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    thanks ursus, I'll try that.

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      Originally posted by Evariste Euler Gauss View Post
      Does anyone on here know of a decent explanation of exactly what bitcoin is and how it works, accessible to a non computer-science person? I find the Wikipedia page on it useless with regard to those questions, as it assumes quite a high degree of familiarity with computer science concepts. Or do you need to have spent many hours absorbing principles of computer science from scratch to a fairly advanced level before you can have a hope of understanding it?
      Gonna try for an explanation, if only cos I want to understand this stuff myself and the best way to do this is to explain it to other people.

      Hashes
      The key computer science concept to understand is hashes.

      Hashes are a way of mapping arbitrary chunks of data to fixed-length values. An example of a hash would be, given a decimal number, take the last digit. That's not a very good hash because there are loads of "collisions" (where two numbers have the same hash) and it's very easy to find data that satisfies that hash.

      The idea of a cryptographically secure hash is that it's very easy to compute the hash of a chunk of data, but very hard to generate a chunk of data that satisfies a particular hash value.

      Public-Private Key Cryptography
      Another maths/compsci concept is public-private key crpytography. This makes use of the fact that it's easy to multiply prime numbers together but hard to factorise products of large primes to create a system where you can encode stuff with a public key but only decode it with the private key.

      This system also allows for digital signatures. A message sender can digitally sign a chunk of data by encoding it with their private key a signature using their private key, in such a way that the recipient can decode it, using the sender's public key. Since only the sender has access to the private key, this proves that the message came from the sender and has not been modified in transit.

      Digital Coins
      A digital coin is a chain of transactions, where the previous transaction is hashed with the new owner's public key, and signed with the old owner's private key. This creates a chain of ownership.

      If I own a digital coin, I (or anyone else) can prove that it was sent to me specifically by the previous owner by verifying (decoding) the last chunk of data using the previous owner's public key, and then using my public key and the penultimate data chunk to verify the hash. The entire chain of ownership can be verified in this way.

      However, there's a problem here. If the previous owner sends the coin to me, but makes a copy of the previous chain, there's nothing to stop them from double-spending the coin and sending it to someone else. This is where the blockchain comes in.

      Blockchains
      A reasonable solution to double-spending might be to have central, trusted authority (a mint).

      The mint issues digital coins, and we only trust coins issued by the mind (i.e. signed by them). When you spend a coin, the transaction is logged with the mint and the coin is returned to the mint and a new one issued to the new owner. The next time you try to spend the old coin, the mint will have a record that the coin has already been spent and it'll be declined.

      Bitcoin, being devised by weird tech libertarians, doesn't want a mint, in part because it they didn't want a central point of authority to store every transaction (which clearly has security implications). Instead, transactions are publicly announced and published on a timestamp server.

      A timestamp servier is essentially a chained list of timestamped transactions published somewhere (this could be a bulletin board, for example). Publishing a time-stamped hash of a chunk of data proves that the data existed at the time stated. Each successive hash includes the timestamp of the previous transaction in its hash, thus a chain of trust is built up.

      When someone sends you a bitcoin, you can look at the records and verify that the coin hasn't previously been spent (in the same way that the mint would have done).

      We don't trust any one entity to honestly operate a single timestamp server either, so we need to distribute it peer-to-peer. This is, essentially, a voting system. When a transaction is made, nodes in the peer-to-peer network decide if the transaction is valid, and if so add the block to the chain. A dishonest party could construct a fraudulent chain, but it would be rejected by the other nodes.

      It's possible that a fraudulent party could set up millions of fake nodes, so proof of work is used to verify a node's integrity. Essentially this makes the system "one-CPU, one vote".

      Proof of work
      Proof of work asks the node that is adding the transaction to the timestamp server to do the hash multiple times, with an incrementing nonce (number used once) at the end until the hash begins with a certain number of zeroes (the precise number of zeroes increments as computing power/nodes increases).

      Once a node has done the necessary proof of work, it broadcasts the block and other nodes verify that the coin has not been spent twice, and if they approve, they add the block to their chains too. In this way, each node builds up a chain of transactions. Given two competing chains, one fraudulently generated, the longest chain is deemed to be valid, because it represents the most work.

      And to modify a transaction in the chain, a malicious party would need to regenerate all subsequent transactions - something that becomes impractically difficult.

      Mining
      Proof of work (i.e. using your system to verify transactions) is incentivised by the generation of new coins. This also means that even if someone did assemble enough computing power to generate fraudulent transactions, they'd be better off using that to generate coins for themselves.

