I think people have largely missed the point of the article. This is specifically in relation to a "magic hash" on a block that was mined on June 19, 2018 with the hash: 00000000000000000021e800c1e8df51b22c1588e5a624bea17e9faa34b2dc4a
The leading zeros are the "proof-of-work". The bitcoin mining algorithm tries various nonces and generates many hashes until it finds one with (currently) 18 leading zeros. Surprisingly, much of the Bitcoin community doesn't know this and think that the leading zeros are special.
The 21e800 is supposedly 'special' because it relates to the E8 'Exceptionally Simple Theory of Everything'. A physics theory proposing a basis for unified field theory.
Anyways, people have mistakenly calculated the odds of such an occurrence and believe it to be exceedingly rare. They are claiming that someone must have left it there and that it is either the result of:
1. A quantum computer
2. Time travelling
3. Something related to the Bible
This doesn't really make sense and we can calculate the odds ourselves. It works out to roughly 3%. (1 - ((16^6 - 1) / (16^6)) ^ 500,000 blocks) = 0.03.
There are 18 hashes with the leading non-zero digits 21e8
There are 3 hashes with the leading non-zero digits 21e80
In this type of scenario (be it bitcoin hashes, serial numbers elsewhere, etc), the real question is how many possible "vanity" hashes exist. The odds of this specific one are not interesting, it's the space of all of them that is.
It's pretty much always infeasible to enumerate that space, but generally speaking there are a looooot of things that could qualify as special-looking enough to be included. All forms of english, foreign languages, language abbreviations, leet-speak, slang, pop-culture-inspired references, etc.
The odds of randomly tripping across something "special" eventually are pretty good. And bonus points if eventually one of those special coincidences is vaguely time-correlated with a real-world version of itself (eg, the number happens to be in the news, the slang word was recently used by a celebrity, etc).
My kids used to celebrate "holimoments" (after the pattern of "holiday"). These were occasions when they'd look at the digital clock on the microwave and see something that didn't quite look random, like "10:01" or "12:34". They had a little ceremony when they saw one of these, pretending to take pictures with an invisible camera and doing a dance which involved wiggling their butts (because butts are always funny). There are a lot of events which deserve a holimoment dance and nothing more.
Hah! That is incredibly endearing. I've also had friends remark (more joking than serious) that if you happen to glance at a clock that reads 11:11 to make a wish because it's lucky.
I have obsessive compulsive disorder, so unfortunately these cosmic peccadillos really throw my brain for a loop!
This is like a variation of the birthday problem. Finding someone who shares your birthday is difficult, but finding any two people who share birthdays is almost inevitable. Trying to generate one vanity hash is almost impossible, but having a large number of interesting vanity hashes will help you find a few easily.
> The odds of this specific one are not interesting, it's the space of all of them that is.
So what you're saying is basically that there's no way to tell whether it's Jesus or Mohammed or Buddha that might be trying to communicate with us, because any of them might be using any of their magic codewords? /s
That actually has an interesting failure. The first interesting number that's interesting because it's not special works. The second might qualify, the 10008 does not.
Because I constructed a set of otherwise boring numbers. The first otherwise boring number can arguably be interesting, but if you accept numbers are not inherently interesting by being on the number line you need find a reason to remove them from the otherwise boring list.
I think the word “otherwise” is key here, and makes the situation completely different. The paradox arises from a self-referential definition, and that word removes the self-reference.
Zeno’s Paradox is solved with real numbers and calculus. This paradox is explicitly on the natural numbers, meaning you have a well defined notion of “smallest” for any nonempty set of them.
I don’t think the solution is related to time. Rather, it’s simply a matter of recognizing that it’s ok for something to be well defined that does not exist. The notion of an interesting natural number, such that it’s a binary property and being the smallest natural number, just doesn’t work. Thus we can conclude that there’s no such thing as “interesting” as defined like this. You can fix it by making interestingness a continuous value, or using a definition such that being the smallest number in a set isn’t enough to be interesting.
There are a bunch of ways to solve Zeno's Paradox involving time (and not necessarily involving real numbers and calculus), Wikipedia gives a quick overview of many.
In the interesting number paradox a solution can be related to time (or recursion depth) such that, as the person you were responding to mentioned, the first few otherwise not interesting numbers can be considered interesting without considering all not otherwise listed numbers as interesting. The wikipedia page gives a different example solution involving time.
Surprisingly, much of the Bitcoin community doesn't know this and think that the leading zeros are special.
That's because most of the Bitcoin community is speculators and get rich quick types due to the frothyness of the space, whom neither know nor care to know about the mathmateical and cryptographic underpinnings of bitcoin.
Great comment. My counter for people that may have misunderstood it before your post is that... if these people think 3% and “magic” occurrences of leetspeak are something note these are people I want to keep myself and my money far away from.
> if these people think 3% and “magic” occurrences of leetspeak are something note these are people I want to keep myself and my money far away from.
The same thing happens with "interesting" serial numbers on money, though. This seems like an equivalent example.
To be more explicit: I don't think that mistaken beliefs/superstition on the part of users should necessarily reflect on the usability or practicality of anything they use.
The leetspeak part was chosen by the author of the other article as a proof-of-concept. However, it seems like other people reported on by both articles' authors were serious in their excitement or perplexity about the "21e800".
Ascribing a religious aspect to weird things isn’t that weird. Think humans have an innate and slightly flawed sense of probability and statistics, so events that are very rare on the flawed model are often ascribed causation by divine intervention. Mutations might be worshipped, uncommon geological formations considered holy or god-wrought, and uncommonly lucky people being ascribed divine characteristics. Rare hashes are the digital equivalent.
Reminds me a lot of "dubs" in the 4chan world. The chans have always struck me as being a bit of a cult to some people. Look up all the weird Pepe/Kek stuff.
"Bitcoin is a cult" is click bait. People have been engaging in numeric paradolia with financial systems forever. "Dow hit 666!" Etc.
The one that actually was quite weird was a block that happened fora fork. I can't remember the details unfortunately but the block had in it the number of the BIP. That was weird because it wasn't just a block with that number but that exact block.
There is, without a doubt, a Bitcoin cult. Or more generally, crypto-currency cults.
The headline reads like it's only a cult, which isn't the case. Even the most critical observer must concede that these distributed networks are novel and interesting.
The farther you move from social media, the less cult-like things get. The best discussion remains on listservs, and there is a lot of interesting and substantive discussion occurring.
>Even the most critical observer must concede that these distributed networks are novel and interesting.
Frankly that's besides the point these days. Lurk in cryptocurrency subreddits for a while and see that hardly anybody talks about the technology anymore, it's all about "memes" and very dubious projections. Things like this for instance: https://i.redditmedia.com/51566F6-xO0zIBDD7HzYRZyEGhDpMqQpAr... (fresh off the bitcoin subreddit front page).
I mean, look at TFA, part of the confusion stems from the fact that many people in the community simply didn't know how PoW functions (or even what it is in the first place). It's not about technology anymore, it reads like a Multi-Level Marketing forum. Nobody cares about what it is, they just want to get rich.
Doesn't really matter for the community mindset I'm talking about. See /r/btc/, /r/cryptocurrency and dozens more, it's mostly discussions about the price of cryptocurrency, dubious long term projections, memes and very little technical discussion.
