4821

Technology & Information / Re: Ask Rushy about Bitcoins.

« on: January 30, 2014, 10:25:04 PM »

This is patently untrue. Over the history of banking, the interest rates paid on savings has been above the inflation rate. You're biasing yourself due to the trend over the past 25 years.

Can't tell if serious.

https://www.commbank.com.au/personal/accounts/savings-accounts/netbank-saver.html

As a bonus, there's no fees, they pay 2.5% interest compounded daily.

Oh, so you are serious. Well, first off, I was quite obviously referencing US banks (or banks that operate in the US). You are referencing an AU bank that uses AUD. So let's take a look at AUD's inflation.

http://www.tradingeconomics.com/australia/inflation-cpi

No wonder that bank pays such a high interest rate, AUD has a pretty ridiculous inflation rate at 2.7% last quarter. Oops. Looks like your money still lost value. Even when inflation is at 2.2% you get the equivalent value increase of 0.3%. One quarter it was at 5%! I wouldn't dare put my savings in AUD.

So if nobody used any transaction fees, then it would just be first come/first served? If there is currently more transaction space than there are transactions, why would anyone bother with a transaction fee?

Yes and no. Miners can decide whether to include transactions with no fees in their blocks, and a lot choose not to.

4822

Technology & Information / Re: Ask Rushy about Bitcoins.

« on: January 30, 2014, 03:48:58 AM »

Bank interest is normally below the inflation threshold regardless, so chances are your savings are losing value despite gaining in numeric volume.

Source?

https://www.wellsfargo.com/savings-cds/

http://www.us.hsbc.com/1/2/home/personal-banking/savings-accounts

https://www.chase.com/savings/savings-account#!chasesavingtabs:chasesavingstab2


Just to name a few, all offer an average of 0.01%, with their "high yield" savings being around 0.05%. Inflation in a good year for any fiat currency is 1% and can sometimes be as high as 5%. Please, please point me to a bank with a savings account >1% while having less than $150,000 in savings. I will thank you, hell, I might even pay you.

With fiat currencies your savings are guaranteed to lose value.

4823

Technology & Information / Re: Ask Rushy about Bitcoins.

« on: January 30, 2014, 02:31:14 AM »

"Being your own bank" doesn't sound like an advantage because your savings wouldn't accumulate interest.

Bank interest is normally below the inflation threshold regardless, so chances are your savings are losing value despite gaining in numeric volume.

4824

Technology & Information / Re: Ask Rushy about Bitcoins.

« on: January 30, 2014, 01:57:15 AM »

You've (somewhat) described what it is and how it functions, but in what aspect is it superior to the dollar?

It isn't meant to be a replacement for the dollar (and it quite frankly, isn't going to). It however has a lot of benefits over the dollar. It can't be counterfeited, it has instant transactions that can't be censored, it can be readily traced, and you can be your own bank if you take reasonable steps to secure your funds. With the dollar the only way to secure your funds is to physically have them in your possession in some sort of vault, which is notably more terrible than just about anything else.

What makes it worth it to make a switch?

That really just depends on what you do with your money. If your total economic interaction involves swiping your credit card at Wal-Mart, then there is zero reason to use Bitcoin. Bitcoin shines if you need something like international transactions or instant transfers. I funded a business in Sweden without having to hassle with my bank and waiting for wire transfers to go through as time was of the essence. To me this is important enough to warrant the use of Bitcoin. Things like remittances would also be very useful if done via Bitcoin since the fees are relatively small. Bitcoin is also very attractive if your country has a dying or no currency at all of its own. No longer do countries have to default to using another country's currency just to maintain their own economy.

What is so awful about our current currency?

It's expensive to transport, secure, and handle. It can be readily counterfeited, despite billions invested in the attempt to stop such things, it cannot be handled by a lone person.  I can go on but I could have a very specific discussion about it forever. It really just depends, again, on what you use it for. Bitcoin really wouldn't help the average person, at least I don't see how it would.

4825

Technology & Information / Re: Ask Rushy about Bitcoins.

« on: January 30, 2014, 01:23:03 AM »

How is the amount of the transaction fee decided?

By everyone else's transactions fees. If everyone happens to be paying $100, you'll have to pay it too. Luckily everyone on the planet are greedy, and normally pay less than a penny.

