Ideally the concept is to reovme the mess that has been created with factional reserve banking. Right now so much power is in the hands of the central banks. This power gives them the ability to control the amount of currency that is in circulation. In essence money is created out of thin air with no weight to it like the gold standard created. Money is built on trust in the value of that currency, which is very scary. You can even see in recent times how this type of system has created massive problems and will only get worse as time goes on. The only way I personally feel that currency can be fixed since we left the gold standard is to create a new currency with a relative value unit assigned to it. The relative value can be tied to something tangible. To supply a certain good or service it requires certain resources. Those resources being natural, human and others. For example it takes a specific amount of resources to produce a car. Machines, equipment, people working on it, natural resources like metal, plastics and time. These factors can be used to produce a RV for that car. Unfortunately I think there is so much money in circulation, that it would be near impossible to go back to the gold standard as there may not be enough gold available in circulation to match out the currency to. Why not create a balance of the commons of ALL available tangible resources and not just gold?The concepts I like of BitCoin are the fact that there is no central authority for currency. What you produce is what you own. You actually own that currency that you have produced using your resources and it has value based on the fact that others had to go through the same create that currency as you did. The idea of using CPU cycles is very geeky and not sustainable. The idea though that you have this resource and by using that resource you are producing something that holds value amongst those doing the same type of work place the value and trust in that currency. So when you go to work based on your education, work experience, skills, time spend doing your job, the actual work being done and even the value your employer feels you are worth to them can all be used as factors. That value of currency that you produce has no value that is set by factional reserve banking and the amount of currency in circulation. It is based on a true tangible asset like the gold standard used to be.Just my two cents.

Incorrect. The currency is a currency, not a short-term investment vehicle, and certainly not a stock. Bitcoin’s cooperative nature of the infrastructure is in part a direct contradiction of your notions of its operation.

The convenience of the currency, and its properties, and the mathematics that protect the hash chain, and its open source, are the reasons to use it as a currency. Therefore, it doesn’t actually matter what the current price is in an exchange market. It was still worthwhile back when it was $0.20USD and cheaper, there just weren’t enough of them in circulation and in enough hands to absorb entire economies.

But we’re getting there.

And I have read the source. I have also read Satoshi’s paper. But the paper doesn’t define Bitcoins, all it does is present an interesting way to solve the double-spend problem. The real details are documented primarily, and most accurately, only in the source code itself.

That you think people wouldn’t give away software for the good of the people as a whole, that such people don’t exist, that these people wouldn’t be interested in operating mining equipment at least partly for the purpose of absorbing chunks of the economy away from the current financial oligarchies means you are forgetting a huge part of human history, back to ancient Greece and earlier, and up through Linux and the *BSDs.

Meanwhile, the trustworthiness of the Bitcoin developers is irrelevant because of the transparency of the entire operation of the network. Everything is visible. It’s open source! Do you think the developers could introduce something that paid them a million dollars without the community as a whole rejecting the new software outright? Anyone could have been mining since Bitcoin was released. But nobody did except the founders. They were the ones spending their power and money protecting the early network.

The fact that we can audit the source and watch every message on the network means we’re already head and shoulders above current government policy on fiat currencies.

Meanwhile, a computational attack on the network also serves the interests of the network.

One hash is about 8k-12k FLOPS equivalent; therefore, the current FLOPS rate of the network is hitting peaks of ~ 180PFLOPS.

That’s kind of a lot. Say you built a structured ASIC similar to Art’s, which did ~ 200MH/s, @ $300/ea. You would need 75000 = $22.5m, just to equal the current network and have a slim long-term chance of outrunning the network by.. a single block, ignoring the cost of power.

Double that for a 66% share of the entire network, for a more reasonable chance of success, long-term. So, $45m.

…to kill a network that would just code around your efforts to inject overwriting blocks or double-spends within a few days tops. Your damage is minimized, and you have one chance to do something big, and inside of a very short, outran block chain that you hope hasn’t been obsoleted by a hardcoded hash checkpoint. It absorbs the attack, and gets stronger because of it.