Even articles about a potential application of Blockchain technology are generally met from an angle of "what coin is this going to pump?" See for instance: https://www.reddit.com/r/CryptoCurrency/comments/8ti8z9/thek... . Nobody talks about anything besides trading.
I suspect a large number of comments across any crypto sub are from fake accounts - marketing teams, account farms, team members themselves. The level of fraud and scam in crypto now is so high, it's hard to distinguish genuine comments from fake stuff.
A lot of things are cults and it doesn't have to do much with social media or the behaviors he is outlining.
Apple - You can argue Apple, the hardware company, is a cult. The fans are rabid in their support for the company. Often the discussions are not at all civil and in this particular case there is no financial incentive.
Let's move even farther away.
There are cults for clothing companies. Companies that make drinks. Gaming companies. Youtube streamers. Heck, there even cults in processor companies.
Take for example AMD. I have had chats with people who just get livid when Intel vs. AMD conversations come up and I am thinking to myself "We are talking about CPUs right?".
There are even cults with Operating Systems. Just ask the nix vs. Windows folks. Those discussions get heated.
So I am not sure what he is trying to argue here. There will always be folks developing who will have a civil discourse and try to make the currency better and then there will be the peanut gallery. That comes with anything that gains wider exposure.
There are many differences (of course!) but one common strand is that both are elements of the adherent's identity. In the case of Crypto there is another defining commonality - which is life style and life chances. Religions provide a vehicle (the community) which provides adherents with different chances from those outside, Crypto does the same - via money... if you have invested you might be rich, or poor, but your life is changed.
Right. I agree. I am also going one step further and arguing that crypto is more of a fan club then a cult. There are cults way stronger that illicit a far greater emotion reaction that crypto.
Even now, when the price is in the toilet, a lot of really smart people are having sane discussions across sub-reddits. And those very smart people are still checkin in code and making improvements.
This has happened before. During the BBS era and ARPA Net era, a lot of people said those things were "cute" and only used by underground cult figures. They said that people who believed in the "internet" were dillusional that a global network would ever happen. They also said that it would have limited impact on society. They said it would stay largely with universities. Newspapers laughed. Television networks laughed. Music companies shrugged it off. But the one thing I learned from both those eras is if there are a lot of smart people working in it then it is not to be discounted.
Right. Everyone disagreeing must surely be on ideological basis as there can be no rational basis for disagreements. As seen in everything from politics to musical taste.
Bitcoin solved some practical problem in someone's mind too, even if that problem was "how do we get private money into the 21st century?".
Ideology played a huge role in BBSes and Arpanet too. The same kind of cyber libertarianism popular in bitcoin was popular in the BBS world, and Arpanet was created to help America win the cold war.
You sure about that? Arpanet was created to exchange short messages in case of a nuclear attack on the United States rendered all above ground communication and survivability useless. I hardly consider that a practical use case. [1]
The U.S. government considered it a practical problem. That’s why they paid for it.
If it helps, replace “practical problem” with “a problem customers will pay you to solve.” ARPANET had that. Bitcoin, on the other, never had an original sale. It was mined as a curiosity and then jumped from narrative (“currency of the future!”) to narrative (“store of value!”) to narrative (“mostly goes up!”)
What the U.S. considers a practical problem often isn't. That is a shitty statement. The U.S. also considered spending 2T on a jet that was worse than the F-22. Just because the U.S. spends on something doesn't mean it has a practical application.
Nevertheless, the internet turned out to be transforming from its original purpose. We can sit here and argue about cyrptocurreny but the game is young and we wont know what it will turn into in 30 years. Just like the people in the 70 and 80s didn't know how transforming the internet would become for our society.
> What the U.S. considers a practical problem often isn't
Sure. But it’s still a customer making a purchase. That purchase grounds the project in someone’s need. A need they’re willing to trade for. The “trades for” part is important, since it references the status quo.
Financial assets, particularly speculative assets, don’t solve a need. They promise to solve a future need. (Sometimes they don’t.) Part of the discipline of speculating investing is knowing when to pull the plug.
On a scale of “practical” to “ideological” I’d say building a system to exchange messages in the event of catastrophe leans heavily toward practical. You can see this because governments of a wide variety of ideological persuasions would be interested in this.
But this is true of all groups. All groups offer identity and possibility of growth. What makes cults special is the element of faith. This is the difference between an investor and a speculator, an engineer and a magician, and real currencies that can be used to pay taxes and exchange tokens like gold/bitcoin/beanie babies. Cryptocurrencies are inviting their members to take a leap of faith on a mechanism that is not subject to rational analysis and be rewarded with riches beyond their wildest dreams. The beauty here is that there's social proof -- in the form of actual crypto millionaires and lots of fancy whitepapers from smart people and open-source code that anybody can download and review. This attracts irrational players into the game (which in turns attracts more predators since irrational players are easy money). There's a vicious cycle at work and eventually the whole game is dominated by irrationality and delusion.
> Apple - You can argue Apple, the hardware company, is a cult. The fans are rabid in their support for the company. Often the discussions are not at all civil and in this particular case there is no financial incentive.
According to Wikipedia, Apple has sold 1.2 billion+ iPhones. Are you going to tell me that all of those people are going to “rabidly” support Apple?
No way.
What you are seeing is a very vocal very small minority.
> these distributed networks are novel and interesting
They were interesting when the bitcoin paper was released.
Then people (outside of the cult) realized that you Do Not Need A Trustless System. Society is built on trust. Wasting ENORMOUS amounts of power just to replace a few trusted entities with 51% of the network is a horrible idea.
> The headline reads like it's only a cult, which isn't the case.
Bitcoin sold itself as a cult from the very beginning so it's no surprise that all manner of cults have congregated around the technology. Bitcoin is an interesting example of a paranoid technology: it purports to be "trustless" and perfectly "fair" and it requires only a "faith" in math. The reality is very different but it's no surprise such a marketing pitch would appeal to the paranoid style that dominates these groups.
Communities that don't value trust accumulate paranoiacs and then become prone to delusion. This is the self-defeating logic that dooms cults in the end: delusions can persist for a while, until they don't, and the real world wins. With Bitcoin I suspect the real world will win once the miners, having extracted 95% of the value from the trade, leave and turn their fleets towards more profitable ventures. This is the real bubble [1] at work, after all, and compared to this all the schemes and schemes and wacky delusions promoted by the holders is nothing.
After spending a few years in the bitcoin space, I avoid anything at the nexus of crypto and social media like the plague. You can almost always find interesting folks to chat with and answer your questions on IRC.
> Even the most critical observer must concede that these distributed networks are novel and interesting.
Nope.
Anything you can do with blockchain you can do simpler and easier and cheaper either with a standard database, or something like git with signed git commits and a trusted third party.
The blockchain exists to try to remove trusted third parties but leads to every increasing energy consumption or order to fuel incentive for "proof of work", and the coin concept is a flat out ponzi scheme.
All these ideas need to get relegated to the dustbin of history.
The Bitcoin community has changed greatly over the years; from technophiles that could explain a Merkle tree in their sleep, to speculators driven by the desire for a quick profit & blockchain startups seeking billion dollar valuations led by people who don’t even know what a Merkle tree is.
I'm not sure which version of history this guy was on, but it clearly hasn't been the one I followed. He's describing a past that never was.
Read the old Bitcoin Talk posts. It took years for Bitcoin's technical ideas to become well-understood by even a fraction of the user base.
