't), then you can choose to take security into your own hands.

I do this myself and I am fully confident in my ability to store a large amounts of bitcoin securely. I have a seed stamped on to steel that I used Shamir39 to generate a 2 of 3 seed. Those three copies are stored in geographically diverse locations from each other. I only need 2 of the 3 different seeds to restore my bitcoin. My seed was also generated off-line using 12 rolls of 4 dice and a quarter and it has never touched an online computer before. Obviously, taking security this seriously is not something that everyone will do our have the know how to do, but the technologies are there (hardware wallets, etc) to allow for adequate security for the individual. Additional technologies that will continue to increase ease of use will no doubt be developed. In my opinion, this gives a much greater degree of security when compared to straight cash.

Also, further technologies for institutional protections will continue to be developed. Coinbase has already implemented some such features such as their Vault accounts. Multi-signature online custodial accounts provide a mix of both worlds that allows the end-user to own a portion of the private key along with another party and a combination of the keys are needed for withdrawals. Withdrawals with Coinbase's Vault accounts take 2 days to go through which allow for adequate reaction time in the event of an unauthorized withdrawal. Again, these are technologies and system designs that can be layered on top of bitcoin. Critiquing bitcoin for a failure in centralized institutions to provide adequate protections to their consumers only validates the main concept behind bitcoin's decentralized design in the first place.

GuitarStv

  • Walrus Stache
  • *******
  • Posts: 9657
  • Age: 36
  • Location: Toronto, Ontario, Canada
Re: Is it too late [bitcoin]?
« Reply #307 on: December 08, 2017, 11:52:13 AM »
Again, to reiterate though, the critique about protection from breaches is not a critique against bitcoin itself, it is just a critique against centralized organizations that don't provide adequate protections for their consumers. It is only a matter of time where it is common place to have larger bitcoin institutions (like Coinbase) that provide the same consumer protections against data breaches that today's traditional institutions provide.

Are you sure about that?  Most financial institutions do not actually hold large quantities of cash at any given time, it's digitally recorded debt that gets swapped back and forth all over the place.  It's not possible for someone to break into the bank and cart away all of the money.  It seems like any institution holding bitcoin would need to actually have the bitcoin, and therefore be vulnerable to this concern wouldn't it?

moof

  • Bristles
  • ***
  • Posts: 416
  • Location: Beaver Town Orygun
Re: Is it too late [bitcoin]?
« Reply #308 on: December 08, 2017, 11:55:11 AM »
Again, to reiterate though, the critique about protection from breaches is not a critique against bitcoin itself, it is just a critique against centralized organizations that don't provide adequate protections for their consumers. It is only a matter of time where it is common place to have larger bitcoin institutions (like Coinbase) that provide the same consumer protections against data breaches that today's traditional institutions provide.
...
Report back when I can get FDIC backed Bitcoin accounts to store my crap in.  None of the Bitcoin infrastructure has ever been tested against a bank run.  Well, actually Mt. Gox did and it failed miserably.

FI40

  • Stubble
  • **
  • Posts: 102
Re: Is it too late [bitcoin]?
« Reply #309 on: December 08, 2017, 12:07:23 PM »
I do this myself and I am fully confident in my ability to store a large amounts of bitcoin securely. I have a seed stamped on to steel that I used Shamir39 to generate a 2 of 3 seed. Those three copies are stored in geographically diverse locations from each other. I only need 2 of the 3 different seeds to restore my bitcoin. My seed was also generated off-line using 12 rolls of 4 dice and a quarter and it has never touched an online computer before. Obviously, taking security this seriously is not something that everyone will do our have the know how to do, but the technologies are there (hardware wallets, etc) to allow for adequate security for the individual. Additional technologies that will continue to increase ease of use will no doubt be developed. In my opinion, this gives a much greater degree of security when compared to straight cash.

I'm just curious, when you have your seed stamped on steel (it's really weird to say that btw) in different geographic locations, can you still use your bitcoins easily, i.e. do you need to find 2 of your 3 seeds every time you want to buy something with your bitcoin, or buy more bitcoins? If so that is inconvenient. If not then please educate this ignoramus.

lifeanon269

  • Bristles
  • ***
  • Posts: 333
Re: Is it too late [bitcoin]?
« Reply #310 on: December 08, 2017, 12:11:23 PM »
Are you sure about that?  Most financial institutions do not actually hold large quantities of cash at any given time, it's digitally recorded debt that gets swapped back and forth all over the place.  It's not possible for someone to break into the bank and cart away all of the money.  It seems like any institution holding bitcoin would need to actually have the bitcoin, and therefore be vulnerable to this concern wouldn't it?

Most data breaches do not consist of heist style robberies where millions of dollars are exfiltrated (as you noted). It is the payment information and PII that is exfiltrated. This often happens without the companies knowing. The fraud/theft then happens afterward in the form of unauthorized transactions. Yes, financial organizations holding bitcoin would need to store that bitcoin, but the positive trade off is that you don't have aftermarket fraud taking place in the form of unauthorized transactions. On top of that, if bitcoin is stolen, it is noticeable immediately after the funds are withdrawn as opposed to having a breach remain dormant for months or years on end while consumer data is being stolen.

Report back when I can get FDIC backed Bitcoin accounts to store my crap in.  None of the Bitcoin infrastructure has ever been tested against a bank run.  Well, actually Mt. Gox did and it failed miserably.

FDIC does not insure against fraud though (which is what the discussion was about). I agree that FDIC insurance would be valuable in the event of institutional insolvency. But, again, that is not a critique against bitcoin, that's a critique against the institutions around it. We may very well see a day where FDIC/NCUA type insurances are extended to bitcoin accounts as well.

L.A.S.

  • Bristles
  • ***
  • Posts: 472
Re: Is it too late [bitcoin]?
« Reply #311 on: December 08, 2017, 12:14:35 PM »
I do this myself and I am fully confident in my ability to store a large amounts of bitcoin securely. I have a seed stamped on to steel that I used Shamir39 to generate a 2 of 3 seed. Those three copies are stored in geographically diverse locations from each other. I only need 2 of the 3 different seeds to restore my bitcoin. My seed was also generated off-line using 12 rolls of 4 dice and a quarter and it has never touched an online computer before. Obviously, taking security this seriously is not something that everyone will do our have the know how to do, but the technologies are there (hardware wallets, etc) to allow for adequate security for the individual. Additional technologies that will continue to increase ease of use will no doubt be developed. In my opinion, this gives a much greater degree of security when compared to straight cash.

