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Re: Peter Schiff interviews the Bitcoin Guy, Donald Norman

MoonShadow — Thu, 12 Jul 2012 22:46:59 GMT

Anenome:

Em_ptySkin:
It's is just computer code. It will get hacked especially if it claims to be producing wealth.

You might think so, but 256-bit encryption is no joke. You can only get away with this statement because the computer industry is young. Eventually there will be standards that are simply secure. Factoring primes is not easy by any means. Quantum computers may change that; we shall see.

The topic of quantum computing has already been reviewed in depth, and even they don't pose a long term threat to Bitcoin's security model. The reason is that Bitcoin uses encryption algos developed openly by others, and is modular. The current protocol expects two successive hashing algos to be used in series, and even in the reference code these are modular code blocks. Currently, only SHA-256 is used twice, and SHA algos may be at risk under quantum computing forms of attack; however quantum resistant hashing algos are currently under development. The expectation is that, once one or more of these quantum resistant hashing algos are mature, the community will decide which one to swap out for one of the two itenerations of SHA-256. It's also possible that quantum computing never materializes in a mature format, and in the future SHA-256 would be at risk only due to Moore's Law. In which case swapping out one (or both) itenerations of SHA-256 for SHA-512 (under development) or SHA-1024 (not yet under development) would be better. In any case, Satoshi Nakamoto foresaw the need to change the encryption algos in use by bitcoin, and included an upgrade method that requires consensus (or near consensus) of users to affect such changes.

Re: Peter Schiff interviews the Bitcoin Guy, Donald Norman

Anenome — Thu, 12 Jul 2012 08:43:10 GMT

Em_ptySkin:
It's is just computer code. It will get hacked especially if it claims to be producing wealth.

You might think so, but 256-bit encryption is no joke. You can only get away with this statement because the computer industry is young. Eventually there will be standards that are simply secure. Factoring primes is not easy by any means. Quantum computers may change that; we shall see.

Re: Peter Schiff interviews the Bitcoin Guy, Donald Norman

MoonShadow — Thu, 12 Jul 2012 02:30:51 GMT

I find it sad that even the Bitcoin advocates on this Austrian forum don't understand how bitcoin actually works....

It's is just computer code. It will get hacked especially if it claims to be producing wealth. They want regulation to legitimize what money peopl have investment in it. It is classic uncompetitive competition behavior.

False. Bitcoin is not a computer program, it's primarily an algorithim. It's potentially possible that someone will find a flaw in a particular implimentation of that algorithim; but with the growing number of clients that exist, the odds of that resulting in any real damage to the bitcoin network or economy are small and decreasing.

Daniel Muffinburg:

What if you break into Bitcoin's office and steal the encryption?

But, ah-ha! So whoever knows the encryption can counterfeit.

False. Bitcoin does not use this kind of encryption. It's entirely different than the kind most people have experience with, and there is no great key to 'unlock' it. Such a thing would be futile in bitcoin, as the blockchain (a massive, redundent triple entry ledger) must be machine readable by every node on the network. Transactions are not hidden from human or machine interpretation. Bitcoin uses secure hashing to digitally 'sign' transactions, so that the nodes on the network can mathmatically verify that the transaction could only have been produced by the person who possesses the private key to those coins, and thus can be assumed to have been the legitimate owner of those coins. No amount of brute force matters in this context, and there is no great secret key to lay open the whole of bitcoin. The only secret keys that exist, are individually produced by end users, and can only control the coins that are tied to that key, and only for as long as they remain unspent. So even a hacking only exposes the users that use that particular machine to hold their private keys. In the early days, this was a problem, but users are finally beginning to be more savvy about how they store those keys.

Re: Peter Schiff interviews the Bitcoin Guy, Donald Norman

Isaac "Izzy" Marmolejo — Wed, 22 Jun 2011 19:25:50 GMT

Thanks Esuric,

Still though I am a little confused about this issue. But to clear this up: I was not claiming that Mises's regression was unfalsifiable, I was claiming that the Bitcoin was consistent to Mises regression... I'll do a bit more research about it and it would be a good topic to discuss when I travel to Auburn for Mises U.

Re: Peter Schiff interviews the Bitcoin Guy, Donald Norman

DanielMuff — Wed, 22 Jun 2011 16:38:08 GMT

My Buddy:

Can't be hacked. World's best encryption. If it was possible, banks, businesses, and nuclear weapons installations would ALL be vulernable to being hacked by the same method.

>What if you break into Bitcoin's office and steal the encryption?

...What? Bitcoin doesn't have an office

>But, ah-ha! So whoever knows the encryption can counterfeit.

Yeah, if they can break NSA AES, they can break anything.

You don't have to break the encryption. You could steal the key from whoever has it.

This is why TrueCrypt is ineffective against the someone shoulder surfing you while you enter your password.

Re: Peter Schiff interviews the Bitcoin Guy, Donald Norman

Nielsio — Wed, 22 Jun 2011 13:45:54 GMT

The relevant part by Schiff on Bitcoin:

http://www.youtube.com/watch?v=vTr_hTC90oQ#t=3m14

Re: Peter Schiff interviews the Bitcoin Guy, Donald Norman

My Buddy — Wed, 22 Jun 2011 12:33:44 GMT

Can't be hacked. World's best encryption. If it was possible, banks, businesses, and nuclear weapons installations would ALL be vulernable to being hacked by the same method.

>What if you break into Bitcoin's office and steal the encryption?

...What? Bitcoin doesn't have an office

>But, ah-ha! So whoever knows the encryption can counterfeit.

Yeah, if they can break NSA AES, they can break anything.