Pick any year after 2010 and you'll find that the vast majority of Bitcoin users were in it to: (1) stick it to the man; (2) make a buck; or both.
Interest in the technology itself motivates only a tiny fraction of users.
> It took years for Bitcoin's technical ideas to become well-understood by even a fraction of the user base.
That last part is the key qualifier for this line of criticism: there were quite a few people who were interested in the tech but also understood it and economics well enough not to become boosters.
I've been following bitcoin since 2012 and that is also my observation.
It was always dollar is worthless and bitcoin is going to replace it, and drugs and assassination markets will run in the open fueled by bitcoin, no taxes will be paid anymore, and government will be powerless to stop any of this.
Given that he read the bitcoin white paper the day it was released and found it an interesting use of Merkle trees, I suspect that he's describing the past he experienced. When he read it, the community was such people.
I've thinking of how many of the communities and belief systems on the internet are very similar to religions.
I've started calling conspiracy theories the "religions of the internet" to make a point to my dad whose understandable distrust of the mainstream narrative has lead him to give more trust to the anti-establishment churches like https://themindunleashed.com that publish conspiracy theories, badly informed opinions on real science news, and pseudo-science mixed in with some real science news.
His reaction to mistrusting the mainstream was to shift his trust somewhere easily identifiable as untrustworthy (to someone educated in the sciences) atleast partly because it acknowledges his mistrust of the mainstream and presents the only-mostly-wrong ideas in a fleshed out manner and authoritative tone.
Some observations and layman speculation:
I've just started reading Sapiens by Yuval Noah Harrari which suggests that there is a strong biological tendency toward adopting unsubstantiated beliefs to enable human cooperation at scale he called them collective myths.
I've also once met a sincere flat earther, but I suspect his ideas arose from doing too much LSD before encountering the idea of tracing his beliefs to their root axioms.
I don't disagree but isn't this true for the popularization of any technology. First it's just the nerds then come the less informed masses who don't fully understand the details along with the people trying to make money out of that fact.
I think crypto is different in the way it actually doesn’t do anything. Bitcoin has been around for 9 years and you have never been able to use bitcoin as a currency fewer places than you can now.
Any data to back that up ? I know anecdotal, but I can buy beers, taxi & coffee with crypto which I could not 9 years ago and I see quite a lot of ATMs appearing; NL/UK/JP/HK. I think the main point is that I can get a coffee with crypto, which is an important milestone.
Because it’s not a currency anymore it’s a commodity.
That first time you had to explain to your mom or aunt what Bitcoin is becsuse they saw it on TV news or radio - that’s the time it became too risky for retailers to trust it.
Today we’ve linked instant payment methods to our credit cards, if the card isn’t rfid enabled on its own. So you just swipe your payment method and you’re done.
We even have a banking app that lets you instantly transfer funds between you, between banks as well, for free. Called mobile pay. So smaller stores that can’t afford to have a credit card system, use that.
So that’s on the payment side. It’s also extremely tedious, and expensive, to turn the bitcoin into actual cash + taxation makes selling a coffee with crypto a bad business case.
Honestly though, I think it’s mostly down to a complete lack of demand.
I'm guessing it's more to do with transaction times than anything. A merchant needs to wait 10, 20 or 30 minutes to get a confirmation in Bitcoin, because he can't be sure there will not be a double-spend of the money until it is confirmed.
Technically, this has always been the case, but there was a false belief that 0conf transactions were secure, because Bitcoin clients rejected double-spend attempts by default (as a DoS protection). This prevention of double-spending unconfirmed transactions was never part of the protocol though, and it was made clear when Replace-by-fee was added, which shows how clients can easily replace existing transactions with new ones, without changing the Bitcoin protocol.
There's still a crowd who believe that 0conf transactions are fine, and RBF should be removed (eg, the Bitcoin Cash developers), but it's really just ignoring the reality that RBF is not an enforcible protocol rule, but a client-side policy in the software. It's probably fine to use 0conf for small transactions because it is manageable risk, similar to accepting credit cards where payments can be reversed.
Another possible solution to faster payments is with payment channels, where the risk of double-spending is mitigated by hashed time-locked contracts which are transmitted between parties and not broadcast over the Bitcoin network until one of the parties wants to reclaim their funds onto the Bitcoin network. Since the parties are just exchanging HTLCs over a TCP connection, they're practically instant, the fees are low or nil, and there is a potential privacy improvement by not revealing every transaction into the Bitcoin ledger. This is in development (minimally working on Lightning Network now), but proceeding quite slowly.
If Bitcoin is going to have widespread global usage, these problems need to be overcome so that it is as simple, or simpler to use than credit cards for the average user. It possibly is simpler to set up for merchants already, if they're technical enough, because they don't have to involve 3rd party payment processors.
The other side to it is that we take credit cards for granted in the developed world, and often miss that there are a billion or more people without banks in the developing world. These are the people who have the real use-case for Bitcoin. A single user can set up a Bitcoin node on a smartphone in some remote village, and suddenly bring banking capability to their entire village. I think that's a very strong use case. People are also using it to hedge against their national currencies which are being hyper-inflated by their own governments - as is happening in Venezuela right now.
Setting up a Bitcoin node in a remote village doesn't "bring banking capability to the entire village". The node doesn't offer a badly-needed credit facility or the ability to turn remittances into local banknotes (at least not without an actual bank account...), the stuff that can be bought with Bitcoins can't be shipped to the village anyway, a foreign language software program that doesn't run on dumbphones certainly isn't an improvement on their existing cash, mobile and IOU payment systems and is an unimaginably awful way for a technically and financially unsophisticated population to store their life savings. It does offer hope to wealthy Westerners who bought Bitcoin in December that they might recover their losses by dumping on the global poor, I guess.
This, retailers don't even want to support Apple Pay because of its transaction fees. If there is already a almost free and efficient payment system that everyone is happy with and is used by 99% of the population why bother with anything new that IS NOT SUPERIOR TO WHAT YOU ALREADY HAVE?
I simply don't know what problem BTC was supposed to solve.
What Apple Pay transaction fees? They’re exactly the same standard credit card transaction fees because they ARE standard credit card transaction fees. Apple doesn’t take a cut.
Creditcards are robbery, they are not very populair and cost retailers money. Why does everyone want to make money from transactions? We are talking about a basic service that costs less than a cent.
Cash also costs retailers money: counting and delivering it, dealing with fraud, etc. – it’s just a cost of doing business and businesses balance those all the time. Right now most places I go are pushing credit cards / NFC because it’s faster and doesn’t suffer from counterfeiting.
The reason Bitcoin hasn’t seen much usage is that it’s worse on every one of those metrics. There just isn’t a non-ideological market for a slow, expensive system with no fraud protection.
> they are not very populair and cost retailers money
Citation needed.
Well on the popular claim. Yes they cost retailers money, so do debit cards, so does cash.
In the UK debit cards are the most popular means to do a retail transaction - in terms of numbers of transactions (it's been plastic in terms of value for years). Credit card transactions from 9% in 2013 to 11.5% in 2016. Debit card from 32% to 43%. Cash decreased from 52% to 42%. 'Plastic' has never been more popular.
Average cost of taking sash has remained fairly stable, but the cost of taking debit and credit cards has plummeted in recent years, in line with their increased popularity.
In 2016, credit cards cost 0.5%, Debit 0.25%, Cash 0.15%.
Non card costs (including things like paypal) is at 1.7%.
