Bitcoin is an alternative digital currency. It is gaining popularity.
Bitcoin is a fiat currency. New bitcoins are generated whenever someone generates a key with certain properties. Some people have set up servers to "mine" bitcoins. They search for suitable keys to generate new bitcoins. There is a limit on the total number of possible bitcoins.
You can trade bitcoins for gold or silver or State paper money.
Bitcoin is distributed. Each Bitcoin client contains an encrypted copy of the entire monetary base. Each Bitcoin client contains an encrypted copy of the full transaction history. Every time there is a transaction, it is shared among every client. The data is strong-encrypted. The P2P nature makes it hard for the State to shut down Bitcoin.
Do you see the flaws in Bitcoin?
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I read an interesting conspiracy theory regarding Bitcoin. Someone said "The guy who created Bitcoin actually works for the NSA."
I don't like Bitcoin. I don't see the attraction of using Bitcoin compared to gold and silver. Are State insiders promoting Bitcoin, as a distraction to using gold and silver?
If someone asked me, I'd accept payment in Bitcoin, only if I could convert it to gold or silver or State money.
Fewer than 1% of the population is running a Bicoin client. This makes it very easy for State thugs. They can check and see who's running a Bitcoin client, and add you to their "subversive persons" list.
For example, State thugs can keep track of who's running Tor. I heard of one guy who set up a Tor exit node. State thugs forced him to shut it down. They claimed someone used his Tor exit node for "downloading child pornography", making him legally responsible. I suspect most Tor nodes are run by the NSA. The NSA would have to be totally clueless, if they weren't controlling a large number of Tor nodes.
Suppose that the Bitcoin encryption has a hidden flaw. It's open source. That doesn't mean there isn't a cleverly-hidden flaw in the encryption.
The NSA is more than 20 years ahead of the general public, regarding encryption tricks. They could have planted an exploitable flaw in the Bitcoin encryption.
Every Bitcoin client has a copy of the full monetary base and the full transaction history. This makes it very easy for State thugs to spy on Bitcoin users, especially if there's a backdoor decryption key.
State tax collectors can run a Bitcoin client, apply their secret encryption backdoor, and see who's a heavy Bitcoin user. It's very easy for State thugs to identify heavy Bitcoin users.
I don't like Bitcoin. It's inferior to gold and silver. You can get the same benefit as Bitcoin by making entries on a piece of paper, settling with physical gold and silver when necessary.
I haven't seen an "alternate monetary system" that's more attractive than gold and silver. Are State insiders intentionally promoting Bitcoin, knowing it has exploitable flaws?
Tuesday, March 29, 2011
The Bitcoin Conspiracy Theory
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16 comments:
Bitcoin uses ECDSA signatures and SHA-256 hashes. Nothing is encrypted. It uses OpenSSL for key pair generation, so unless there is a flaw in the OpenSSL library (which is far more popular than bitcoin) that makes key generation predictable or significantly limits the key space, the ECDSA key generation is secure. That's the only real potential crypto-related vulnerability in the system, as it would allow an attacker to spend other people's bitcoins. Any other vulnerabilities will most likely just be your normal run-of-the-mill remote exploits due to a buffer overflow or something similar, and would provide the same access as any other vulnerable software or poor configuration would, having nothing to do with cryptography/encryption.
Please educate yourself before spouting off nonsense about something which you don't understand. If you later learn that bitcoin is an good monetary system on par with precious metals, you will see the potential damage a post like yours could cause to the adoption of bitcoin. Please spend some time in the bitcoin wiki, forums, and #bitcoin-discussion and #bitcoin-dev channels on freenode and learn.
Anonymous:
And his little dog too???
I don't know anything about encryption or ECDSA or whatever, so, I am just gonna fantasize about this.
I think that the biggest potential for a security hole would be from within windows itself. Now, if NSA "has" your OS, I don't know how much can they discover about other users of the system (BitCoin), but it at least has you.
I am pretty sure there are several doors into Windows and Mac, not sure about Linux, since it is an open source.
NSA would be fools if they did not demand doors from Apple and M$. To believe that would be same as to believe that the government is here to help.
Likely a multitude of types of doors, because NSA can not be sure what you run / how you configure your OS. This is probably the reason for constant security vulnerabilities in windows, because as the door-related components are being discovered, M$ then would have to patch the door and declare it a mistake, then move on.