I'm just curious, when you have your seed stamped on steel (it's really weird to say that btw) in different geographic locations, can you still use your bitcoins easily, i.e. do you need to find 2 of your 3 seeds every time you want to buy something with your bitcoin, or buy more bitcoins? If so that is inconvenient. If not then please educate this ignoramus.

Yeah, what kind of steel did you use?  Steel, even many "stainless" steels varieties are still prone to rust, pitting, and corrosion over long durations and poor environmental  conditions...  Its why they don't use it for coins, at least not in the U.S.

lifeanon269

  • Bristles
  • ***
  • Posts: 333
Re: Is it too late [bitcoin]?
« Reply #312 on: December 08, 2017, 12:15:54 PM »
I'm just curious, when you have your seed stamped on steel (it's really weird to say that btw) in different geographic locations, can you still use your bitcoins easily, i.e. do you need to find 2 of your 3 seeds every time you want to buy something with your bitcoin, or buy more bitcoins? If so that is inconvenient. If not then please educate this ignoramus.

That's my cold storage vault. That very secure wallet contains 99% of my bitcoin. I rarely ever withdraw from it (maybe once a month) and I can still send money to it any time without needing the seed. The seed is only needed for spending. I chose to stamp it on steel so that it is better protected against fire, corrosion, electricity, and water (compared to just storing it on paper in a fire safe, for example). For spending, I just use the online wallet through Coinbase where I keep small amounts of funds (<$1000) at any given time. I have a bitcoin debit card tied to that wallet that allows me to spend that bitcoin anywhere VISA is accepted without any transaction fees.

Hope that helps.

lifeanon269

  • Bristles
  • ***
  • Posts: 333
Re: Is it too late [bitcoin]?
« Reply #313 on: December 08, 2017, 12:17:52 PM »
Yeah, what kind of steel did you use?  Steel, even many "stainless" steels varieties are still prone to rust, pitting, and corrosion over long durations and poor environmental  conditions...  Its why they don't use it for coins, at least not in the U.S.

100% stainless AISI 304 steel

L.A.S.

  • Bristles
  • ***
  • Posts: 472
Re: Is it too late [bitcoin]?
« Reply #314 on: December 08, 2017, 12:30:11 PM »
Yeah, what kind of steel did you use?  Steel, even many "stainless" steels varieties are still prone to rust, pitting, and corrosion over long durations and poor environmental  conditions...  Its why they don't use it for coins, at least not in the U.S.

100% stainless AISI 304 steel

Well, hopefully thats good enough...

Depending on the size of your bitcoin 'stache, though, you might want to consider upgrading your seed steel to a super-corrosion resistant steel like Hastelloy C-276 or Inconel or something along those lines.

GuitarStv

  • Walrus Stache
  • *******
  • Posts: 9657
  • Age: 36
  • Location: Toronto, Ontario, Canada
Re: Is it too late [bitcoin]?
« Reply #315 on: December 08, 2017, 12:37:03 PM »
Are you sure about that?  Most financial institutions do not actually hold large quantities of cash at any given time, it's digitally recorded debt that gets swapped back and forth all over the place.  It's not possible for someone to break into the bank and cart away all of the money.  It seems like any institution holding bitcoin would need to actually have the bitcoin, and therefore be vulnerable to this concern wouldn't it?

Most data breaches do not consist of heist style robberies where millions of dollars are exfiltrated (as you noted). It is the payment information and PII that is exfiltrated. This often happens without the companies knowing. The fraud/theft then happens afterward in the form of unauthorized transactions. Yes, financial organizations holding bitcoin would need to store that bitcoin, but the positive trade off is that you don't have aftermarket fraud taking place in the form of unauthorized transactions. On top of that, if bitcoin is stolen, it is noticeable immediately after the funds are withdrawn as opposed to having a breach remain dormant for months or years on end while consumer data is being stolen.

Agreed mostly.

The difference is that data breaches do not really financially impact end users under our current banking system.  Data breaches will directly impact end users who have bitcoin held somewhere.  So the case of a data breach with bitcoin is very similar to a heist style robbery that hits safety deposit boxes where someone has squirreled away some cash.

lifeanon269

  • Bristles
  • ***
  • Posts: 333
Re: Is it too late [bitcoin]?
« Reply #316 on: December 08, 2017, 01:39:03 PM »
Agreed mostly.

The difference is that data breaches do not really financially impact end users under our current banking system.  Data breaches will directly impact end users who have bitcoin held somewhere.  So the case of a data breach with bitcoin is very similar to a heist style robbery that hits safety deposit boxes where someone has squirreled away some cash.

Again, that is a critique against the institutions providing services for costumers, not against bitcoin. Data breaches with most traditional financial institutions do not impact the end user because most of those institutions value their business and purchase insurance so that if a breach were to occur, it doesn't have to impact their customers.

Case in point, Coinbase is insured in this same way against data breaches as it states on their website:

"Digital Currency

All digital currency that Coinbase holds online is fully insured. This means that if Coinbase were to suffer a breach of its online storage, the insurance policy would pay out to cover any customer funds lost as a result.

The insurance policy covers any losses resulting from a breach of Coinbase’s physical security, cyber security, or by employee theft.

Coinbase holds less than 2% of customer funds online. The rest is held in offline storage."

ILikeDividends

  • Stubble
  • **
  • Posts: 152
Re: Is it too late [bitcoin]?
« Reply #317 on: December 08, 2017, 01:44:27 PM »
Agreed mostly.

The difference is that data breaches do not really financially impact end users under our current banking system.  Data breaches will directly impact end users who have bitcoin held somewhere.  So the case of a data breach with bitcoin is very similar to a heist style robbery that hits safety deposit boxes where someone has squirreled away some cash.

Again, that is a critique against the institutions providing services for costumers, not against bitcoin. Data breaches with most traditional financial institutions do not impact the end user because most of those institutions value their business and purchase insurance so that if a breach were to occur, it doesn't have to impact their customers.

Case in point, Coinbase is insured in this same way against data breaches as it states on their website:

"Digital Currency

All digital currency that Coinbase holds online is fully insured. This means that if Coinbase were to suffer a breach of its online storage, the insurance policy would pay out to cover any customer funds lost as a result.

The insurance policy covers any losses resulting from a breach of Coinbase’s physical security, cyber security, or by employee theft.

Coinbase holds less than 2% of customer funds online. The rest is held in offline storage."


No insurance covering acts of God? Destruction from acts of war?  Not trying to gin up a religious debate.  Just curious.  I'm trying to read that language the way the insurance adjuster might.