I can be a bit more specific than that though. Bitcoin has a major disadvantage of only being able to process a maximum a 7 transactions a second (or otherwise notated as a maximum block size of 1MB). Transactions take up space in a block and transaction fees are how transactions "fight" their way into a block. Miners want money, so they pick people with the highest transaction fees. What this means is if too many people are making transactions and you have a very small fee or none at all (yes, you can choose to send bitcoins with a fee of 0) then you might not make it into a block and your transaction floats in purgatory forever (the network later rejects it entirely, you won't lose you money this way).

There is no way around this, unfortunately. It is a issue currently being discussed. Currently the only way to allow more transactions is to increase block size, in which the blockchain will start getting big, as in a few terabytes in less than a year, which is seen as detrimental to Bitcoin's status as "decentralized."

The sort of good news is that Bitcoin hasn't come close to approaching 7 transactions a second. In November 2013 it saw 3 per second.

What do I need to know before starting with Bitcoin? Because I went to the site and there was scary talk at the sign up and many privacy concern that I can't understand right now because I'm tired. What's the most important info for a noob?

That really depends on what you plan on doing with it. First off, there is no official Bitcoin site. Because Bitcoin is an open source, decentralized project, no one can claim rights to it or power over it. That said, you can trust this site, at least for now:

https://bitcoin.org/en/

Read the introduction. Watch the video. Do all of it even if you've read this thread because Bitcoin is something you need to truly understand. It has never existed before and it can't be described using any existing technology. If you still have questions after that, let me know.


@Thork, Ben Franklin, Blanko have your discussion somewhere else, you are derailing the thread.

4826

Technology & Information / Re: Ask Rushy about Bitcoins.

« on: January 29, 2014, 05:31:02 AM »

Why do you post incorrect things in a thread where you are supposed to be answering questions? You should at least disclose when you're talking about things you don't understand.

Point out precisely why and how it's wrong and I'll correct my statement. Continue to post one-word replies with no evidence and I'll simply ignore you entirely.

4827

Technology & Information / Re: Ask Rushy about Bitcoins.

« on: January 29, 2014, 05:19:08 AM »

Can I tip you in dogecoins?

I'd prefer you donate to a charity. I never seriously ask for money, the donation address below is a joke.

Unless of course you plan on giving me a billion dogecoins, I'll take that.

4828

Technology & Information / Re: Ask Rushy about Bitcoins.

« on: January 29, 2014, 05:09:52 AM »

Oh.  I thought transactions were mediated by a 3rd party client.

As for the transactions it's good that they can't be controlled, because otherwise I could see a situation where a ring of hackers modify their client to artificially increase their number of bitcoins and use each others' clients to validate the change for the network.

A client that is different from the others cannot modify the others, even if there are more of them. Each version of Bitcoin is not just an updated client, it is literally a different network. This is why Litecoin, Peercoin, Dogecoin, etc. exist. They are Bitcoin clients, just with minor (or in the case of Peercoin, major) changes.

There is nothing stopping me from turning Bitcoin into RushyCoin. The problem lies in convincing everyone to use RushyCoins instead of Bitcoins, a feat no competing network has accomplished.

4829

Technology & Information / Re: Ask Rushy about Bitcoins.

« on: January 29, 2014, 03:18:45 AM »

You skipped my question about 3rd parties.

There is no third party in bitcoin. You have a sender and a receiver. No one else partakes in bitcoin transactions. Miners record transactions, they can not modify them in any way. You don't get to choose which blocks your transaction goes into, I'm not even sure why you would want to.

I am not sure if tis has been covered elsewhere but what inherent properties, if any, of bitcoin makes it a secure currency against counterfeiting and money-laundering?

Bitcoin can not be counterfeited as of today. If for any reason elliptic curve cryptography is broken in the future then my previous statement will no longer be true. However since cryptography is prevalent throughout the internet, bitcoins would be my least worry if elliptic curves are broken.

Money laundering is a different beast entirely. Bitcoin addresses can be traced, so it isn't exactly a good currency to use for theft or other illegal activities in the first place. That said, it has been used for money laundering. The dollar would actually win out between the two as being the best vehicle for illegal activity.

4830

Technology & Information / Re: Ask Rushy about Bitcoins.

« on: January 29, 2014, 02:17:31 AM »

Incorrect.  The value of a dollar is, at least in part, proportional to the number of dollars in circulation.  Having too many dollars in circulation has the effect of devaluing the dollar and that generally is not considered a good thing.

The only thing the value of the dollar is correlated to is how much people think it is worth. USD inflation is about ~1% a year but the Federal Reserve prints more money than 1% of the total amount in circulation in a year.