I don't know where you live, but the only place I know of in my city that takes it is CEX, a place to buy and sell second hand movies, games and computer equipment. And I don't imagine the staff would know what to do if someone actually tried to use it.
Not a great analogy. Government bonds were never meant to be a currency. Bitcoin was advertised as a currency. Yet its adoption for that purpose, despite the massive network available for its propagation, has yet to materialize.
Government bonds are stable if you ignore tail risk. Governments tend to collapse eventually, at which point your bonds are not a great store of value.
Bitcoin is however similar to a government bond in that it a) has value, b) is not directly useful for consumer transactions. Also, I dunno that behaving like money can be put in such stark binary terms.
> Government bonds are stable if you ignore tail risk
Nothing is eternal. That doesn’t make everything ephemeral equally risky. Bitcoin is a speculative asset. Speculative assets are volatile by design (you want them to go up).
More critically, government bonds’ role as a store of value is ancillary to their core purpose: to enable public deficit spending.
> Bitcoin is however similar to a government bond in that it a) has value, b) is not directly useful for consumer transactions
My cat has value and is useless for consumer transactions. That doesn’t make him a government bond.
The point is not that Bitcoin is a government bond, if that wasn't obvious, but that just because some people said it's a currency and proceeded to build failing businesses on that faulty premise doesn't preclude it having actual, unrelated uses, such as a store of value with a vastly different risk profile than any other asset ever known.
> a store of value with a vastly different risk profile than any other asset ever known
For which there (a) is zero evidence and yet (b) are lots of unsophisticated investors throwing money at. This combination is well known in financial engineering circles, which has had a habit of dreaming up assets with inobservable specialness since the days of John Law.
Bitcoin could be similar to art in those terms. A van Gogh has value and isn't practical for consumer transactions. Your argument has painted itself into a corner and the next step is to knock a hole in the wall.
Saying Bitcoin is like one thing does not preclude it from being like other things. Never the less, it's not necessarily useless just because it doesn't have the use some people mistakenly thought it had.
I don't see the relationship between "meant to be" and "is" here. Doesn't it only matter what it actually is rather than what some people thought it might be?
9 years is not very long for an emerging technology. AI has been around since the 60's. Arpanet was established in 1969. Electricity was relatively well understood in 1750 (we had batteries that could store electrical charge) but the electric lightbulb wasn't invented until more than 100 years later.
Bitcoin is very early, it's core infrastructure, it's going to take time to get established, and once it does get established it's going to change society as much as electricity did.
I work in the public sector, we’ve done quite a few proof of concepts on blockchain over the years, because we have actual use cases where a decentralized system makes sense. Like land registry, keeping bi-temporal records and case flows where citizens can follow their progress from home.
We’ve yet to make it work though. Decentralized voting is too vulnerable and mining is too anti-climate, so it’s really all turning out to a big pile of nothing.
My colleagues in banking are running into the same issues.
The only place I’ve seen blockchain put to good use is at Maersk, who runs their claims of ownership on the tech. Because of port corruption, the claim of ownership linked to a container is more expensive to ship than the container itself, even though it’s a single a4 document. Their blockchain isn’t really decentralized though.
By comparison the arpanet had an instant use case, so did electricity. They took time to spread, like everything new does, but they are very different from the blockchain in the way they weren’t searching for a reason to exist.
Blockchains do have instant use cases. Remittances being one huge example, for many years blockchains were the cheapest way to send money across borders, and for many countries they still are, though they've put a lot of pressure on banks to reduce the prices of remittances.
Other types of digital international payments have also been made a lot easier. You don't need to sign an agreement with a credit card company or a bank to start accepting money from a blockchain, you just run a node an you are good to go. Especially for use cases where payments are typically high risk or denied altogether (shipping expensive hardware, adult entertainment, or any business with a generally high fraud rate and chargeback rate).
Blockchains also allow for completely transparent, auditable, provably fair gambling, something you simply can't achieve in the physical world.
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A lot of the blockchain projects that have kicked off do not understand the limitations and uses of blockchain technology. For example, decentralized land ownership and decentralized voting are both things that you fundamentally can't get fully secure using a blockchain. Land is a physical asset, and it will always be a government or police force that ultimately decides who owns a property. The blockchain may say one thing, but that result has to be defended in the physical world by someone who agrees with the blockchain results.
Voting is the same way. Identity is inherently centralized, there is no way to connect a physical human being to a single identity in the digital world unless there's some centralized entity like a government managing the ID system.
One big use case that's around the corner but needs more foundational technology work is point of sale payments. It seems like the adoption curve has been going backwards on those for blockchain, however this is because layer 1 fees have been getting more expensive, and attackers have finally started exploiting weaknesses like zero confirmation payments, something that originally a lot of blockchain proponents asserted was secure (core developers never endorsed this notion, however core developers rarely had control of the blockchain narrative). As more user friendly, more secure, and more scalable solutions like the lightning network come online, we will see point of sale payments using blockchain technology pick up again.
We're still probably 1-2 years out from the lightning network being production ready, so merchants are still generally discouraged from using it for daily business. But it's going to get there and when it's ready the scalability will be on the order of tens of millions of daily users.
We have the cryptography and technology to get from tens of millions to hundreds of millions, but again that's technology and research which is just now coming out, won't be in production for another 5-8 years by my estimations.
Whether or not you choose to believe it, there are tens of thousands of businesses out there today tackling markets and buyers that would be completely unavailable to them without the use of blockchains. And that's because blockchains make payment rails viable that simply aren't viable when you are stuck with traditional systems like credit cards, paypal, stripe, and bank transfers.
Blockchains aren't searching for a reason to exist either. Decentralized currencies/conmodities not controlled by any single entity are an obviously useful thing.
Some people may take issue with morality etc, but cryptocurrencies (Bitcoin mainly) are now the default means for transferring funds back and forth to sports book / poker / casino websites for US residents, and probably elsewhere where the legal climate is oppressive.
Except this time it's not "tech" it's money, and money is wired quite deep in your mind as the force of anything. So many people are spending time on btc (I was, and it made me feel all kind of weirds listening to these people and following their games)
I saw a t-shirt the other day that said "friends don't let friends sell bitcoins". At first I thought it was anti-bitcoin, but then I realized that they were advocating "hodl". Yeah feels like a cult to me.
Pretty biased story, sounds like it was Blockstream against everyone else (it wasn't). Most people on the mailinglist thought it was dangerous to increase the blocksize, not just people who worked for Blockstream.
> Some of the employees of Blockstream also put forth some proposals, but all were so conservative, it would take bitcoin many decades before it could reach a scale of VISA.
I hate to bring it to you, but no big decentralized network where everything happens on a single chain will ever reach VISA scale. I'm not sure why people think Bitcoin can do this. I do not work for blockstream and I think just scaling this up is a terrible idea. I only know a handful of technical people who disagree.
> After this free and open source software was released, Theymos, the person who controls all the main communication channels for the bitcoin community implemented a new moderation policy that disallowed any discussion of this new software. Specifically, if people were to discuss this software, their comments would be deleted and ultimately they would be banned temporarily or permanently. This caused chaos within the community as there was very clear support for this software at the time and it seemed our best hope for finally solving the problem and moving on.