I mean, insurance companies aren't filthy rich because they pay out on every claim, right?
« Last Edit: December 08, 2017, 01:59:39 PM by ILikeDividends »

L.A.S.

  • Bristles
  • ***
  • Posts: 472
Re: Is it too late [bitcoin]?
« Reply #318 on: December 08, 2017, 01:51:02 PM »
Agreed mostly.

The difference is that data breaches do not really financially impact end users under our current banking system.  Data breaches will directly impact end users who have bitcoin held somewhere.  So the case of a data breach with bitcoin is very similar to a heist style robbery that hits safety deposit boxes where someone has squirreled away some cash.

Again, that is a critique against the institutions providing services for costumers, not against bitcoin. Data breaches with most traditional financial institutions do not impact the end user because most of those institutions value their business and purchase insurance so that if a breach were to occur, it doesn't have to impact their customers.

Case in point, Coinbase is insured in this same way against data breaches as it states on their website:

"Digital Currency

All digital currency that Coinbase holds online is fully insured. This means that if Coinbase were to suffer a breach of its online storage, the insurance policy would pay out to cover any customer funds lost as a result.

The insurance policy covers any losses resulting from a breach of Coinbase’s physical security, cyber security, or by employee theft.

Coinbase holds less than 2% of customer funds online. The rest is held in offline storage."


No insurance covering acts of God?  Not trying to gin up a religious debate.  Just curious.  I'm trying to read that language the way the insurance adjuster might.

I mean, insurance companies aren't filthy rich because they pay out on every claim, right?

I read it as meaning only 2% of the bitcoins held are insured.  Since it only refers to insurance for bitcoins held "online" and only 2% is held online.  So, I'm guessing the other 98% held offline is uninsured?

ILikeDividends

  • Stubble
  • **
  • Posts: 152
Re: Is it too late [bitcoin]?
« Reply #319 on: December 08, 2017, 01:55:14 PM »
I read it as meaning only 2% of the bitcoins held are insured.  Since it only refers to insurance for bitcoins held "online" and only 2% is held online.  So, I'm guessing the other 98% held offline is uninsured?
Good point.  Are you an insurance adjuster by any chance?  ;)

talltexan

  • Handlebar Stache
  • *****
  • Posts: 1235
Re: Is it too late [bitcoin]?
« Reply #320 on: December 08, 2017, 02:11:14 PM »
So there's a pretty high chance of a future in which some form of crypto currency is accepted by many merchants as a payment. No one is denying that, right? Even people who don't want to own Bitcoin now think that future is coming, right?

ILikeDividends

  • Stubble
  • **
  • Posts: 152
Re: Is it too late [bitcoin]?
« Reply #321 on: December 08, 2017, 02:19:08 PM »
So there's a pretty high chance of a future in which some form of crypto currency is accepted by many merchants as a payment. No one is denying that, right? Even people who don't want to own Bitcoin now think that future is coming, right?
Heck, most of our money is already moved around digitally.  Why stop short of crypto?

Even the federal reserve (and other central banks) have kicked that idea around.  They don't speak highly of bitcoin, but in my mind, a federal reserve issued fiat-friendly crypto, eventually, is as near a certainty as the sun coming up tomorrow. Hello FDIC insurance.  Settle your tax bill with the IRS using crypto, anyone? ;)

Volatility and valuation will never be problems searching for solutions.  No price discovery needed.

Acceptance by merchants, at least in the USA, will not be optional.  Acceptance will be required by law, unless specifically exempted. Then again, maybe credit card companies will step up and solve that problem with existing partnerships and infrastructure.  Either way, problem solved. 

I don't seriously expect any central bank to embrace a "global" crypto currency, such as bitcoin.  That would cede too much authority over monetary policy, and I just can't imagine congress authorizing that.  I'll let the lawyer-inclined members debate whether a constitutional amendment would be needed for that.
« Last Edit: December 08, 2017, 03:39:18 PM by ILikeDividends »

dougules

  • Pencil Stache
  • ****
  • Posts: 983
  • Location: AL
Re: Is it too late [bitcoin]?
« Reply #322 on: December 08, 2017, 02:36:09 PM »
So there's a pretty high chance of a future in which some form of crypto currency is accepted by many merchants as a payment. No one is denying that, right? Even people who don't want to own Bitcoin now think that future is coming, right?

Even if it is the future, you still have the two real questions of

- Will it be Bitcoin specifically?

- Is the current exchange rate justified right now?

I think the answers are "maybe" and "most likely no." 

waltworks

  • Magnum Stache
  • ******
  • Posts: 2549
Re: Is it too late [bitcoin]?
« Reply #323 on: December 08, 2017, 03:15:36 PM »
I could see Zelle taking over most of the money-transferring market. I've already had a number of customers use it, though I think there's a ~$2k daily transaction limit. Early days, of course.

-W

phil22

  • Stubble
  • **
  • Posts: 125
  • "This quote is very memorable." -Randall Munroe
Re: Is it too late [bitcoin]?
« Reply #324 on: December 08, 2017, 06:06:15 PM »

BattlaP

  • Stubble
  • **
  • Posts: 137
Re: Is it too late [bitcoin]?
« Reply #325 on: December 09, 2017, 11:39:07 PM »
So there's a pretty high chance of a future in which some form of crypto currency is accepted by many merchants as a payment. No one is denying that, right? Even people who don't want to own Bitcoin now think that future is coming, right?

I think it will look very different to anything around now. The whole model whereby the inventors, their mates and early adopters end up owning a significant percentage of the total supply, is unnecessary, overtly scamish and detrimental to adoption efforts. I think if there turns out to be any benefits to any of the concepts over current banking solutions, they will be integrated into the backend of existing institutions and the frontend of interacting with day-to-day finances will not change at all for the individual. The average person doesn't know or care about cryptography, it will be managed behind the scenes. Any actually successful 'crypto currency' in terms of actual daily use will most likely be created 'above board' by existing banking institutions.

The notion that such a thing can only be invented/created through an evolutionary 'free market' free-for-all meme war that we are currently seeing is a naive libertarian belief/desire. I think there's a chance that it ends up going so badly that the whole notion will become something that culture will look upon in the same way as pyramid schemes, MLM, beanie babies, etc, which could really slow down or kill development/investment/interest/adoption of the ideas.