So you're saying that no one can ever change 10^8 to 10^12 at the source?

Of course they can. Bitcoin is open source, you can change whatever you want to. Getting millions of other people to change theirs too is the problem. Bitcoin is a network, there is no giant server that says "BITCOIN" on it and controls the whole network.

If no one is spending bitcoins, then what's the point?  Currency only has value when you try to exchange it for something else.

Well then, its a good thing people are spending bitcoins then, isn't it? You need to come up with some better points, markjo. I won't entertain your trolling forever.

4831

Technology & Information / Re: Ask Rushy about Bitcoins.

« on: January 29, 2014, 01:56:35 AM »

Irrelevant.

Hardly.

Justify this statement.

Read this thread.

As far as destruction of currency is concerned, paper money wins. It can be regulated if the amount lost is significant enough to be noticed. As you have said, the amount of bitcoin in circulation is much more rigid. Backups, encryption passwords? Is this a joke? It's my money and I need it now!

You don't have to worry about paper money being destroyed because it's like monopoly money, the government can print unlimited amounts forever. Everyone knows the government is just great at regulating the economy.

What is the process involved in "generating a new address"?

I've made it a point not to get too technical in this thread, but generating a new address is basically creating a private key, public key, and a hash of the public key (which is the address). All addresses are created via SHA-256 and RIPEMD160 and start with a ECDSA key.

What that all means is that you can create as many addresses as you want. The process of address creation intrinsically has nothing to do with the Bitcoin protocol. There is no record of generated addresses or anything. Only addresses that receive or transmit bitcoins are shown on the blockchain.

Flexibility of a currency != unlimited supply.

Unlimited means there is no limit to how much can be created. Gold is limited. Bitcoins are limited. Dollars are unlimited. The government can print however many they want, and they typically do just that. It's like having an economic cheat code.

If I install Bitcoin, will I get a virus?

That depends on what client you install. You shouldn't install a client that is not open source and you should always verify the PGP signature. Why am I even telling you this? You should already know all that.

How much, roughly, (in old-skool currency) have you managed to spend with bitcoins and how much did you spend acquiring them?

I don't make a habit of talking about my personal finances on the interwebs.

What's to stop someone from changing the protocol to allow for more bitcoins to be generated?

Nothing. The problem lies in that you will be the only one to have changed your protocol. You are now a bitcoin network of 1. Congratulations on your expansive but worthless collection of Markjo-coins.

  Also, if the number of bitcoins is to be limited, how can they generate enough for everyone to use?

You can have 10^-8 bitcoin.

  What's to prevent bitcoin hoarding?

Nothing. Additionally, there is nothing wrong with hoarding.

Why would anyone mine bitcoins if it's cheaper just to purchase them?

They probably wouldn't.

Conversely, what happens in 2140 when mining stops, and nobody devotes any more of their processing time to bitcoin?

This is when transaction fees will increase. Right now transaction fees are very tiny because miners care more about the large block of coins in their reward.

How can both of these statements simultaneously be true?

Some people mine on GPUs, which use a lot of energy for very little reward. I said ASICs specifically make a shitload of money.

@Ben Franklin, either ask a question or make a real argument. I have no time for your petty one word replies.

4832

Technology & Information / Re: Ask Rushy about Bitcoins.

« on: January 28, 2014, 05:17:30 AM »

Portability: Paper currency printed by a central government wins. Hassles like internet access and printing + verification codes make it much more complicated than what is already in place.

E-mail is more complicated than good old fashioned snail mail, but the benefits of learning how to use it outweigh the benefits of keeping snail mail. Will things other than bitcoin exist? Of course. But using Bitcoin is more advantageous in the long run than not using it.

Durability: What do you mean by lost? I don't want to cast judgment before I know what you mean. Physical money can obviously be lost. That amount is not easy to determine either.

As in never to be recovered. If I have 10 bitcoins on a hard drive and I light the hard drive on fire, those bitcoins are gone. Forever. This can be avoided by keeping backups and not forgetting your encryption password.

Uniformity: At a glance, the idea of tracking monetary transactions seems to be an invasion of privacy. Besides that, I don't see anything wrong with "tainted" money. I'd be willing to bet that a substantial portion of the currency in circulation has been used in an illegal transaction. What exactly happens to a tainted bitcoin.