The hashrate which supports our tiny economy is ridiculous. By the time it is a threat to someone, the hashrate supporting it will be proportionally larger, and will be beyond the efforts of all but medium-to-large governments to stamp it out using the already well-studied hashrate attack.

You seem to think the most viable attack is a competing hashrate. You are wrong.

“Bitcoin is decoupled from capital and labour”. Not exactly. Similar to mining for gold, there is a finite supply of bitcoin (approx. 21M) and while the rate of bitcoin creation is designed to follow a mathematically predictable (inverse hockey stick) curve, they are allocated in direct proportion to those individuals who supply mining labor. It is work (expertise, electricity, GPU power, cooling, etc. and time) for an individual working alone or in a pool (think “mining company”) to mine a coin. It is also like gold, for now, fiercely competitive. In terms of capital, mining is no longer worthwhile for all but the diehards, and so most bitcoin is now being purchased for USD and other gov’t money from exchanges such as Mt Gox.
Therefore I believe that bitcoin is coupled to labor and to capital.

“The BitFed is injecting fiat into the currency”. This was a fiat currency to begin with. It’s not pegged to a commodity and it’s not backed by a gov’t (which I think is how you’re defining fiat). It is simply backed by the people and the computing resources used by the people who run the client. That’s it, that’s all. It’s not backed by the developers unless they are running the client.

Paraphrase: “There is no destruction of bitcoin”. Actually a significant amount has been lost by those who have deleted or lost their wallet files or have abandoned using it. In that respect, it can be destroyed like cash, but currently not by a central authority. So there is an uncontrolled “sink” of sorts, and much Bitcoin has already been destroyed.

Paraphrase: “Best case endgame scenario is that the BitFed will serve their own interests or VISA or the US government or someone else will put up a giant server farm to destroy Bitcoin by outcomputing the gaming geeks.”

1) Of course many people tend to act in their own rational self-interest, notably the Rand inspired people involved in this project. However, it’s important here to note that the developers don’t control the client or anything else. Let me explain the management of an open source project to you by using the most famous one, Linux, as an example. Linux is the operating system which powers most the servers on the Internet.

Most projects are a volunteer, technical merit based, benign dictatorship. So you don’t get a vote or influence unless you’re on the project, and you’re not on the project unless you have technical merit and contribute. After debate the head of the project typically has final say about what goes in. Not only that, outside groups could co-opt, pay these guys off, or otherwise influence them (Gavin has already presented to the CIA). So this is bad. But here’s what’s built in that fixes it: the code is fully transparent and can be reviewed by anyone. Also, if you don’t like it, don’t use it. Vote with your feet and walk. Or…”fork” the project, in other words, use whatever bits of it you like and make your own currency with your rules. Don’t know how to program? Hire someone, or learn yourself. In fact, there are probably 50 versions (called “distributions”) of Linux out there. Competition is good.

2) VISA or some other group with resources will outcomputer and subvert/kill the project. Sure, maybe. That becomes more difficult as time goes on and those checkpoints are hardcoded in. Also, per the paper it’s designed so that someone with 51% or more of the computing power on the network is rewarded more by mining and accruing transaction fees then by counterfeiting/invalidating. But, let’s say it happens…ok, we get annoyed and leave and start WidgetCoin and redesign it so that kind of attack is more difficult. The Internet was originally designed by the US DoD to be decentralized and withstand Soviet nuclear attack. It is very hard to eradicate the Internet (and P2P) at this point. The vast music industry killed Napster, but couldn’t kill BitTorrent. Bitcoin is the same, very soon it’s not going to be trivial to shut it down by computation alone. Something more resilient will pop up and take its place.

Now I do have some ideas about what would kill Bitcoin, but I’ll save them for my next reply.

A second problem is that the security of bitcoins is designed to be unsustainable. The currency issues coins to pay people to use their computing power to protect the currency from hacking. There is no credible explanation of how these will people can be paid as the system issues fewer and fewer coins and eventually nothing. The percentage of extant bitcoins devoted to security is coded to fall exponentially over time. Either security was never necessary or the system will become insecure.

Final note. Both of these problems are solvable. It is just that bitcoin hasn’t solved them.