I've said it before and I'll say it again, I have yet to see any proof of the existing application of cryptocurrencies/blockchain (that haven't been bastardised into being basically databases anyway) that leads to an undeniable competitive advantage that means businesses need to adopt it or risk being left behind. The overwhelming bulk (if not literally all) of journalism you see reporting on 'adoption' are companies doing preliminary investigation, experimentation, or just signing up to lists (ethereum foundation) that are essentially them saying 'sure, we'll use your technology if it ever becomes practical and advantageous' (basically, hedging their bets). Or the name 'blockchain' being applied to things which are obviously not blockchain as it espoused by the crypto community (eg the recent ASX news).
« Last Edit: December 09, 2017, 11:41:40 PM by BattlaP »

chasesfish

  • Handlebar Stache
  • *****
  • Posts: 1877
  • Location: Texas
    • Years in the making, I created a journal!
Re: Is it too late [bitcoin]?
« Reply #326 on: December 10, 2017, 04:48:29 AM »
I could see Zelle taking over most of the money-transferring market. I've already had a number of customers use it, though I think there's a ~$2k daily transaction limit. Early days, of course.

-W

Zelle's impact on Venmo, Paypal, ect will be interesting.  The banks are slow, but they own Zelle and it can be instantaneous vs. through an intermediary.
Check out our journal, counting down the days until I Stop Ironing Shirts

We hit $1mil by 33 and will retire at 36!  Stop by over at our site Stop Ironing Shirts

libertarian4321

  • Handlebar Stache
  • *****
  • Posts: 1222
Re: Is it too late [bitcoin]?
« Reply #327 on: December 10, 2017, 06:02:58 AM »
Bitcoin.  A "currency" that no one uses to buy stuff with.  Backed by nothing but the faith of a small number of American millennials and a lot of rich Chinese trying to smuggle money out of their country.  It's all about smuggling and speculative "investing."

Reminds me more of a 1999 profitless ".com" than an investment (plus the smuggling).

It's in full mania mode now, so the end game (collapse) is likely near.

Though, as with all manias, a certain number of fools who had not heard of Bitcoin before a week ago, will pile on at the end ("Greater Fool" theory of investing) and lose nearly everything they invest.

YttriumNitrate

  • Stubble
  • **
  • Posts: 173
  • Location: Northwest Indiana
Re: Is it too late [bitcoin]?
« Reply #328 on: December 10, 2017, 07:52:17 AM »
It's in full mania mode now, so the end game (collapse) is likely near.
Don't forget the old saying that the market can stay irrational longer than you can stay solvent.


My typical gauge for determining if a correction/collapse is coming is to watch and see if the particular investment is discussed on Christmas day at the gathering of my extended family.* If bitcoin is not discussed two weeks from now, then my prediction is that bitcoin is good until 2019.

**I purposefully won't be bringing up the topic to see if someone else does.
« Last Edit: December 10, 2017, 07:58:15 AM by YttriumNitrate »

theolympians

  • 5 O'Clock Shadow
  • *
  • Posts: 62
Re: Is it too late [bitcoin]?
« Reply #329 on: December 10, 2017, 11:33:41 AM »
I have some thoughts on bitcoin. First it is a currency, but no one here that I have seen (just skimming through the posts, if I missed one) has used it as such. In the press, there hasn't been any discussion on what large numbers of people are purchasing with it. I am sure it has happened, "businesses accept it", though at what level I am not sure. As someone posted here, how would a business price something in bitcoin with such swings in volatility?

Secondly, why would anyone use bitcoin as opposed to dollars or any other currency? The plus is anonymity. That is a good thing only if you are trying to hide what you are doing. I bet the Norks, Chinese, and Russians love it. For the average person, is hiding what you are doing that important day-to-day?

Finally, "bitcoin is going up!" at a rocket rate. Reading the posts here, and reviewing the press, everyone seems to be trying to lasso the rocket to get rich quick (or even just to make a little extra). I believe that will work as long as people keep pumping money into the system buying into the dream. When that slows, or when the big players cash out......

It might be the way of the future, but at some point governments are going to get involved and heavily regulate it. There was post buried in here that less than 2% is insured by coinbase. There is no protection there, so if someone boosts your wallet they will be zero help.

In short, it just looks like a gambling frenzy to me; wrapped up in financial terms. That said if you bought bitcoin when it was 1$, you'd be sitting pretty. Now that is over $10000, it has to climb to even more super-highs to realize more modest gains.

Aggie1999

  • Bristles
  • ***
  • Posts: 293
Re: Is it too late [bitcoin]?
« Reply #330 on: December 10, 2017, 01:55:36 PM »
There was post buried in here that less than 2% is insured by coinbase. There is no protection there, so if someone boosts your wallet they will be zero help.

The 2% is the amount of crypto Coinbase says they keep in online storage. They say rest is kept in offline storage. They claim all crypto funds are fully insured from theft on their side. Who knows if it is or not. They specifically say no funds will be covered for someone hacking an individual account. I would not keep anything in Coinbase or any other exchange except that which is needed to trade.

maizeman

  • Handlebar Stache
  • *****
  • Posts: 1815
Re: Is it too late [bitcoin]?
« Reply #331 on: December 10, 2017, 02:16:54 PM »
I have some thoughts on bitcoin. First it is a currency, but no one here that I have seen (just skimming through the posts, if I missed one) has used it as such. In the press, there hasn't been any discussion on what large numbers of people are purchasing with it. I am sure it has happened, "businesses accept it", though at what level I am not sure. As someone posted here, how would a business price something in bitcoin with such swings in volatility?

Secondly, why would anyone use bitcoin as opposed to dollars or any other currency? The plus is anonymity. That is a good thing only if you are trying to hide what you are doing. I bet the Norks, Chinese, and Russians love it. For the average person, is hiding what you are doing that important day-to-day?

*Waves* Hi there! I've used bitcoin to actually pay for goods online.

I wasn't trying to be anonymous,* but the very first time I bought bitcoin I was ordering something from India, from a company I hadn't heard of before, and I didn't feel at all comfortable giving them my credit card info and setting up a bank wire for a $60 purchase seemed ridiculous.

Like paypal, the nice thing about using bitcoin to process payments is that it's "push" driven, rather than "pull" driven, so you can do business with someone without having to trust them to A) not decide to bill you again later without your consent, B) use appropriate data security so no one else can steal your credit card info and run around buying all sorts of stuff on your account. Unlike paypal, transactions have the potential be be very low cost, and you don't have to worry about paypal draining bank accounts you have linked to you paypal account if someone does a chargeback (or various other  horror stories). At the time, transaction fees were on the order of $0.05, and the whole thing went quite smoothly.

Right now the fees are ridiculously high, and I agree with you that the rapid run up in price has brought in a lot of people who are buying bitcoin in the hopes of making a lot of money rather than because they're actually needing to use it to buy and sell things.