Consider the constant push from MS to a newer OS, I think that is an indication as well. They have to keep pushing new OS versions, because the existing ones are being patched. Also, consider that M$ isn't only selling a new OS. They are most active on pushing out old ones by incompatibility tricks, understandably so, because a user on old OS is less vulnerable (has fewer doors open).
That said, there is a way to run windows on hardware not linked to you, on a connection not linked to you either and as such to be as secure as BitCoin itself, unless BitCoin does something as "ingenious" as Facebook, where you are vulnerable primarily because of other people, and not your own information leaks (dumb friend may tag your photo, or open his piehole about your life).
It is interesting, anyway, I need to learn more about it.
Thanks, Anonymous about info on BitCoin. You don't front for NSA, do you? :)
FSK:
There is a good discussion about Bitcoin here:
http://www.marcstevens.net/board/viewtopic.php?f=58&t=2102
I wouldn't suggest anyone place all their wealth into bitcoins, the experiment may very well fail. However, bitcoin does have a lot of the properties of gold and silver with the added benefit of being digital. You can move wealth worldwide, anonymously, in a matter of milliseconds with no (or very low) transaction fees. I suppose it's possible that it's a gov't conspiracy, but I highly doubt it (and I've worked on the source code...most state employees couldn't string two decent lines of code together, let alone come up with something like bitcoin). There is no central bank to steal wealth and trust is distributed throughout the community of bitcoin users.
@Mannie: just don't use crappy OS such as Windows or Macintosh.
I won't comment on the conspiracy theory or how bitcoin fairs as an alternative currency. Instead I wanted to say something these remarks:
I don't see the attraction of using Bitcoin compared to gold and silver.
You can get the same benefit as Bitcoin by making entries on a piece of paper, settling with physical gold and silver when necessary.
I haven't seen an "alternate monetary system" that's more attractive than gold and silver.
Alternative currencies aren't used instead of gold but as the perfect complement to it. I'll explain what I mean.
The problem with these statements is that they seem to mix up the ideas of medium of exchange, unit of account and store of value aspects of 'money'.
Bitcoin hopes, from what I can tell, to be a medium of exchange and perhaps a unit of account. But taking on those roles does nothing to prevent gold from being the ultimate store of value function of money.
You say so yourself: You can trade bitcoins for gold or silver...
That means that bitcoins are gold currencies because the market already treats gold as the store of value; therefore, any alternative medium of exchange can't help but be like those "entries on a piece of paper."
I think maybe you're assuming, incorrectly, that to be a true gold currency, it has to be backed by gold. All it needs to do is float against gold, i.e. people are willing to use it because there is a market conversion rate to gold that is widely known and available.
So the "attraction" of any currency, alternative or otherwise, is that
"the money used as a store of value must be something completely separate and different from the medium of exchange. It must be so, so that the store of value unit can expand in value while the medium of exchange unit expands in quantity and/or velocity...
Compare this concept to a gold standard in which you fix the value of gold to the dollar [or those entries on paper - Neverfox] at, say, $5,000 per ounce. The assumption is that this is where the price of gold will stay for a long time, if you manage the system properly. So what is the result? You artificially constrain the expansion of the medium of exchange fiat currency while also restricting the value expansion of the store of value. You are locking the two together." (FOFOA)
That may sound a lot like what we have now except that gold's conversion rate against various available mediums of exchange is artificially low (very very low) and unstable, primarily because of "paper gold" influences. When physical gold is freed from this (and legal tender laws are dropped on state currencies), there would all kinds of reasons to experiment with different currencies with gold as the focal point. They would compete for respect by reference to a market for a stable supply of above-ground physical gold. Freeing that market is where we should focus, though it's not likely to need much help the way things are going.
If you try to set up a business that makes it easy for people to convert State paper money to gold or silver, then you will be treated as a criminal. Consider Nothaus, E-Gold, Franklin Sanders, and others.
State thugs make it very hard to use gold and silver as money.
Also, if someone offered to pay me via Bitcoin, I'd probably accept it and immediately convert it to State money or gold or silver (taking into account exchange fees when quoting a Bitcoin-denominated price).
If you try to set up a business that makes it easy for people to convert State paper money to gold or silver, then you will be treated as a criminal.