      Anyway, bitcoin is nice maths but fundamentally a really awful thing.

      Comment


        Originally posted by Snake Plissken View Post
        I find the whole Bitcoin thing fascinating. The underlying idea of the blockchain is an elegant technical solution to a problem. The story of how it got there and who the hell Satoshi Nakamoto is worthy of the finest mystery novel. The market around it is a microcosm of human nature, with greed, crime, stupidity and so on. It's like living through the tulip bubble or the Gold Rush.
        If you search back through this thread, I made a post in May 2016 after reading this:

        https://www.lrb.co.uk/v38/n08/john-l...tcoin-grows-up

        It's about as clear and detailed account as you could wish to read. So clear, I thought it would make sense to buy a bitcoin due to its finite quantity and the instability of global economics. Plus, they only cost £320 at the time, what could I lose?

        Stupidly, I told sra. stev9e that I was going to buy one and she went apesh1t because I would be throwing money away we desperately needed. I didn't buy it and we no longer mention the B word.

        However, I really believe its time is limited from an environmental aspect. That's surely how governments can put the breaks on it, by taxing the hell out of servers encypting and decrypting these insanely long block chains.

        Comment


          And now Bulgaria finds itself saddled with $3b worth of the cryptocurrency:

          https://venturebeat.com/2017/12/08/b...rth-3-billion/

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            Bitcoin Q&A which may answer some of EEG's questions and touches on the transaction fee issue I mentioned a few pages back, and includes this hilarious passage:
            JV: How high could fees go and what impact does that have on the possibility of using bitcoin as a currency?

            EO: Since fees are expected to eventually substitute for block rewards, we might see transaction fees in the tens or hundreds of dollars, depending on the future price of bitcoin. The good news is, people are building second-layer solutions where transactions can be netted and batched in payment channels before being settled on the blockchain. This should keep fees low for non-critical transactions.
            So bitcoin is revolutionising payments by, um, requiring traditional non-blockchain settlement systems to be built on top of it.

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              Comment


                Haha. Where's that from, ursus?

                Thanks for the answers to my questions upthread by the way, people. The later question about it being a pyramid scheme is essentially what I was wondering myself.

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                  The fella that I work with who I mentioned upthread apparently cashed out all bar two of his Bitcoins yesterday for about £300,000. He's going to use the money to buy a house. Good luck to him, but I still think that the whole thing is just insane. Like Snake above, I find it fascinating, though.

                  Comment


                    I think this is the first ICO enforcement action based solely on the unregistered securities offering angle. Interestingly, this one explicitly purported to be a utility token offering, so the case should set some useful precedents.

                    That said, some of this stuff is pretty sketchy, utility token wise:
                    In the MUN White Paper, on the Munchee Website and elsewhere, Munchee and its agents further emphasized that the company would run its business in ways that would cause MUN tokens to rise in value. First, Munchee described a “tier” plan in which the amount it would pay for a Munchee App review would depend on the amount of the author’s holdings of MUN tokens. For example, a “Diamond Level” holder having at least 300 MUN tokens would be paid more for a review than a “Gold Level” holder having only 200 MUN tokens. Also, Munchee said it could or would “burn” MUN tokens in the future when restaurants pay for advertising with MUN tokens, thereby taking MUN tokens out of circulation. Munchee emphasized to potential purchasers how they could profit from those efforts:
                    Munchee could potentially choose to to [sic] burn (take out of circulation) a small fraction of MUN tokens everytime [sic] a restaurant pays Munchee as [sic] advertising fee. This, along with our tiered membership plan could potentially increase the appreciation of the remaining MUN tokens as the total supply in circulation reduces and as users would prefer holding their MUN tokens.
                    Still a bit of a slap on the wrist though. No requirement to refund token purchases, as far as I can see.
                    Last edited by Ginger Yellow; 12-12-2017, 15:52.

                    Comment


                      Originally posted by Sam View Post
                      The later question about it being a pyramid scheme is essentially what I was wondering myself.
                      As I said above, it's not formally a pyramid scheme. I'd argue it's closest to a pump-and-dump scheme, except for the most part the pumpers are buy-and-hold (or maybe buy and convert to some other crypto) investors. But here's an interesting analysis of it in the context of the law around ponzi/pyramid schemes.