IMO the chaos did not come from content moderation but from different groups of people who all claimed their software (bitcoin XT, bitcoin core) was the real bitcoin. And not many people understood what was going on. There was definitely some support for bitcoin XT, but it was always minuscule compared to bitcoin's IMO. This has nothing to do with either Theymos nor Blockstream.
I definitely agree about Bitcoin and scaling, as anybody who can do napkin math would realize that increases in block size to scale to a level of transactions/second competitive with a credit card network would cause the blockchain to grow at a catastrophically unsustainable rate. Bitcoin Cash imho offers absolutely nothing of value because it runs up against the exact same technical problems. Think of it like slightly reducing a constant factor to an O(n^3) algorithm, you haven't made things more efficient in the required way.
I think the main takeaway about /r/bitcoin is that bitcoin claims to be this decentralized democratic technical project where anybody can contribute but in reality many of the places where discussion takes place are completely censored and controlled by entities who aren't transparent about their intentions like Blockstream and Theymos. This also applies to /r/btc for Bitcoin Cash shills.
> bitcoin claims to be this decentralized democratic technical project where anybody can contribute
Where is this claimed? The technical project is just another open source project, not very decentralized. The idea of bitcoin is that you (the user) can decide what software you want to run, if you don't agree with rules imposed by a certain software project you not run it or run an older version. This (as well as how the network works) is decentralized. Ofcourse Reddit and other social media channels are not decentralized, and neither is development of the different node implementations.
I don't think there exists a way to collaborate on any technical open source project in a truly decentralized way. I love to be proven wrong, do you know any project that is? So no BDFL (Linus, Guido), no foundation and actual decentralized contribution?
Ugh. These silly conspiracy theories don't hold up to reality. An overwhelming majority of the technical development community, wider community and industry was and still is supportive of Bitcoin's scaling roadmap. Trying to attribute that to Blockstream or to the moderation policies of a subreddit (among hundreds of online bitcoin communities) is just silly and not grounded on any facts.
See my previous comments on that topic for some more info:
Thank you, that was a great read. As someone that's only ever been interested at the periphery of Bitcoin (though generally interested in the applicability of blockchain tech and the technical problems with same), I was not aware of any of this. Would this story be considered common knowledge among the Bitcon literati? I find it hard to fathom how anybody could rationally invest in BTC knowing this story. Surely this level of influence (if not control) by Blockstream and /u/theymos goes against the very promise of decentralisation that Bitcoin promises?
Don't believe everything you read online, especially in the Bitcoin space, which is flooded with nonsense, conspiracies and deception promoted to push agendas. I highly recommend you do some more independent research before taking your parent comment at face value.
What I do know and have known is that anyone that believes the “it’s decentralized” part about any cryptocommodity is a damn fool. The database might be but nothing else. There are at any time a dozen people that could utterly destroy bitcoin with some well placed shenanigans.
The shit you read on reddit is full of conspiracy theorist nonsense, and completely detached from Bitcoin development. Development is done and discussed in the open on mailing lists, github etc, and is subject to community review. There's a process outlined in BIP2 for any (non-trivial code) changes to the Bitcoin Core software. Of course, anyone can fork the software and make complaints publicly if there was malicious intent from the Core developers. There are a lot of people who have money invested in Bitcoin, and keep a close eye on the developments occurring.
This is a completely, outrageously false version of events, and it is very frustrating trying to debunk it for non-crytpo geeks who haven't followed things.
There is a group of "altcoin" (ICO and non-Bitcoin coins) investors who have put together a terrific social media team and spread nonsense like this. They run a "The_Donald"-esq subreddit called /r/btc who's head moderator is Roger Ver, convicted felon (sold explosives online and renounced his US citizenship). Somehow Roger Ver bought the domain Bitcoin.com, and has been using it to promote a different coin, "Bitcoin Cash", and outright saying it "is Bitcoin". Of course He's heavily invested in sites like Shapeshift which allow you to buy altcoins... and I assume links like this (posted by"singularity87" who is a top /r/btc poster) are designed to spook people into switching to ETH, Bitcoin Cash, etc. It's bizarre nonsense.
ho another troll from /r/bitcoin. Read carefully, everything is sourced. Everyone favorable to small blocks came to that opinion after all the communications channels were censored by Theymos and the like to delete alternate opinions. Was absolutely fascinating, and disturbing, to watch that unfold.
The way that people are reacting to 00000000000000000021e800c1e8df51b22c1588e5a624bea17e9faa34b2dc4a is really sad. The bit about people thinking that there is a sha256 preimage attack on a quantum computer is just icing on the ignorance cake.
When I first got into bitcoin I thought it could be a wonderful alternative to the current monetary system, I especially hoped it would be more equitably shares. Unfortunately it’s turned out to be as unequally shared as our current wealth is, if not more.
Perhaps some kind of coin where everybody in the world is issued the same amount or something.
> Perhaps some kind of coin where everybody in the world is issued the same amount or something.
That is why the Monopoly game was created. All players start with the same amount of money and the same rules. Skill and mostly luck accumulates all money in the hand of just one player. Monopoly games can be long, be it is not so long until one player has everything.
> Perhaps some kind of coin where everybody in the world is issued the same amount or something.
What would be the point of such a currency? Trade and wealth exist because of inequalities. Having the same amount of a currency is same as having none of it!
As along as everything else is unequally shared in the world, distribution of coins will merely reflect that as it's a medium of exchange. Even if material wealth was reset and equally redistributed, the same processes that caused it to be unequally distributed in the first place, will apply again.
Equally distributed wealth is not as common as non-broken legs. In fact, the reason you call a broken body part broken is because it diverged from what its natural state.
There is Manna, formerly GrantCoin, which is about basic income. They issue every person with an account about $0.006 every week, so it's inflationary.
One idea would be to create a cryptocurrency where the currency supply increases following a Gompertz function rather than a log function. If you could magically guess the right variables so supply approximately followed adoption rate, you'd create a currency where the supply/demand was near enough constant, and the price would hardly change after the market had given it a rate. Lets say you expect demand to double each year for N years, where N is where peak adoption rate occurs, then your function would be 2^y for N years, after which you have a gradual decline in the supply. The earliest adopter who mines for N years would gain at most (assuming equivalent mining power), twice as much as someone who mines during year N only, since each year effectively doubles the entire supply up until N.
The real question is, who would mine for N years when it is basically unprofitable? Since everyone else can have the same mining opportunity and the value is approximately constant. An early adopter would only get up to a 2x advantage over someone joining in year N, but would need to put in N years of mining to get that. Also, if demand does not increase as expected, the currency value will half year on year. Nobody will invest in this kind of currency when there are many others "promising" potential 100x gains by overly rewarding early adopters.
You'd also never actually guess the right rate at which adoption is going to grow, and you'd jinx whatever values you expected by specifying them, because there'd be an attitude of "If I can start mining in year N, and still have essentially the same opportunity as everyone else, I'm not gonna bother investing right now, I'll do it when it's close to the time." As a result, you'd end up with nobody actually participating initially, smart people would invest during peak supply, and everyone else would FOMO as the supply rate is declining, which is effectively the same as happened for Bitcoin.
Of course, the process Bitcoin underwent can't really be repeated. Most altcoins are get rich quick schemes, which utilize the log function of coin supply to pre-mine or whatnot to give the "founders reward," with the expectation that if the currency gains any popularity and has liquid markets, the founders can cash out before anyone realizes their currency is useless.
>Perhaps some kind of coin where everybody in the world is issued the same amount or something.