Re: Peter Schiff interviews the Bitcoin Guy, Donald Norman

Conza88 — Wed, 22 Jun 2011 11:55:51 GMT

"I do not quite get your claim... Bitcoin is tied to currencies. Why cant this flow chart work:

bartered use commodity - medium of exchange - fiat currency - Bitcoin"

Because you've omitted the part about legal tender laws... allowing fiat currency to remain in existence.

bartered use commodity (freemarket) -> medium of exchange (*freemarket) -> fiat currency (state intervention -> legal tender laws etc. cut ties to gold completely for USD in 1971) -> Bitcoin (built on top of fiat currency)

Bitcoin is merely a reaction to the existence of the state. It is not a valid free-market money. Does anyone know if there's anyone exchanging their gold coins for bitcoins? Haha!

Can someone give me the 'positives' / 'arguments for' bitcoin - that would still exist, if there was a voluntary society? Are there any?

*Daily Bell: You have also written extensively on money and monetary affairs. Is a gold standard necessary for a free society?

Dr. Hans-Hermann Hoppe: in a free society, the market would produce money, as all other goods and services. There would be no such thing as money in a world that was perfectly certain and predictable. But in a world with unpredictable contingencies people come to value goods also on account of their marketability or salability, i.e., as media of exchange. And since a more easily and widely salable good is preferable to a less easily and widely salable good as a medium of exchange, there is an inevitable tendency in the market for a single commodity to finally emerge that differs from all others in being the most easily and widely salable commodity of all. This commodity is called money. As the most easily salable good of all it provides its owner with the best humanly possible protection against uncertainty in that it can be employed for the instant satisfaction of the widest range of possible needs. Economic theory has nothing to say as to what commodity will acquire the status of money. Historically, it happened to be gold. But if the physical make-up of our world would have been different or is to become different from what it is now, some other commodity would have become or might become money. The market will decide. In any case, there is no need for government to get involved in any of this. The market has provided and will provide some money-commodity, and the production of that commodity, whatever it is, is subject to the same forces of supply and demand as the production of everything else.

Re: Peter Schiff interviews the Bitcoin Guy, Donald Norman

Esuric — Wed, 22 Jun 2011 11:54:24 GMT

Just a quick note: the sign of a good theory is falsiability. I don't see anything wrong with proving some theory invalid because it contradict reality. Problem would be if it was impossible to disprove it.

Indeed. Isaac seems to think that Mises' theory is absolutely unfalsifiable; that money can emerge in anyway and it will be absolutely consistent with Mises' theory. This simply isn't so. Mises' theory asserts that money must emerge, and may change over time, in a very specific way (which is why it's a theory in the first place).

Re: Peter Schiff interviews the Bitcoin Guy, Donald Norman

MaikU — Wed, 22 Jun 2011 11:27:47 GMT

Just a quick note: the sign of a good theory is falsiability. I don't see anything wrong with proving some theory invalid because it contradict reality. Problem would be if it was impossible to disprove it.

Re: Peter Schiff interviews the Bitcoin Guy, Donald Norman

Esuric — Wed, 22 Jun 2011 11:17:09 GMT

I really cannot grasp your view here. Bitcoins are linked to currencies though, right?

Please re-read my previous comment. I edited it for clarity. But to answer your question:

there is an exchange rate between bitcoins and dollars, the same way that there's an exchange rate between apple pies and dollars, gallons of gas and dollars, etc. But this does not mean that apple pies and gallons of gas = money. When I say a "direct link," I mean that 1 unit of bitcoin is, for all intents and purposes, absolutely identical to a unit of dollars; when they are interchangeable as a medium of exchange.

Re: Peter Schiff interviews the Bitcoin Guy, Donald Norman

Isaac "Izzy" Marmolejo — Wed, 22 Jun 2011 11:13:38 GMT

I really cannot grasp your view here. Bitcoins are linked to currencies though, right?

Re: Peter Schiff interviews the Bitcoin Guy, Donald Norman

Esuric — Wed, 22 Jun 2011 10:54:52 GMT

I do not quite get your claim... Bitcoin is tied to currencies. Why cant this flow chart work:

bartered use commodity - medium of exchange - fiat currency - Bitcoin

This flow chart could work, and bitcoin is not directly tied to any currency (the value of paper notes were directly tied to gold).

Bitcoin would have to become directly tied to money proper, to the point where the two are interchangeable. Next, individuals would have to choose/prefer the employment of bitcoin over fiat paper currency, to the point where they suspend the employment of the latter altogether. This can occur organically or through government intervention (decree), as was the case with the employment of fiat paper money. If it occurred in this way, then it would not constitute a serious problem for Mises' theory. If, on the other hand, people just decide to employ bitcoin as money over fiat paper-currency, without a direct link, then Mises' theory would be empirically invalidated.

So in other words, Mises' theory would be compromised if tomorrow individuals just stopped using dollars altogether in favor of bitcoins.

[Edited for clarity]

Re: Peter Schiff interviews the Bitcoin Guy, Donald Norman

John James — Wed, 22 Jun 2011 10:33:54 GMT

I was kind of disappointed with this interview, but I can't really say I didn't expect as much. I could have easily guess Schiff wouldn't have done any homework. This is why I'm so looking forward to Murphy's article. I want to hear a real assessment from someone who understands both ecnoomics and the technological workings of bitcoin.

If anyone wasn't able to download the show, the interview portion should be available in the sidebar under "Broadcast Central" at the SchiffRadio.com site until the end of the week.

Re: Peter Schiff interviews the Bitcoin Guy, Donald Norman

Isaac "Izzy" Marmolejo — Wed, 22 Jun 2011 10:32:36 GMT

I do not quite get your claim... Bitcoin is tied to currencies. Why cant this flow chart work:

bartered use commodity - medium of exchange - fiat currency - Bitcoin