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                        I don't know anything about the new book, but I'm a bit skeptical about Lewis in general. He's not usually outright wrong, but his determination to fit all the facts into a single catchy angle (eg Germany's alleged anal fixation in this piece) can be misleading, or just annoying. So, that piece is good in that it brings to light a relatively underappreciated (in mass media) point about the financial crisis, that its global spread was to a large extent driven not by deliberate, excessive risk taking, but a) the removal of state guarantees from the Landesbanks, and b) what the people doing it thought was risk aversion. But the storytelling part is completely overegged and just ends up obscuring the facts.

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                          Good old Curtis, never let the facts get in the way of another fast cut. The signs were there as early as The Mayfair Set, where the abandonment of Social Democracy in the UK and elsewhere seems the devious plot of evil men like Goldsmith and Aspinall, barely a ref to the Oil Crisis, Pinochet and the Chicago Boys, Nixon’s second term move toward Monetarism. Fucking Thatcher had been worshipping that malevolent fraud Hayek since she was at Oxford. But nah, it was all a plot by Bad Men in double breasted wool suits that smelt of piss.

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                            At some point in the near future these things will cost more in electricity to mine than they are worth. I assume that people will stop mining them then. Then the price will go up further??

                            Ok, so bitcoin makes no sense, but neither does hoarding gold, and there's a market for that.

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                              But jaysus, if I was 10 years younger I'd have been mining bitcoins ten years ago. Instead it was Seti@home that I was wasting my time on.

                              Comment


                                Getting the “money” out of the fucking thing would seem to be the key. I understand nothing of it really, but that already seems difficult. Imagine when mass panic sets in.

                                Comment


                                  But a greater fool dynamic doesn't imply a pyramid/ponzi scheme. After all, it was true of the (first) tech bubble, but nobody called Pets.com a pyramid scheme. A pyramid scheme involves "sales" to insiders and a business model built around recruiting other sales people to buy goods from you. A ponzi scheme involves needing more money coming in to make promised returns for existing investors, because the previous investments aren't generating those returns (usually because they have been embezzled, but possibly because they were invested in something lower yielding). That's not what's happening with bitcoin - or rather, it's not the central thing with bitcoin; I'm sure there are plenty of pyramid/ponzi schemes being built on top of it. It's just a classic bubble with lots of bad actors taking advantage of it, in an environment where almost all traditional investment return fuck all. The bubble is particularly frothy because of the techno-utopianism of it and the fact that the whole crypto sector has been so lightly regulated until now, so truly scammy, bubble inflating things like ICOs were able to flourish without being clamped down on until too late.
                                  Last edited by Ginger Yellow; 13-12-2017, 03:36.

                                  Comment


                                    A Google engineer tries to sell some BitCoin

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                                      This reply from some way down that thread is quite ... well, it's something.

                                      It's morally good for me to be "profiteering". Like the free market it grows stronger due to my profiteering. Using or trading grows the network AND hoarding increases the value. Everyone wins in a non-violent way because you are free not to play the game. #antifragile

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                                        I have an acquaintance here who gambles for a living (mostly on snooker and poker, I think). He was talking a couple of weeks ago about starting a business to buy and sell bitcoin. He opened last week, and ran into problems on his first day because he had US$50,000 in the office and someone walked in wanting to sell US$300,000 of bitcoin.

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                                          It doesn't even make sense on its own terms. The bigger the network, the shittier bitcoin works.

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                                            This sort of shit is the clearest evidence it's all an insane bubble. And even this 200% blockchain bump is pretty modest by the standards of these things (of which there are depressingly many). If you just say you're transitioning your boring, crappy company into an exciting, crappy blockchain company, you're pretty much guaranteed to triple your stock price. Even if it would by definition require you to pay an inflated price to acquire said blockchain exploiting capacity.

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                                              Right guys, joke incoming, assume brace position.

                                              <clears throat> you've heard of Tulip Computers, right? Well now these bitcoin are more like Computer Tulips ahahahaha

                                              Comment


                                                Originally posted by N est à? View Post
                                                Right guys, joke incoming, assume brace position.

                                                <clears throat> you've heard of Tulip Computers, right?
                                                Nope.

                                                Comment




                                                  Work with me here guys? Anyone?

                                                  Comment


                                                    Originally posted by Sam View Post
                                                    This reply from some way down that thread is quite ... well, it's something.
                                                    He got "antifragile" from Nassim Taleb.

                                                    I can guarantee you that Taleb is not stupid enough to invest in Bitcoin.

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