You mean like any coin store or APMEX? ;)
Most coin stores and Internet dealers:
1. report transactions to the State
2. give you a 1099 for capital gains taxes when you sell
I think the issues of taxes and security are the wrong place to be looking., I was given a tour of a bitcoin miner by a friend who operates a server and as I joked to him, "So, you tied up $5000 worth of computer equipment for a week to get a $20 bitcoin?" But he was showing me these photos of people who had loaded up their computers with multiple GPU cards for an amazing amount of computer power; far more than is needed for the functions of bitcoin, and after examining the code, it looks to me that the mining system can also be used as a vast distributed processor for code breaking. With a million computer users running bitmining processes using hot-rodded machines such as I saw last night, the total aggregate computational power makes the NSA's new rumored Exaflop computer look like a pocket calculator. But one thing is obvious. There is a huge surplus of CPU work being done in the crypto code, far in excess of what is needed to support bitcoin transactions. If it isn't the NSA behind this, then it is hackers, and none of our data is safe!
As a final historical perspective, at the end of WW2 the United States and Britain made gifts of captured German Enigma machines to friendly governments ... without telling them that the messages sent on those machines could be read. Then there was the Crypto Ag scandal in which the owner of a European commercial cryptography company accepted a bribe from the NSA to include a trapdoor in his system he was selling. There are many other such examples.
There is more in that mining than just bitcoin.
seems like someone is paying you virtual money to take advantage of your gpu.
there is a truth we are not seeing here.
soon enough, you will.
I wouldn't say that bitcoin is fiat money. It is being created, but at a known rate and is guaranteed to soon have an uninflatable quantity. You could have said gold is fiat by the same definition since people are constantly extracting it out of the ground and increasing its supply. In reality neither are fiat.
That being said, back when gold was monetized, the banksters gave it fiat-like properties by multiplying it with notes and accounting entries that they loaned out as money. This is no different than what banks do today, supposedly with monetized government debt as reserves instead of gold, except I suppose now banks are protected from bankruns by the government just borrowing more money, whereas a run on gold would cause insolvency.
The interesting thing about bitcoin, besides some of the things you and some commenters pointed out, is that if it gets popular enough, it could easily be hijacked by note issuing banksters and used as reserves to multiply the money supply with, just like gold in the past. It suffers from the weakness that it is hard to functionally represent its value in an inert, physical way, to be used conveniently in local real world marketplaces, and therefore it will create a vacuum for entities to step in, issue notes that are difficult to counterfeit, and promise to redeem real network bitcoins in the blockchain for the pieces of paper at their various convenient branch banking locations near you. It has advantages over gold in that it is easily transported. It has advantages over government debt in that it can't be inflated with QE or the like.
Anyhow, this note issuing, money multiplying thing will inevitibly result in the same situation we were in right before 1913, if it is controlled totally by private humans. Unless the big boy banks already have a plan for this (maybe that's the conspiracy), then the little boys will start doing this. Some will go broke because they issued too many notes. They then either simply go broke, or they get acquired or bailed out by another bank and merged with it or owned by it, which makes it bigger, until finally we end up with giant bitcoin note issuing monopolies and cartels like we had with gold right before 1913.
It's possible that the elite plan to create a one world currency which they control is on its way. Observe how Cyprus was not being 'bailed' out by imf and bitcoins all the sudden show up there...
Bitcoins are possibly (and very likely) being produced by the same gangsters who gave us the US dollar. Check out the wiki and how hard they try to get rid of 'myths'
No private entity should ever control a super powers money supply again. It's too much power and this is why we are approaching ww3 today. The feds are broke because their interest based system is inevitably collapsing on itself. Their system required that every one uses the us dollar. So when a country sells oil in another currency other than us dollar its a huge financial problems for the US. Thus war. Hence Libya and Iraq. If every one trades in US dollar, all is well. This is why we are seeing bitcoins. It's an attempt at a new world Currency by the same corrupt folks who brought us ww1,ww2 and now ww3!
I don't necessarily believe all the "flaws" mentioned, yet I'd like to introduce another potential flaw: What if the actual founders knew that one day this is going to sink, and used this as a perfectly concealed (think of technicalities and other things) Ponzi scheme where all future users (and media coverage as some claim) cause the value of coins inflate fast? Meanwhile founders (or their friends) will be silently collecting an important sum of coins, just to convert it to another tangible (e.g. money, physical things, etc) just before the whole thing collapses.
While I believe in new things, it's just there are too many bad signs about it (unbelievable fluctuations-gambling anyone?, no real/biggish company uses it yet, no means of stability etc).
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