*And bitcoin is not a particularly good way to stay anonymous. If you were actually getting into the drug trade I assume you'd pick a currency like monero instead.

surfhb

  • Guest
Re: Is it too late [bitcoin]?
« Reply #332 on: December 10, 2017, 02:24:02 PM »
I have some thoughts on bitcoin. First it is a currency, but no one here that I have seen (just skimming through the posts, if I missed one) has used it as such. In the press, there hasn't been any discussion on what large numbers of people are purchasing with it. I am sure it has happened, "businesses accept it", though at what level I am not sure. As someone posted here, how would a business price something in bitcoin with such swings in volatility?

Secondly, why would anyone use bitcoin as opposed to dollars or any other currency? The plus is anonymity. That is a good thing only if you are trying to hide what you are doing. I bet the Norks, Chinese, and Russians love it. For the average person, is hiding what you are doing that important day-to-day?

*Waves* Hi there! I've used bitcoin to actually pay for goods online.

I wasn't trying to be anonymous,* but the very first time I bought bitcoin I was ordering something from India, from a company I hadn't heard of before, and I didn't feel at all comfortable giving them my credit card info and setting up a bank wire for a $60 purchase seemed ridiculous.

Like paypal, the nice thing about using bitcoin to process payments is that it's "push" driven, rather than "pull" driven, so you can do business with someone without having to trust them to A) not decide to bill you again later without your consent, B) use appropriate data security so no one else can steal your credit card info and run around buying all sorts of stuff on your account. Unlike paypal, transactions have the potential be be very low cost, and you don't have to worry about paypal draining bank accounts you have linked to you paypal account if someone does a chargeback (or various other  horror stories). At the time, transaction fees were on the order of $0.05, and the whole thing went quite smoothly.

Right now the fees are ridiculously high, and I agree with you that the rapid run up in price has brought in a lot of people who are buying bitcoin in the hopes of making a lot of money rather than because they're actually needing to use it to buy and sell things.

*And bitcoin is not a particularly good way to stay anonymous. If you were actually getting into the drug trade I assume you'd pick a currency like monero instead.

Not a very good reason to buy a product with bitcoin IMO.   First off you are not accountable if someone steals your account and secondly, your product is insured if you have an issue with the vendor.     

BTW....NO ONE should ever link their bank account to anything online OR even use one for purchases.   I learned that lesson before.   Use a credit card!!!  Its a no brainer.     No way in hell I'm going to give a vendor my hard earned money within an anonymous environment!
« Last Edit: December 10, 2017, 02:28:19 PM by surfhb »

maizeman

  • Handlebar Stache
  • *****
  • Posts: 1815
Re: Is it too late [bitcoin]?
« Reply #333 on: December 10, 2017, 02:50:46 PM »
Not a very good reason to buy a product with bitcoin IMO.   First off you are not accountable if someone steals your account and secondly, your product is insured if you have an issue with the vendor.     

BTW....NO ONE should ever link their bank account to anything online OR even use one for purchases.   I learned that lesson before.   Use a credit card!!!  Its a no brainer.     No way in hell I'm going to give a vendor my hard earned money within an anonymous environment!

I definitely agree with you that credit card > bank account for online purchases.

In my observation cleaning up the mess left behind by credit card/identity theft is a huge pain and hassle even if the loses are ultimately covered by someone other than you. I'd much rather work with "push" based methods for online payments instead of "pull" and never have to go through the hassle in the first place. I acknowledge other people with weight the same pros and cons and come to the opposite conclusion.

Anyway, I'm not trying to convince you to replace your credit card spending with bitcoin spending. But if the question is whether anyone in this thread has used bitcoin to make purchases, the answer is "yes."


aspiringnomad

  • Pencil Stache
  • ****
  • Posts: 592
Re: Is it too late [bitcoin]?
« Reply #334 on: December 10, 2017, 07:35:38 PM »
It's in full mania mode now, so the end game (collapse) is likely near.
Don't forget the old saying that the market can stay irrational longer than you can stay solvent.


My typical gauge for determining if a correction/collapse is coming is to watch and see if the particular investment is discussed on Christmas day at the gathering of my extended family.* If bitcoin is not discussed two weeks from now, then my prediction is that bitcoin is good until 2019.

**I purposefully won't be bringing up the topic to see if someone else does.

Oh, this old bubble indicator is already flashing like crazy for me personally. Besides being a frequent topic of conversation amongst those with some knowledge of it, two of my older friends who have absolutely zero interest in new technology and/or serious investments have independently registered new Coinbase accounts in the past week. One jumped right into the craze and just bought some BTC despite my warning that they're playing with fire. Neither has any interest in cryptocurrency other than to try to sell it to a greater fool. What strikes me as really odd is that these are among the last people I would have expected to jump on the crypto bandwagon. These two happened to ask me my thoughts about it, assuming that I had some knowledge of it and then they largely viewed my skepticism with their own (uninformed) skepticism about my views. I can't imagine how many millions more are doing the same and I also can't imagine it'll end well for many.

shadow

  • 5 O'Clock Shadow
  • *
  • Posts: 80
Re: Is it too late [bitcoin]?
« Reply #335 on: December 11, 2017, 10:44:10 AM »
For the average person, is hiding what you are doing that important day-to-day?

You may not value privacy, but alot of people do. Use-cases would include looking up embarassing medical conditions, freedom of expression vs self-censorship and chilling effects, entertainment derived from tipping an online stripper, purchasing file download software for foot fetish, debating political and religious views without persecution, protection from stalking or other effects if you are a celebrity or well-known personality, and other situations protecting identity or sensitive data that warrants confidentiality.

shadow

  • 5 O'Clock Shadow
  • *
  • Posts: 80
Re: Is it too late [bitcoin]?
« Reply #336 on: December 11, 2017, 10:58:59 AM »
Forgive me if I'm wrong, but isn't that the complete opposite scenario of most bitcoin investors at the moment?  Few people have only a couple hundred dollars of bitcoin, most appear to be hoarding large sums with the intent to use as an investment rather than for any transactions that can be carried out.

The original premise was that bitcoin would have use-cases that would compel people to acquire it to use; and this would therefore escalate demand and value. However, rising use-cases and transactions have shifted to newer, superior crypto. My prediction is that by 2019, bitcoin's market dominance will dip below 50% (it's currently 62.4% and one year ago it was 86%). There will be crypto that will outperform bitcoin; and a few of these crypto have the potential for a huge breakout due to true onchain scalability, mass adoption, and compelling use-cases (superior remittance system, access to online financial services, a platform that allows payment networks to instantly settle and various units of value to be traded with each other, etc).   