That’s an interesting idea for how a currency would work and I’m half tempted to ask you to explain if everyone had the same where is the value in it... but more tempted to suggest you develope a currency based on human fingers as most of us start with the same number.
One idea I’ve had and heard similar descriptions of elsewhere is to give people grants for various things. Ie. If you’re diagnosed with skin cancer you’re given a grant to fund the treatment. There’d have to be an algorithm in place to settle on the optimum grant - and I don’t claim to know it. Maybe it’s a grant that establishes a reimbursement contract between the service provider, the government, and the patient with an allotment for a maximal amount of profit. But giving people blocks of money is compatible with the capitalistic market. They would still have to choose how to spend their stipend(s) and the associated trade offs. I liken it to filling in missing data with the average value. Making sure everyone made at least the average per capita income wouldn’t change inflation, I think.
You don't think that people should be rewarded for risking their time and capital on an eventually-successful niche technology, versus people who haven't risked anything, or contributed anything?
Bitcoin isn't magic beans, it has been successful due to these people that you're (implicitly) chastising.
"The term cult usually refers to a social group defined by its religious, spiritual, or philosophical beliefs, or its common interest in a particular personality, object or goal" [1]. Membership connotes devotion. That is different from network effects. For example, telephones benefit from network effects. Buying a telephone does not join one onto a cult.
(Buying Bitcoin, alone, does not admit one into a cult, either. It’s the behaviour of the community around Bitcoin that exhibits cult-like tendencies.)
> Buying Bitcoin, alone, does not admit one into a cult, either. It’s the behaviour of the community around Bitcoin that exhibits cult-like tendencies.
In that case, is Bitcoin really a cult? or is there a cult that is using Bitcoin?
Telephones strapped onto the telegraph network. After that, they were “leased in pairs” [1]. It wasn’t until 1889 that switches were deployed. Only the could these bilateral-only phones begin talking to each other. (This is also when network effects began emerging.)
TL; DR Telephones, like most useful technology, established themselves in a small niche and then scaled from that base. Its success in its niche wasn’t driven by zeal, but by usefulness.
It's an open-source project and not a startup, but I think that Namecoin [0] is a very interesting non-currency use for blockchains.
It is a decentralized name registry that maps domain names to public keys and IP addresses, removing the need for Certificate Authorities and resolving Zooko's triangle [1].
I do agree that blockchain is insanely over-hyped, has very few real use-cases and mostly used as a PR tool in ways that makes no sense. Sound money and cryptographic identity registries are among the only reasonable use-cases that I can name.
well, you may not call Sia successful (a cloud storage network with 200 TB of data being actively stored on it), but it uses blockchain to achieve something that it could not achieve without.
Sia works without any centralized orchestration, enabling you to safely use financially incentivized hosts without needing to know who they are, and allowing you to know that that only get paid if they store your data as promised. The hosts also can be guaranteed that they get paid even if the renter disappears, and you can't achieve those things without a blockchain.
Depending on your classification of "startup", there is a massive amount of (illegal, of course) drug distributors using blockchain-based cryptocurrencies to conduct their business.
There is no such thing although the believers will be able to give you many examples. Wikileaks being one, remember that time when Visa/Paypal/Mastercard would not take payments for them? Julian Assange would have starved had it not been for bitcoin.
Then there is some land registry in some African country. Had it not been for the magic of the bitcoin then the evil thugs in the government would have stolen all of the peasants land.
I have been told of other examples, by cult members that know nothing of finance and nothing of programming. But, if you locked me in a police cell and the only way I could get out was to provide further examples, then I would be stuck there for a very long time!
Nonetheless the two examples provided deserve further scrutiny. In the case of Wikileaks, if I was able to respond to the assertion of the believer (which would not be possible as they do not listen), then I would point out how little it costs to host a website and how 'cryptome.org' has been going for years doing a similar/much better thing for two decades without the site owner having to solicit big bucks to keep the thing going. I would also point out that Julian Assange was in it to monetize it and how that behaviour is questionable, tantamount to warmongering.
So if the believer gets into a discussion with someone that knows facts then they a) shout louder and b) move on to the next bogus example of where blockchain goodness has saved the world, e.g. with the land registry in Africa example. Specifics are lacking, if it is all on the public ledger then surely the believer should be able to prove one instance of one poor African farmer who has his property secured by the magic blockchain? Surely this would be a Google search away? Of course they are too busy for that, trading their alt-coins 24/7, unable to stop for pedants that have trite 'I have a bridge to sell you' arguments.
But then the true cult isn't about hard fact things from the past, it is about the wonderful future that is to come. So any hard questioning of concrete evidence of blockchain success stories pivots to the paradise promised. No matter what your profession the true blockchain believer will try to interest you in how blockchain will revolutionise whatever it is that you do.
If you are a lowly fruit picker then you get told that blockchain will revolutionise things so that those organic strawberries you pick will soon be notched up to some farm to consumer blockchain 'technology' so that the consumer won't be fobbed off with those fake organic strawberries. Because it will be decentralized and on a public ledger nobody will have the wool pulled over their eyes. All sounds good but if you are that lowly fruit picker then you know a little bit about the industry and know that is not going to happen.
Or, if you are further up the food chain, e.g. in dentistry and fix people's teeth for a living, then you get told about how a blockchain startup is going to revolutionise dental records.
The patronising attitude gets worse if, heaven forbid, you are a developer. In your career you may have worked in many sectors and in many industries but you can't think of a single blockchain application that would make your work better or deliver better deliverables for a single client. However, the believer will be able to tell you that soon there is a blockchain application for whatever it is that you do, so rather than slave away for months on that complicated integration that you are working on you might as well give up now as 'very soon' this 'app' is coming out that will enable you to do it all in a fraction of the time.
The believer in the blockchain probably does not have a day job so they do not understand how preposterous is their proposition, but your domain expertise can be dismissed as you don't understand how blockchain is going to revolutionise everything.
Of course none in the cult can do any useful programming. Yes there are people with day jobs that hold a few coins and enjoy speculating on them from time to time, but these folk are not hardcore cult members. The true cult members see themselves as above the programmers of the world, they see 'developers' as like sheep that can be herded by them to do things for a few table scraps from the blockchain geniuses such as themselves.
Recently I learned of a multi-billion dollar air-drop where the founders would hold onto a few tens of billions of these altcoins and the developers of the world would be given an opportunity to develop save the world green applications. So through the generosity of the blockchain believers and their unique abilities to incentivise developers the world would be saved. There is this view that developers are simple folk and that they just need the right blockchain platform to work with. These developers are almost mystical, thousands of them from all over the world will just turn up to work for free on their blockchain platform in some open-source type of way whilst they do their 'fintech' part, holding on to the billions of alt-coins they kept back for 'the founders'.
The cult members also have an amazing excuse for being skint. Much like how real cult members in real cults of the religious flavour don't have day jobs or money, blockchain cult members can't do real work. So they are skint. But they can always claim their funds are in this greater world of crypto and they don't have any 'fiat' right now as 'everything is locked up until the EOS mainnet goes live' or some other spurious story.
So maybe that is it, a genuine 'startup' success that actually uses blockchain, the ability of the believer to scavenge real cash, food and whatnot from their parents, friends and partner because they always have a good excuse for not having any 'fiat'.
I was curious about the following statement and am hoping someone could explain why:
>"hashing is one thing that’s considered safe from quantum computers."