Because addresses can be generated at free will, privacy isn't a large concern (it is a concern, though). You can generate a new address every time you receive any sum of coin. There are 2^256 possible addresses. To give you an idea of how big that number is, if I hooked a computer up to the sun (for energy) and this computer generated 1 billion addresses every second... the sun would burn out before it generates even half of the addresses.

Limited Supply: There is currently a limited supply of USD in circulation. That amount changes, but there isn't some cave that hasn't been discovered full of trillions of hundred dollar bills. If I understand correctly, the amount of bitcoin in circulation is dependent on miners and an algorithm. Correct me if I'm wrong. To answer the question of which is more effective in terms of limited supply, it is a matter of opinion. Do you trust an algorithm more than you trust the people that make decisions about how much money is in circulation?

I can tell you exactly how many bitcoins will be generated. Can you tell me how many dollars will be printed? The federal reserve can print how ever much it wants whenever it wants, the Bitcoin protocol, however, can only generate what is allowed.

Asking if I "trust" the protocol is irrelevant. Do I trust 2 + 2 to equal 4? Bitcoin is open source, you're welcome to look at the protocol's code yourself.

4833

Technology & Information / Re: Ask Rushy about Bitcoins.

« on: January 28, 2014, 05:01:32 AM »

Why is there so much turmoil in the Reddit bitcoin community? The subreddit regularly appears in subredditdrama.

Put fanatical libertarians, anarchists, capitalists, investors, and developers all in tiny ass room and watch the fireworks.


There are a lot of different kind of people in Bitcoin and I can tell you it used to be a lot worse. People that think taxes are theft, banks are demonic, think Bitcoin is made by the NSA and controlled by the NWO/Illuminati etc. Alternate currencies are always coming in trying to stir shit up. Litecoin (a coin I consider to not be secure) trying to pull people over to their side, etc. Bitcoin is a perfect storm of politics and money. Drama is unavoidable.

4834

Technology & Information / Re: Ask Rushy about Bitcoins.

« on: January 28, 2014, 04:41:06 AM »

-Portability

Bitcoin itself is available anywhere you have Internet access. You can print out your own physical notes with verification codes for physical portability outside of Internet zones. It is important to note that you shouldn't make transactions with people you don't trust if you don't have Internet access.

-Durability

Bitcoins can not be destroyed. They can, however, be lost. Exactly how many are lost is unknown.

-Divisibility

Bitcoin is divisible up to 10^8. If for example a single bitcoin is worth $1 million, then you could still send cents in a transaction.

-Uniformity

This is actually an interesting concern. Because a bitcoin can be traced back to all of its transactions, it is possible to "taint" a bitcoin by using it for something illegal. For example if a person with bitcoin address x smuggled drugs, and later made a legitimate purchase somewhere and sent his bitcoin to address y, address y now has a technically "tainted" bitcoin. This can be avoided using high transaction addresses or coin tumblers. For example an exchange may deal with thousands of bitcoins every day, so it becomes impossible to determine who received what bitcoin from the exchange.

In other words, bitcoin addresses can be tracked, but individual bitcoins can not.

-Limited Supply

Well this is certainly interesting. The US dollar doesn't have a limited supply, but Bitcoin does, most economists don't agree Bitcoin is the better currency, so clearly your class taught you a concept most economists don't agree on.

Anyway, there will only ever be 21 million bitcoins. Right now there are ~12 million. Miners bring more into existence until the year ~2140, where the protocol will no longer create new coins.

-Acceptability

This is a problem with Bitcoin, but it is being solved over time. Overstock and TigerDirect now take Bitcoin whereas they didn't before. Bitcoin can overcome the "no one uses it so no one uses it" problem, it will just take time.

4835

Technology & Information / Re: Coinye, a Bitcoin spin-off, is being sued by Kanye West

« on: January 28, 2014, 03:30:30 AM »

http://www.icanbarelydraw.com/comic/2565

4836

Technology & Information / Re: Ask Rushy about Bitcoins.

« on: January 28, 2014, 03:11:24 AM »

What are Bitcoins and why do they matter?

Well first I'd like to point out a major difference between Bitcoin (the protocol/network) and bitcoins, the currency. Bitcoin is a system that solves, from an engineering standpoint, the Byzantine Generals' Problem (http://en.wikipedia.org/wiki/Byzantine_fault_tolerance). What this ultimately means is the Bitcoin is a network in which everyone can agree with each other without knowing each other over just about any line of communication. Essentially Bitcoin does not require the Internet per se, but the Internet makes what it does a lot easier. The protocol itself is an autonomous Peer-to-Peer client that communicates with other clients like itself. In no way can any one person modify their client and damage the network. For example I could modify my client to say some nonsense, like I have 10 billion bitcoins. Other clients wouldn't agree with mine, and therefore mine would be ignored by the majority.