Enigma

  • Bristles
  • ***
  • Posts: 273
  • Age: 38
  • Location: Overseas Contractor
Re: Is it too late [bitcoin]?
« Reply #337 on: December 12, 2017, 02:17:38 AM »
For argument's sake, lets call it a Fad (possibly even a pyramid scheme)...  It has value but for the most part you are now seeing Bitcoin everywhere in the news.  As of Monday (yesterday), it is now being traded on the futures market.  2014 the US IRS said gains were taxable so the government makes their cut on the profits.  Every time a chain is completed via mining a little more bitcoin makes itself into the market (It costs money, electricity, and time to produce).

That aside it is limited.  Unlike currency printing there is a finite amount.  Even with the decimal points the lowest denomination is a satoshi (0.00000001 bitcoin).  If one satoshi becomes worth 1 cent ($.01) then one bitcoin becomes worth $1M.  It will take 100 years before all the bitcoin is completely mined.  By design more cannot be created.

"The combined value of the US paper currency printed each day is thought to be about $900 million"

Pros:
Governments cannot control the value of bitcoin.  They can try to regulate the currency exchanges but hundreds if not thousands of computers worldwide agree to each new block entered into the Bitchain.  Kind of reminds me of how governments try to take down WikiLeaks.  The issue is everyone started mirroring the site.  Causing the site to always be up.

If you don't trust your country's banking system (no FDIC/SPIC), the current government (mass corruption), local currency (over inflated/worthless), or a million other reasons then the global cryptocurrency has value.

So after doing weeks of research lots of youtube videos for and against, I have decided to go the route of investing $3k into where the market currently is.  Gives me a better chance to see it from an inside perspective rather than speculate.  Plus if one day, CryptoCurrencies completely replace the paper currency of the US (not money due to no gold standard since 1971).
"Periodically calculating your net worth -- the value of your assets minus your liabilities -- is the best way to measure and track your financial well-being." - unk

FI: Sept 1, 2014 (Age 35) - Completed
RE: Friday July 12, 2019 (Just b4 40th Bday) - Goal

worldtraveler

  • 5 O'Clock Shadow
  • *
  • Posts: 15
Re: Is it too late [bitcoin]?
« Reply #338 on: December 12, 2017, 04:51:17 AM »
https://www.financemagnates.com/cryptocurrency/news/gmo-internet-pay-employees-bitcoin/

The giant company was relatively quick to get into cryptocurrency, announcing the establishment of a cryptocurrency exchange, GMO Wallet, at the beginning of 2017.

It launched a blockchain development service for customers in July, and a Bitcoin mining operation in September.

At the time, the company said: “We believe that cryptocurrencies will develop into ‘new universal currencies’ available for use by anyone from any country or region to freely exchange ‘value,’ creating a ‘new borderless economic zone.”

In keeping with this national enthusiasm for digital money, the company stated in a press release today: “GMO Internet Group has decided to introduce a system that allows part of the salary’s payment to be received by Bitcoin in order to promote ownership of the [employees’] virtual currency.”

Needless to say, such a massive company deciding to pay employees in Bitcoin is a major step for digital money.

Indexer

  • Handlebar Stache
  • *****
  • Posts: 1064
Re: Is it too late [bitcoin]?
« Reply #339 on: December 13, 2017, 05:21:48 AM »
Report back when I can get FDIC backed Bitcoin accounts to store my crap in.  None of the Bitcoin infrastructure has ever been tested against a bank run.  Well, actually Mt. Gox did and it failed miserably.

FDIC does not insure against fraud though (which is what the discussion was about). I agree that FDIC insurance would be valuable in the event of institutional insolvency. But, again, that is not a critique against bitcoin, that's a critique against the institutions around it. We may very well see a day where FDIC/NCUA type insurances are extended to bitcoin accounts as well.

FDIC doesn't protect against fraud. It does protect against the institution going bankrupt. The institution protects against fraud. Therefore, if the fraud was bad enough that the institution became insolvent FDIC would step in to reimburse depositors.

I don't see bitcoin getting FDIC insurance or anything similar. SIPC, which protects investment accounts, has already said they will not reimburse stolen bitcoins. They also have ponzi scheme and fraud alerts on bitcoin, but that's another conversation. FDIC and SIPC have strings attached. Banks and investment firms have know your customer laws, anti-money laundering laws, and suspicious transaction reports. I highly doubt any government would extend the same protection to bitcoin when bitcoin's appeal is that it gets around those laws.




If we are going to keep calling bitcoin a currency I have an important question. Is anyone using it to buy things? I hear about companies accepting it, but does anyone actually use it? I know there are illegal transactions it is used for, but it's current price can only be justified if people think it will go mainstream. Is it being used for regular legal transactions? I imagine there are a few, but do we have any data on how frequently?

Transaction fees: I've read in multiple places of late that a transaction can take a week unless you pay $20 for priority processing. I thought bitcoin was supposed to be faster and cheaper. $20 for a same day transaction... that's the international wire fee at many major banks. Credit card and ACH transactions, what bitcoin should be competing against, clear much faster and much cheaper.

I've heard about how it is easier for international transfers, but I know someone who tried to do that and the receiving company would only do the transaction if the buyer insured the bitcoin against market fluctuations. They didn't want to agree to $200k in bitcoins and then have the bitcoins drop in value to $160k before they could sell them. The buyer didn't want to insure the bitcoin either, too much risk. They opted for a bank wire transfer. Fee was probably $20...

GuitarStv

  • Walrus Stache
  • *******
  • Posts: 9657
  • Age: 36
  • Location: Toronto, Ontario, Canada
Re: Is it too late [bitcoin]?
« Reply #340 on: December 13, 2017, 07:45:14 AM »
If we are going to keep calling bitcoin a currency I have an important question. Is anyone using it to buy things?

No, not really.  Aside from drug/child prostitute related uses, there's really only disadvantage for most people and companies in attempting to use bitcoin as a currency at the moment.  Data regarding frequency of uses of bitcoin to buy things is never going to be available because there's no record kept of what a bitcoin transaction is actually for.


Transaction fees: I've read in multiple places of late that a transaction can take a week unless you pay $20 for priority processing. I thought bitcoin was supposed to be faster and cheaper. $20 for a same day transaction... that's the international wire fee at many major banks. Credit card and ACH transactions, what bitcoin should be competing against, clear much faster and much cheaper.