Why is it safe? Is this because the number of cubits that will be available in the near future would be too small for something like SAH256? Something else entirely?
The problem here is simple: people have too much money at stake now. The solution is not so simple, given this is a technology about money.
But I do feel that it may be possible to learn from all of this, and preserve what is useful and use technology to eliminate the negative influence. For example, preserve the incentive mechanism for decentralising certain services (which could have genuine benefits for some use cases) while ensuring there isn't a publicly tradeable token or that if there is that it is protected by a stablecoin mechanism to prevent speculation. (Just one example.)
Thanks for speaking out. I've collected some anti bitcoin-propaganda - titled best of bitcoin maximalist [1] and crypto facts - true or false? [2] in free online booklets among others.
People in the West don't seem to realize how much Bitcoin is supported by Chinese businesses, and citizens, that are trying to evade their government's capital controls. Many people have an urgent desire to get money out of China, to invest it or spend it elsewhere. Bitcoin gives them a way to evade government regulations. This is why Bitcoin mining is such a big deal in China.
> Cargo cult programming is a style of computer programming characterized by the ritual inclusion of code or program structures that serve no real purpose.
> Cargo cult programming can also refer to the practice of applying a design pattern or coding style blindly without understanding the reasons behind that design principle.
I don't really believe those apply here - they're the same and they're supposed to be, and they function the same. The level of understanding is largely irrelevant.
It's forced me to think a lot more about the material worth of our economy, specifically legal tender. I took a $20 Bank Note to the Coin Shop yesterday to trade ~1g of Cotton and Flax for a $1 Unit (~1oz of Silver) which I'll be tithing at Church this morning. The Nuts and Bolts of our economy started to get obscure when I got interested in Cryptocurrencies and I feel like I'm still recovering... From a certain perspective the copper traces in a Bitcoin Miner are worth more than any "coin" it produces and should sooner be melted down and turned into 1 Cent pieces so we can actually pass something that at least resembles Art around instead of just a secure Ledger.
Interesting bit of spam on the forum from an account created ~2hours ago:
>globalrobin00 35 minutes ago [-]
> Are you from US, and have a verified coinbase account?
> Then what are you waiting for when you can be earning up
> to 0.5 > BTC weekly, with your empty verified coinbase
> wallet. Contact +1-423-445-xxxx"
Apparently seeking to 1) get around Know Your customer rules using your account or 2) escalate into your linked US bank accounts.
Purpose 1) will land you in serious legal jeopardy for a mere ~70mBTC per day, while purpose 2) will drain your bank account at some point.
Quite cheap compensation for being a sink for toxic side-effects of money laundering &/or theft.
Bitcoin and other crypto currencies are not a store of value. They are a store of hype and momentum. Right now they have none, hence the steady decline.
Cult: a system of religious veneration and devotion
directed toward a particular figure or object.
Religion: a pursuit or interest to which someone ascribes
supreme importance.
yes; in this way it seems very much like the cult of any other currency that has no intrinsic value, but a population of people who are willing to accept it as a surrogate or bookkeeping symbol.
Seems a silly article. The fact that bitcoin has attracted some idiots is entirely consistent with the hypothesis that bitcoin is a great success, and destined for continued success and not at all a cult.
The author is wrong as in presenting the cult as a flaw. Every imaginary human construct has value because we have agreed collectively to subscribe value to it. The stronger the religion the strongest the construct. For bitcoin to become a dominant SoV we need to see some crypto talibans/missionaries/crusaders.
Bitcoin is for the paranoid and conspiracy theorists.
The argument crypto currency supporters have is always Venezuela or the European banking crisis (hilarious because citizens didn't actually lose any money). If our banking system DOES collapse your crypto wallet won't save you.
> Bitcoin is for the paranoid and conspiracy theorists
I would wager a small fraction of technically-literate paranoids and conspiracy theorists own Bitcoin. More plausible: people with some other tendency buy and then, when asked for an explanation, rationalise with conspiracy theory-like reasoning. (My guess for the tendency: gambling affinity.)
Venezuela citizens didn't lose any money? are you serious?
So you must be happy, since most Venezuelans may be millionaires now! (but let's just forget about the fact that 1M+ from their currency is valued as less than a dollar; and that this value loss have destroyed their lives)
Venezuela is irrelevant to the situation in most of the world, its an outlier. Thats why it is a stupid argument for bitcoin. It would be like preparing for volcanoes in Denmark.
Besides they are using USD and foreign banks in Venezuela not crypto currency. The rich in Venezuela haven't lost a cent I am willing to bet. And last but not least: bitcoin doesn't solve a single systemic problem Venezuela has. Its a corrupt failed state that could have been a South American Norway. Technology won't save it.
so are your thoughts about Bitcoin from their (those whose lives were saved because of cryptos) point of view, obviously.
>Besides they are using USD
A few may. But in such violent place, saving cryptos is cheaper than saving in any (physical) cash. Easier to trade as well, since banking is not THAT accessible and illegal USD trading have its safety's costs.
>bitcoin doesn't solve a single systemic problem Venezuela has.
all fiat is a systemic problem. According to Austrian School of Economics. Don't get me wrong, I'm not appealing to authority or anything. This is not meant for you.
Someone might read our comments, care to actually know what's going on and look further into it.
Fiat money is a century-old cult. Democracy is a cult. Lefty progressiveness is a cult.
Bitcoining is a far less dangerous of a cult, because it's completely optional, it doesn't interacts with whom doesn't want it.
Finally, just because some are having fun about mystery in a social network doesn't mean they are a cult.
I myself think satoshi is probably dead (frozen) and will reborn in the future because bounty-hunters will demand his coins, some kind of long-way holder. This is just fun.
Bitcoin is a tool for tax evasion and money exchange on criminal assets. It turns out that also some geeks like to use it to bypass banks incompetence on international funds transfers but tax evasion is the use that drives BTC's value.
The cult is just a small visible part of it but is a pretty minor aspect of it. BTC would exist without the cultists as long as Russian or Saudi assets need to be transfered without too much oversight.
That’s media sensationalism. BTC is not remotely anonymous and is useless as a tax evasion mechanism. Your money still has to go through someone to turn into BTC, and that’s the same as any other money laundering operation. Once their books are audited, your “safe haven” is worth nothing.
I don't completely agree, you can move BTC around, mix it and exchange it for other cryptocurrencies while leaving only a very small trail. You don't have to involve other people directly, you don't have to carry duffel-bags of cash across borders etc...
Of course if your money starts in your "books" before being converted into cryptocurrency then yeah, it's useless. But that's not the use case, it's more about laundering money that's not in the books to begin with (corruption, black market, undeclared sales etc...).
I believe that right now the main deterrent to this scenario is the same reason people don't use cryptocurrencies for legit use cases: it's wildly unstable and you have to convert it to dollars or some other "fiat" to do anything with it.
If you got the bitcoin originally through mining, then it never has to be converted from another currency. Bitcoin is anonymous, but only if you mine instead of purchasing on an exchange.
The only transaction that is going to appear is currency->BTC. After that, there are many efficient ways of obfuscating a BTC->BTC transcation. There are legitimate uses of BTC, so nothing necessarily suspicious.
However, if you want to receive bribes, you just create a new wallet, you receive the bribes in BTC and either change them somehow in dollars or pay a premium to receive some services directly paid in btc (I am sure many people would be happy to receive BTC payment at a 30% discount).