Bitcoins on the other hand, refers to the currency, which is actually just a result of the network keeping track of keys attached to addresses. The currency itself is still revolutionary, as it is a financial system in which transactions are not censored and can not be reversed. A bitcoin can not be duplicated and it is impossible to spoof the network into thinking that you have money when you really don't. The currency itself is the next logical step in the evolution of finance. The technology Bitcoin has put forward will do to finance what the Internet did to communication.

How often is the algorithim difficulty upped and who has the job of making that crucial decision?

Bitcoin mining (the process of adding transactions to the network) is, quite simply, SHA-256 hashing. The network protocol determines what SHA-256 hash it is looking for, this also determines how hard it is to find the hash. Every 2040 blocks the network calculates how much time it took to reach 2040 blocks. It should take 20,400 minutes, or two weeks, to find 2040 blocks. If the protocol computes that it has been less than two weeks, it increases the difficulty, if it has been more than two weeks, it will decrease the difficulty. Bitcoin difficulty does not have to up or down, although it is very rare to have the difficulty go down. It should always, on average, take about 10 minutes for the network to find a block.

Why are you so obsessed with bitcoins?

And isn't asking for donations basically being a cyber-beggar?

1. Everyone needs a hobby. I also genuinely think Bitcoin technology is the future.

2. Yes.

4837

Technology & Information / Ask Rushy about Bitcoins.

« on: January 28, 2014, 02:23:09 AM »

As titled ask plain and concise questions about the Bitcoin protocol or bitcoins in general.

The other thread basically turned into people who haven't looked into Bitcoin trying to discuss Bitcoin with more people who haven't looked into Bitcoin. I think it's important at least some of you learn about cryptocurrency now rather than later.

4838

Technology & Information / Re: Coinye, a Bitcoin spin-off, is being sued by Kanye West

« on: January 28, 2014, 02:18:51 AM »

Do me a favor guys and just ask questions, you're all stumbling around in the dark and I'm not sure where to begin... or whether I should laugh or cry.

I was shocked when these numbers came up which makes me think that I am missing a piece of information because if Rushy seems to know his bitcoins. Maybe he can weigh in about this miner?

The KnC Neptune isn't due to arrive until June or later. I can't tell you how many bitcoins it can mine, because predicting what the difficulty in June will be would be pure voodoo.

In this case, a bitcoin would cost $0.47 to produce, plus whatever the cost of this Neptune thing is over its useful life, which if Moore's Law is correct should be about 2 years. The only thing I saw was that these things cost $10,000, so $420/mo, which would put the cost of production at $1.25/bitcoin. In which case, why would anyone pay the $800/bitcoin it costs now, when you can produce your own for $1.25. We now have a lower limit of cost at $1.25 per coin, which means that the difference between the cost to produce, and the cost to buy is a 640 times difference. Nobody in their right mind would pay that kind of markup, and if you're spending $3,200 to produce a bitcoin, as Rushy would have us believe, while someone else is spending $1.25 to produce the same product, you'd be better off putting your resources to something else.

You seem to be doing a great job of confusing yourself, so I'm going to make this simple.

1. ASIC miners make a shitload of money. They are literally money printers and people are paying through the nose to grab one.
2. The company doesn't mine with their own miners because that is called "selfish mining" and it theoretically causes you to lose more money than you make because you damage the Bitcoin network. Butterfly Labs tried doing that and most of the community ignores them now. Unfortunately they continue to catch newbs in their marketing trap.
3. "as Rushy would have us believe" is the dumbest thing I've ever heard. You're making shit up and putting words in my mouth. I'm starting to think you don't even read my posts.

That sounds like virtually every aspect of Bitcoin.

Well if you want to be vague, all of life that has ever existed is a money grab.

4839

Arts & Entertainment / Re: The Elder Scrolls Online

« on: January 27, 2014, 05:21:36 AM »

Best MMO of all time?

That really boils down to your opinion.

4840

Arts & Entertainment / Re: The Elder Scrolls Online

« on: January 27, 2014, 04:29:27 AM »

World of Warcraft stuck to lore too and we all see just how well that worked out. Better start the ESO countdown to pandas.