I've heard about how it is easier for international transfers, but I know someone who tried to do that and the receiving company would only do the transaction if the buyer insured the bitcoin against market fluctuations. They didn't want to agree to $200k in bitcoins and then have the bitcoins drop in value to $160k before they could sell them. The buyer didn't want to insure the bitcoin either, too much risk. They opted for a bank wire transfer. Fee was probably $20...

The behaviour you're describing is caused by the design of bitcoin.  The blockchain is the permanent record of all bitcoin transactions.  When you 'spend' a bitcoin, you say 'I want to transfer this bitcoin to XXX'.  Then you have to pay a fee and wait for this to be recorded on the blockchain.

Just including this information in a block on the blockchain isn't enough to guarantee that the transaction has been made (on average several times a day a single block from the blockchain becomes orphaned - which means that the record of transactions might not actually be kept).  Each block produced after the block that contains your transaction makes it less likely that your transaction will be orphaned and forgotten.  The current standard with bitcoin is to wait for at least six blocks after the transaction (so 7 blocks total) before you consider the transaction confirmed.  It is an average of 10 minutes per block to complete, but this number can grow or shrink depending on the hash power of the Bitcoin network.

A block handles about 2500 transactions.  I mentioned that you have to pay a fee to include your transaction in a block.  If you pay a bigger fee, you get higher in the queue to have your transaction happen.  If there are more transactions taking place than can fit in a single block, then you can choose to wait for the next block (or maybe the next block after that, or after that, etc.) for a lower price.  Bitcoin has recently become popular, so there are longer queues for transactions . . . so if you want to complete your transaction more quickly you have to shell out lots of money or you have to wait a long time.

zoltani

  • Handlebar Stache
  • *****
  • Posts: 1011
  • Location: PNW
Re: Is it too late [bitcoin]?
« Reply #341 on: December 13, 2017, 09:18:16 AM »
I found this article "HOW TO MAKE A MINT: THE CRYPTOGRAPHY OF ANONYMOUS ELECTRONIC CASH" written by the NSA in 1996. It makes me question the who and why behind its creation.

http://groups.csail.mit.edu/mac/classes/6.805/articles/money/nsamint/nsamint.htm


“The hardest thing in the world is to simplify your life. It’s so easy to make it complex. What’s important is leading an examined life.”

Yvon Chouinard

sherr

  • Bristles
  • ***
  • Posts: 403
  • Age: 32
  • Location: North Carolina
Re: Is it too late [bitcoin]?
« Reply #342 on: December 13, 2017, 09:53:07 AM »
I found this article "HOW TO MAKE A MINT: THE CRYPTOGRAPHY OF ANONYMOUS ELECTRONIC CASH" written by the NSA in 1996. It makes me question the who and why behind its creation.

I wouldn't read too much into it. No new technology springs from a void, they all are developments of previous years / decades worth of foundational work. The NSA is possibly the world's most expert organization on things related to cryptography, so it's completely unsurprising that they would have looked at stuff like this before.

shadow

  • 5 O'Clock Shadow
  • *
  • Posts: 80
Re: Is it too late [bitcoin]?
« Reply #343 on: December 13, 2017, 11:41:32 AM »
I wouldn't read too much into it. No new technology springs from a void, they all are developments of previous years / decades worth of foundational work. The NSA is possibly the world's most expert organization on things related to cryptography, so it's completely unsurprising that they would have looked at stuff like this before.

NSA had backdoor access (private key) to the early cryptography that was sold and used by businesses. This issue actually still prevails in today's infrastructure: (example) google controls the master key for gmail. Of course, blockchain with zero-proof resolves this (decentralized messaging), which would allow greater security for trade secrets. 

sherr

  • Bristles
  • ***
  • Posts: 403
  • Age: 32
  • Location: North Carolina
Re: Is it too late [bitcoin]?
« Reply #344 on: December 13, 2017, 01:59:52 PM »
I wouldn't read too much into it. No new technology springs from a void, they all are developments of previous years / decades worth of foundational work. The NSA is possibly the world's most expert organization on things related to cryptography, so it's completely unsurprising that they would have looked at stuff like this before.

NSA had backdoor access (private key) to the early cryptography that was sold and used by businesses. This issue actually still prevails in today's infrastructure: (example) google controls the master key for gmail. Of course, blockchain with zero-proof resolves this (decentralized messaging), which would allow greater security for trade secrets.

I am not a crypto expert, but I don't think this response makes much sense. First of all because it doesn't seem to apply to anything we were talking about.

Secondly, Google knows about the contents of your GMail not because of any secret cryto backdoor, but because you are sending them unencrypted emails that they store in their database on their servers. You are using their application, of course they can look at it and see what's in it. You don't want them to? Okay, then pre-encrypt your message and copy the encrypted nonsense blob into GMail. Now they can't read it. They can still see the blob, but they won't understand what it says.

Yes it is known that the NSA had backdoored several crypto algorithms in several different ways. You can read about some of them starting here:
https://en.wikipedia.org/wiki/National_Security_Agency#Bypassing_encryption

It is also reasonably suspected that they have unknown-to-the-public tricks that weaken several others. And that's part of the point, they know more than anyone else. They are a thousand times smarter and sneakier than you and I put together. So it's almost literally impossible to tell what they can do and what is just rumor.

Blockchain / cryptocurrencies are no more immune than their underlying cryto algorithms. Certainly not from decentralized messaging, that's a minor speed bump to them not a roadblock. And as a non-crypto-expert it's not clear to me what zero-knowledge proofs have to do with anything. Nor does zero-knowledge proofs have anything really to do with decentralized messaging.

All that being said, just because the NSA published a paper 20 years ago that laid some of the groundwork for cryptocurrencies means nothing about the security or vulnerability of blockchain / cryptocurrencies. The NSA also has an interest in making sure strong crypto works so that no one else can spy on them. And banks don't want people to be able to steal from them, and software companies don't want to be at fault if software they sell to their customers ends up getting them hacked, etc. So there is a lot of work that goes into making sure that crypo algorithms actually are working as advertised, and presumably blockchain / cryptocurrencies would be using the best-available algorithms, not known-weak ones.

I could be wrong about everything and it could be that you know way more about this than I do, but I would caution people in general about just throwing around jargon and pretending it's a magic solution to a problem. Crypto is really hard and there are probably only tens of people worldwide who actually really truly know what they're talking about. If you're not one of them you basically have to trust that they're not missing something. But at the same time I don't have any reason to suspect that blockchain / cryptocurrencies are vulnerable to anything, and that article should not make anyone suspicious of anything either.