Tax evasion works the same: you receive some payments that you do not declare in BTC. It works exactly the same way people use cash to evade taxes, except that here you don't have to transport luggages full of banknotes.
Another feature of BTC is that it can't be seized. Cash, gold, paintings, they all can be. BTCs are much easier to protect.
Vice has a good video on drug dealers lining up to use a Bitcoin ATM every day somewhere in an American ghetto. Bitcoin is 100% about drug dealing, gambling, and tax avoidance.
You would have to be a total moron to go through all the hoops to use it otherwise. Its kinda like running desktop linux in that way.
A lot of Bitcoin volume is criminal in nature. What is contested is that a large fraction of criminal fund flows go through Bitcoin.
For the same reasons it sucks for individuals (volatile, slow, expensive, publicly recorded, difficult to spend and difficult to convert), it sucks for criminals.
In most countries there are no hoops. In most places in Europe it's harder go get a bank account than to get bitcoin. Does that mean only morons go through all the hoops of obtaining bank accounts?
Do you have any sources for your claim that Bitcoin is used for large Russian/Saudi assets? It seems like the volume of BTC traded for illicit purposes is large in aggregate, but I'm not sure I've seen evidence of individual transfers being big. There are many ways that bad or unscrupulous actors can transfer money now that are actually less risky than Bitcoin.
I'm not commenting on the use of Bitcoin for Russian/Saudi interests, simply some information on Money Laundering and Terrorist Financing.
Money Laundering tends to be smallish sums deposited over time, resulting in large amounts. You can't wash 100MM in one go.
Terrosist Financing tends to be a very large number of small transactions from multiple global sources in a very short space of time into one account/wallet/location. Like crowd-sourcing, in fact exactly the same as crowd-sourcing.
Less risky than Bitcoin? In the end you have to get it out of the blockchain to be useful, so that's where the pointers from a law-enforcement perspecive are.
I have zero interest in Bitcoin, but the idea that terrorists finance happens through cryptocurrency is very naive. Terrorism is sponsored on the ground, with goods, not money that you have to convert to some other money first, and then buy things you need.
This is correct. International funding does happen. Funds travel across regions, countries, territoritories, very quickly, to enable the passing of goods on the ground.
Look at the BTC price fluctuations when another round of sanctions is added on Russia, when Cyprus cracked down on tax evaders or wduring the Saudi corruption crackdown. Everytime it peaks.
Exactly: No crypto in it's current state is liquid enough for any serious moving of money. Slipping, fees (and potential hedging costs) will eat you if you need to to move serious money.
As such it only works for entities who don't have vast amounts of capital, eg. people who can't afford an army of tax lawyers to create complex legal tax evasion schemes to pay less tax than the rest of us.
I don't think so. If someone put 5K BTC up for sale on one day the price of the whole market would be disrupted, but similar sales happen in London and New York every day and the market seems unbothered.
If I'm moving stolen money (or magic math coins or whatever) I don't give a damn about the fees - it's 100% profit either way. It costs money to have it laundered, whether that goes to a shady lawyer(s) or a Bitcoin processor who cares, it doesn't matter it's all profit for the thief.
> I don't give a damn about the fees - it's 100% profit either way
If I worked in your criminal enterprise, I'd could tell your deputies "look at this chump, throwing money away. I'll hire trucks to haul cash and boost our profits by 20%. Help me 'replace' the leader and I'll split those gains with you."
That's not how dirty money works if you want to get away with it. You need to launder it -- put it into something legitimate and, most importantly, get something back out of it that looks legitimate enough to pass casual scrutiny -- for this service anything and anyone, legit or not, is going to take a cut (or "fee"). It's the cost of doing criminal business. And if you're in a criminal enterprise and you even talk to the other members of the ent. about how you're going to move your money you ain't gonna be in the enterprise very long. That type of dirt you do by your lonesome or you die.
Needing to pay fees is different from not "giv[ing] a damn about the fees." I understand I have to pay a broker's fee when I buy and sell stock. That doesn't mean I'm indifferent to its level.
Using Bitcoin to surreptitiously move large quantities of funds is almost always riskier and more expensive than traditional money-laundering techniques.
No. My knowledge comes from anti-money laundering training.
Depending on how fast one needs to move, money laundering fees go from 5% to 30%. Bitcoin is cheaper than that per se. But include the costs of anonymising and cleanly cash out, and you're just adding cost and risk over a wire transfer between fronts.
No man, there's so much more exposure that way. And remember, this is a criminal enterprise. Those people who run your fronts could just as easily rob/kill you and take it for themselves, and given the chance they will. With bitcoins you can 1) do it yourself, no middlemen other than the bitcoin processor who doesn't give a flying right-hand fuck where the money comes from, and 2) do it far, far, far quicker than traditional methods. A thief isn't going to give a damn about fees, I'm tellin ya, in the end it's all profit for them. Get in, get it, and get out. If I hit a lick for $100k, flip it in a couple days while interacting with not another soul but lose 30k to fees, I'm still up 70k that's a good lick. and if I paid the 30k to not have to deal with ANYONE face-to-face (least of all other criminals) that's worth it in spades because I'm not spending MY 30k, I'm spending YOUR 30k.
> if I paid the 30k to not have to deal with ANYONE face-to-face
How do you propose cashing out? Your cronies aren’t going to want their wages in Bitcoin.
> I'm not spending MY 30k, I'm spending YOUR 30k
Practically speaking, if you steal my money it’s now your money. More money is better than less money. In any enterprise, criminal or legitimate, there are systemic incentives for maximising pay-out.
Conversely, if you steal my money and then interact face to face with someone else in the transaction the money potentially becomes seen as their money and you are seen as an overhead at best. I am irrelevant. You may become irrelevant.
>Bitcoin is a tool for tax evasion and money exchange on criminal assets
You just made it more appealing and useful, since taxation is theft. Some "criminal" assets are incorrectly classified as criminal, so that's another +1 for Bitcoin.
The leading zeros are the "proof-of-work". The bitcoin mining algorithm tries various nonces and generates many hashes until it finds one with (currently) 18 leading zeros. Surprisingly, much of the Bitcoin community doesn't know this and think that the leading zeros are special.
The 21e800 is supposedly 'special' because it relates to the E8 'Exceptionally Simple Theory of Everything'. A physics theory proposing a basis for unified field theory.
Anyways, people have mistakenly calculated the odds of such an occurrence and believe it to be exceedingly rare. They are claiming that someone must have left it there and that it is either the result of:
1. A quantum computer
2. Time travelling
3. Something related to the Bible
This doesn't really make sense and we can calculate the odds ourselves. It works out to roughly 3%. (1 - ((16^6 - 1) / (16^6)) ^ 500,000 blocks) = 0.03.
There are 18 hashes with the leading non-zero digits 21e8
There are 3 hashes with the leading non-zero digits 21e80
There are many other "vanity hashes":
(57ea1 or steal) https://blockchain.info/block/000000000057ea16558140e0b3995a...
(1055e5 or losses) https://blockchain.info/block/00000000001055e54d1d11bae837d5...
These things are not rare, but as mentioned in the article, people have ascribed a sort of religious aspect to them. It's really weird.
I also wrote about this today. If you're interested in some of the other weird responses see: https://medium.com/@thisisjoshvarty/lets-talk-about-hashes-o...