Edit: This is also why the FBI and anyone else who complains about why the government should have backdoors into crypto algorithms "for national security reasons" should be boo'd out of office. There is no such thing as a backdoor that only the "good guys" can use. Either crypto is strong and your bank transactions are secure and your blockchain works and your private messages are private and the website you are visiting is actually the real website it says it is, or it's not and it's only a matter of time before the "bad guys" figure out how to break it (if they havn't already). There is no in-between. Support politicians who support real crypto, literally the entire internet depends on it.
« Last Edit: December 13, 2017, 02:09:55 PM by sherr »

ILikeDividends

  • Stubble
  • **
  • Posts: 152
Re: Is it too late [bitcoin]?
« Reply #345 on: December 13, 2017, 02:38:41 PM »
"Bitcoin plays a very small role as a payment system.  It is a highly speculative asset."

"It is not a stable source of value, and it doesn't constitute legal tender."

Quotes from outgoing fed chair, Janet Yellen, about two hours ago.

http://money.cnn.com/2017/12/13/investing/bitcoin-janet-yellen-federal-reserve/index.html

No doubt these remarks will not be regarded as surprising by many on this thread.
« Last Edit: December 13, 2017, 02:43:07 PM by ILikeDividends »

shadow

  • 5 O'Clock Shadow
  • *
  • Posts: 80
Re: Is it too late [bitcoin]?
« Reply #346 on: December 13, 2017, 03:53:26 PM »
I wouldn't read too much into it. No new technology springs from a void, they all are developments of previous years / decades worth of foundational work. The NSA is possibly the world's most expert organization on things related to cryptography, so it's completely unsurprising that they would have looked at stuff like this before.

NSA had backdoor access (private key) to the early cryptography that was sold and used by businesses. This issue actually still prevails in today's infrastructure: (example) google controls the master key for gmail. Of course, blockchain with zero-proof resolves this (decentralized messaging), which would allow greater security for trade secrets.

I am not a crypto expert, but I don't think this response makes much sense. First of all because it doesn't seem to apply to anything we were talking about.

My post was a general statement acknowledging yours, saying that yes, the NSA was and are highly involved with cryptography; yes, they have a history with it. I think we're both coming from different frames of reference.   

Quote
Secondly, Google knows about the contents of your GMail not because of any secret cryto backdoor, but because you are sending them unencrypted emails that they store in their database on their servers. You are using their application, of course they can look at it and see what's in it. You don't want them to? Okay, then pre-encrypt your message and copy the encrypted nonsense blob into GMail. Now they can't read it. They can still see the blob, but they won't understand what it says.

You're using their service, so yes, they have access to all your activities; your gmail is encrypted within their service; gmail to gmail is encrypted but not outside of that (though are workarounds but that requires the receiver a way to decrypt what you encrypted). I'm using them as an example to illustrate the lack of transaction or communications medium that offer greater privacy protection where it would be needed (political activists or journalists or where someone simply wants to use email services without their data being scanned and collected for advertising purposes).

Quote
Blockchain / cryptocurrencies are no more immune than their underlying cryto algorithms. Certainly not from decentralized messaging, that's a minor speed bump to them not a roadblock. And as a non-crypto-expert it's not clear to me what zero-knowledge proofs have to do with anything. Nor does zero-knowledge proofs have anything really to do with decentralized messaging.

Most blockchains right now only offer public-private key functionality at the endpoint, and not between transactions. Zero-knowledge allows encryption between transactions. If we're able to build email or messaging protocol on top of these endpoints in zero-knowledge environments, now we have true decentralized email. It can offer other use-cases where businesses can transact without revealing trade secrets, yet are able to guarantee certain work has been performed. Zero-knowledge and variant tech allows mathematical expression stating that yes, you're the owner of the private key, you can prove it without exposing what the private key is.

Quote
All that being said, just because the NSA published a paper 20 years ago that laid some of the groundwork for cryptocurrencies means nothing about the security or vulnerability of blockchain / cryptocurrencies. The NSA also has an interest in making sure strong crypto works so that no one else can spy on them. And banks don't want people to be able to steal from them, and software companies don't want to be at fault if software they sell to their customers ends up getting them hacked, etc. So there is a lot of work that goes into making sure that crypo algorithms actually are working as advertised, and presumably blockchain / cryptocurrencies would be using the best-available algorithms, not known-weak ones.

I could be wrong about everything and it could be that you know way more about this than I do, but I would caution people in general about just throwing around jargon and pretending it's a magic solution to a problem. Crypto is really hard and there are probably only tens of people worldwide who actually really truly know what they're talking about. If you're not one of them you basically have to trust that they're not missing something. But at the same time I don't have any reason to suspect that blockchain / cryptocurrencies are vulnerable to anything, and that article should not make anyone suspicious of anything either.

I'm not suspicious of blockchain. My earlier reference about nsa backdoor never meant to imply an nsa backdoor into blockchain. I don't consider myself an expert on cryptography at all; my knowledge stems from a university network security class, where we learned about Bob and Alice and performed some cryptographic calculations, and where I also had to write a paper on cryptography; and years of blockchain interest. I consider myself to have an enthusiast knowledge.

thenextguy

  • Stubble
  • **
  • Posts: 177
Re: Is it too late [bitcoin]?
« Reply #347 on: December 13, 2017, 03:56:49 PM »
"Bitcoin plays a very small role as a payment system.  It is a highly speculative asset."

"It is not a stable source of value, and it doesn't constitute legal tender."

Quotes from outgoing fed chair, Janet Yellen, about two hours ago.

http://money.cnn.com/2017/12/13/investing/bitcoin-janet-yellen-federal-reserve/index.html

No doubt these remarks will not be regarded as surprising by many on this thread.

I don't really have much of an issue with her assessment. Seems pretty spot on to me and non-controversial.

shadow

  • 5 O'Clock Shadow
  • *
  • Posts: 80
Re: Is it too late [bitcoin]?
« Reply #348 on: December 13, 2017, 04:03:03 PM »
@sherr

Adding to what I said earlier: I'm excited about blockchain because it represents a new form of digital communication; it effectively resolves a network protocol issue (byzantine general's problem, which was once thought to be unsolvable). The decentralized aspect makes it extremely difficult or impractical to be backdoored.

talltexan

  • Handlebar Stache
  • *****
  • Posts: 1235
Re: Is it too late [bitcoin]?
« Reply #349 on: December 15, 2017, 07:03:37 AM »
Thank you for this comment about the Byzantine general. I found this useful article that really answers some of my skepticism about the Blockchain.

https://medium.com/@DebrajG/how-the-byzantine-general-sacked-the-castle-a-look-into-blockchain-370fe637502c